<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CONSOLIDATED CONTAINER COMPANY LLC
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C> <C>
DELAWARE 3085 75-2825338
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
CONSOLIDATED CONTAINER CAPITAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C> <C>
DELAWARE 3085 75-2838559
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
2515 MCKINNEY AVENUE, SUITE 850
DALLAS, TEXAS 75201
(214) 303-3700
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
------------------------------
TIMOTHY W. BRASHER
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY
2515 MCKINNEY AVENUE, SUITE 850
DALLAS, TEXAS 75201
(214) 303-3700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
WITH A COPY TO:
STEPHAN J. FEDER, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective. If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
--------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED NOTE PRICE (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
10 1/8 Senior Subordinated Notes due 2009........ $185,000,000 100% $185,000,000 $51,430
Guarantees of 10 1/8% Senior Subordinated Notes
due 2009 (2)................................... $185,000,000 None (3) None (3) None (4)
</TABLE>
(1) This amount has been estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933,
as amended.
(2) See inside facing page for table of additional registrants which are
providing the guarantees being registered hereby.
(3) No separate consideration will be received for the guarantees of the 10 1/8%
Senior Subordinated Notes due 2009 by the subsidiary guarantors of
Consolidated Container Company LLC.
(4) No separate filing fee is required for the guarantees pursuant to Rule
457(n) under the Securities Act of 1933, as amended.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF ADDITIONAL REGISTRANTS PROVIDING GUARANTEES
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<CAPTION>
STATE OR OTHER ADDRESS, INCLUDING ZIP CODE,
JURISDICTION OF I.R.S. AND TELEPHONE NUMBER,
EXACT NAME OF REGISTRANT INCORPORATION EMPLOYER INCLUDING AREA CODE,
AS SPECIFIED IN ITS CHARTER AND OR IDENTIFICATION OF REGISTRANT'S
REGISTRATION NO. ORGANIZATION NUMBER PRINCIPAL EXECUTIVE OFFICES
- --------------------------------------- --------------- -------------- ---------------------------------------
<S> <C> <C> <C>
Reid Plastics Group LLC Delaware 75-2825339 2515 McKinney Avenue, Suite 850 Dallas,
(333- ) Texas 75201
(214) 303-3700
Plastic Containers LLC Delaware 13-3632393 2515 McKinney Avenue, Suite 850 Dallas,
(333- ) Texas 75201
(214) 303-3700
Continental Plastic Containers LLC Delaware 06-1056158 2515 McKinney Avenue, Suite 850 Dallas,
(333- ) Texas 75201
(214) 303-3700
Continental Caribbean Containers, Inc. Delaware 66-0342024 2515 McKinney Avenue, Suite 850 Dallas,
(333- ) Texas 75201
(214) 303-3700
</TABLE>
ii
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER , 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THE EXCHANGE NOTES OFFERED BY THIS PROSPECTUS UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE>
PROSPECTUS
$185,000,000
CONSOLIDATED CONTAINER COMPANY LLC,
CONSOLIDATED CONTAINER CAPITAL, INC.
OFFER TO EXCHANGE ALL
OUTSTANDING 10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
FOR
10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
---------------------
- We will exchange all of your outstanding notes that are validly tendered
and not validly withdrawn for an equal principal amount of exchange notes.
- The exchange notes will be substantially identical to the outstanding
notes, except that, because we have registered the exchange notes under
the Securities Act of 1933, they will:
-- be freely tradeable, will not bear legends restricting their transfer;
-- will not be subject to any additional obligations regarding
registration under the Securities Act of 1933; and
-- will not be subject to special interest payments.
- The exchange notes will be issued under, and entitled to the benefits of,
the same indenture under which we issued the outstanding notes.
- All of our domestic subsidiaries which jointly and severally guarantee the
outstanding notes on an unconditional basis will jointly and severally
guarantee the exchange notes on an unconditional basis.
- The outstanding notes and the guarantees of the outstanding notes are, and
the exchange notes and the guarantees of the exchange notes will be,
senior subordinated debt that rank junior to senior debt. At July 2, 1999,
we and the guarantors had approximately $597.5 million of senior debt
outstanding.
- The exchange offer expires at 5:00 p.m., New York City time, on
, 1999, unless extended. We do not currently intend to extend
the expiration date
- We will not receive any proceeds from the exchange offer.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 15 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1999.
<PAGE>
TABLE OF CONTENTS
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PAGE
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Prospectus Summary.............................. 3
Risk Factors.................................... 15
Where You Can Find More Information............. 25
Forward-Looking Statements...................... 26
Use of Proceeds................................. 27
Capitalization.................................. 28
The Exchange Offer.............................. 29
Description of Notes............................ 41
U.S. Federal Income Tax Consequences of the
Exchange Offer................................ 95
Plan of Distribution............................ 96
Consolidated Container Company LLC Unaudited Pro
Forma Financial Information................... 97
Management's Discussion and Analysis of
Financial Condition and Pro Forma Results of
Operations of Consolidated Container Company
LLC........................................... 106
Selected Historical Financial Data of Reid
Plastics, Inc................................. 113
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Management's Discussion and Analysis of
Financial Condition and Results of Operations
of Reid Plastics, Inc......................... 115
Selected Historical Financial Data of Suiza
Packaging..................................... 119
Management's Discussion and Analysis of
Financial Condition and Results of Operations
of Suiza Packaging............................ 121
Selected Historical Pre-Acquisition Financial
Data of PlasticContainers, Inc................ 124
Business........................................ 126
The Transactions................................ 142
Management...................................... 146
Security Ownership of Certain Beneficial Owners
and Management................................ 153
Certain Relationships and Related Party
Transactions.................................. 156
Description of Senior Credit Facility........... 163
Legal Matters................................... 166
Experts......................................... 166
Index to Financial Statements................... F-1
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission. By this prospectus, we are offering to
exchange all outstanding 10 1/8% Senior Subordinated Nots due 2009, which we
placed in a private offering on July 2, 1999, for 10 1/8% Senior Subordinated
Notes due 2009 that we registered with the Securities and Exchange Commission.
In connection with the private offering, we entered into a registration rights
agreement with the initial purchasers of the outstanding notes in which we
agreed to deliver to you this prospectus and to complete the exchange offer
within 210 days after the date of the original issuance of the outstanding
notes.
This prospectus contains information about Consolidated Container Company
LLC and Consolidated Container Capital, Inc., the issuers of the outstanding
notes, and Reid Plastics Group LLC, Plastic Containers LLC, Continental Plastic
Containers LLC and Continental Caribbean Containers, Inc., the subsidiaries of
Consolidated Container Company which are guarantors of the outstanding notes.
This prospectus does not contain, however, all of the information contained in
the registration statement or in the exhibits to the registration statement
which we filed with it. For more information regarding the registration
statement, its exhibits and the periodic reports and other information that we
will file with the Securities and Exchange Commission, see "Where You Can Find
More Information" in this prospectus.
In this prospectus, we rely on and refer to information and statistics
regarding the packaging industry and our market share in the sectors in which we
compete. We obtained this information and statistics from various third party
sources, discussions with our customers and our own internal estimates. We
believe that these sources and estimates are reliable, but we have not
independently verified them and cannot guarantee their accuracy or completeness.
You should rely only on the information provided in this prospectus. We have
not authorized anyone else to provide you with different or additional
information.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY CONTAINS INFORMATION ABOUT CONSOLIDATED CONTAINER
COMPANY, ITS SUBSIDIARIES AND THE EXCHANGE OFFER. BECAUSE IT IS JUST A SUMMARY,
IT MAY NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD
READ THIS ENTIRE PROSPECTUS, INCLUDING THE FINANCIAL DATA AND RELATED NOTES, IN
ITS ENTIRETY. UNLESS THE CONTEXT INDICATES OTHERWISE, ALL REFERENCES TO "WE,"
"US," OR "OUR" IN THIS PROSPECTUS MEAN CONSOLIDATED CONTAINER COMPANY AND ITS
SUBSIDIARIES ON A CONSOLIDATED BASIS AFTER GIVING EFFECT TO THE TRANSACTIONS
SUMMARIZED BELOW IN THIS SUMMARY UNDER THE SECTION "THE TRANSACTIONS." WHEN WE
REFER TO "PRO FORMA" FINANCIAL RESULTS OR "ADJUSTED" FINANCIAL RESULTS WE MEAN
THE FINANCIAL RESULTS OF CONSOLIDATED CONTAINER COMPANY AND ITS SUBSIDIARIES ON
A COMBINED BASIS AS IF THE TRANSACTIONS HAD OCCURRED AT THE BEGINNING OF THE
TIME PERIOD INDICATED.
COMPANY OVERVIEW
We are a leading domestic developer, manufacturer and marketer of rigid
plastic containers for many of the world's largest branded consumer products and
beverage companies. In 1998, we sold over 4 billion containers to the dairy,
water, other beverage, food, household chemical and personal care, automotive
and agricultural and industrial chemical sectors. Our broad container product
line ranges in size from two ounce to six gallon containers and consists of
single and multi-layer plastic containers made from a variety of plastic resins,
including high density polyethylene, polycarbonate, polypropylene, polyethylene
terephthalate and polyvinyl chloride. Because our broad range of product lines
serves customers in diverse industries and regions in the United States, we
believe that our net sales and cash flow are relatively stable, reducing our
exposure to particular market or regional economic cycles. We have grown net
sales through acquisitions and internal growth between 1996 and 1998 at a
compounded annual growth rate of approximately 58.0%. For the six months ended
June 30, 1999, we generated pro forma net sales of $348.9 million and pro forma
EBITDA of $66.6 million.
We serve our customers with a wide range of manufacturing capabilities and
services through a nationwide network of 71 strategically located manufacturing
facilities and through a nationally recognized research, development and
engineering center. In addition, we have five international manufacturing
facilities in Canada, Puerto Rico and Mexico. Twenty-eight of our manufacturing
facilities are located on-site at our customers' plants. On-site facilities
enable us to work more closely with these customers, to facilitate just-in-time
inventory management, to eliminate costly shipping and handling charges, to
reduce working capital needs and to foster the development of long-term
manufacturing and distribution relationships. Our nationally recognized
research, development and engineering center creates innovative product designs
for our customers and process improvements in the manufacture of our containers.
Our customers rely on our design and technical expertise because package design
is a critical component in many of their marketing programs. Having been among
the first to use the higher output wheel manufacturing process, we continue to
be an industry leader in production technologies for plastic containers by:
- innovating new products, such as patented insulated handle designs for
microwaveable table syrup bottles, containers for liquid juice
concentrates and retortable containers, which permit reheating after being
filled without distortion to the container; and
- efficiently manufacturing containers with specialized features, such as
multiple barrier layers, in-mold labeling and "window-stripes," which are
see-through stripes that permit visual measurement of the container's
contents.
3
<PAGE>
COMPETITIVE STRENGTHS
We believe the following contribute to our position as a leading domestic
developer, manufacturer and marketer of rigid plastic containers:
- WE HAVE LEADING SHARES IN STABLE MARKETS.
- WE HAVE DEVELOPED ADVANCED MANUFACTURING, DESIGN AND ENGINEERING
CAPABILITIES.
- WE MAINTAIN A SIGNIFICANT ON-SITE PRESENCE WITH OUR CUSTOMERS.
- WE HAVE BUILT AND MAINTAINED LONG-TERM CUSTOMER RELATIONSHIPS.
- WE HAVE CAPITALIZED ON ECONOMIES OF SCALE TO LOWER UNIT COSTS IN A NUMBER
OF CRITICAL FUNCTIONS.
- WE ARE LEAD BY AN EXPERIENCED AND MOTIVATED MANAGEMENT TEAM.
We discuss each of these competitive strengths under
"Business -- Competitive Strengths" in this prospectus.
BUSINESS STRATEGY
We intend to capitalize on our significant industry position to become the
preeminent supplier of rigid plastic containers in North America with a presence
in selected international markets. To achieve this objective, we intend to
continue to implement the following strategies:
- BROADEN OUR CUSTOMER RELATIONSHIPS;
- REALIZE COST SAVINGS AND OPERATING SYNERGIES;
- CAPITALIZE ON PLASTIC CONVERSION TRENDS; AND
- PURSUE STRATEGIC ACQUISITIONS.
We discuss each of these strategies under "Business -- Business Strategy" in
this prospectus.
THE TRANSACTIONS
The private offering of the outstanding notes was part of a series of
simultaneous transactions that closed on July 2, 1999. These transactions
resulted in the creation of Consolidated Container Company, a new Delaware
limited liability company, and its parent, Consolidated Container Holdings, also
a Delaware limited liability company. Consolidated Container Holdings LLC owns
all of the member units in Consolidated Container Company.
The transactions included the following:
- Vestar Packaging LLC, a newly formed Delaware limited liability company,
controlled by Vestar Capital Partners III, L.P., contributed $60.8 million
in cash to Consolidated Container Holdings. Vestar Capital Partners III is
an investment fund managed by Vestar Capital Partners. Vestar Capital
Partners, headquartered in New York with an office in Denver, Colorado,
manages over $1 billion in private equity capital. Founded in 1988, Vestar
Capital Partners focuses on management buyouts, recapitalizations and
growth equity investments and, to date, has completed 29 investments with
an total value of approximately $6 billion.
- Vestar Capital Partners III caused Reid Plastics Holdings, Inc. and Vestar
Reid LLC, both companies which it controls, to contribute Reid Plastics,
Inc. to Consolidated Container Holdings and its subsidiaries. In
consideration for the contributions described above, Vestar Capital
Partners III, through its controlled affiliates, controls 51% of the
member units in Consolidated Container Holdings.
4
<PAGE>
- Suiza Foods Corporation caused its subsidiaries to contribute
substantially all of the U.S. plastics packaging assets of Franklin
Plastics, Inc. and Plastic Containers, Inc. to Consolidated Container
Holdings and its subsidiaries. As a result, Suiza Foods, through a
subsidiary, controls 49% of the member units of Consolidated Container
Holdings and had its debt repaid and preferred stock redeemed, as
described below.
- Plastic Containers conducted a consent solicitation and tender offer for
its outstanding 10% Senior Secured Notes due 2006, in which all of the
holders of these notes consented to remove restrictive covenants under the
related indenture and, then, tendered their notes on the closing of the
tender offer for them.
- Consolidated Container Holdings repaid substantially all of the
outstanding debt of Reid Plastics and Franklin Plastics, redeemed the
preferred stock of Franklin Plastics and paid a portion of accrued
interest and dividends on the debt and preferred stock of Franklin
Plastics.
- We paid the fees and expenses in connection with the transactions,
including the fees and expenses of the initial purchasers, the lenders,
the trustee and our lawyers, accountants and printing company.
- Consolidated Container Company and the related guarantors entered into a
new senior credit facility and borrowed $412.5 million under it to fund
the transactions described above.
- We issued the outstanding notes in a private offering exempt from the
registration requirements of the Securities Act of 1933 to fund the
transactions described above.
* * * * * *
Consolidated Container Company is a Delaware limited liability company, and
Consolidated Container Capital is a Delaware corporation. The address of their
principal executive offices is 2515 McKinney Avenue, Suite 850, Dallas, Texas
75201, and their telephone number is (214) 303-3700.
5
<PAGE>
SUMMARY OF TERMS OF THE EXCHANGE OFFER
On July 2, 1999, we completed the private offering of the outstanding notes.
We summarize below the principal terms of the exchange offer. For a more
complete description of the exchange offer, see "The Exchange Offer" in this
prospectus.
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The Exchange Offer................ We are offering to exchange up to $185.0 million total
principal amount of exchange notes for up to $185.0
million total principal amount of outstanding notes. You
may exchange outstanding notes only in integral
multiples of $1,000. The exchange notes will be
substantially identical to the outstanding notes, except
that, because we have registered the exchange notes,
they:
- will be freely tradeable;
- will not bear legends restricting their transfer;
- will not be subject to any additional obligations
regarding registration under the Securities Act of
1933; and
- will not be subject to the special interest
payments described in "Description of Notes --
Registration Rights; Liquidated Damages" in this
prospectus.
We will issue the exchange notes under the same
indenture under which we issued the outstanding notes.
Consequently, the exchange notes will be entitled to the
benefits of, and both series of notes will be treated as
a single class of debt securities, under the indenture.
Resales........................... Based on interpretations of the staff of the Securities
and Exchange Commission contained in no-action letters
issued to other parties, we believe that the exchange
notes may be offered for resale, resold and otherwise
transferred by you without compliance with the
registration and prospectus delivery provisions of the
Securities Act of 1933, if you meet three requirements.
These requirements are:
- you are acquiring the exchange notes in the
ordinary course of your business;
- you have not engaged in, do not intend to engage
in, and have no arrangement or understanding with
any person to participate in, a distribution of
the exchange notes; and
- you are not an "affiliate" of either Consolidated
Container Company or Consolidated Container
Capital within the meaning of Rule 405 under the
Securities Act of 1933.
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6
<PAGE>
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If you do not meet these requirements, you will need to
comply with the registration and prospectus delivery
requirements of the Securities Act of 1933 in connection
with the resale of exchange notes, unless an exemption
to these requirements applies. The exchange offer
requires that each participating broker-dealer which
receives exchange notes for its own account in exchange
for outstanding notes that were acquired as a result of
market-making or trading activity must acknowledge that
it will deliver a prospectus in connection with any
resale of the exchange notes. See "Plan of Distribution"
in this prospectus.
Expiration Date; Withdrawal of
Tender.......................... The exchange offer expires at 5:00 p.m., New York City
time, on , 1999, unless we extend the
expiration date. We do not currently intend to extend
the expiration date. You may withdraw tenders of
outstanding notes at any time prior to the expiration of
the exchange offer.
Conditions to the Exchange
Offer........................... The exchange offer is subject to customary conditions,
which we may waive if, in our reasonable determination,
one or more conditions have not been satisfied. We
currently expect that each of the conditions will be
satisfied and that no waivers will be necessary. For
more information regarding the conditions to the
exchange offer, see the section "The Exchange Offer
-- Conditions to the Exchange Offer" in this prospectus.
Procedures for Tendering
Outstanding Notes............... If you wish to accept the exchange offer, you must:
- complete, sign and date the accompanying letter of
transmittal, or a facsimile of the letter of
transmittal, according to the instructions
contained in this prospectus and the letter of
transmittal; and
- mail or otherwise deliver the letter of
transmittal, or a facsimile of the letter of
transmittal, together with the outstanding notes
and any other required documents to the exchange
agent at the address listed on the cover page of
the letter of transmittal.
If you hold outstanding notes through The Depository
Trust Company and wish to participate in the exchange
offer, you must comply with the Automated Tender Offer
Program procedures of The Depository Trust Company, by
which you will agree to be bound by the letter of
transmittal.
Terms and Conditions of the Letter
of Transmittal.................. By signing, or agreeing to be bound by, the letter of
transmittal, you will represent to us that, among other
things:
- any exchange notes that you receive will be
acquired in the ordinary course of your business;
- you have no arrangement or understanding with any
person or entity to participate in, and do not
intend to engage in, a distribution of the
exchange notes;
</TABLE>
7
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<TABLE>
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- if you are a broker-dealer which will receive
exchange notes for your own account in exchange for
outstanding notes that you have acquired as a
result of market-making or trading activities,
that you will deliver a prospectus, as required by
law, in connection with any resale of the exchange
notes;
- you are not an "affiliate," as defined in Rule 405
of the Securities Act of 1933, of either
Consolidated Container Company or Consolidated
Container Capital or, if you are an "affiliate,"
you will comply with the applicable registration
and prospectus delivery requirements of the
Securities Act of 1933; and
- if you are a person in the United Kingdom, that
your ordinary activities involve you in acquiring,
holding, managing or disposing of investments, as
principal or agent, for the purposes of your
business.
Special Procedures for Beneficial
Owners.......................... If you are a beneficial owner of outstanding notes which
are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee, and you
wish to tender these outstanding notes in the exchange
offer, you should contact promptly the person in whose
name your outstanding notes are registered and instruct
that person to tender them on your behalf. If you wish
to tender them on your own behalf, you must, prior to
completing and executing the letter of transmittal and
delivering your outstanding notes, either make
appropriate arrangements to register ownership of the
outstanding notes in your name or obtain a properly
completed bond power from the registered holder. The
transfer of registered ownership may take considerable
time and may not be able to be completed prior to the
expiration date.
Guaranteed Delivery Procedures.... If you wish to tender your outstanding notes and, prior
to the expiration date, you cannot:
- deliver your outstanding notes, the letter of
transmittal or any other documents required by the
letter of transmittal; or
- comply with the applicable procedures under The
Depository Trust Company's Automated Tender Offer
Program,
then you must tender your outstanding notes according to
guaranteed delivery procedures. We explain these
procedures under the section "The Exchange Offer --
Guaranteed Delivery Procedures" in this prospectus.
</TABLE>
8
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<TABLE>
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Effect on Holders of Outstanding
Notes........................... When we complete the exchange offer, we will have
fulfilled a covenant contained in the registration
rights agreement. If you do not tender your outstanding
notes in the exchange offer, you will continue to be
entitled to the rights and benefits of the indenture but
will not be entitled to an increase in the interest rate
on these notes.
Consequence of Failure to
Exchange........................ If you do not exchange your outstanding notes for
exchange notes, your outstanding notes will continue to
be subject to restrictions on transfer. In general,
outstanding notes may not be offered or sold, unless
registered under the Securities Act of 1933, except
pursuant to an exemption from, or in a transaction not
subject to, the Securities Act of 1933 and applicable
state securities laws. We do not currently anticipate
that we will register the outstanding notes under the
Securities Act of 1933. In addition, the tender of
outstanding notes in the exchange offer will reduce the
principal amount of the outstanding notes outstanding,
which may have an adverse effect upon, and increase the
volatility of, the market price of the outstanding notes
due to a reduction in liquidity. See "Risk Factors --
Risks of Not Participating in the Exchange Offer" in
this prospectus.
U.S. Federal Income Tax
Considerations.................. The exchange of outstanding notes for exchange notes in
the exchange offer, will not be a taxable event for U.S.
federal income tax purposes. See "U.S. Federal Income
Tax Consequences of the Exchange Offer."
Use of Proceeds................... We will not receive any cash proceeds from the issuance
of exchange notes.
Exchange Agent.................... The Bank of New York is the exchange agent for the
exchange offer. The address and telephone number of the
exchange agent are listed under the section "Exchange
Offer -- Exchange Agent" in this prospectus.
</TABLE>
9
<PAGE>
SUMMARY OF TERMS OF THE EXCHANGE NOTES
<TABLE>
<S> <C>
Issuers...................................... Consolidated Container Company LLC and
Consolidated Container Capital, Inc.
Notes Offered................................ $185.0 million total principal amount of
10 1/8% Senior Subordinated Notes due 2009,
which have been registered under the
Securities Act of 1933.
Maturity..................................... July 15, 2009.
Interest Rate and Payment Dates.............. Interest on the exchange notes will accrue at
the rate of 10 1/8% per year, payable
semi-annually in cash in arrears on January
15 and July 15 of each year, commencing on
January 15, 2000.
Optional Redemption.......................... Prior to July 15, 2002, we may redeem up to
40% of the exchange notes with the net cash
proceeds of one or more equity offerings at
the price listed under the section
"Description of Notes -- Optional Redemption"
in this prospectus.
On or after July 15, 2004, we may redeem some
or all of the exchange notes at any time at
the redemption prices listed under the
section "Description of Notes -- Optional
Redemption" in this prospectus.
Mandatory Repurchase Offer................... If we sell all or substantially all of our
assets or undergo specific kinds of changes
in control, we will be required to offer to
repurchase the exchange notes at 101% of the
principal amount of the exchange notes plus
accrued but unpaid interest to the date of
redemption. We may not have, however,
sufficient funds to repurchase the exchange
notes if a sale of assets or a change of
control were to occur. See "Risk Factors --
Limitations on Ability to Make Change of
Control Payment" in this prospectus.
Subsidiary Guarantees........................ All of our existing and future domestic
restricted subsidiaries will jointly and
severally guarantee on an unconditional basis
our obligation to pay principal, premium, if
any, and interest on the exchange notes. In
general, our restricted subsidiaries are
subsidiaries that are subject to the
restrictions contained in the indenture.
Currently, all of our subsidiaries are
restricted subsidiaries. Two of our
subsidiaries are not domestic subsidiaries
and are not a guarantors.
If we cannot make payments on the exchange
notes when they are due, the guarantors will
be required to make them instead. The
obligations of
</TABLE>
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<TABLE>
<S> <C>
each guarantor will, however, be limited as
necessary to prevent that guarantee from
constituting a fraudulent conveyance under
applicable law. In addition, one or more of
our guarantors may not have the funds or
resources to satisfy our obligations in the
event they are called upon to do so. Our
subsidiaries that are not guarantors will not
be required to make any payments on the
exchange notes from their assets unless those
assets are transferred to us or a guarantor.
In the event of a bankruptcy, liquidation or
reorganization of a non-guarantor subsidiary,
holders of its liabilities, including its
trade creditors, will generally be entitled
to payment of claims from the assets of that
subsidiary before any assets are made
available for distribution to us. At July 2,
1999, the total liabilities, including trade
payables, of our non-guarantor subsidiaries
were approximately $3.7 million.
Ranking of Exchange Notes and Guarantees..... The exchange notes will constitute senior
subordinated debt, will rank junior to all of
our existing and future senior debt and will
rank senior in right of payment to all of our
future debt that is expressly subordinated to
the outstanding notes. At July 2, 1999, the
outstanding notes were contractually
subordinated to approximately $412.5 million
of senior debt and structurally subordinated
to approximately $3.7 million of liabilities
of non-guarantor subsidiaries. See
"Description of Notes -- Subordination" in
this prospectus.
The guarantees will constitute senior
subordinated guarantees, will rank junior in
right of payment to all existing and future
senior debt of the guarantors and will rank
senior in right of payment to all of their
future debt that is expressly subordinated to
the guarantees. At July 2, 1999, we and our
guarantors had approximately $597.5 million
of senior debt outstanding. See "Description
of Notes -- Subsidiary Guarantees" in this
prospectus.
Covenants.................................... We will issue the exchange notes under the
indenture dated as of July 1, 1999 among
Consolidated Container Company, Consolidated
Container Capital, the subsidiary guarantors
and The Bank of New York, as trustee. The
indenture will limit, among other things,
our, and our restricted subsidiaries, ability
to:
</TABLE>
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<TABLE>
<S> <C>
- incur additional debt;
- pay dividends on our stock or repurchase
our stock;
- make investments;
- use assets as security in other
transactions; and
- sell specified assets or merge with or into
other companies.
Each of the covenants referred to above are
subject to a number of important
qualifications and exceptions. For more
information, see "Description of Notes --
Covenants" in this prospectus.
Use of Proceeds.............................. There will be no cash proceeds to us from the
exchange offer. See "Use of Proceeds" in this
prospectus.
</TABLE>
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CONSOLIDATED CONTAINER COMPANY LLC
SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
The following table presents summary pro forma financial data derived from
our unaudited pro forma financial statements for the year ended December 31,
1998 and the six months ended June 30, 1999, which statements are included
elsewhere in this prospectus. The historical balance sheet data has been derived
from our audited balance sheet at July 2, 1999, which statement is included
elsewhere in this prospectus. The summary pro forma data give effect to the
transactions as if they had occurred, for the purposes of the operating data, on
January 1, 1998. The summary pro forma financial data do not purport to
represent what our combined results of operations would have been had the
transactions, in fact, occurred on this date and do not purport to project our
combined results of operations for the current year or any future period. In
reviewing the data presented here, you should refer to the information under the
headings "Consolidated Container Company LLC Unaudited Pro Forma Financial
Information," and "Management's Discussion and Analysis of Financial Condition
and Pro Forma Results of Operations of Consolidated Container Company of
Consolidated Container Company LLC."
<TABLE>
<CAPTION>
PRO FORMA
--------------------------------
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
1998 JUNE 30, 1999
--------------- ---------------
(IN MILLIONS)
<S> <C> <C>
INCOME STATEMENT DATA:
Net sales.................................................... $ 687.3 $ 348.9
Cost of goods sold........................................... 548.1 266.1
------ ------
Gross profit................................................. 139.2 82.8
Selling, general and administrative expenses................. 61.4 34.4
Amortization of goodwill..................................... 13.5 6.9
------ ------
Operating income............................................. 64.3 41.5
Other income................................................. 1.4 0.8
Interest expense, net (a).................................... 51.5 25.9
Income before income taxes................................... 14.2 16.4
Income tax (benefit) expense (b)............................. -- --
Minority interest in subsidiaries............................ 0.1 (0.3)
------ ------
Income before extraordinary item............................. 14.1 16.7
------ ------
------ ------
OTHER DATA:
EBITDA (c)................................................... $ 110.0 $ 66.6
Depreciation and amortization................................ 44.4 24.0
Capital expenditures (d)..................................... 83.2 21.1
Cash interest expense, net (e)............................... 48.3 24.2
Ratio of EBITDA to cash interest expense, net................ 2.3x 2.8x
Ratio of earnings to fixed charges (f)....................... 1.2x 1.6x
<CAPTION>
AT JULY 2, 1999
---------------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................................... $ 54.2
Total assets.................................................................. 984.0
Total debt.................................................................... 603.9
Total member's equity......................................................... 256.0
</TABLE>
(FOOTNOTES APPEAR ON THE FOLLOWING PAGE)
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(FOOTNOTES FROM TABLE ON PRIOR PAGE)
(a) Represents interest expense, net of interest income. For more information
regarding our calculation of pro forma interest expense, see Note (c) to the
Unaudited Pro Forma Statement of Operations of Consolidated Container
Company LLC for the six months ended June 30, 1999 and Note (j) to the
Unaudited Pro Forma Statement of Operations of Consolidated Container
Company LLC for the year ended December 31, 1998.
(b) As a limited liability company, Consolidated Container Company is not
subject to corporate income taxes. Consolidated Container Company expects to
distribute cash to its sole member, Consolidated Container Holdings, to
allow its members to pay income taxes to the extent required.
(c) EBITDA represents earnings, including minority interest and other income,
before interest, income taxes, depreciation and amortization and
extraordinary items. EBITDA is presented because it is a widely accepted
financial indicator used by some investors and analysts to analyze and
compare companies on the basis of operating performance. EBITDA is not
intended to represent cash flows for the periods presented, nor has it been
presented as an alternative to operating income as an indicator of operating
performance. It should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles and is not indicative of operating income or cash flow
from operations as determined under generally accepted accounting
principles. In addition, our calculation of EBITDA is not necessarily
comparable to other similarly titled captions of other companies due to
potential inconsistencies between methods of calculating it.
(d) Of the total amount of capital expenditures listed, we spent approximately
$16.4 million for the year ended December 31, 1998 and approximately $9.2
million for the six months ended June 30, 1999, in each case on maintenance.
(e) Cash interest expense, net excludes amortization of deferred financing fees.
(f) For purposes of determining the ratio of earning to fixed charges,
"earnings" is defined as income (loss) before income taxes plus fixed
charges. "Fixed charges" consist of interest expense on all debt,
amortization of deferred financing costs and one-third of rental expense on
operating leases, representing that portion of rental expense which we deem
to be attributable to interest.
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RISK FACTORS
BEFORE YOU TENDER YOUR OUTSTANDING NOTES IN THE EXCHANGE OFFER, YOU SHOULD
BE AWARE THAT THERE ARE VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW, RELATING
TO AN INVESTMENT IN THE OUTSTANDING NOTES AND THE EXCHANGE NOTES. YOU SHOULD
CONSIDER CAREFULLY THESE RISK FACTORS, TOGETHER WITH ALL OF THE OTHER
INFORMATION INCLUDED IN THIS PROSPECTUS, BEFORE YOU DECIDE TO PARTICIPATE IN THE
EXCHANGE OFFER. WE HAVE SUMMARIZED BELOW THE MATERIAL RISKS RELATING TO YOUR
PARTICIPATION IN THE EXCHANGE OFFER AND AN INVESTMENT IN THE EXCHANGE NOTES.
RISKS OF NOT PARTICIPATING IN EXCHANGE OFFER -- IF YOU DO NOT EXCHANGE YOUR
OUTSTANDING NOTES, THE PRESENT TRANSFER RESTRICTIONS WILL REMAIN IN FORCE AND
THE MARKET PRICE OF YOUR OUTSTANDING NOTES COULD DECLINE.
If you do not participate in the exchange offer, or you do not successfully
tender your outstanding notes, the market for outstanding notes will be less
liquid and more volatile and, accordingly, the market price for them could
decline. Outstanding notes that are not exchanged for exchange notes will suffer
from reduced liquidity for two reasons. First, the outstanding notes will
continue to be subject to transfer restrictions because they will not have been
registered under the Securities Act of 1933, whereas the exchange notes will be
freely tradeable. As a result, the outstanding notes will, following the
completion of the exchange offer, become less liquid than they were before.
Second, the tender of outstanding notes in the exchange offer will reduce the
outstanding amount of outstanding notes, which will likely reduce the liquidity
for them. The result is that their price will likely become more volatile.
Accordingly, the market price for outstanding notes could decline after the
exchange offer.
RISK THAT AN ACTIVE TRADING MARKET WILL NOT DEVELOP -- IF AN ACTIVE TRADING
MARKET DOES NOT DEVELOP FOR THE OUTSTANDING NOTES AND THE EXCHANGE NOTES, IT
WILL LIKELY HAVE A MATERIAL ADVERSE EFFECT ON THE MARKET PRICE AND LIQUIDITY OF
THESE NOTES.
If a liquid market for the exchange notes or outstanding notes does not
develop, you may not be able to sell these notes at attractive prices or at all.
The outstanding notes and exchange notes constitute a new class of securities
for which there is no established trading market. We do not intend to list the
outstanding notes or exchange notes on any national securities exchange or to
seek their quotation on any automated dealer quotation system. Although the
initial purchasers of the outstanding notes have informed us that they intend to
make a market in the outstanding notes and exchange notes, they are not
obligated to do so and may cease market-making activities at any time without
notice. The liquidity of a market for the outstanding notes and exchange notes
will depend upon a number of factors, including the number of those holding
these notes and the interest of securities dealers in making a market in these
notes.
In addition, if the outstanding notes and exchange notes are traded, they
may trade at a discount from the initial offering price of the outstanding
notes, depending upon prevailing interest rates, the market for similar
securities, our operating and financial performance and other factors. In
addition, the market for non-investment grade debt has been historically subject
to disruptions that have caused volatility in their prices independent of the
operating and financial performance of the issuers of these securities. It is
possible that the market for the outstanding notes and the exchange notes will
be subject to these kind of disruptions. Accordingly, declines in the liquidity
and market price of the outstanding notes or exchange notes may also occur
independent of our operating and financial performance.
LIMITATIONS ON ABILITY TO MAKE CHANGE OF CONTROL PAYMENT -- WE MAY NOT BE
PERMITTED, AND WE MAY NOT HAVE SUFFICIENT FUNDS, TO PURCHASE THE OUTSTANDING
NOTES OR THE EXCHANGE NOTES UPON A CHANGE OF CONTROL AS REQUIRED BY THE
INDENTURE.
We may not be permitted, and we may not have sufficient funds, to purchase
the outstanding notes or the exchange notes upon a change of control as required
by the indenture. Upon a change of
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<PAGE>
control under the indenture, we will be required to offer to purchase all of the
outstanding notes and the exchange notes then outstanding at 101% of their
principal amount, plus accrued interest to the date of repurchase. However, a
change of control will also constitute an event of default under the senior
credit facility that would permit the lenders to accelerate the debt under the
facility. In addition, the senior credit facility will restrict our purchase of
the outstanding notes and exchange notes upon a change of control. As a result,
prior to purchasing the outstanding notes and the exchange notes upon a change
of control, we must either repay the debt under the senior credit facility or
obtain the consent of the lenders under the facility. If we do not repay the
senior credit facility or obtain the required consent, we will be prohibited
from offering to purchase the outstanding notes and exchange notes.
The source of funds for any purchase of the outstanding notes and exchange
notes would be our available cash or cash generated from other sources,
including borrowings, sales of assets, sales of equity or funds provided by an
existing or a new controlling person. These source may not, however, be
available to us. Upon the occurrence of a change of control event, we may seek
to refinance the debt outstanding under the senior credit facility, the
outstanding notes and exchange notes. It is possible, however, that we will not
be able to complete this refinancing on commercially reasonable terms or at all.
In that event, we would not have the funds necessary to finance the required
change of control offer. See "Description of Notes -- Repurchase at the Option
of Holders -- Change of Control" and "Description of Senior Credit Facility
- -- Senior Credit Facility."
CONTROL BY VESTAR CAPITAL PARTNERS III AND SUIZA FOODS -- OUR OWNERS' INTERESTS
MAY CONFLICT WITH YOURS AS HOLDERS OF NOTES.
The interests of Vestar Capital Partners III and Suiza Foods, the owners of
Consolidated Container Company and its subsidiaries, may conflict with yours as
a holder of outstanding notes or exchange notes. For example, Vestar Capital
Partners III and Suiza Foods, as equity holders, may have an incentive to
increase the value of their equity investment or cause us to distribute funds by
dividend or otherwise at the expense of our financial risk and our ability to
make payments on the outstanding notes and exchange notes. Each of Vestar
Capital Partners III, through affiliates which it controls, and Suiza Foods,
through its indirect ownership, is able to veto most major decisions regarding
the management and operations of Consolidated Container Company. We summarize
these decisions under "Certain Relationships and Related Party Transactions
- -- Limited Liability Company Agreement of Consolidated Container Holdings
- -- Management." In addition, Vestar Capital Partners III, through affiliates
which it controls, will have the sole power to elect a majority of the
management committee and appoint new officers and management of Consolidated
Container Company and, therefore, will effectively control many other major
decisions regarding our operations. We cannot assure you that the interests of
either Vestar Capital Partners III or Suiza Foods will not conflict with your
interests as a holder of the notes. In addition, we note that each of Vestar
Capital Partners III and Suiza Foods is a party to specified related party
transactions with Consolidated Container Company. For more information regarding
Vestar Capital Partners III, Suiza Foods and related matters, see "Security
Ownership of Certain Beneficial Owners and Management," "Management" and
"Certain Relationships and Related Party Transactions."
SUBSTANTIAL LEVERAGE AND DEBT SERVICE -- OUR SUBSTANTIAL LEVEL OF DEBT HAS
INCREASED OUR FINANCIAL RISK AND, IN PARTICULAR, MAY PREVENT US FROM MAKING THE
REQUIRED PAYMENTS ON THE OUTSTANDING NOTES AND THE EXCHANGE NOTES.
Our substantial level of debt has increased our financial risk and, in
particular, may prevent us from making the required payments on the outstanding
notes and the exchange notes. We have now, and after the exchange offer will
continue to have, a substantial amount of debt. At July 2, 1999, we had total
debt of $603.9 million, not including unused commitments, and member's equity of
$256.0 million and a ratio of total debt to pro forma EBITDA of 4.7x for the
twelve months ended June 30, 1999. Subject to restrictions in our senior credit
facility and the indenture, we may incur more
16
<PAGE>
debt for working capital, capital expenditures, acquisitions and for other
purposes. At July 2, 1999, approximately $27.5 million was available for
borrowing as additional senior debt under our senior credit facility subject to
borrowing conditions in it, and we may issue an additional $115.0 million of
senior subordinated notes under the indenture, which senior subordinated notes
would rank equally with the outstanding notes and the exchange notes. In
addition, the senior credit facility permits us to borrow substantial additional
amounts, if we maintain specified financial ratios, including:
- up to $25.0 million at any time outstanding under capitalized lease
obligations and purchase money debt, all of which could rank senior to the
outstanding notes and the exchange notes; and
- up to $10.0 million at any time outstanding, all of which could rank
senior to the outstanding notes and the exchange notes.
The indenture also permits us to borrow substantial additional amounts,
including:
- up to $50.0 million in total principal amount at any time outstanding of
additional debt, all of which could be senior to the outstanding notes and
the exchange notes;
- an amount up to 15% of our total assets at any time outstanding under
capitalized lease obligations, mortgage financings or purchase money
obligations incurred in connection with real estate or other property used
in our business, which could be senior to the outstanding notes and the
exchange notes; and
- additional amounts if we are able to satisfy the financial ratios, or
other exceptions, summarized under "Description of the Notes -- Covenants
-- Incurrence of Indebtedness and Issuance of Preferred Stock."
Our high level of debt could have important consequences for you, including
the following:
- make it more difficult for us to satisfy or refinance our obligations
regarding the outstanding notes, exchange notes and our other debt;
- we may have difficulty borrowing money in the future for working capital,
capital expenditures, acquisitions or other purposes;
- we will need to use a large portion of the money that we earn to pay
principal and interest on borrowings under the senior credit facility, the
notes and on our other debt, which will reduce the amount of money
available to us to finance our operations, capital expenditures and other
business activities;
- we may have a much higher level of debt than our competitors, which may
put us at a competitive disadvantage;
- $412.5 of our debt, at July 2, 1999, had a variable rate of interest,
which exposes us to the risk of increased interest rates and, if we borrow
additional amounts under the senior credit facility, the amount of
variable rate debt could increase;
- borrowings under our senior credit facility will be secured and will
mature prior to the outstanding notes and the exchange notes;
- our high debt level makes us more vulnerable to economic downturns and
adverse developments in our business;
- our high debt level reduces our flexibility in responding to changing
business and economic conditions, including increased competition and
demand for new products which may require new technology and know-how in
the sectors in which we operate, which are undergoing consolidation and
other changes; and
- our high debt level limits our ability to implement our business strategy.
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In addition, our failure to comply with the financial and other restrictive
covenants contained in our debt agreements could result in an event of default
under that debt, which if not cured or waived, could have a material adverse
effect on us. If we cannot meet or refinance our obligations when they become
due, we may have to sell assets, reduce capital expenditures or take other
actions which could have a material adverse effect on us.
We expect to obtain the money to pay the principal and interest on the
outstanding notes and the exchange notes from cash flow from operations and from
future borrowings under our senior credit facility. Our ability to meet our debt
service thus depends on our future performance and our ability to meet the
conditions for future borrowings under the senior credit facility, which will be
affected by financial, business, economic, competitive and other factors, many
of which are beyond our control. We cannot be certain that the money earned by
us will be sufficient to pay principal and interest on our debt, including the
outstanding notes and the exchange notes, and meet our other obligations. If we
do not have enough money, we may be required to refinance all or part of our
existing debt, including the outstanding notes and the exchange notes, sell
assets or incur more debt. We cannot guarantee that we will be able to refinance
our debt, sell assets or incur more debt on terms acceptable to us or at all. In
addition, the terms of existing or future debt agreements, including the senior
credit facility and the indenture, will place restrictions on our ability to
adopt any of these alternatives.
CONTRACTUAL SUBORDINATION -- AS A RESULT OF THE SUBORDINATION PROVISIONS OF THE
OUTSTANDING NOTES AND EXCHANGE NOTES, YOU MAY NOT RECEIVE PAYMENT ON YOUR NOTES
IF WE ARE INVOLVED IN A BANKRUPTCY OR SIMILAR PROCEEDING.
Because the notes are contractually subordinated in right of payment to all
of our senior debt, and each subsidiary guarantee is contractually subordinated
in right of payment to all senior debt of the subsidiary guarantors, other of
our creditors will get paid before you do and there may not be sufficient funds
to repay you if we are declared bankrupt or insolvent, or if there is a payment
default under any senior debt. If we or the subsidiary guarantors are declared
bankrupt or insolvent, or if there is a payment default under any senior debt,
we will be required to pay the lenders under the senior credit facility and any
other creditors who are holders of senior debt in full before we pay you.
Accordingly, we may not have enough assets remaining after payments to holders
of that senior debt to pay you. In addition, under some circumstances,
Consolidated Container Company may not pay any amount on the outstanding notes
and the exchange notes if some senior debt, including borrowings under the
senior credit facility, is not paid when due or any other default on that senior
debt exists. See "Description of Notes -- Subordination." At July 2, 1999,
Consolidated Container Company had approximately $597.5 million of senior debt,
including senior debt of subsidiary guarantors and excluding unused commitments,
all of which is secured, and the subsidiary guarantors had $6.4 million of
senior debt, excluding their guarantees of the senior credit facility. The
indenture permits us and our subsidiary guarantors to incur additional debt
under specific conditions, which may be senior debt.
Further, the senior credit facility prohibits us from repurchasing any
outstanding notes or exchange notes prior to maturity, even though the indenture
requires us to offer to repurchase outstanding notes and exchange notes in some
circumstances. If we or the subsidiary guarantors make specified asset sales or
if a change of control occurs when we are prohibited from repurchasing
outstanding notes and exchange notes, we could ask the lenders under the senior
credit facility to allow us to repurchase the outstanding notes and exchange
notes or we could attempt to refinance the borrowings that contain these
prohibitions. If we do not obtain that consent or repay those borrowings, we
would be unable to repurchase the outstanding notes and exchange notes. Our
failure to repurchase tendered notes at a time when that repurchase is required
by the indenture would constitute an event of default under the indenture,
which, in turn, would constitute a default under the senior credit facility. In
these circumstances, the subordination provisions in the indenture would
restrict payments to you. See "Description of Senior Credit Facility" and
"Description of Notes -- Subordination."
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RESTRICTIVE COVENANTS -- COVENANT RESTRICTIONS MAY ADVERSELY LIMIT OUR ABILITY
TO OPERATE OUR BUSINESS.
The indenture and our senior credit facility restrict, and debt that we may
incur in the future may also restrict, among other things, our ability to incur
additional debt, sell assets, create liens or other encumbrances, make
restricted payments, pay dividends and merge or consolidate, all of which could
affect our ability to operate our business and may limit our ability to take
advantage of potential business opportunities as they arise. Our ability to
comply with these covenants depends on many events beyond our control. See
"Description of Senior Credit Facility" and "Description of Notes -- Covenants."
ASSET ENCUMBRANCES -- BECAUSE OUR ASSETS ARE PLEDGED TO SECURE PAYMENT OF THE
SENIOR CREDIT FACILITY, THE LENDERS COULD FORECLOSE ON THEIR COLLATERAL TO YOUR
EXCLUSION, EVEN IF AN EVENT OF DEFAULT EXISTS UNDER THE INDENTURE AT THE TIME OF
THE FORECLOSURE.
Because our assets are pledged to secure payment of the senior credit
facility, the lenders could foreclose on their collateral to your exclusion,
even if an event of default exists under the indenture at the time of the
foreclosure. In addition to being contractually subordinated to all existing and
future senior debt, the outstanding notes and exchange notes are unsecured while
our obligations under the senior credit facility are secured by a first priority
perfected security interest in:
- all of the limited liability company interests and stock of each direct
and indirect domestic subsidiary of Consolidated Container Holdings,
including Consolidated Container Company;
- 65% of the stock of each foreign subsidiary of Consolidated Container
Holdings, except Reid Mexico, S.A. de C.V.; and
- all other tangible and intangible assets of Consolidated Container
Holdings and each of its direct and indirect domestic subsidiaries,
including Consolidated Container Company.
If we default under the senior credit facility, the lenders could declare,
at that time, all of the funds borrowed under that senior credit facility,
together with accrued interest, immediately due and payable. If we are unable to
repay debt under the senior credit facility, the lenders could foreclose on
their collateral to your exclusion, even if an event of default exists under the
indenture at the time of the foreclosure. Furthermore, under the subsidiary
guarantees, if all shares of a subsidiary guarantor are sold to persons pursuant
to an enforcement of a pledge of shares for the benefit of the senior lenders,
then the applicable subsidiary guarantor will be released from its subsidiary
guarantee automatically and immediately upon the sale. See "Description of Notes
- -- Subsidiary Guarantees."
STRUCTURAL SUBORDINATION -- THE OUTSTANDING NOTES AND EXCHANGE NOTES ARE
SUBORDINATED TO THE LIABILITIES OF OUR NON-GUARANTOR SUBSIDIARIES.
Consolidated Container Company is both an operating company and a holding
company with total assets at July 2, 1999 of $984.0 million. To the extent that
Consolidated Container Company is a holding company, it is dependent upon
dividends or other intercompany transfers of funds from its subsidiaries to meet
its debt service and other obligations. Generally, creditors of a subsidiary
have a superior claim to the assets and earnings of that subsidiary than the
claims of creditors of its parent company, except to the extent the claims of
the parent's creditors, including its trade creditors, are guaranteed by the
subsidiary. The outstanding notes and exchange notes, therefore, are effectively
subordinated to creditors of the direct and indirect subsidiaries of
Consolidated Container Company that do not guarantee the outstanding notes and
exchange notes. At July 2, 1999, Consolidated Container Company's non-subsidiary
guarantors had total liabilities of approximately $3.7 million.
Although the indenture and the senior credit facility limit the ability of
the non-subsidiary guarantors to incur debt and issue preferred stock, there are
significant qualifications and exceptions to these limitations. The indenture
does not limit these subsidiaries from incurring liabilities that are
19
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excluded from the definitions of debt or preferred stock. See "Description of
Notes -- Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock."
In addition, the ability of Consolidated Container Company's subsidiaries to
pay dividends and make other payments to Consolidated Container Company may be
restricted by, among other things, applicable corporate and other laws and
regulations and agreements of the subsidiaries. Although the indenture limits
the ability of these subsidiaries to enter into consensual restrictions on their
ability to pay dividends and make other payments, these limitations are subject
to a number of significant qualifications and exceptions. See "Description of
Notes -- Covenants -- Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries."
FUTURE CAPITAL REQUIREMENTS -- IF WE CANNOT OBTAIN THE FUNDS TO MAKE THE
SIGNIFICANT CAPITAL EXPENDITURES THAT OUR BUSINESS WILL REQUIRE, WE MAY NOT BE
ABLE TO MAINTAIN OUR CURRENT LEVEL OF OPERATIONS OR GROW OUR BUSINESS.
If we cannot obtain the funds for capital expenditures, or if our growth
strategy or current level of business requires more capital than anticipated, it
could have a material adverse effect on the growth of our operations as well as
our current level of business. We will have to make substantial capital
expenditures to maintain our current level of operations and to fund the growth
of future operations. Namely:
- We made capital expenditures of approximately $16.4 million in 1998 on a
pro forma basis to maintain our current facilities, and we estimate that
we will spend approximately $15.5 million in 1999 for the same purpose.
- We expect that we will need to make additional capital expenditures beyond
these amounts to expand or add new production capacity in the future.
- In addition, we may be required to make additional investments in
research, engineering and development and capital expenditures to develop
new molding processes, products and resins with improved barrier and
performance properties as the industry evolves and as our customers
demand.
We cannot assure you that we will be able to fund the kind of investments
which we have described above, and the failure to do so could have a material
adverse effect on our business.
INTEGRATION OF REID PLASTICS AND SUIZA PACKAGING -- WE FACE CONSIDERABLE
BUSINESS RISK IN INTEGRATING REID PLASTICS AND SUIZA PACKAGING BUSINESSES.
Our success, and thus our ability to pay interest and principal on the
outstanding notes and the exchange notes, depends in part on our ability to
integrate Reid Plastics and Suiza Packaging into one company and to realize cost
reductions and operating synergies from the combination of these businesses.
This objective is made more difficult by the fact that each of these businesses,
on their own, are still in the process of integrating several acquisitions which
they made in the last several years. We cannot assure you that we will be able
to integrate these businesses or to realize the cost savings and operational
synergies that we expect from combining them.
ACQUISITION STRATEGY -- WE FACE CONSIDERABLE BUSINESS AND FINANCIAL RISK IN
IMPLEMENTING OUR ACQUISITION STRATEGY.
We face considerable business and financial risk in implementing our
acquisition strategy. Our business strategy calls, in part, for the acquisition
of companies in the plastic container business. Our ability to grow by
acquisition is dependent upon, and may be limited by, the availability of
suitable acquisition candidates, our access to additional capital and the
restrictive covenants contained in the indenture and the other agreements
governing our debt. In implementing an acquisition strategy, we will face
considerable operating and financial risks. Operating risks include those of
integrating
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acquisitions into our business, which itself has undergone and is undergoing
considerable integration from prior acquisitions and will undergo further
integration from the contributions and mergers, dissipating our limited
management resources and exacerbating the risks relating to managing important
relationships with customers, employees and vendors. Financial risks include
those associated with the incurrence of additional debt to fund acquisitions and
a related reduction in liquidity and financial flexibility. We cannot assure you
that we will be able to identify suitable acquisition candidates, obtain the
capital necessary to pursue our acquisition strategy, consummate acquisitions on
satisfactory terms or, if we acquire any companies, successfully integrate them
into our business. Although we routinely enter into discussions with potential
acquisition candidates, none of these
discussions have progressed beyond the preliminary stages. See "Management's
Discussion and Pro Forma Analysis of Financial Condition and Results of
Operations of Consolidated Container Company LLC -- Liquidity and Capital
Resources."
CONCENTRATION OF CUSTOMERS -- WE ARE DEPENDENT ON SEVERAL CUSTOMERS, THE LOSS OF
WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON US. IN ADDITION, BECAUSE MANY OF
OUR CUSTOMERS' CONTRACTS ARE REQUIREMENTS CONTRACTS, WE FACE THE RISK THAT THEY
WILL PURCHASE LESS THAN WE ANTICIPATED.
We are dependent on several customers, the loss of which could have a
material adverse effect on us. For the year ended December 31, 1998, our largest
customer, Procter & Gamble, accounted for approximately 15% of our pro forma net
sales from our different products and our largest 10 customers accounted for
approximately 48% of our pro forma net sales. The termination by Procter &
Gamble, or other of our top customers, of its, or their, relationship with us
could have a material adverse effect on our business and results of operations.
In addition, because many of our customers' contracts are requirements
contracts, we face the risk that they will purchase less than we anticipated.
Our existing customers' purchase orders and contracts typically vary from one to
five years. Pursuant to industry practice, prices under these arrangements vary
with market conditions. The contracts generally are requirements contracts that
do not obligate the customer to purchase any given amount of product from us.
Accordingly, we face the risk that customers will not purchase the amounts
expected by us pursuant to these supply contracts. See "Business -- Customers."
COMPETITION -- WE FACE CONSIDERABLE COMPETITIVE RISK.
We face substantial competition throughout our product lines from a number
of well-established businesses operating nationally and from firms operating
regionally. Our primary national competitors include American National Can,
Inc., Crown Cork & Seal Company, Inc., Graham Packaging Company, Liquid
Container, Liqui-Box Corporation, Owens-Illinois, Inc., Plastipak, Inc. and
Silgan Holdings Inc. Several of these competitors are larger and have greater
financial and other resources than us. In addition, we face substantial
competition from a number of captive packaging operations with significant
in-house bottling and blow molding capacity, such as The Perrier Group of
America, The Kroger Company and Dean Foods. We cannot assure you that we will be
able to compete effectively or that our competition will not negatively affect
our business and results operations. See "Business -- Competition."
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EXPOSURE TO FLUCTUATIONS IN RESIN PRICES AND DEPENDENCE ON RESIN SUPPLIES -- WE
ARE EXPOSED TO THE RISKS ASSOCIATED WITH FLUCTUATIONS IN THE PRICES OF SOME RAW
MATERIALS.
If our access to some raw materials is interrupted or we cannot purchase
them at competitive prices, then our business and results of operations would
suffer. We use large quantities of high density polyethylene, polycarbonate,
polypropylene, polyethylene terephthalate and polyvinyl chloride resins in
manufacturing our products. In general, we do not have long-term supply
contracts with our suppliers and our purchases of raw materials are subject to
market prices. In general, we pass changes in the prices of raw materials
through to our customers over a period of time. We may not always be able to do
so, however, and therefore we cannot assure you that we will be able to pass
through any future raw material price increases in a timely manner. Any
limitation on our ability to pass through any of these kinds of price increases
on a timely basis could have a material adverse effect on our results of
operations. Furthermore, a significant increase in resin prices could slow the
pace of conversions from paper, glass and metal containers to plastic containers
to the extent that these costs are passed on to the customer. We cannot assure
you that we will have an uninterrupted supply of raw materials at competitive
prices. See "Management's Discussion and Pro Forma Analysis of Financial
Condition and Results of Operations of Consolidated Container Company LLC" and
"Business -- Raw Materials."
DEPENDENCE ON KEY PERSONNEL -- WE ARE DEPENDENT ON SEVERAL KEY SENIOR MANAGERS,
THE LOSS OF WHOM COULD HAVE A MATERIAL EFFECT ON OUR BUSINESS AND DEVELOPMENT.f
Our success depends, to a large extent, on a number of key employees, the
loss of whom could have a material adverse effect on our business and results of
operations. In particular, the loss of the services provided by William Estes,
who will be the President and Chief Executive Officer of Consolidated Container
Holdings, among others, could have material adverse effect on our business and
results of operations.
LABOR STOPPAGE -- EMPLOYEE SLOWDOWNS, STRIKES AND SIMILAR ACTIONS COULD HAVE A
MATERIAL ADVERSE EFFECT ON US.
A prolonged labor dispute, slowdown, strike or similar action could have a
material adverse effect on our business and results of operations. At June 30,
1999, approximately 24% of our employees were represented under collective
bargaining agreements which expire between 1999 to 2002. At June 30, 1999,
unions represented approximately 1,150 of our employees at 16 of our 76 U.S. and
international facilities. In addition, the transportation and delivery of raw
materials to our manufacturing facilities and of our products to our customers
by union members is critical to our business. See "Business -- Employees."
ENVIRONMENTAL MATTERS -- WE FACE THE RISK OF ENVIRONMENTAL PENALTIES UNDER
ENVIRONMENTAL LAWS AND REGULATIONS.
We may be liable under a variety of environmental laws and regulations. In
the United States and in the other countries in which we operate, we are subject
to national, state, provincial and/or local laws and regulations that impose
limitations and prohibitions on the discharge and emission of, and establish
standards for the use, disposal, and management of, some kinds of materials and
waste, and impose liability for the costs of investigating and cleaning up, and
damages resulting from, present and past spills, disposals, or other releases of
hazardous substances or materials. Compliance with these laws and regulations
can require significant capital expenditures and operating expenses, and
violations may result in substantial fines and penalties. In addition,
environmental laws in the United States, such as the Comprehensive Environmental
Response, Compensation and Liability Act, impose liability on several grounds
for the investigation and cleanup of contaminated soil, groundwater, and
buildings, and for damages to natural resources, at a wide range of properties.
For example, contamination at properties formerly owned or operated by us, as
well as at properties we currently own or operate, and properties to which
hazardous substances were sent by us, may result in liability for us under these
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environmental laws and regulations. As a manufacturer, we have an inherent risk
of liability under environmental laws and regulations regarding ongoing
operations and with respect to contamination that may have occurred in the past
on our properties or as a result of our operations. We cannot assure you that
the costs of complying with environmental laws and regulations, any claims
concerning noncompliance, or liability with respect to contamination will not in
the future materially adversely affect us.
In addition, a number of governmental authorities in the United States and
in other countries have considered or are expected to consider legislation aimed
at reducing the amount of disposed plastic wastes. These programs have included,
for example, mandating some rates of recycling and/or the use of recycled
materials, imposing deposits or taxes on plastic packaging material, and/or
requiring retailers or manufacturers to take back packaging used for their
products. This legislation, as well as voluntary initiatives similarly aimed at
reducing the level of plastic wastes, could reduce the demand for some kinds of
plastic packaging, result in greater costs for plastic packaging manufacturers
or otherwise impact our business. Some consumer products companies, including
some of our customers) have responded to these governmental initiatives and to
perceived environmental concerns of consumers by, for example, using bottles
made in whole or in part of recycled plastic. We cannot assure you that this
legislation and these initiatives will not have a material adverse effect on our
business and results of operations. See "Business -- Environmental Matters."
U.S. FRAUDULENT TRANSFER CONSIDERATIONS -- YOU FACE THE RISK THAT U.S.
BANKRUPTCY OR FRAUDULENT CONVEYANCE LAW MAY INTERFERE WITH THE PAYMENT OF THE
OUTSTANDING NOTES AND THE EXCHANGE NOTES AND PAYMENTS UNDER THE RELATED
GUARANTEES.
You face the risk that the outstanding notes and the exchange notes could be
avoided or made further subordinate to our other debt. The incurrence of debt by
Consolidated Container Company and Consolidated Container Capital may be subject
to review under U.S. federal bankruptcy law or relevant state fraudulent
conveyance laws if a bankruptcy case or lawsuit is commenced by unpaid creditors
of Consolidated Container Company and Consolidated Container Capital. Under
these laws, if in this kind of a case or lawsuit a court were to find that, at
the time of the issuance of the outstanding notes and exchange notes that
Consolidated Container Company and Consolidated Container Capital:
(1) incurred debt with the intent of hindering, delaying or defrauding
current or future creditors; or
(2) received less than reasonably equivalent value or fair consideration for
incurring the debt and they:
- were insolvent or were rendered insolvent by reason of any of the
transactions;
- were engaged, or about to engage, in a business or transaction for
which the assets remaining with Consolidated Container Company and
Consolidated Container Capital constituted unreasonably small capital
to carry on that business;
- intended to incur, or believed that they would incur, debts beyond
their ability to pay as these debts matured; or
- were defendants in an action for money damages, or had a judgment for
money damages docketed against them, if, in either case, after final
judgment, the judgment is unsatisfied,
then that court could avoid or subordinate the amounts owing under the
outstanding notes and exchange notes to existing and future debt of Consolidated
Container Company and Consolidated Container Capital and take other actions
detrimental to you.
In addition, the subsidiary guarantees may be subject to the same risk
described above. In that case, the criteria summarized above would generally
apply, except that our subsidiaries could also be
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subject to the claim that, since their subsidiary guarantees were incurred for
the benefit of Consolidated Container Company and Consolidated Container
Capital, their obligations under the subsidiary guarantee were incurred for less
than reasonably equivalent value or fair consideration. A court could avoid
their obligations under the subsidiary guarantees, subordinate the subsidiary
guarantees to other debt of these subsidiaries or take other action detrimental
to the holders of the notes.
YEAR 2000 PROBLEM -- THE YEAR 2000 PROBLEM COULD HAVE A MATERIAL ADVERSE EFFECT
ON US.
Our failure to make our computer systems Year 2000 compliant, and the
failure by our material customers and suppliers, among others, to make their
computer systems Year 2000 compliant, could have a material adverse impact on
our business and results of operations. There are many risks associated with the
Year 2000 compliance issue, including the possible failure of our systems and
hardware with embedded applications. These kinds of failures could result in:
- our inability to order raw materials;
- the malfunctioning of our manufacturing or service processes;
- our inability to properly bill and collect payments from our customers;
and
- errors or omissions in accounting and financial data.
In addition, the Year 2000 problem has inherent risks that are difficult to
measure, including our ability to test all material systems on a timely basis
and the readiness of third parties. We cannot assure you that we will foresee
and remediate all Year 2000 problems on a timely basis. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Year
2000 Compliance."
PRODUCT LIABILITY EXPOSURE AND NEGATIVE PUBLICITY -- WE FACE PRODUCTS LIABILITY
RISK. IN ADDITION, OUR BUSINESS IS EXPOSED TO THE PRODUCTS LIABILITY RISK AND
NEGATIVE PUBLICITY OF OUR CUSTOMERS.
Our business entails products liability risk. Currently, we maintain
approximately $20.0 million of insurance for products liability claims. The
amount and scope of our insurance may not, however, be adequate to cover a
products liability claim that is successfully asserted against us. In addition,
products liability insurance could become more expensive and difficult to
maintain and, in the future, may not be available on commercially reasonable
terms or at all. Accordingly, we cannot assure you that we have, or will
continue to have, adequate insurance coverage against possible products
liability claims against us.
In addition, we are exposed to the products liability risk and negative
publicity of our customers. Because many of our customers are dairy, water and
branded consumer products companies, with their own products liability risk, our
sales may decline if any of our or our competitors' customers are sued on a
products liability claim. We may also suffer a decline in sales from the
negative publicity associated with that kind of a lawsuit or with adverse public
perceptions in general regarding our products or the products for which our
customers use our containers.
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<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement and related exhibits under the Securities Act of 1933 regarding the
exchange notes being offered and the exchange offer described by this
prospectus. This prospectus, which forms a part of the registration statement,
does not contain all of the information contained in, or filed as an exhibit to,
the registration statement. For further information about Consolidated Container
Company and Consolidated Container Capital and the exchange notes, we refer you
to the registration statement. In addition, while we believe that we have
provided all material information regarding the contracts and other documents
described in this prospectus, the information we have provided is not
necessarily complete. Where these contracts and other documents are filed as
exhibits to the registration statement, our descriptions are qualified by the
exhibits.
We are not currently subject to the information requirements of the
Securities Exchange Act of 1934. Upon completion of the exchange offer, however,
we will become subject to the informational requirements of the Securities
Exchange Act of 1934. Accordingly, we will file periodic reports and other
information with the Securities and Exchange Commission. The registration
statement which we filed and our periodic reports and other information which we
will file with the Securities and Exchange Commission can be inspected and
copied at the Public Reference Section of the Securities and Exchange Commission
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C.
20549 and at regional public reference facilities maintained by the Securities
and Exchange Commission located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300,
New York, New York 10048. You can obtain copies of these materials from the
Public Reference Section of the Securities and Exchange Commission at prescribed
rates and may obtain information regarding the operation of the Public Reference
Section by calling 1-800-SEC 0330. You may also access this material
electronically by means of the Securities and Exchange Commission's home page on
the Internet at http://www.sec.gov.
Whether or not required by the Securities and Exchange Commission, so long
as any outstanding notes are outstanding, beginning with the quarter ended
September 30, 1999 we will furnish to those holding outstanding notes, within
the time periods specified in the Securities and Exchange Commission's rules and
regulations:
- all quarterly and annual financial information that would be required to
be contained in a filing with the Securities and Exchange Commission on
Forms 10-Q and 10-K if we were required to file these Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and, with respect to the annual information only, a report
on the annual financial statements by our independent auditors; and
- all current reports that we would be required to file with the Securities
and Exchange Commission on Form 8-K if we were required to file these
reports.
In addition, whether or not required by the Securities and Exchange Commission,
we will file a copy of all of the information and reports referred to above with
the Securities and Exchange Commission for public availability within the time
periods specified in the Securities and Exchange Commission's rules and
regulations, unless the Securities and Exchange Commission will not accept the
filing. We will also make this information available to securities analysts and
prospective investors upon request.
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FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. All statements other
than statements of historical facts included in by this prospectus, including
the statements about our plans, strategies and prospects under the sections
"Prospectus Summary," "Management's Discussion and Pro Forma Analysis of
Financial Condition and Results of Operations of Consolidated Container Company
LLC," "Business," "The Transactions," "Certain Relationships and Related Party
Transactions" and in the "Unaudited Pro Forma Financial Information of
Consolidated Container Company LLC" and the notes related to them. We have based
these forward-looking statements on our current assumptions, expectations and
projections about future events. We caution you that a variety of factors could
cause business conditions and results to differ materially from what is
contained in the forward-looking statements. We summarize the important factors
that could cause our actual results to differ from these expectations above
under "Risk Factors."
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<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange
notes.
The net proceeds from the sale of the outstanding notes were approximately
$178.3 million after deducting underwriting discounts and other fees and
expenses. We used the net proceeds, together with available cash from Reid
Plastics and Suiza Packaging, initial borrowings under the senior credit
facility and the cash contribution by Vestar Packaging to Consolidated Container
Holdings, to:
- repay substantially all of the outstanding debt of Reid Plastics, which
bore a weighted average interest rate of 7.2% at June 30, 1999;
- repay substantially all of the outstanding debt of Franklin Plastics,
which bore a weighted average interest rate of 11.0% at June 30, 1999,
redeem the preferred stock of Franklin Plastics, which had a preferred
dividend rate of 15%, and pay a portion of accrued interest and dividends
on these amounts;
- fund the consent solicitation and tender offer for the 10% Senior Secured
Notes due 2006 of Plastic Containers; and
- pay fees and expenses of the transactions, including the fees and expenses
of the initial purchasers, the lenders, the trustee and our lawyers,
accountants and printing company.
Because a portion of the debt that we repaid from the net proceeds of the
offering of the outstanding notes had a lower weighted average interest rate
than that of the outstanding notes and the exchange notes, our average interest
expense has increased as a result of the transactions. Had this debt not been
repaid, however, we could not have completed the transactions, as contemplated.
In addition, Morgan Guaranty Trust Company of New York, an affiliate of one
of the initial purchasers of the outstanding notes, was the agent and a lender
under the former credit facility of Reid Plastics and, therefore, received a
portion of the net proceeds of the offering of the outstanding notes that were
used to repay this facility.
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CAPITALIZATION
We provide in the table below the cash and cash equivalents and
capitalization of Consolidated Container Company and its subsidiaries on a
consolidated and an actual basis at July 2, 1999. You should read the table
below in conjunction with the financial statements of Consolidated Container
Company and the notes to them included elsewhere in this prospectus. See also
"Management's Discussion and Analysis of Financial Condition and Pro Forma
Results of Operations of Consolidated Container Company LLC -- Liquidity and
Capital Resources."
In consideration for issuing the exchange notes as contemplated by this
prospectus, we will receive in exchange a like principal amount of outstanding
notes. For accounting purposes, the exchange notes will evidence the same debt
as the outstanding notes. The outstanding notes surrendered in exchange for the
exchange notes will be retired and canceled and will not be able to be reissued.
Accordingly, the issuance of the exchange notes will not result in any change in
our capitalization.
<TABLE>
<CAPTION>
AT JULY 2, 1999
---------------
(IN MILLIONS)
<S> <C>
Cash and cash equivalents......................................................................... $ 10.6
------
------
Total debt (including current maturities):
Revolving credit loans.......................................................................... $ 27.5
Term loans...................................................................................... 385.0
Outstanding notes issued at 100% of their face amount........................................... 185.0
Capital leases.................................................................................. 6.4
------
Total debt.................................................................................... 603.9
Member's equity:
Member's equity................................................................................. 256.0
------
Total capitalization.......................................................................... $ 859.9
------
------
</TABLE>
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THE EXCHANGE OFFER
OVERVIEW
We are offering, upon the terms and subject to the conditions listed in this
prospectus and in the accompanying letter of transmittal to exchange up to
$185.0 million total principal amount of the exchange notes for a like total
principal amount of outstanding notes which have been properly tendered on, or
prior to, the expiration date and which have not withdrawn as permitted pursuant
to the procedures described below. We are making the exchange offer for all of
the outstanding notes. The terms, conditions and other provisions of the
exchange offer are contained in this prospectus and the letter of transmittal.
The form and terms of the exchange notes will be substantially identical to
the form and terms of the outstanding notes, except that the exchange notes:
- will be freely tradeable because we have registered them under the
Securities Act of 1933;
- will not bear legends restricting their transfer; will not be subject to
any additional obligations regarding registration under the Securities Act
of 1933; and
- will not be subject to the special interest payments described in
"Description of Notes -- Registration Covenant; Exchange Offer."
The exchange notes will be issued under, and entitled to the benefits of,
the same indenture under which we issued the outstanding notes. Consequently,
both series will be treated as a single class of debt securities under the
Indenture.
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We are making the exchange offer in order to satisfy our obligations under
the registration rights agreement, which we and the subsidiary guarantors
entered into on July 2, 1999 with the initial purchasers of the outstanding
notes. Under the registration rights agreement, we and the subsidiary guarantors
agreed, among other things:
- to use our reasonable best efforts to file with the Securities and
Exchange Commission, within 90 days of July 2, 1999, a registration
statement under the Securities Act of 1933 relating to the exchange offer;
- to use our reasonable best efforts to cause the registration statement to
become effective as soon as practicable, but no later than 180 days after
July 2, 1999; and
- to commence the exchange offer promptly after registration statement has
become effective, hold the offer open for at least 30 days, and exchange
the exchange notes for all outstanding notes validly tendered and not
withdrawn before the expiration of the offer.
If we fail to comply with our obligations under the registration rights
agreement, we will be required to pay additional interest to holders of the
outstanding notes. For more information regarding the registration rights
agreement, see "Description of Notes -- Registration Rights; Liquidated
Damages." We have filed a copy of the registration rights agreement as an
exhibit to the registration statement, of which this prospectus forms a part.
Other than pursuant to the registration rights agreement, we are not
required to file any registration statement to register any outstanding notes
which may remain outstanding following the exchange offer. If you hold
outstanding notes and do not tender them or your outstanding notes are tendered
but not accepted, you will have to rely on exemptions to the registration
requirements under the securities laws, including the Securities Act of 1933, if
you wish to sell your outstanding notes.
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<PAGE>
RESALE OF EXCHANGE NOTES
Based on interpretations of the staff of the Securities and Exchange
Commission contained in no-action letters issued to other parties, we believe
that exchange notes that we will issue under the exchange offer in exchange for
outstanding notes may be offered for resale, resold and otherwise transferred by
any exchange note holder without compliance with the registration and prospectus
delivery provisions of the Securities Act of 1933, if three conditions apply.
These conditions are that:
- you are acquiring the exchange notes in the ordinary course of your
business;
- you have not engaged in, do not intend to engage in, and have no
arrangements or understanding with any person to participate in, a
distribution of the exchange notes; and
- that you are not our "affiliate," as defined in Rule 405 of the Securities
Act of 1933 of Consolidated Container Company or Consolidated Container
Capital, or if you are an "affiliate," that you will comply with
applicable registration and prospectus delivery requirements of the
Securities Act of 1933.
See K-III COMMUNICATIONS CORPORATION, SEC No-Action Letter (available May
14, 1993); MARY KAY COSMETICS, INC., SEC No-Action Letter (available June 5,
1991); MORGAN STANLEY & CO., INCORPORATED, SEC No-Action Letter (available June
5, 1991); and EXXON CAPITAL HOLDINGS CORPORATION, SEC No-Action Letter
(available May 13, 1988). If you do not meet these requirements, you:
- cannot rely on the position of the staff of the Securities and Exchange
Commission enunciated in "Exxon Capital Holdings Corporation" or similar
interpretive letters; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act of 1933 in connection with a secondary resale
transaction.
This prospectus may be used for an offer to resell, resale or other
retransfer of exchange notes only as specifically stated in this prospectus.
With regard to broker-dealers, only broker-dealers that acquired the outstanding
notes as a result of market-making activities or other trading activities may
participate in the exchange offer. Each broker-dealer that receives exchange
notes for its own account in exchange for outstanding notes, where these
outstanding notes were acquired by that broker-dealer as a result of market
- -making activities or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of the exchange notes. For
more details regarding the transfer of exchange notes, see "Plan of
Distribution".
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions stated in this prospectus and
in the letter of transmittal, we will accept for exchange any outstanding notes
properly tendered and not withdrawn prior to the expiration date. We will issue
$1,000 principal amount of exchange notes in exchange for each $1,000 principal
amount of outstanding notes surrendered in the exchange offer. You may tender
only in integral multiples of $1,000.
As of the date of this prospectus, $185.0 million total principal amount of
the outstanding notes are outstanding. This prospectus and the letter of
transmittal are being sent to all registered holders of outstanding notes. There
will be no fixed record date for determining registered holders of outstanding
notes entitled to participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the provisions of
the registration rights agreement, the requirements of the Securities Act of
1933, the Securities Exchange Act of 1934 and the rules and regulations of the
Securities and Exchange Commission. Outstanding notes that are not tendered for
exchange will:
- remain outstanding;
- will continue to accrue interest at 10 1/8% payable semi-annually in
arrears;
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<PAGE>
- will be entitled to the rights and benefits under the indenture and the
registration rights agreement; but
- will not be entitled to Liquidated Damages, as described under
"Description of Notes -- Registration Rights; Liquidated Damages."
We will be deemed to have accepted for exchange properly tendered
outstanding notes when we have given oral or written notice of the acceptance to
the exchange agent. The exchange agent will act as agent for the tendering
holders for the purposes of receiving the exchange notes from us and delivering
exchange notes to these holders. Subject to the terms of the registration rights
agreement, we expressly reserve the right to amend or terminate the exchange
offer, and not to accept for exchange any outstanding notes not previously
accepted for exchange, upon the occurrence of any of the conditions specified
below under the section "-- Conditions to the Exchange Offer."
If you tender outstanding notes in the exchange offer, you will not be
required to pay brokerage commissions or foes or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes. We will pay all charges and expenses, other than applicable
taxes described below, in connection with the exchange offer. It is important
that you read the section "-- Fees and Expenses" below for more details
regarding fees and expenses incurred in the exchange offer.
EXPIRATION DATE, EXTENSIONS AND AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time on ,
1999, unless in our sole discretion, we extend it.
In order to extend the exchange offer, we will notify the exchange agent
orally or in writing of any extension. We will notify the registered holders of
outstanding notes of the extension no later than 9:00 a.m., New York City time,
on the business day after the previously scheduled expiration date.
We reserve the right, in our sole discretion:
- to delay accepting for exchange any outstanding notes;
- to extend the exchange offer or to terminate the exchange offer and to
refuse to accept outstanding notes which we have not previously accepted
if any of the conditions listed below under the section "-- Conditions to
the Exchange Offer" have not been satisfied, by giving oral or written
notice of that delay, extension or termination to the exchange agent; or
- to amend the terms of the exchange offer in any manner, subject to the
terms of the registration rights agreement.
We expressly reserve the right, at any time or at various times, to extend
the period of time during which the exchange offer is open. Consequently, we may
delay acceptance of any outstanding notes by giving oral or written notice of
that extension to their holders. During any extensions, all outstanding notes
previously tendered will remain subject to the exchange offer, and we may accept
them for exchange. We will return any outstanding notes that we do not accept
for exchange for any reason without expense to their tendering holder as
promptly as practicable after the expiration or termination of the exchange
offer.
We expressly reserve the right to amend or terminate the exchange offer, and
to reject for exchange any outstanding notes not previously accepted for
exchange, upon the occurrence of any of the conditions of the exchange offer
specified above. We will give oral or written notice of any extension,
amendment, non-acceptance or termination to the holders of the outstanding notes
as promptly as practicable. In the case of any extension, that notice will be
issued no later than 9:00 a.m., New York City time, on the business day after
the previously scheduled expiration date.
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<PAGE>
If we delay accepting exchange notes, extend or terminate the exchange offer
or amend the terms of the exchange offer, then we will provide oral or written
notice as promptly as possible to registered holders of outstanding notes. If we
amend the exchange offer in a manner that we determine to constitute a material
change to it, then we will promptly disclose the amendment in a manner
reasonably calculated to inform you of the amendment.
Without limiting the manner in which the we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we shall have no obligation to publish, advertise or
otherwise communicate any public announcement, other than by making a timely
release to a financial news service.
CONDITIONS TO THE EXCHANGE OFFER
Despite any other provision of the exchange offer, we will not be required
to accept for exchange, or exchange any exchange notes for, any outstanding
notes, and we may terminate the exchange offer as provided in this prospectus
before accepting any outstanding notes for exchange if, in our reasonable
judgment:
- any action or proceeding is instituted or threatened in any court or by or
before any governmental agency or regulatory authority, or any injunction,
order or decree is issued regarding the exchange offer which, in our sole
judgment, might materially impair our ability to proceed with the exchange
offer or have a material adverse effect on the contemplated benefits of
the exchange offer to us;
- any change, or any development involving a prospective change, shall have
occurred or been threatened in our business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects that is or may be adverse to us, or we shall have become aware
of facts that have or may have adverse significance with respect to the
value of the outstanding notes or the exchange notes or that may
materially impair the contemplated benefits of the exchange offer to us;
- any law, rule or regulation or applicable interpretations of the staff of
the Securities and Exchange Commission is issued or promulgated which, in
our good faith determination, do not permit us to effect the exchange
offer;
- any governmental approval has not been obtained, which approval we, in our
sole discretion, deem necessary for the consummation of the exchange
offer;
- there shall have been proposed, adopted or enacted any law, statute, rule
or regulation, or an amendment to any existing law, statute, rule or
regulation, which, in our sole judgment, might materially impair our
ability to proceed with the exchange offer or have a material adverse
effect on the contemplated benefits of the exchange offer to us; or
- there shall occur a change in the current interpretation by the staff of
the Securities and Exchange Commission which permits outstanding notes to
be offered for resale, resold and otherwise transferred by holders who are
not "affiliates" of either Consolidated Container Company or Consolidated
Container Capital within the meaning of Rule 405 under the Securities Act,
without compliance with the registration and prospectus delivery
provisions of the Securities Act of 1933, PROVIDED that these notes are
acquired in the ordinary course of the holder's business and the holder
has no arrangement with any person to participate in the distribution of
these notes.
In addition, we will not be obligated to accept for exchange your
outstanding notes if you have not made to us the following representations:
- any exchange notes that you receive will be acquired in the ordinary
course of your business;
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- you have no arrangement or understanding with any person to participate
in, and does not intend to engage in, the distribution of the exchange
notes;
- if you are not a broker-dealer that will receive exchange notes for your
own account in exchange for outstanding notes that you acquired as a
result of market -making or trading activities, that it will deliver a
prospectus, as required by law, in connection with any resale of those
exchange notes;
- you are not our "affiliate," as defined in Rule 405 of the Securities Act
of 1933 of either Consolidated Container Company or Consolidated Container
Capital, or if you are an "affiliate," that you will comply with
applicable registration and prospectus delivery requirements of the
Securities Act of 1933;
- if you are a person in the United Kingdom, that your ordinary activities
involve it in acquiring, holding, managing or disposing of investments, as
principal or agent, for the purposes of your business;
- other representations as may be reasonably necessary under applicable
Securities and Exchange Commission rules, regulations or interpretations
to make available to us an appropriate form for registration of the
exchange notes under the Securities Act of 1933.
These conditions are for our sole benefit, and we may assert them regardless
of the circumstances that may give rise to them or waive them in whole or in
part at any or at various times in our sole discretion if we reasonably
determine that one or more conditions have not been satisfied. If we fail at any
time to exercise any of the rights above, this failure will not constitute a
waiver of this right. Each right is an ongoing right that we may assert at any
time or at various times.
In addition, we will not accept for exchange any outstanding notes tendered,
and will not issue exchange notes in exchange for any outstanding notes, if at
that time any stop order will be threatened or in effect regarding the
registration statement, of which this prospectus forms a part, or the
qualification of the indenture under the Trust Indenture Act of 1939.
The exchange offer is not conditioned, however, upon our receiving a minimum
principal amount of outstanding notes being tendered for exchange.
PROCEDURES FOR TENDERING
TENDER ONLY BY REGISTERED HOLDERS
Only a registered holder of outstanding notes may tender outstanding notes
in the exchange offer. If you are a registered holder of outstanding notes, to
tender in the exchange offer, you must:
- complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal; have the signature on the letter of transmittal
guaranteed if the letter of transmittal so requires; and mail or deliver
that letter of transmittal or facsimile to the exchange agent prior to the
expiration date; or
- comply with The Depositary Trust Company's Automated Tender Offer Program
procedures described below.
In addition, regarding the delivery of outstanding notes, one of the
following must occur:
- the exchange agent must receive outstanding notes with the letter of
transmittal; or
- the exchange agent must receive, prior to the expiration date, a timely
confirmation of book-entry transfer of these outstanding notes into the
exchange agent's account at The Depository Trust Company according to the
procedure for book-entry transfer described below or a properly
transmitted agent's message; or
- the holder must comply with the guaranteed delivery procedures described
below.
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If your outstanding notes are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and you wish to tender them, you
should contact that party promptly and instruct it to tender on your behalf. If
your outstanding notes are registered in the name of a nominee and you wish to
tender on their or your behalf, you must, prior to completing and executing the
letter of transmittal and delivering outstanding notes; either:
- make appropriate arrangements to register ownership of the outstanding
notes in your name; or
- obtain a properly completed bond power from the nominee. The bond power
must be signed by you as your name appears on the outstanding notes, and
an eligible institution must guarantee the signature on the bond power.
The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.
If you tender your outstanding notes and do not withdraw your tender prior
to the expiration date, your tender will constitute an agreement between you and
us in accordance with the terms of and subject to the conditions listed in, this
prospectus and in the letter of transmittal.
REQUIREMENTS REGARDING DELIVERY
If you physically deliver the letter of transmittal and other required
documents, the exchange agent must receive them at the address listed below
under the section "-- Exchange Agent" prior to the expiration date.
The method of delivery of outstanding notes, the letter of transmittal and
all other required documents to the exchange agent is at your election and risk.
Rather than mail these items, we recommend that you use an overnight or hand
delivery service. In all cases, you should allow sufficient time to assure
delivery to the exchange agent before the expiration date. You should not send
the letter of transmittal or outstanding notes to us. You may request your
broker, dealer, commercial bank, trust company or other nominee to effect the
transactions described above for you.
REQUIREMENTS REGARDING SIGNATURES
If you sign the letter transmittal, your signature on it, or a notice of
withdrawal described below, must be guaranteed by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or another "eligible institution" within the
meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, unless:
- you are the registered owner of the outstanding notes, and you have not
completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the letter of transmittal; or
- you are on an eligible institution.
If the letter of transmittal is signed by a person other than you, the
outstanding notes must be endorsed or accompanied by a properly completed bond
power. The bond power must be signed by you as your name appears on the
outstanding notes and an eligible institution must guarantee the signature on
the bond power. If the letter of transmittal or any outstanding notes or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, these persons should indicate that fact when signing.
Unless waived by us, they should also submit evidence satisfactory to us of
their authority to deliver the letter of transmittal.
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THE AUTOMATED TENDER OFFER PROGRAM
The exchange agent and The Depository Trust Company have confirmed that any
financial institution that is a participant in The Depository Trust Company's
system may use The Depository Trust Company's Automated Tender Offer Program to
tender their outstanding notes. Participants in the program may, instead of
physically completing and signing the letter of transmittal and delivering it to
the exchange agent, may transmit their acceptance of the exchange offer
electronically. They may do so by causing The Depository Trust Company to
transfer the outstanding notes to the exchange agent in accordance with its
procedures for transfer. The Depository Trust Company will then send an agent's
message to the exchange agent. The term "agent's message" means a message
transmitted by The Depository Trust Company, received by the exchange agent and
forming part of the book-entry confirmation, to the effect that:
- The Depository Trust Company has received an express acknowledgment from a
participant in its Automated Tender Offer Program that is tendering
outstanding notes that are the subject of that book-entry confirmation;
- that participant has received and agrees to be bound by the terms of the
letter of transmittal or, in the case of an agent's message relating to
guaranteed delivery, that participant has received and agrees to be bound
by the applicable notice of guaranteed delivery; and
- the agreement may be enforced against that participant.
OTHER MATTERS
We will determine in our sole discretion all questions as to the validity,
form, eligibility, time of receipt, acceptance of tendered outstanding notes and
withdrawal of tendered outstanding notes. Our determination will be final and
binding. We reserve the absolute right to reject any outstanding notes not
properly tendered or any outstanding notes our acceptance of which would, in the
opinion of our counsel, be unlawful. We also reserve the right to waive any
defects, irregularities or conditions of tender as to particular outstanding
notes. Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of outstanding notes must be cured within that time as
we shall determine. Although we intend to notify holders of defects or
irregularities with respect to tenders of outstanding notes, neither we, the
exchange agent nor any other person will incur any liability for failure to give
that notification. Tenders of outstanding notes will not be deemed made until
these defects or irregularities have been cured or waived. Any outstanding notes
received by the exchange agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned by
the exchange agent without cost to the tendering holder, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
In all cases, we will issue exchange notes for outstanding notes that we
have accepted for exchange under the exchange offer only after the exchange
agent timely receives:
- outstanding notes or a timely book-entry confirmation of these outstanding
notes into the exchange agent's account at The Depository Trust Company;
and
- a properly completed and duly executed letter of transmittal and all other
required documents or a properly transmitted agent's message.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The letter of transmittal contains, among other things, the following terms
and conditions, which are part of the exchange offer.
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- The party tendering, or transferring, outstanding notes for exchange notes
exchanges, assigns and transfers the outstanding notes to us and
irrevocably constitutes and appoints the exchange agent as the
transferor's agent and attorney-in-fact to cause the outstanding notes to
be assigned, transferred and exchanged.
- The transferor represents, warrants and agrees that:
-- it has full power and authority to tender, exchange, assign and
transfer the outstanding notes and to acquire exchange notes issuable
upon the exchange of the tendered outstanding notes, and that, when
the outstanding notes are accepted for exchange, we will acquire good
and unencumbered title to the tendered outstanding notes, free and
clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim;
-- it will, upon request, execute and deliver any additional documents
deemed by the exchange agent or us to be necessary or desirable to
complete the exchange, assignment and transfer of tendered
outstanding notes or transfer ownership of these outstanding notes on
the account books maintained by a book-entry transfer facility; and
-- acceptance of any tendered outstanding notes by us and the issuance
of exchange notes in exchange for these outstanding notes will
constitute performance in full by us and our subsidiaries
guaranteeing the outstanding notes of our obligations under the
registration rights agreement.
- All authority conferred by the transferor will survive the death or
incapacity of the transferor and every obligation of the transferor shall
be binding upon the heirs, legal representatives, successors, assigns,
executors and administrators of the Transferor.
By signing the letter of transmittal and tendering outstanding notes you
will represent to us that, among other things:
- any exchange notes that you receive will be acquired in the ordinary
course of your business;
- you have no arrangement or understanding with any person or entity to
participate in and do not intend to engage in, the distribution of the
exchange notes;
- if you are a broker-dealer that will receive exchange notes for your own
account in exchange for outstanding notes, that you acquired as a result
of market-making or trading activities, that you will deliver a
prospectus, as required by law, in connection with any resale of those
exchange notes;
- you are not our "affiliate," as defined in Rule 405 of the Securities Act
of 1933 of either Consolidated Container Company or Consolidated Container
Capital, or if you are an "affiliate," that you will comply with
applicable registration and prospectus delivery requirements of the
Securities Act of 1933; and
- if you are a person in the United Kingdom, that your ordinary activities
involve you in acquiring, holding, managing or disposing of investments,
as principal or agent, for the purposes of your business.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account regarding the
outstanding notes at The Depository Trust Company for purposes of the exchange
offer promptly after the date of this prospectus. If you are a financial
institution participating in The Depository Trust Company's system, you may make
book-entry delivery of outstanding notes by causing The Depository Trust Company
to transfer the outstanding notes into the exchange agent's account at The
Depository Trust Company in accordance with The Depository Trust Company's
procedures for transfer. Holders of outstanding notes who are unable to deliver
confirmation of the book-entry tender of your outstanding notes into the
exchange agent's account at The Depository Trust Company or all other documents
required by the
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letter of transmittal to the exchange agent on or prior to the expiration date,
you must tender your outstanding notes according to the guaranteed delivery
procedures described below.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your outstanding notes but (1) your outstanding notes
are not immediately available, (2) you cannot deliver your outstanding notes,
the letter of transmittal or any other required documents to the exchange agent
or (3) you are not able to comply with the applicable procedures under The
Depository Trust Company's Automated Tender Offer Program prior to the
expiration date, then you may still tender your outstanding notes in the
exchange offer if you follow, or cause to be followed, the specified procedures.
The procedures are:
- you make the tender through an eligible institution;
- prior to the expiration date, the exchange agent receives from the
eligible institution either a properly completed and duly executed notice
of guaranteed delivery by facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight courier), mail
or hand delivery or a properly transmitted agent's message and notice of
guaranteed delivery listing:
-- your name and address, the registered number(s) of the outstanding
notes and the principal amount of outstanding notes tendered;
-- stating that the tender is being made by the notice of guaranteed
delivery; and
-- guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, (1) the letter of transmittal or a
facsimile of it, (2) the outstanding notes or a book-entry
confirmation of the transfer and (3) any other documents required by
the letter of transmittal will be deposited by the eligible
institution with the exchange agent; and
- the exchange agent receives a properly completed and executed letter of
transmittal or facsimile of it, as well as all tendered outstanding notes
in proper form for transfer or a book-entry confirmation, and all other
documents required by the letter of transmittal, within three New York
Stock Exchange trading days after the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to you.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender at any time prior to the expiration date. For a withdrawal to be
effective:
- the exchange agent must receive a written notice, which may be by
telegram, telex, facsimile transmission or letter of withdrawal at one of
the addresses listed below under "-- Exchange Agent"; or
- you must comply with the appropriate procedures of The Depository Trust
Company's Automated Tender Offer Program system.
A notice of withdrawal must:
- specify the name of the person who tendered the outstanding notes to be
withdrawn;
- identify the outstanding notes to be withdrawn, including the principal
amount of these outstanding notes; and
- where certificates for outstanding notes have been transmitted, specify
the name or names in which these outstanding notes were registered, if
different from that of the withdrawing holder.
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If certificates for outstanding notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of these
certificates, the withdrawing holder must also submit:
- the serial numbers of the particular certificates to be withdrawn; and
- a signed notice of withdrawal with signatures guaranteed by an eligible
institution unless the holder is an eligible institution.
If you have tendered outstanding notes pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at The Depository Trust Company to be credited
with the withdrawn outstanding notes and otherwise comply with the procedures of
that facility. We will determine all questions as to the validity, form and
eligibility, including time of receipt, of these notices, and our determination
shall be final and binding on all parties. We will conclude that any outstanding
notes properly withdrawn not to have validity tendered for exchange for purposes
of the exchange offer. Any outstanding notes that you have tendered for exchange
but that are not exchanged for any reason will be returned to you without cost
as soon as practicable after the withdrawal, rejection of tender or termination
of the exchange offer. In the case of outstanding notes being tendered by
book-entry transfer into the exchange agent's account at The Depository Trust
Company according to the procedures described above, these outstanding notes
will be credited to an account maintained with The Depository Trust Company for
outstanding notes as soon as practicable after the withdrawal, rejection of
tender or termination of the exchange offer. Properly withdrawn outstanding
notes may be re-tendered by following one of the procedures described under "--
Procedures for Tendering" above at any time on or prior to the expiration date.
EXCHANGE AGENT
We have appointed The Bank of New York to act as exchange agent for the
exchange offer. You should direct questions and requests for assistance,
requests for additional copies of this prospectus or of the letter of
transmittal and requests for the notice of guaranteed delivery to the exchange
agent addressed as follows:
<TABLE>
<S> <C>
FOR DELIVERY BY REGISTERED OR CERTIFIED MAIL: FOR OVERNIGHT DELIVERY ONLY OR BY HAND:
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attention: Reorganization Unit Ground Level
New York, New York 10286
Attention: Reorganization Unit
BY FACSIMILE TRANSMISSION (FOR ELIGIBLE INSTITUTIONS ONLY):
The Bank of New York
(212) 815-4699
Attention: Reorganization Unit
CONFIRM BY TELEPHONE:
(212) 815-4997
FOR INFORMATION CALL:
(212) 815-4997
</TABLE>
FEES AND EXPENSES; TRANSFER TAXES
We will bear the expenses of soliciting tenders. We are making the principal
solicitation by mail. We may make, however, additional solicitations by
telegraph, telephone or in person by our officers and regular employees and
those of our affiliates. We have not retained any dealer-manager in
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connection with the exchange offer and will not make any payments to
broker-dealers or others soliciting acceptances of the exchange offer.
We will pay the expenses to be incurred in connection with the exchange
offer. We estimate that these expenses will be approximately $500,000. They
include:
- registration fee of the Securities and Exchange Commission;
- fees and expenses of the exchange agent, including the reasonable and
customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses and the trustee;
- accounting and legal fees;
- printing costs;
- transfer taxes, if any, as described below; and
- related fees and expenses.
We will pay all transfer taxes, if any, applicable to the exchange of
outstanding notes under the exchange offer. If you tender outstanding notes,
however, you will be required to pay any transfer taxes, whether imposed on
yourself directly, or any other person, if:
- certificates representing outstanding notes for principal amounts not
tendered or accepted for are to be delivered to, or are to be issued in
the name of, any person other than the registered holder of outstanding
notes tendered;
- tendered outstanding notes are registered in the name of any person other
than the person signing the letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of
outstanding notes under the exchange offer.
If you do not submit satisfactory evidence of payment of these taxes with
the letter of transmittal, then we will bill the amount of these transfer taxes
to you.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not tender your outstanding notes in the tender offer, the
outstanding notes which you will hold will continue to have transfer
restrictions and which are less liquid and more volatile in price.
If you do not exchange your outstanding notes for exchange notes, your
outstanding notes will continue to be subject to restrictions on transfer. In
general, outstanding notes may not be offered or sold unless registered under
the Securities Act of 1933, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act of 1933 and applicable state
securities laws. We do not currently anticipate that we will register the
outstanding notes under the Securities Act of 1933. In addition, the tender of
outstanding notes in the exchange offer will reduce the principal amount of the
outstanding notes outstanding, which may have an adverse effect upon, and
increase the volatility of, the market price of the outstanding notes due to a
reduction in liquidity.
ACCOUNTING TREATMENT
We will record the exchange notes in our accounting records at the same
carrying value as the outstanding notes, which is the total principal amount, as
reflected in our accounting records on the date of exchange. Accordingly, we
will not recognize any gain or loss for accounting purposes in connection with
the exchange offer. We will capitalize the expenses of the exchange offer and
amortize them over the life of these notes.
OTHER
You are not required to exchange your outstanding notes for exchange notes
and to participate in the exchange offer. You should consider carefully whether
to accept the offer to exchange the
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outstanding notes for exchange notes. We urge you to consult your financial and
tax advisors in making your own decision on what action to take.
In the future, we may seek to acquire untendered outstanding notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. We have no present plans to acquire any outstanding notes that are
not tendered in the exchange offer or to file a registration statement to permit
resales of any untendered outstanding notes.
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DESCRIPTION OF NOTES
You can find the definitions of the capitalized terms used in this
description under the subcaption "Definitions." In this description, the word
"Company" refers only to Consolidated Container Company LLC and not to any of
its subsidiaries, the word "Capital" refers only to Consolidated Container
Capital, Inc. and not to any of its subsidiaries and the word "Issuers" refers
collectively to the Company and Capital.
The outstanding notes were issued, and the exchange notes will be, issued
under an Indenture (the "Indenture") among the Issuers, the Guarantors and The
Bank of New York, as trustee (the "Trustee"). Upon the issuance of the exchange
notes, the Indenture will be subject to and governed by the Trust Indenture Act
of 1939. All references to the "Notes" are to the outstanding notes (the
"Outstanding Notes") and the exchange notes (the "Exchange Notes") collectively.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939.
Some purchasers of the outstanding notes would not have been able to buy
them because they are prohibited from buying debt securities of a limited
liability company. Accordingly, Capital was incorporated in Delaware, as a
wholly owned subsidiary of the Company, to serve as a co-issuer of the Notes.
Capital does not have any substantial operations or assets and does not have any
revenues. As a result, you should not expect Capital to participate in servicing
the interest and principal obligations on the Notes. See "-- Covenants --
Restrictions on Activities of Capital" below.
The following description is a summary of the material provisions of the
Indenture and the Registration Rights Agreement. It does not restate those
agreements in their entirety. We urge you to read the Indenture and the
Registration Rights Agreement because they, and not this description, define
your rights as holders of the Notes. The Indenture and the Registration Rights
Agreement are exhibits to the registration statement of which this prospectus is
a part.
BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES
THE NOTES
The Notes:
- are general unsecured obligations of the Issuers;
- are subordinated in right of payment to all existing and future Senior
Debt of the Issuers;
- are equal in right of payment with any future senior subordinated
Indebtedness of the Issuers;
- are senior in right of payment to any future subordinated Indebtedness of
the Issuers; and
- are unconditionally guaranteed by the Subsidiary Guarantors.
THE GUARANTEES
The Notes are guaranteed by all of the Domestic Subsidiaries of the Company
other than Capital, which are Reid Plastic Group, Plastic Containers,
Continental Plastic Containers and Continental Caribbean Containers.
Each Subsidiary Guarantee of the Notes:
- is a general unsecured obligation of the Subsidiary Guarantor;
- is subordinated in right of payment to all existing and future Senior Debt
of the Subsidiary Guarantor;
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- is equal in right of payment with any future senior subordinated
Indebtedness of the Subsidiary Guarantor; and
- is senior in right of payment to any future subordinated Indebtedness of
the Subsidiary Guarantor.
At July 2, 1999, the Issuers and the Subsidiary Guarantors had total Senior
Debt of approximately $597.5 million. As indicated above and as discussed in
detail below under the subcaption "Subordination," payments on the Notes and the
Subsidiary Guarantees are subordinated to the payment of Senior Debt. The
Indenture permits us and the Subsidiary Guarantors to incur additional Senior
Debt.
Not all of our subsidiaries guarantee the outstanding notes and will
guarantee the exchange notes. In the event of a bankruptcy, liquidation or
reorganization of any of these non-guarantor subsidiaries, these non-guarantor
subsidiaries will pay the holders of their debts and their trade creditors
before they will be able to distribute any of their assets to us. At July 2,
1999, Consolidated Container Company's non-Subsidiary Guarantors had total
liabilities of approximately $3.7 million.
Currently, all of our subsidiaries are "Restricted Subsidiaries." However,
under the circumstances described below under the subcaption "-- Covenants --
Designation of Restricted and Unrestricted Subsidiaries," the Company is
permitted to designate some of its subsidiaries as "Unrestricted Subsidiaries."
The Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants in the Indenture. The Unrestricted Subsidiaries will not guarantee the
Notes.
PRINCIPAL, MATURITY AND INTEREST
The Issuers may issue Notes with a maximum total principal amount of $300.0
million, of which the Issuers issued $185.0 million total principal amount of
outstanding notes on July 2, 1999. As a result, the Issuers may issue a total
principal amount of $115.0 million of additional notes (the "Additional Notes")
from time to time after the offering of the outstanding notes. Any offering of
Additional Notes is subject to the covenant described below under the section
"-- Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock."
The Notes and any Additional Notes subsequently issued under the Indenture would
be treated as a single class for all purposes under the Indenture, including,
without limitation, waivers, amendments, redemptions and offers to purchase. The
Issuers issued the outstanding notes, and will issue the exchange notes, in
denominations of $1,000 and integral multiples of $1,000. The Notes will mature
on July 15, 2009.
Interest on the Notes will accrue at the rate of 10 1/8% per annum and will
be payable semi-annually in arrears on each January 15 and July 15, commencing
on January 15, 2000. The Issuers will make each interest payment to the Holders
of record on the immediately preceding January 1 and July 1.
Interest on the Notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
FORM AND TERM OF EXCHANGE NOTES
The form and terms of the exchange notes will be substantially identical to
the form and terms of the outstanding notes, except that the exchange notes:
- will be freely tradeable as a result of their registration under the
Securities Act of 1933;
- will not bear legends restricting their transfer, will not be subject to
any additional obligations regarding registration under the Securities Act
of 1933; and
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- will not be subject to the special interest payments described in "--
Registration Covenant; Exchange Offer."
The exchange notes will be issued under and entitled to the benefits of the
same indenture under which the Issuers issued the outstanding notes.
Consequently, both series will be treated as a single class of debt securities
under the indenture.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a Holder has given wire transfer instructions to the Issuers, the Issuers
will pay all principal, interest and premium and Liquidated Damages, if any, on
that Holder's Notes in accordance with those instructions. All other payments on
Notes will be made at the office or agency of the Paying Agent and Registrar
within the City and State of New York unless the Issuers elect to make interest
payments by check mailed to the Holders at their addresses as listed in the
register of Holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustee will initially act as Paying Agent and Registrar. The Issuers
may change the Paying Agent or Registrar without prior notice to the Holders,
and the Company or any of its Restricted Subsidiaries may act as Paying Agent or
Registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents, and the Issuers may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Issuers are not required to transfer or exchange any Note
selected for redemption. Also, the Issuers are not required to transfer or
exchange any Note for a period of 15 days before the mailing of a notice of
redemption of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
SUBSIDIARY GUARANTEES
The Subsidiary Guarantors will jointly and severally guarantee the Issuers'
obligations under the Notes. Each Subsidiary Guarantee will be subordinated to
the prior payment in full of all Senior Debt of that Subsidiary Guarantor. The
subordination provisions applicable to the Subsidiary Guarantees will be
substantially similar to the subordination provisions applicable to the Notes as
set forth below under "Subordination." The obligations of each Subsidiary
Guarantor under its Subsidiary Guarantee will be limited as necessary to prevent
that Subsidiary Guarantee from constituting a fraudulent conveyance under
applicable law. See "Risk Factors -- Fraudulent Conveyance Matters."
A Subsidiary Guarantor may not sell or otherwise dispose of all or
substantially all of its assets to, or consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person), another
Person, other than the Company or another Subsidiary Guarantor, unless:
(1) immediately after giving effect to that transaction, no Default or Event
of Default exists; and
(2) either:
(a) the Person acquiring the property in any such sale or disposition or
the Person formed by or surviving any such consolidation or merger
(if other than such Subsidiary Guarantor) assumes all the obligations
of that Subsidiary Guarantor under the Indenture, its Subsidiary
Guarantee and the Registration Rights Agreement pursuant to a
supplemental indenture satisfactory to the Trustee; or
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(b) the Net Proceeds of such sale or other disposition are applied in
accordance with the "Asset Sale" provisions of the Indenture.
The Subsidiary Guarantee of a Subsidiary Guarantor will be released:
(1) in connection with any sale or other disposition of all or substantially
all of the assets of that Subsidiary Guarantor (including by way of
merger or consolidation) to a Person that is not (either before or after
giving effect to such transaction) a Restricted Subsidiary of the
Company, if the Subsidiary Guarantor applies the Net Proceeds of that
sale or other disposition in accordance with the "Asset Sale" provisions
of the Indenture;
(2) in connection with any sale of all of the Capital Stock of a Subsidiary
Guarantor to a Person that is not (either before or after giving effect
to such transaction) a Restricted Subsidiary of the Company, if the Net
Proceeds of that sale are applied in accordance with the "Asset Sale"
provisions of the Indenture; or
(3) if the Company properly designates any Restricted Subsidiary that is a
Subsidiary Guarantor as an Unrestricted Subsidiary.
See "-- Repurchase at the Option of Holders -- Asset Sales."
SUBORDINATION
The payment of principal, interest and premium and Liquidated Damages, if
any, on the Notes will be subordinated to the prior payment in full in cash or
Cash Equivalents of all Senior Debt of the Issuers, including Senior Debt
incurred after the date of the Indenture.
The holders of Senior Debt will be entitled to receive payment in full in
cash or Cash Equivalents of all Obligations due in respect of Senior Debt
(including interest after the commencement of any bankruptcy proceeding at the
rate specified in the applicable Senior Debt whether or not such interest is an
allowable claim) before the Holders of Notes will be entitled to receive any
payment or distribution of any kind or character with respect to any Obligation
on, or relating to, the Notes (except that Holders of Notes may receive and
retain Permitted Junior Securities and payments made from the trust described
under "-- Legal Defeasance and Covenant Defeasance" so long as the trust was
created in accordance with all relevant conditions specified in the Indenture at
the time it was created), in the event of any distribution to creditors of
either Issuer:
(1) in a liquidation or dissolution of such Issuer;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to such Issuer or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of such Issuer's assets and liabilities.
The Issuers also may not make any payment or distribution of any kind or
character with respect to any Obligations on, or with respect to, the Notes or
acquire any Notes for cash or property or otherwise (except in Permitted Junior
Securities or from the trust described under "-- Legal Defeasance and Covenant
Defeasance" so long as the trust was created in accordance with all relevant
conditions specified in the Indenture at the time it was created) if:
(1) a payment default on Designated Senior Debt occurs and is continuing; or
(2) any other default occurs and is continuing on any series of Designated
Senior Debt that permits holders of that series of Designated Senior Debt
to accelerate its maturity and the Trustee receives a notice of such
default (a "Payment Blockage Notice") from the Issuers or the holders of
any Designated Senior Debt.
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Payments on the Notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such default is
cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived, 179 days after the date on which
the applicable Payment Blockage Notice is received or the Trustee
receives notice from the representative for such Designated Senior Debt
rescinding the Payment Blockage Notice, unless the maturity of any
Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the delivery of the immediately prior
Payment Blockage Notice; and
(2) all scheduled payments of principal, interest and premium and Liquidated
Damages, if any, on the Notes that have come due have been paid in full
in cash.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice unless such default shall have been
cured or waived for a period of not less than 90 days.
If the Trustee or any Holder of the Notes receives a payment or distribution
of any kind or character with respect to any Obligations on, or with respect to,
the Notes (except in Permitted Junior Securities or from the trust described
under "-- Legal Defeasance and Covenant Defeasance" so long as the trust was
created in accordance with all relevant conditions specified in the Indenture at
the time it was created) when the payment is prohibited by these subordination
provisions, the Trustee or the Holder, as the case may be, shall hold the
payment in trust for the benefit of the holders of Senior Debt. Upon the proper
written request of the holders of Senior Debt, the Trustee or the Holder, as the
case may be, shall deliver the amounts in trust to the holders of Senior Debt or
their proper representative.
The Issuers must promptly notify holders of Senior Debt (or their
representative) if payment of the Notes is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event of
a bankruptcy, liquidation or reorganization of either Issuer, Holders of Notes
may recover less ratably than creditors of the Issuers who are holders of Senior
Debt. See "Risk Factors -- Contractual Subordination."
OPTIONAL REDEMPTION
At any time prior to July 15, 2002, the Issuers may on any one or more
occasions redeem up to 40% of the total principal amount of Notes issued under
the Indenture at a redemption price of 110.125% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of one or more Equity Offerings of
the Company (or of Holdings to the extent such proceeds are contributed to the
Company); PROVIDED that:
(1) at least 60% of the total principal amount of Notes issued under the
Indenture remains outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Company and its Subsidiaries);
and
(2) the redemption occurs within 90 days of the date of the closing of such
Equity Offering.
Except pursuant to the preceding paragraph, the Notes will not be redeemable
at the Issuers' option prior to July 15, 2004.
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On or after July 15, 2004, the Issuers may redeem all or a part of the Notes
upon not less than 30 nor more than 90 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on July 15 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2004.............................................................................. 105.0625%
2005.............................................................................. 103.3750%
2006.............................................................................. 101.6875%
2007 and thereafter............................................................... 100.0000%
</TABLE>
MANDATORY REDEMPTION
The Issuers are not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each Holder of Notes will have the right to
require the Issuers to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that Holder's Notes pursuant to a Change of
Control Offer on the terms set forth in the Indenture. In the Change of Control
Offer, the Issuers will offer a Change of Control Payment in cash equal to 101%
of the total principal amount of Notes repurchased plus accrued and unpaid
interest and Liquidated Damages, if any, thereon, to the date of purchase.
Within 30 days following any Change of Control, the Issuers will mail a notice
to each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Notes on the Change of Control
Payment Date specified in such notice, which date shall be no earlier than 30
days and no later than 60 days from the date such notice is mailed, pursuant to
the procedures required by the Indenture and described in such notice. The
Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Notes as
a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the Change of Control provisions of
the Indenture, the Issuers will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the
Change of Control provisions of the Indenture by virtue of such conflict.
On the Change of Control Payment Date, the Issuers will, to the extent
lawful:
(1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the total principal amount
of Notes or portions thereof being purchased by the Issuers.
The Paying Agent will promptly mail to each Holder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be
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transferred by book entry) to each Holder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered, if any; PROVIDED that each
such new Note will be in a principal amount of $1,000 or an integral multiple
thereof.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, the
Company will either repay all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the repurchase of Notes required by this covenant. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Company shall first comply with the covenant in the first sentence in
the immediately preceding paragraph before it shall be required to repurchase
Notes pursuant to the provisions described above. The Company's failure to
comply with the covenant described in the immediately preceding sentence will
(with notice and lapse of time) constitute an Event of Default described in
clause (3) but shall not constitute an Event of Default described under clause
(2) under the section "-- Events of Defaults and Remedies."
The provisions described above that require the Issuers to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Issuers repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The Issuers will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Issuers and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
Notwithstanding the foregoing, the Company shall not be required to make a
Change of Control Offer as provided above if, in connection with or in
contemplation of any Change of Control, it has made an offer to purchase (an
"Alternate Offer") any and all Notes validly tendered at a cash price equal to
or higher than the Change of Control Payment and has purchased all Notes
properly tendered in accordance with the terms of such Alternate Offer.
The definition of Change of Control includes a phrase relating to the direct
or indirect sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the properties or assets of the Company and its
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of Notes to require the Issuers to repurchase such Notes as a result of a
sale, lease, transfer, conveyance or other disposition of less than all of the
assets of the Company and its Subsidiaries taken as a whole to another Person or
group may be uncertain.
ASSET SALES
The Company will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or
otherwise disposed of;
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(2) such fair market value is determined by the Management Committee and, in
the case of Asset Sales in excess of $10.0 million, evidenced by a
resolution of the Management Committee set forth in an Officers'
Certificate delivered to the Trustee; and
(3) at least 75% of the consideration therefor received by the Company or
such Restricted Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed to
be cash:
(a) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any
Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any
Subsidiary Guarantee) that are assumed by the transferee of any such
assets that releases the Company or such Restricted Subsidiary from
further liability;
(b) any securities, notes or other obligations received by the Company or
any such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash (to
the extent of the cash received in that conversion) within 180 days
of the closing of such Asset Sale; and
(c) any Designated Noncash Consideration received by the Company or any
of its Restricted Subsidiaries in such Asset Sale (i) having a fair
market value, taken together with all other Designated Noncash
Consideration received pursuant to this clause (c)(i) that is at that
time outstanding, not to exceed 15% of Total Assets at the time of
the receipt of such Designated Noncash Consideration or (ii) if, on a
pro forma basis after giving effect to such Asset Sale and the
application of the Net Proceeds therefrom (including the application
of the proceeds pursuant to clause (1) or (2) of the next paragraph),
the Company can incur $1.00 of Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first sentence of the
covenant described below under "Incurrence of Indebtedness and
Issuance of Preferred Stock," in the case of each clause (c)(i) or
(c)(ii), with the fair market value being measured at the time
received and without giving effect to subsequent changes in value.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds at its option:
(1) to repay Senior Debt and, if the Senior Debt repaid is revolving credit
Indebtedness, to correspondingly reduce commitments with respect to them;
(2) to repay PARI PASSU Indebtedness PROVIDED that the Company will equally
and ratably reduce Obligations under the Notes if the Notes are then
redeemable or, if the Notes may not be then redeemed, the Company will
make an offer (in accordance with the procedures set forth below for an
Asset Sale Offer) to all Holders to purchase the Notes that would
otherwise be redeemed at a price equal to 100% of the principal amount of
such Notes;
(3) to make an investment in properties or assets that replaces the assets
that are the subject of such Asset Sale;
(4) to make capital expenditures; or
(5) to make an investment in one or more businesses or to acquire other
assets that are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings, invest such Net Proceeds in Cash
Equivalents or Investment Grade Securities or otherwise invest such Net Proceeds
in any manner that is not prohibited by the Indenture.
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Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." Within
ten business days after the date on which the total amount of Excess Proceeds
exceeds $15.0 million, the Issuers will make an Asset Sale Offer to all Holders
of Notes and all holders of other Indebtedness that is PARI PASSU with the Notes
containing provisions similar to those set forth in the Indenture with respect
to offers to purchase or redeem with the proceeds of sales of assets to purchase
the maximum principal amount of Notes and such other PARI PASSU Indebtedness
that may be purchased out of the Excess Proceeds. The offer price in any Asset
Sale Offer will be equal to 100% of principal amount plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase, and will be
payable in cash. If any Excess Proceeds remain after consummation of an Asset
Sale Offer, the Company may use such Excess Proceeds for any purpose not
otherwise prohibited by the Indenture. If the total principal amount of Notes
and such other PARI PASSU Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such other PARI PASSU Indebtedness to be purchased on a pro rata basis based on
the principal amount of Notes and such other PARI PASSU Indebtedness tendered.
Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of the Indenture, the Issuers will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the Indenture by virtue of such
conflict.
The agreements governing the Issuers' outstanding Senior Debt currently
prohibit the Issuers from purchasing any Notes, and also provide that specified
change of control or asset sale events with respect to the Company would
constitute a default under these agreements. Any future credit agreements or
other agreements relating to Senior Debt to which the Issuers becomes a party
may contain similar restrictions and provisions. In the event a Change of
Control or Asset Sale occurs at a time when the Issuers are prohibited from
purchasing Notes, the Issuers could seek the consent of its senior lenders to
the purchase of Notes or could attempt to refinance the borrowings that contain
such prohibition. If the Issuers do not obtain such a consent or repay such
borrowings, the Issuers will remain prohibited from purchasing Notes. In such
case, the Issuers' failure to purchase tendered Notes would constitute an Event
of Default under the Indenture, which would, in turn, constitute a default under
such Senior Debt. In such circumstances, the subordination provisions in the
Indenture would likely restrict payments to the Holders of Notes.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, the Trustee
will select Notes for redemption as follows:
(1) if the Notes are listed, in compliance with the requirements of the
principal national securities exchange on which the Notes are listed; or
(2) if the Notes are not so listed, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate.
No Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional.
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If any Note is to be redeemed in part only, the notice of redemption that
relates to that Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion of
the original Note will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
COVENANTS
RESTRICTED PAYMENTS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of the Company's or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in
their capacity as such (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or to the
Company or a Restricted Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct
or indirect parent of the Company;
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes or the Subsidiary Guarantees, except:
(a) a mandatory sinking fund payment or a payment of interest or
principal that is paid within one year prior to the Stated Maturity
of such subordinated Indebtedness; or
(b) Indebtedness permitted under clause (6) of the covenant described
below under "--Incurrence of Indebtedness and Issuance of Preferred
Stock"; or
(4) make any Restricted Investment (all such payments and other actions set
forth in clauses (1) through (4) above being collectively referred to as
"Restricted Payments");
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(2) the Company would, at the time of such Restricted Payment and after
giving pro forma effect to them as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
the covenant described below under the section "--Incurrence of
Indebtedness and Issuance of Preferred Stock;" and
(3) such Restricted Payment, together with the total amount of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of the Indenture
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(excluding Restricted Payments permitted by clauses (2), (3), (4), (6),
(7), (8), (11), (14), (15) and (16) of the next succeeding paragraph) is
less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from April 1, 1999 to the end of the
Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), PLUS
(b) 100% of the total net proceeds, including cash and the fair market
value of property other than cash, received by the Company since the
date of the Indenture as a contribution to its common equity capital
or from the issue or sale of Equity Interests of the Company (other
than Disqualified Stock) or from the issue or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable debt
securities of the Company that have been converted into or exchanged
for such Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Subsidiary of the
Company), PLUS
(c) to the extent that any Restricted Investment that was made after the
date of the Indenture is sold or otherwise liquidated or repaid, the
total amount received in cash and the fair market value of property
other than cash received with respect to such Restricted Investment,
PLUS
(d) in case any Unrestricted Subsidiary has been redesignated a
Restricted Subsidiary or has been merged, consolidated or amalgamated
with or into, transfers or conveys assets to, or is liquidated into,
the Company or any of its Restricted Subsidiaries, the fair market
value of such Investment in such Unrestricted Subsidiary at the time
of such redesignation, combination or transfer (or of the assets
transferred or conveyed, as applicable), after deducting any
Indebtedness associated with the Unrestricted Subsidiary so
designated or combined or with the assets so transferred or conveyed.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied
with the provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or other acquisition
of any PARI PASSU or subordinated Indebtedness of the Company or any
Restricted Subsidiary or of any Equity Interests (the "Retired Equity
Interests") of the Company in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of, Equity Interests of the Company (the
"Refunding Equity Interests"); PROVIDED that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause
(3)(b) of the preceding paragraph;
(3) the declaration and payment of dividends on the Retired Equity Interests
out of the proceeds of the substantially concurrent sale (other than to a
Restricted Subsidiary) of Refunding Equity Interests; PROVIDED that the
amount of any such proceeds that are utilized for any such dividends
shall be excluded from clause (3)(b) of the preceding paragraph;
(4) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Restricted Subsidiary
with the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness;
(5) the payment of any dividend by a Restricted Subsidiary of the Company to
the holders of its Equity Interests on a pro rata basis;
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(6) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of the Company or any Restricted Subsidiary of
the Company or any direct or indirect parent of the Company held by any
future, present or former member of the Company's (or any of its
Restricted Subsidiaries') management or any director, employee or
consultant of the Company or any of its Restricted Subsidiaries pursuant
to any management equity subscription agreement or stock option agreement
in effect as of the date of the Indenture or by any employee upon
retirement of such employee; PROVIDED that the total price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall
not exceed in any calendar year $5.0 million (with unused amounts in any
calendar year being carried over to succeeding calendar years subject to
a maximum (without giving effect to the following proviso) of $10.0
million in any calendar year); PROVIDED FURTHER that such amount in any
calendar year may be increased by any amount not to exceed
(a) the cash proceeds from the sale of Equity Interests of the Company
(or of Holdings that are contributed to the Company) to members of
management, directors or consultants of the Company and its
Subsidiaries or Vestar that occurs after the date of the Indenture
(PROVIDED that such proceeds have not been included for the purpose
of determining whether a previous Restricted Payment was permitted
pursuant to the preceding paragraph) PLUS
(b) the cash proceeds of key man life insurance policies received by the
Company and its Restricted Subsidiaries after the date of the
Indenture;
(7) so long as the Company is a limited liability company treated as a
partnership or an entity disregarded as separate from its owner for
federal and state income tax purposes (and prior to any distribution of
any Tax Amount, the Company delivers an officers' certificate to such
effect), distributions to members of the Company in an amount, with
respect to any period after March 31, 1999 not to exceed the Tax Amount
with respect to the Company for such period;
(8) the making of distributions, loans or advances to Holdings in order to
permit the Company to pay the ordinary operating expenses of Holdings
(including, without limitation, directors' fees, indemnification
obligations, professional fees and expenses);
(9) the declaration and payment of dividends or distributions to holders of
any class or series of Disqualified Stock of the Company or any of its
Restricted Subsidiaries issued or incurred in accordance with the
covenant described below under the section "Incurrence of Indebtedness
and Issuance of Preferred Stock";
(10) the declaration and payment of dividends or distributions to holders of
any class or series of Designated Preferred Stock; PROVIDED that for the
most recently ended four full fiscal quarters for which internal
financial statements are available preceding the date of declaration of
any such dividend or distribution, after giving effect to such dividend
or distribution as a Fixed Charge on a pro forma basis, the Company and
its Restricted Subsidiaries would have had a Fixed Charge Coverage Ratio
of at least 1.75 to 1.0;
(11) the repurchase of (or a dividend or distribution to fund the repurchase
of) Equity Interests of the Company or any direct or indirect parent of
the Company deemed to occur upon exercise of stock options if such Equity
Interests represent a portion of the exercise price of such options;
(12) so long as no Default (except for any Default set forth below in clause
(3) or (7) under the section "Events of Default") has occurred and is
continuing or would be caused thereby, the payment of dividends on the
Company's common Equity Interests (or the payment to Holdings to fund the
payment by Holdings of dividends on Holdings' common Equity
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Interests) following the first public offering of common Equity Interests
of the Company or Holdings, as the case may be, after the date of the
Indenture, of up to 6% per annum of the net proceeds received by the
Company or contributed to the Company by Holdings, as the case may be, in
such public offering;
(13) the repurchase, retirement or other acquisition for value after the
first anniversary of the date of the Indenture (or dividend or
distribution to fund the repurchase, retirement or other acquisition) of
Equity Interests of the Company or any direct or indirect parent of the
Company in existence on the date of the Indenture and that are not held
by the Principals or any of their Related Parties on the date of the
Indenture (including any Equity Interests issued in respect of such
Equity Interests as a result of a stock split, recapitalization, merger,
combination, consolidation or otherwise, but excluding any management
equity plan or stock option plan or similar agreement), PROVIDED that (a)
the total amounts paid under this clause (13) shall not exceed (i) $15.0
million on or prior to the second anniversary of the date of the
Indenture or (ii) $30.0 million at any time after the second anniversary
of the date of the Indenture and (b) after giving effect to them, the
Company would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth
in the first sentence of the covenant described below under "--Incurrence
of Indebtedness and Issuance of Preferred Stock";
(14) Investments that are made with Excluded Contributions;
(15) so long as no Default (except for any Default set forth below in clause
(3) or (7) under the section "Events of Default") has occurred and is
continuing or would be caused thereby, other Restricted Payments in an
total principal amount not to exceed $15.0 million; and
(16) Restricted Payments contemplated by the Contribution and Merger
Agreement and any agreement executed in connection therewith or
contemplated thereby.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued to or by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant shall be determined by the Management Committee whose resolution with
respect to them shall be delivered to the Trustee. The Management Committee
determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $5.0 million. Not later than the date of making any
Restricted Payment, the Issuers shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this "Restricted Payments"
covenant were computed, together with a copy of any fairness opinion or
appraisal required by the Indenture.
Accrual of interest, accretion or amortization of original issue discount,
the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
will not be deemed to be a Restricted Payment for purposes of this covenant;
PROVIDED, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued.
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INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Company will not issue any Disqualified Stock and will not permit any of its
Restricted Subsidiaries that are not Subsidiary Guarantors to issue any shares
of preferred stock; PROVIDED, HOWEVER, that the Issuers and the Subsidiary
Guarantors may incur Indebtedness (including Acquired Debt) or issue
Disqualified Stock, and the Company's Restricted Subsidiaries that are not
Subsidiary Guarantors may incur Indebtedness (including Acquired Debt) or issue
preferred stock, if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock or preferred stock is issued
would have been at least 1.75 to 1.0, determined on a pro forma basis (including
a pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred or the preferred stock or Disqualified Stock had
been issued, as the case may be, at the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit the incurrence of any
of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by the Company and its Restricted Subsidiaries of
additional Indebtedness and letters of credit under Credit Facilities in
an total principal amount at any one time outstanding under this clause
(1) (with letters of credit being deemed to have a principal amount equal
to the maximum potential liability of the Company and its Restricted
Subsidiaries thereunder) not to exceed $575.0 million outstanding at any
one time;
(2) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(3) the incurrence by the Issuers and the Subsidiary Guarantors of
Indebtedness represented by the $185.0 million in total principal amount
of the Notes to be issued on the date of the Indenture, the related
Subsidiary Guarantees to be issued on the date of the Indenture and the
Exchange Notes and the related Subsidiary Guarantees to be issued
pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case, incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an total
principal amount that, when aggregated with the principal amount of all
other Indebtedness then outstanding and incurred pursuant to this clause
(4) and including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (4), does not exceed 15% of the Total Assets at the time of the
respective incurrence;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that was permitted by the Indenture to be
incurred under the first paragraph of this covenant or clauses (2), (3),
(4), (5), (10), (16) or (18) of this paragraph;
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(6) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; PROVIDED, HOWEVER, that:
(a) if the Issuers or any Subsidiary Guarantor is the obligor on such
Indebtedness and the lender is not a Subsidiary Guarantor, such
Indebtedness must be expressly subordinated to the prior payment in
full in cash of all Obligations with respect to the Notes, in the
case of the Issuers, or the Subsidiary Guarantees, in the case of a
Subsidiary Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than
the Company or a Restricted Subsidiary thereof and (ii) any sale or
other transfer of any such Indebtedness to a Person that is not
either the Company or a Restricted Subsidiary thereof shall be
deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the
case may be, that was not permitted by this clause (6);
(7) the incurrence by the Company or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred:
(a) for the purpose of fixing or hedging interest rate risk with respect
to any floating rate Indebtedness that is permitted by the terms of
this Indenture to be outstanding;
(b) for the purpose of fixing or hedging currency exchange rate risk with
respect to any currency exchanges; or
(c) for the purpose of fixing or hedging commodity price risk with
respect to any commodity purchases;
(8) the guarantee by the Issuers or any of the Subsidiary Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company
that was permitted to be incurred by another provision of this covenant;
(9) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of
dividends on Disqualified Stock in the form of additional shares of the
same class of Disqualified Stock will not be deemed to be an incurrence
of Indebtedness or an issuance of Disqualified Stock for purposes of this
covenant; PROVIDED, in each such case, that the amount thereof is
included in Fixed Charges of the Company as accrued;
(10) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, PROVIDED, HOWEVER, that if any such Indebtedness
ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event
shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company that was not permitted by this
clause (10);
(11) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including,
without limitation, letters of credit in respect of workers' compensation
claims or self-insurance, or other Indebtedness with respect to
reimbursement type obligations regarding workers' compensation claims or
self-insurance;
(12) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness arising from agreements of the Company or such Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or Capital Stock of a
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Subsidiary, other than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or a Subsidiary for
the purpose of financing such acquisition;
(13) the issuance of preferred stock by any of the Company's Restricted
Subsidiaries issued to the Company or another Restricted Subsidiary;
PROVIDED that any subsequent issuance or transfer of any Equity
Securities or any other event that results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such shares of preferred stock (except to the Company or
another Restricted Subsidiary) shall be deemed, in each case to be an
issuance of such shares of preferred stock;
(14) the incurrence by the Company or any of its Restricted Subsidiaries of
obligations in respect of performance and surety bonds and completion
guarantees provided by the Company or such Restricted Subsidiary in the
ordinary course of business;
(15) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness or Disqualified Stock not otherwise permitted under this
covenant in an total principal amount or liquidation preference that,
when aggregated with the principal amount and liquidation preference of
all other Indebtedness and Disqualified Stock then outstanding and
incurred pursuant to this clause (15) does not exceed $50.0 million;
(16) the incurrence of Indebtedness or Disqualified Stock of Persons that
are acquired by the Company or any of its Restricted Subsidiaries or
merged into a Restricted Subsidiary in accordance with the terms of the
Indenture; PROVIDED that such Indebtedness or Disqualified Stock is not
incurred in contemplation of such acquisition or merger; PROVIDED FURTHER
that after giving effect to such acquisition, either:
(a) the Company would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first sentence of this covenant; or
(b) the Fixed Charge Coverage Ratio is greater than immediately prior to
such acquisition;
(17) the incurrence of any Excluded Guarantee by any Restricted Subsidiary;
and
(18) the incurrence of any Indebtedness by a Receivables Subsidiary that is
not recourse to the Company or any other Restricted Subsidiary of the
Company (other than Standard Securitization Undertakings) incurred in
connection with a Qualified Receivables Transaction.
For purposes of determining compliance with this "Incurrence of Indebtedness
and Issuance of Preferred Stock" covenant, in the event that an item of proposed
Indebtedness meets the criteria of more than one of the categories of Permitted
Debt described in clauses (1) through (18) above, or is entitled to be incurred
pursuant to the first paragraph of this covenant, the Company will be permitted
to classify such item of Indebtedness on the date of its incurrence, or later
reclassify all or a portion of such item of Indebtedness, in any manner that
complies with this covenant. Indebtedness under Credit Facilities outstanding on
the date on which Notes are first issued and authenticated under the Indenture
shall be deemed to have been incurred on such date in reliance on the exception
provided by clause (1) of the definition of Permitted Debt.
Accrual of interest, accretion or amortization of original issue discount,
the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
will not be deemed to be a Restricted Payment for purposes of this covenant;
PROVIDED, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued.
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NO SENIOR SUBORDINATED DEBT
The Issuers will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt of the Issuers and senior in any respect in right of
payment to the Notes. No Subsidiary Guarantor will incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate or
junior in right of payment to the Senior Debt of such Subsidiary Guarantor and
senior in any respect in right of payment to such Subsidiary Guarantor's
Subsidiary Guarantee.
LIENS
The Company will not and will not permit any of its Restricted Subsidiaries
to, create, incur, assume or otherwise cause or suffer to exist or become
effective any Lien of any kind securing Indebtedness, Attributable Debt or trade
payables (other than Permitted Liens) upon any of their property or assets, now
owned or hereafter acquired, unless all payments due under the Indenture and the
Notes are secured on an equal and ratable basis with the obligations so secured
until such time as such obligations are no longer secured by a Lien.
No Subsidiary Guarantor will, directly or indirectly, create, incur, assume
or otherwise cause or suffer to exist or become effective any Lien of any kind
securing Indebtedness, Attributable Debt or trade payables (other than Permitted
Liens) that secures any Indebtedness that is PARI PASSU or subordinated to such
Subsidiary Guarantor's Subsidiary Guarantee upon any of its property or assets,
now owned or hereafter acquired, unless all payments due under its Subsidiary
Guarantee are secured on an equal and ratable basis with the obligations so
secured until such time as such obligations are no longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
the Company or any of its Restricted Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or pay
any indebtedness owed to the Company or any of its Restricted
Subsidiaries;
(2) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) the Credit Facilities as in effect on the date of the Indenture;
(2) contractual encumbrances or restrictions as in effect on the date of
the Indenture, including pursuant to Existing Indebtedness;
(3) the Indenture and the Notes, the Exchange Notes and the Subsidiary
Guarantees;
(4) applicable law or regulation;
(5) any agreement or other instrument of a Person acquired by the Company
or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which
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encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired;
(6) customary provisions in leases entered into in the ordinary course of
business;
(7) purchase money obligations for property acquired in the ordinary course
of business that impose restrictions on the property so acquired of the
nature described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of assets, including,
without limitation customary restrictions with respect to a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(9) Permitted Refinancing Indebtedness, PROVIDED that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(10) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien;
(11) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements, assets sale agreements, stock sale
agreements and other similar agreements entered into in the ordinary
course of business;
(12) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business;
(13) other Indebtedness of any Restricted Subsidiary that is not a Domestic
Subsidiary permitted to be incurred subsequent to the date of the
Indenture pursuant to the provisions of the covenant described above
under "-- Incurrence of Indebtedness and Issuance of Preferred Stock";
(14) any encumbrance or restrictions of the type referred to in clauses (1),
(2) and (3) of the preceding paragraph imposed by any amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of the contracts, instruments or
obligations referred to in clauses (1) through (13) above, PROVIDED that
such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacement or refinancings are (in the good
faith judgment of the Management Committee) no more restrictive, taken as
a whole, with respect to such dividend and other payment restrictions
than those contained in such contracts, instruments or obligations prior
to such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing;
(15) any agreement relating to a sale and leaseback transaction or Capital
Lease Obligation, but only on the property subject to such transaction or
Capital Lease Obligation and only to the extent that such restrictions or
encumbrances are customary with respect to a sale and leaseback
transaction or Capital Lease Obligation;
(16) any encumbrance or restriction that will not in the aggregate cause the
Issuers not to have the funds necessary to pay the principal of, premium,
if any, or interest on the Notes, Senior Debt and any PARI PASSU
Indebtedness; or
(17) any other agreement, instrument or document relating to Senior Debt
hereafter in effect, PROVIDED that the terms and conditions of such
encumbrances or restrictions are not more restrictive than those
encumbrances or restrictions imposed in connection with the Credit
Agreement as in effect on the date of the Indenture.
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MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company may not, directly or indirectly: (1) consolidate or merge with
or into another Person (whether or not the Company is the surviving entity); or
(2) sell, assign, transfer, convey, lease or otherwise dispose of all or
substantially all of the properties or assets of the Company and its Restricted
Subsidiaries taken as a whole, in one or more related transactions, to another
Person; unless:
(1) either: (a) the Company is the surviving corporation or entity; or (b)
the Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer,
conveyance, lease or other disposition shall have been made is a
corporation, limited liability company or partnership organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger (if
other than the Company or Capital) or the Person to which such sale,
assignment, transfer, conveyance, lease or other disposition shall have
been made assumes all the obligations of the Company under the Notes, the
Indenture and the Registration Rights Agreement pursuant to agreements
reasonably satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) the Company or the Person formed by or surviving any such consolidation
or merger (if other than Capital), or the Person (if other than Capital)
to which such sale, assignment, transfer, conveyance, lease or other
disposition shall have been made will, on the date of such transaction
after giving pro forma effect thereto and any related financing
transactions as if the same had occurred at the beginning of the
applicable four-quarter period, either
(a) be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the section "--
Incurrence of Indebtedness and Issuance of Preferred Stock"; or
(b) have a Fixed Charge Coverage Ratio that is greater than such ratio
for the Company and its Restricted Subsidiaries immediately prior to
that transaction.
The predecessor Company will not be relieved from its obligations to pay the
principal of, and interest on the Notes except in the case of a sale (but not
lease) of all of the Company's assets that meets the requirements of this
covenant. This "Merger, Consolidation or Sale of Assets" covenant will not apply
to a sale, assignment, transfer, conveyance or other disposition of assets
between or among the Company and any of its Wholly Owned Restricted
Subsidiaries.
Notwithstanding the foregoing, the Company is permitted to reorganize as a
corporation in accordance with the procedures established in the Indenture (and
may merge or consolidate with an Affiliate for such purpose), PROVIDED that the
Company shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that the holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such reorganization.
TRANSACTIONS WITH AFFILIATES
The Company will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement,
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understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each, an "Affiliate Transaction"), unless:
(1) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving total consideration in excess of $5.0 million,
such Affiliate Transaction is on terms that are not materially less
favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company
or such Subsidiary with an unrelated Person; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving total consideration in excess of
$5.0 million, a resolution of the Management Committee set forth in
an Officers' Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the
Management Committee; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving total consideration in excess of
$10.0 million, an opinion as to the fairness to the holders of the
Notes of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of
national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment or consulting agreement entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Restricted
Subsidiary;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) transactions with a Person that is an Affiliate of the Company solely
because the Company owns an Equity Interest in such Person;
(4) payment of reasonable directors' fees and the provision of customary
indemnities to directors and officers;
(5) sales of Equity Interests (other than Disqualified Stock) to Affiliates
of the Company;
(6) Restricted Payments that are permitted by the provisions of the
Indenture described above under the section "-- Restricted Payments";
(7) the payment (directly or through the Company) of annual management,
consulting, monitoring and advisory fees and related expenses to Vestar
and its Affiliates;
(8) transactions in which the Company or any of its Restricted Subsidiaries,
as the case may be, delivers to the Trustee a letter from an accounting,
appraisal or investment banking firm of national standing stating that
such transaction is fair to the Company or such Restricted Subsidiary
from a financial point of view or meets the requirements of clause (1) of
the preceding paragraph;
(9) payments or loans to employees or consultants that are approved in good
faith by a majority of the Management Committee of the Company;
(10) any agreement (and payments pursuant thereto) as in effect on the date
of the Indenture (including the Permitted Agreements) or any amendment
thereto (so long as such amendment is not disadvantageous to the Holders
in any material respect) or any transaction contemplated thereby;
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(11) the existence of, or the performance by the Company or any Restricted
Subsidiary of its obligations under the terms of, the Contribution and
Merger Agreement, or any agreement contemplated thereunder (including any
registration rights agreement or purchase agreement related thereto) to
which it is a party as of the date of the Indenture and any similar
agreements that it may enter into thereafter; PROVIDED, HOWEVER, that the
existence of, or the performance by the Company or any Restricted
Subsidiary of obligations under, any future amendment to any such
existing agreement or under any similar agreement entered into after the
date of the Indenture shall only be permitted by this clause (11) to the
extent that the terms of any such amendment or new agreement are not
otherwise disadvantageous to the Holders in any material respect;
(12) the payment of all fees, expenses, bonuses and awards related to the
transactions contemplated by the Contribution and Merger Agreement,
including fees to Vestar;
(13) transactions with customers, clients, suppliers, or purchasers or
sellers of goods or services, in each case in the ordinary course of
business and otherwise in compliance with the terms of the Indenture that
are fair to the Company and its Restricted Subsidiaries in the reasonable
determination of the majority of the Management Committee or are on terms
at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party; and
(14) payments by the Company or any of its Restricted Subsidiaries to Vestar
and its Affiliates made for any financial advisory, financing,
underwriting or placement services or in respect of other investment
banking activities, including, without limitation, in connection with
acquisitions or divestitures, which payments are approved by the majority
of the Management Committee in good faith.
ADDITIONAL SUBSIDIARY GUARANTEES
If the Company or any of its Restricted Subsidiaries acquires or creates
another Domestic Subsidiary after the date of the Indenture, then that newly
acquired or created Domestic Subsidiary must become a Subsidiary Guarantor and
execute a supplemental indenture and deliver an Opinion of Counsel to the
Trustee within 10 Business Days of the date on which it was acquired or created;
PROVIDED that (i) all Subsidiaries that have properly been designated as
Unrestricted Subsidiaries in accordance with the Indenture shall not become
Subsidiary Guarantors for so long as they continue to constitute Unrestricted
Subsidiaries and (ii) the foregoing covenant shall not apply to any newly
acquired or created Domestic Subsidiary for so long as such Domestic Subsidiary
does not have total assets exceeding $500,000.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Management Committee may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the total
fair market value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an
Investment made as of the time of such designation and will either reduce the
amount available for Restricted Payments under the first paragraph or under
clause (14) or (15) of the covenant described above under the section "--
Restricted Payments" or reduce the amount available for future Investments under
one or more clauses of the definition of Permitted Investments, as the Company
shall determine. That designation will only be permitted if such Investment
would be permitted at that time and if such Restricted Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary. The Management Committee may
redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the
redesignation would not cause a Default.
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SALE AND LEASEBACK TRANSACTIONS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, enter into any sale and leaseback transaction; PROVIDED that the Company or
any Restricted Subsidiary may enter into a sale and leaseback transaction if:
(1) the Company or that Restricted Subsidiary, as applicable, could have
incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction under the Fixed Charge
Coverage Ratio test in the first paragraph of the covenant described
above under the section "-- Incurrence of Indebtedness and Issuance of
Preferred Stock";
(2) the gross cash proceeds of that sale and leaseback transaction are at
least equal to the fair market value, as determined in good faith by the
Management Committee and set forth in an Officers' Certificate delivered
to the Trustee, of the property that is the subject of that sale and
leaseback transaction; and
(3) the transfer of assets in that sale and leaseback transaction is
permitted by, and the Company applies the proceeds of such transaction in
compliance with, the covenant described above under the section "--
Repurchase at the Option of Holders -- Asset Sales."
LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS IN WHOLLY OWNED
RESTRICTED SUBSIDIARIES
The Company will not, and will not permit any of its Restricted Subsidiaries
to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests
in any Wholly Owned Restricted Subsidiary of the Company to any Person (other
than the Company or a Wholly Owned Restricted Subsidiary of the Company), unless
the cash Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with the covenant described above under
the section "-- Repurchase at the Option of Holders -- Asset Sales."
In addition, the Company will not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company.
LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS
The Company will not permit any of its Restricted Subsidiaries, directly or
indirectly, to Guarantee any other Indebtedness of the Company or any Restricted
Subsidiary unless either (1) such Restricted Subsidiary is a Subsidiary
Guarantor or (2) such Restricted Subsidiary simultaneously executes and delivers
a supplemental indenture providing for the Guarantee of the payment of the Notes
by such Subsidiary, which Guarantee shall be senior to or PARI PASSU with such
Restricted Subsidiary's Guarantee of such other Indebtedness, unless such other
Indebtedness is Senior Debt, in which case the Guarantee of the Notes may be
subordinated to the Guarantee of such Senior Debt to the same extent as the
Notes are subordinated to such Senior Debt.
The provisions of this covenant will not apply to any guarantee by any
Restricted Subsidiary:
(1) that
(a) existed at the time such Person became a Restricted Subsidiary of the
Company, and
(b) was not incurred in connection with, or in contemplation of, such
Person becoming a Restricted Subsidiary of the Company; or
(2) that guarantees the payment of Obligations of the Company or any
Restricted Subsidiary under the Credit Facilities and any refunding,
refinancing or replacement thereof, in whole or in part, PROVIDED that
such refunding, refinancing or replacement thereof is not incurred
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pursuant to a registered offering of securities under the Securities Act
or a private placement of securities (including under Rule 144A) pursuant
to any exemption from the registration requirements of the Securities Act
(other than securities issued pursuant to any bank or similar credit
facility (including the Credit Agreement), which private placement
provides for registration rights under the Securities Act (any guarantee
excluded by operation of this clause (2) being an "Excluded Guarantee").
Notwithstanding the preceding paragraph, any Subsidiary Guarantee of the
Notes will provide by its terms that it will be automatically and
unconditionally released and discharged under the circumstances described above
under the section "-- Subsidiary Guarantees." The form of the Subsidiary
Guarantee will be attached as an exhibit to the Indenture.
BUSINESS ACTIVITIES
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Restricted Subsidiaries taken as a
whole.
PAYMENTS FOR CONSENT
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration to or for
the benefit of any Holder of Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Indenture or the
Notes unless such consideration is offered to be paid and is paid to all Holders
of the Notes that consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.
RESTRICTIONS ON ACTIVITIES OF CAPITAL
Capital will not hold any material assets, become liable for any material
obligations, other than the Notes, or engage in any significant business
activities; PROVIDED that Capital may be a co-obligor with respect to
Indebtedness if the Company is a primary obligor of such Indebtedness and the
net proceeds of such Indebtedness are received by the Company or one or more of
the Company's Restricted Subsidiaries other than Capital.
REPORTS
Whether or not required by the Commission, so long as any Notes are
outstanding, the Issuers will furnish to the Holders of Notes, within the time
periods specified in the Commission's rules and regulations:
(1) all quarterly and annual financial information that would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if
the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and, with respect to the annual information only, a report on the annual
financial statements by the Company's certified independent accountants;
and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports.
In addition, following the consummation of the exchange offer contemplated
by the Registration Rights Agreement, whether or not required by the Commission,
the Issuers will file a copy of all of the information and reports referred to
in clauses (1) and (2) above with the Commission for public availability within
the time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts
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and prospective investors upon request. In addition, the Issuers and the
Subsidiary Guarantors have agreed that, for so long as any Notes (but not
Exchange Notes) remain outstanding, they will furnish to the Holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph shall include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereto, and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or premium
or Liquidated Damages, if any, with respect to, the Notes whether or not
prohibited by the subordination provisions of the Indenture;
(2) default in payment when due of the principal of the Notes, whether or
not prohibited by the subordination provisions of the Indenture;
(3) failure by the Company or any of its Subsidiaries to comply with the
provisions described under the sections "-- Repurchase at the Option of
Holders -- Change of Control" or "-- Repurchase at the Option of Holders
-- Asset Sales";
(4) failure by the Company or any of its Subsidiaries for 60 days after
notice by the Trustee or by the Holders of at least 25% in principal
amount of the Notes to comply with any of the other agreements in the
Indenture;
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Restricted Subsidiaries) whether such Indebtedness or guarantee
now exists, or is created after the date of the Indenture, if that
default:
(a) is caused by a failure to pay principal at the final stated maturity
of such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment
Default"); or
(b) results in the acceleration of such Indebtedness prior to its express
maturity,
and, in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $20.0 million or more;
(6) failure by the Company or any of its Restricted Subsidiaries to pay
judgments, aggregating in excess of $20.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days after such
judgments have become final and nonappealable, and in the event such
judgment is covered by insurance, an enforcement proceeding has been
commenced by any creditor upon such judgment or decree that is not
promptly stayed;
(7) except as permitted by the Indenture, any Subsidiary Guarantee by a
Significant Subsidiary shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full
force and effect or any Subsidiary Guarantor that is a Significant
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Subsidiary, or any Person acting on behalf of any such Subsidiary
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and
(8) specified events of bankruptcy or insolvency with respect to the Company
or any of its Significant Subsidiaries.
In the case of an Event of Default arising from specified events of
bankruptcy or insolvency with respect to the Company, all outstanding Notes will
become due and payable immediately without further action or notice. If any
other Event of Default occurs and is continuing, the Trustee (upon request of
Holders of at least 25% in principal amount of the Notes then outstanding) or
the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable by notice in writing to the
Company and the Trustee specifying the respective Event of Default and that such
notice is a "notice of acceleration" (the "Acceleration Notice"), and the same
(1) shall become immediately due and payable or (2) if there are any amounts
outstanding under the Credit Agreement, shall become immediately due and payable
upon the first to occur of an acceleration under the Credit Agreement or five
Business Days after receipt by the Company and the representative under the
Credit Agreement of such Acceleration Notice but only if such Event of Default
is then continuing.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to specified limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest or Liquidated Damages) if it determines that withholding notice is in
their interest.
The Holders of a majority in total principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest or Liquidated Damages on, or the principal of, the Notes.
The Issuers are required to deliver to the Trustee annually a statement
regarding compliance with the Indenture. Upon becoming aware of any Default or
Event of Default, the Issuers are required to deliver to the Trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF MANAGERS, DIRECTORS, OFFICERS, EMPLOYEES, STOCKHOLDERS
AND MEMBERS
No manager, director, officer, employee, incorporator, stockholder or member
of the Company, Capital or any Subsidiary Guarantor, as such, shall have any
liability for any obligations of the Company, Capital or the Subsidiary
Guarantors under the Notes, the Indenture, the Subsidiary Guarantees, or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. The waiver may not be effective to waive liabilities under the
federal securities laws.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuers may, at their option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes and all obligations
of the Subsidiary Guarantors discharged with respect to their Subsidiary
Guarantees ("Legal Defeasance") except for:
(1) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, or interest or premium and Liquidated
Damages, if any, on such Notes when such payments are due from the trust
referred to below;
(2) the Issuers' obligations with respect to the Notes concerning issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and
the Issuers' and the Subsidiary Guarantor's obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Issuers may, at their option and at any time, elect to have
the obligations of the Issuers and the Subsidiary Guarantors released with
respect to specified covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with those covenants shall
not constitute a Default or Event of Default with respect to the Notes. In the
event Covenant Defeasance occurs, specified events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Issuers must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, or interest and
premium and Liquidated Damages, if any, on the outstanding Notes on the
stated maturity or on the applicable redemption date, as the case may be,
and the Issuers must specify whether the Notes are being defeased to
maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, the Issuers shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that (a) the Issuers have received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date
of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(3) in the case of Covenant Defeasance, the Issuers shall have delivered to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
either: (a) on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of
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funds to be applied to such deposit); or (b) insofar as Events of Default
from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach
or violation of, or constitute a default under any material agreement or
instrument (other than the Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(6) the Issuers must have delivered to the Trustee an Opinion of Counsel to
the effect that, assuming no intervening bankruptcy of the Issuers or any
Subsidiary Guarantor between the date of deposit and the 91st day
following the deposit and assuming that no Holder is an "insider" of the
Company or Capital under applicable bankruptcy law, after the 91st day
following the deposit, the trust funds will not be subject to the effect
of any applicable federal bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally;
(7) the Issuers must deliver to the Trustee an Officers' Certificate stating
that the deposit was not made by the Issuers with the intent of
preferring the Holders of Notes over the other creditors of the Issuers
with the intent of defeating, hindering, delaying or defrauding creditors
of the Issuers or others; and
(8) the Issuers must deliver to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating
to the Legal Defeasance or the Covenant Defeasance have been complied
with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes (other
than provisions relating to the covenants described above under the
section "-- Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on any
Note;
(4) waive a Default or Event of Default in the payment of principal of, or
interest or premium, or Liquidated Damages, if any, on the Notes (except
a rescission of acceleration of the Notes by the Holders of at least a
majority in total principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration);
(5) make any Note payable in money other than that stated in the Notes;
(6) make any change in the provisions of the Indenture relating to the
rights of Holders of Notes to receive payments of principal of, or
interest or premium or Liquidated Damages, if any, on the Notes;
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(7) waive a redemption payment with respect to any Note (other than a
payment required by one of the covenants described above under the
section "-- Repurchase at the Option of Holders"); or
(8) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the Indenture
relating to subordination that adversely affects the rights of the Holders of
the Notes will require the consent of the Holders of at least 75% in total
principal amount of Notes then outstanding.
Notwithstanding the preceding, without the consent of any Holder of Notes,
the Issuers, the Subsidiary Guarantors and the Trustee may amend or supplement
the Indenture or the Notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to provide for the assumption of the Company's, Capital's or any
Subsidiary Guarantor's obligations to Holders of Notes in the case of a
merger or consolidation or sale of all or substantially all of the
Company's, Capital's or such Subsidiary Guarantor's assets;
(4) to make any change that would provide any additional rights or benefits
to the Holders of Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture
Act.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect as
to all Notes issued thereunder, when the Issuers or any Subsidiary Guarantor
have paid or caused to be paid all sums payable by it under the Indenture and
either:
(1) all Notes that have been authenticated (except lost, stolen or destroyed
Notes that have been replaced or paid and Notes for whose payment money
has theretofore been deposited in trust and thereafter repaid to the
Issuers) have been delivered to the Trustee for cancellation; or
(2) (a) all Notes that have not been delivered to the Trustee for
cancellation have become due and payable by reason of the making of a
notice of redemption or otherwise or will become due and payable within
one year and the Issuers or any Subsidiary Guarantor has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in
trust solely for the benefit of the Holders, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient without consideration of any reinvestment
of interest, to pay and discharge the entire indebtedness on the Notes
not delivered to the Trustee for cancellation for principal, premium and
Liquidated Damages, if any, and accrued interest to the date of maturity
or redemption, (b) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit or shall occur as a result of
such deposit and such deposit will not result in a breach or violation
of, or constitute a default under, any other instrument to which the
Issuers or any Subsidiary Guarantor is a party or by which the Issuers or
any Subsidiary Guarantor is bound and (c) the Issuers have delivered
irrevocable instructions to the Trustee under the Indenture to apply the
deposited money toward the payment of the Notes at maturity or the
redemption date, as the case may be.
In addition, the Issuers must deliver an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
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CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of the Issuers or any Subsidiary
Guarantor, the Indenture limits its right to obtain payment of claims in
specified cases, or to realize on specified property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; HOWEVER, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
specified exceptions. The Indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder of Notes, unless such Holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to the Company at the
address set forth on the cover page of this prospectus.
BOOK-ENTRY, DELIVERY AND FORM
The Issuers will issue the exchange notes only in fully registered form,
without interest coupons, in denominations of $1,000 and integral multiples of
$1,000. The Issuers will not issue exchange notes in bearer form. The exchange
notes will initially be represented by one or more global notes (the "Global
Notes") that will be deposited with, or on behalf of, The Depository Trust
Company and registered in the name of Cede & Co., as nominee of The Depository
Trust Company, on behalf of the acquirers of exchange notes represented thereby
for credit to the respective accounts of the acquirers, or to such other
accounts as they may direct, at The Depositary Trust Company, or Morgan Guaranty
Trust Company of New York, Brussels Office, as operator of the Euroclear System,
or Cedel Bank, societe anonyme. See "The Exchange Offer -- Book-Entry Transfer."
Transfers of beneficial interests in the Global Notes will be subject to the
applicable rules and procedures of The Depository Trust Company and its direct
or indirect participants, including, if applicable, those of Euroclear and
CEDEL, which may change from time to time. The Global Nots may be transferred,
in whole and not in part, only to another nominee of The Depositary Trust
Company or to a successor of The Depositary Trust Company or its nominee, except
as set forth below. You may not exchange your beneficial interest in the Global
Notes for exchange notes in certificated form except in the limited
circumstances described below under "-- Exchanges of Global Notes for
Certificated Notes."
DEPOSITARY PROCEDURES
The following description of the operations and procedures of The Depositary
Trust Company, Euroclear and Cedel are provided solely as a matter of
convenience. These operations and procedures are solely within the control of
the respective settlement systems and are subject to changes by them. The
Issuers take no responsibility for these operations and procedures and urge
investors to contact the system or their participants directly to discuss these
matters.
The Depositary Trust Company has advised the Issuers that it is a
limited-purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to
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facilitate the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers (including
the Initial Purchasers), banks, trust companies, clearing corporations and other
organizations. Access to The Depository Trust Company's system is also available
to other entities such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of The
Depositary Trust Company only through the Participants or the Indirect
Participants. The ownership interests in, and transfers of ownership interests
in, each security held by or on behalf of The Depositary Trust Company are
recorded on the records of the Participants and Indirect Participants.
The Depositary Trust Company has also advised the Issuers that, pursuant to
procedures established by it:
(1) upon deposit of the Global Notes, The Depositary Trust Company will
credit the accounts of Participants designated by the Initial Purchasers
with portions of the principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown on, and
the transfer of ownership thereof will be effected only through, records
maintained by The Depositary Trust Company (with respect to the
Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interest in the Global Notes).
Investors in the Global Notes who are Participants in The Depositary Trust
Company's system may hold their interests in these notes directly through The
Depositary Trust Company. Investors in the Global Notes who are not Participants
may hold their interests in these notes indirectly through organizations
(including Euroclear and Cedel) which are Participants in such system. All
interests in a Global Note, including those held through Euroclear or Cedel, may
be subject to the procedures and requirements of The Depositary Trust Company.
Those interests held through Euroclear or Cedel may also be subject to the
procedures and requirements of such systems. The laws of some states require
that specified Persons take physical delivery in definitive form of securities
that they own. Consequently, the ability to transfer beneficial interests in a
Global Note to such Persons will be limited to that extent. Because The
Depositary Trust Company can act only on behalf of Participants, which in turn
act on behalf of Indirect Participants, the ability of a Person having
beneficial interests in a Global Note to pledge such interests to Persons that
do not participate in The Depositary Trust Company system, or otherwise take
actions in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interests.
Except as described below, owners of interest in the Global Notes will not
have Notes registered in their names, will not receive physical delivery of
Notes in certificated form and will not be considered the registered owners or
"Holders" thereof under the Indenture for any purpose.
Payments in respect of the principal of, and interest and premium and
Liquidated Damages, if any, on a Global Note registered in the name of The
Depositary Trust Company or its nominee will be payable to The Depositary Trust
Company in its capacity as the registered Holder under the Indenture. Under the
terms of the Indenture, the Issuers and the Trustee will treat the Persons in
whose names the Notes, including the Global Notes, are registered as the owners
thereof for the purpose of receiving payments and for all other purposes.
Consequently, neither the Issuers, the Trustee nor any agent of the Issuers or
the Trustee has or will have any responsibility or liability for:
(1) any aspect of The Depositary Trust Company's records or any
Participant's or Indirect Participant's records relating to or payments
made on account of beneficial ownership interest in the Global Notes or
for maintaining, supervising or reviewing any of The Depositary Trust
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Company's records or any Participant's or Indirect Participant's records
relating to the beneficial ownership interests in the Global Notes; or
(2) any other matter relating to the actions and practices of The Depositary
Trust Company or any of its Participants or Indirect Participants.
The Depositary Trust Company has advised the Issuers that its current
practice, upon receipt of any payment in respect of securities such as the Notes
(including principal and interest), is to credit the accounts of the relevant
Participants with the payment on the payment date unless The Depositary Trust
Company has reason to believe it will not receive payment on such payment date.
Each relevant Participant is credited with an amount proportionate to its
beneficial ownership of an interest in the principal amount of the relevant
security as shown on the records of The Depositary Trust Company. Payments by
the Participants and the Indirect Participants to the beneficial owners of Notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will not
be the responsibility of The Depositary Trust Company, the Trustee or the
Issuers. Neither the Issuers nor the Trustee will be liable for any delay by The
Depositary Trust Company or any of its Participants in identifying the
beneficial owners of the Notes, and the Issuers and the Trustee may conclusively
rely on and will be protected in relying on instructions from The Depositary
Trust Company or its nominee for all purposes.
Subject to the transfer restrictions set forth under "Notice to Investors,"
transfers between Participants in The Depositary Trust Company will be effected
in accordance with The Depositary Trust Company's procedures, and will be
settled in same-day funds, and transfers between participants in Euroclear and
Cedel will be effected in accordance with their respective rules and operating
procedures.
Subject to compliance with the transfer restrictions applicable to the Notes
described herein, cross-market transfers between the Participants in The
Depositary Trust Company, on the one hand, and Euroclear or Cedel participants,
on the other hand, will be effected through The Depositary Trust Company in
accordance with The Depositary Trust Company's rules on behalf of Euroclear or
Cedel, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Cedel, as the case may be, by the counterparty in such system in accordance with
the rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Cedel, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its behalf by delivering
or receiving interests in the relevant Global Note in The Depositary Trust
Company, and making or receiving payment in accordance with normal procedures
for same-day funds settlement applicable to The Depositary Trust Company.
Euroclear participants and Cedel participants may not deliver instructions
directly to the depositaries for Euroclear or Cedel.
The Depositary Trust Company has advised the Issuers that it will take any
action permitted to be taken by a Holder of Notes only at the direction of one
or more Participants to whose account The Depositary Trust Company has credited
the interests in the Global Notes and only in respect of such portion of the
total principal amount of the Notes as to which such Participant or Participants
has or have given such direction. However, if there is an Event of Default under
the Notes, The Depositary Trust Company reserves the right to exchange the
Global Notes for legended Notes in certificated form, and to distribute such
Notes to its Participants.
Although The Depositary Trust Company, Euroclear and Cedel have agreed to
the foregoing procedures to facilitate transfers of interests in the Global
Notes among participants in The Depositary Trust Company, Euroclear and Cedel,
they are under no obligation to perform or to continue to perform such
procedures, and may discontinue such procedures at any time. Neither the Issuers
nor the Trustee nor any of their respective agents will have any responsibility
for the performance by The
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Depositary Trust Company, Euroclear or Cedel or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
The Depositary Trust Company's management is aware that some computer
applications, systems, and the like for processing data ("Systems") that are
dependent upon calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 problems." The Depositary Trust Company has
informed its Participants and other members of the financial community (the
"Industry") that it has developed and is implementing a program so that its
Systems, as the same relate to the timely payment of distributions (including
principal and income payments) to securityholders, book-entry deliveries, and
settlement of trades within The Depositary Trust Company ("DTC Services"),
continue to function appropriately. This program includes a technical assessment
and a remediation plan, each of which is complete. Additionally, The Depositary
Trust Company's plan includes a testing phase, which is expected to be completed
within appropriate time frames.
However, The Depositary Trust Company's ability to perform properly its
services is also dependent upon other parties, including but not limited to
issuers and their agents, as well as third party vendors from whom The
Depositary Trust Company licenses software and hardware, and third party vendors
on whom The Depositary Trust Company relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. The Depositary Trust Company has informed the Industry that it is
contacting (and will continue to contact) third party vendors from whom The
Depositary Trust Company acquires services to: (i) impress upon them the
importance of such services being Year 2000 compliant; and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate, testing)
of their services. In addition, The Depositary Trust Company is in the process
of developing such contingency plans as it deems appropriate.
According to The Depositary Trust Company, the foregoing information with
respect to The Depositary Trust Company has been provided to the Industry for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive Notes in registered
certificated form ("Certificated Notes") if:
(1) The Depositary Trust Company (a) notifies the Issuers that it is
unwilling or unable to continue as depositary for the Global Notes and
the Issuers fail to appoint a successor depositary or (b) has ceased to
be a clearing agency registered under the Exchange Act;
(2) the Issuers, at their option, notifies the Trustee in writing that it
elects to cause the issuance of the Certificated Notes; or
(3) there shall have occurred and be continuing a Default or Event of
Default with respect to the Notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the Trustee by or on
behalf of The Depositary Trust Company in accordance with the Indenture. In all
cases, Certificated Notes delivered in exchange for any Global Note or
beneficial interests in Global Notes will be registered in the names, and issued
in any approved denominations, requested by or on behalf of the depositary (in
accordance with its customary procedures) and will bear the applicable
restrictive legend referred to in "Notice to Investors," unless that legend is
not required by applicable law.
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EXCHANGE OF CERTIFICATED NOTES FOR GLOBAL NOTES
Certificated Notes may not be exchanged for beneficial interests in any
Global Note unless the transferor first delivers to the Trustee a written
certificate (in the form provided in the Indenture) to the effect that such
transfer will comply with the appropriate transfer restrictions applicable to
such Notes. See "Notice to Investors."
SAME DAY SETTLEMENT AND PAYMENT
The Issuers will make payments in respect of the Notes represented by the
Global Notes (including principal, premium, if any, interest and Liquidated
Damages, if any) by wire transfer of immediately available funds to the accounts
specified by the Global Note Holder. The Issuers will make all payments of
principal, interest and premium and Liquidated Damages, if any, with respect to
Certificated Notes by wire transfer of immediately available funds to the
accounts specified by the Holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address. The Notes
represented by the Global Notes are expected to be eligible to trade in the
PORTAL market and to trade in The Depositary Trust Company's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such
Notes will, therefore, be required by The Depositary Trust Company to be settled
in immediately available funds. The Issuers expect that secondary trading in any
Certificated Notes will also be settled in immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Note from a Participant in
The Depositary Trust Company will be credited, and any such crediting will be
reported to the relevant Euroclear or Cedel participant, during the securities
settlement processing day (which must be a business day for Euroclear and Cedel)
immediately following the settlement date of The Depositary Trust Company. The
Depositary Trust Company has advised the Issuers that cash received in Euroclear
or Cedel as a result of sales of interests in a Global Note by or through a
Euroclear or Cedel participant to a Participant in The Depositary Trust Company
will be received with value on the settlement date of The Depositary Trust
Company but will be available in the relevant Euroclear or Cedel cash account
only as of the business day for Euroclear or Cedel following The Depositary
Trust Company's settlement date.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The following description is a summary of the material provisions of the
Registration Rights Agreement. It does not restate that agreement in its
entirety. We urge you to read the Registration Rights Agreement in its entirety
because it, and not this description, defines your registration rights as
Holders of the Outstanding Notes. See "--Additional Information."
The Issuers, the Subsidiary Guarantors and the Initial Purchasers have
entered into the Registration Rights Agreement. Pursuant to the Registration
Rights Agreement, the Issuers and the Subsidiary Guarantors have agreed to file
with the Commission the Exchange Offer Registration Statement on the appropriate
form under the Securities Act with respect to the Exchange Notes. Upon the
effectiveness of the Exchange Offer Registration Statement, the Issuers and the
Subsidiary Guarantors will offer to the Holders of Transfer Restricted
Securities (defined below) pursuant to the Exchange Offer who are able to make
specified representations the opportunity to exchange their Transfer Restricted
Securities for Exchange Notes.
If:
(1) the Issuers and the Subsidiary Guarantors are not
(a) permitted to file the Exchange Offer Registration Statement; or
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(b) permitted to consummate the Exchange Offer because the Exchange Offer
is not permitted by applicable law or Commission policy; or
(2) any Holder of Transfer Restricted Securities notifies the Issuers prior
to the 20th day following consummation of the Exchange Offer that:
(a) it is prohibited by law or Commission policy from participating in
the Exchange Offer; or
(b) that it may not resell the Exchange Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is
not appropriate or available for such resales; or
(c) that it is a broker-dealer and owns Outstanding Notes acquired
directly from the Issuers or an affiliate of the Issuers,
the Issuers and the Subsidiary Guarantors will use best efforts to file with the
Commission a Shelf Registration Statement to cover resales of the Outstanding
Notes by the Holders thereof who satisfy specified conditions relating to the
provision of information in connection with the Shelf Registration Statement.
The Issuers and the Subsidiary Guarantors will use their best efforts to
cause the applicable registration statement to be declared effective as promptly
as possible by the Commission.
For purposes of the preceding, "Transfer Restricted Securities" means each
Outstanding Note until:
(1) the date on which such Outstanding Note has been exchanged by a Person
other than a broker-dealer for an Exchange Note in the Exchange Offer;
(2) following the exchange by a broker-dealer in the Exchange Offer of an
Outstanding Note for an Exchange Note, the date on which such Exchange
Note is sold to a purchaser who receives from such broker-dealer on or
prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement;
(3) the date on which such Outstanding Note has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement; or
(4) the date on which such Outstanding Note is distributed to the public
pursuant to Rule 144 under the Securities Act.
The Registration Rights Agreement provides:
(1) unless the Exchange Offer would not be permitted by applicable law or
Commission policy, the Issuers and the Subsidiary Guarantors will file an
Exchange Offer Registration Statement with the Commission on or prior to
90 days after the closing of the offering of the outstanding notes;
(2) unless the Exchange Offer would not be permitted by applicable law or
Commission policy, the Issuers and the Subsidiary Guarantors will use
their best efforts to have the Exchange Offer Registration Statement
declared effective by the Commission on or prior to 180 days after the
closing of the offering of the outstanding notes;
(3) unless the Exchange Offer would not be permitted by applicable law or
Commission policy, the Issuers and the Subsidiary Guarantors will
(a) commence the Exchange Offer; and
(b) use their best efforts to issue on or prior to 30 business days, or
longer, if required by the federal securities laws, after the date on
which the Exchange Offer Registration
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Statement was declared effective by the Commission, Exchange Notes in
exchange for all Outstanding Notes tendered prior thereto in the
Exchange Offer; and
(4) if obligated to file the Shelf Registration Statement, the Issuers and
the Subsidiary Guarantors will use their best efforts to file the Shelf
Registration Statement with the Commission on or prior to 90 days after
such filing obligation arises and to cause the Shelf Registration to be
declared effective by the Commission on or prior to 180 days after such
obligation arises.
If:
(1) the Issuers and the Subsidiary Guarantors fail to file any of the
registration statements required by the Registration Rights Agreement on
or before the date specified for such filing; or
(2) any of such registration statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), subject to specified limited exceptions; or
(3) the Issuers and the Subsidiary Guarantors fail to consummate the
Exchange Offer within 30 business days of the Effectiveness Target Date
with respect to the Exchange Offer Registration Statement; or
(4) the Shelf Registration Statement or the Exchange Offer Registration
Statement is declared effective but, subject to specified limited
exceptions, thereafter ceases to be effective or usable in connection
with resales of Transfer Restricted Securities during the periods
specified in the Registration Rights Agreement (each such event referred
to in clauses (1) through (4) above, a "Registration Default"),
then the Issuers and the Subsidiary Guarantors will pay Liquidated Damages to
each Holder of Outstanding Notes, with respect to the first 90-day period
immediately following the occurrence of the first Registration Default in an
amount equal to $.05 per week per $1,000 principal amount of Outstanding Notes
held by such Holder.
The amount of the Liquidated Damages will increase by an additional $.05 per
week per $1,000 principal amount of Outstanding Notes with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages for all Registration Defaults of $.50 per
week per $1,000 principal amount of Outstanding Notes.
All accrued Liquidated Damages will be paid by the Issuers and the
Subsidiary Guarantors on each Damages Payment Date to the Global Note Holder by
wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Notes by wire transfer to the accounts specified by them
or by mailing checks to their registered addresses if no such accounts have been
specified.
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages will cease.
Holders of Outstanding Notes will be required to make representations to the
Issuers (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver specified
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the Registration Rights Agreement in order to have their
Outstanding Notes included in the Shelf Registration Statement and benefit from
the provisions regarding Liquidated Damages set forth above. By acquiring
Transfer Restricted Securities, a Holder will be deemed to have agreed to
indemnify the Issuers and the Subsidiary Guarantors against specified losses
arising out of information furnished by such Holder in writing for inclusion in
any Shelf Registration Statement. Holders of Outstanding Notes will also be
required to suspend their use of the prospectus included in the Shelf
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Registration Statement under specified circumstances upon receipt of written
notice to that effect from the Issuers.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in accordance
with, the laws of the State of New York.
DEFINITIONS
We provide below some of the defined terms which are used in this section
and in the Indenture. Reference is made to the Indenture for a full disclosure
of all these terms, as well as any other capitalized terms which we use in this
section for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person
is merged with or into or became a Restricted Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with
or into, or becoming a Restricted Subsidiary of, such specified Person;
and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" shall have
correlative meanings.
"ASSET SALE" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales of inventory in the ordinary course of business
consistent with past practices; PROVIDED that the sale, conveyance or
other disposition of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole will be governed by the
provisions of the Indenture described above under the section "--
Repurchase at the Option of Holders--Change of Control" and/or the
provisions described above under the section "-- Covenants -- Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset
Sale covenant; and
(2) the issuance or sale of Equity Interests by any of the Company's
Restricted Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that involves
assets having a fair market value of less than $2.0 million;
(2) a transfer of assets between or among the Company and its Restricted
Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary;
(4) the sale or lease of equipment, inventory, accounts receivable or other
assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents or Investment
Grade Securities;
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(6) a Restricted Payment or Permitted Investment that is permitted by the
covenant described above under the section "-- Covenants -- Restricted
Payments";
(7) any exchange of like property pursuant to Section 1031 of the Code for
use in a Permitted Business;
(8) any sale-leaseback or asset securitization by the Company or any of its
Restricted Subsidiaries with respect to property built or acquired by the
Company or such Restricted Subsidiary after the date of the Indenture;
(9) foreclosures on assets;
(10) any sale of Equity Interests in, or Indebtedness or other securities
of, an Unrestricted Subsidiary; and
(11) any sale of accounts receivable, or participations therein, in
connection with any Qualified Receivables Transaction.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means, at
the time of determination, the present value of the obligation of the lessee for
net rental payments during the remaining term of the lease included in such sale
and leaseback transaction including any period for which such lease has been
extended or may, at the option of the lessor, be extended. Such present value
shall be calculated using a discount rate equal to the rate of interest implicit
in such transaction, determined in accordance with GAAP.
"BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"BOARD OF DIRECTORS" means:
(1) with respect to a corporation, the board of directors of the
corporation;
(2) with respect to a partnership, the Board of Directors of the general
partner of the partnership;
(3) with respect to any other Person, the board or committee of such Person
serving a similar function; and
(4) any duly authorized committee of any of the foregoing.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
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(4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CASH EQUIVALENTS" means:
(1) United States dollars (and foreign currency exchanged into United States
dollars within 180 days);
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
(PROVIDED that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than six months from
the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding six months and overnight bank deposits, in
each case, with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thomson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having a rating no lower than "A-2" from Moody's
Investors Service, Inc. ("Moody's") or "P2" from Standard & Poor's Rating
Services ("S&P") and in each case maturing within twelve months after the
date of acquisition;
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition;
(7) readily marketable direct obligations issued by any state of the United
States or any political subdivision thereof having one of the two highest
rating categories obtainable from either Moody's or S&P; and
(8) Indebtedness or preferred stock issued by Persons with a rating of "A"
or higher from S&P or "A-2" or higher from Moody's.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the properties or
assets of Holdings and its Restricted Subsidiaries taken as a whole or
the Company and its Restricted Subsidiaries taken as a whole to any
"person" (as that term is used in Section 13(d)(3) of the Exchange Act)
other than a Principal or a Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution of the
Issuers;
(3) the Company becomes aware (by way of a report or any other filing
pursuant to Section 13(d) of the Exchange Act, proxy, vote, written
notice or otherwise) of the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is
that any "person" (as defined above), other than the Principals and their
Related Parties, becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the Voting Equity Securities of one of the Issuers or of
Holdings, measured by voting power rather than number of shares; or
(4) the first day on which a majority of the members of the Management
Committee of the Company are not Continuing Managers.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSOLIDATED CASH FLOW" means, with respect to any specified Person for any
period, the Consolidated Net Income of such Person for such period PLUS:
(1) an amount equal to any extraordinary loss plus any net loss realized by
such Person or any of its Restricted Subsidiaries in connection with an
Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; PLUS
(2) provision for taxes based on income or profits or the Tax Amount of such
Person and its Restricted Subsidiaries for such period, to the extent
that such provision for taxes or Tax Amount was included in computing
such Consolidated Net Income; PLUS
(3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations), to the extent
that any such expense was deducted in computing such Consolidated Net
Income; PLUS
(4) depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or
reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person and
its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; PLUS
(5) any fees, expenses or charges related to any Equity Offering, Permitted
Investment, acquisition or recapitalization or Indebtedness permitted to
be incurred by the Indenture (whether or not successful) and fees,
expenses or charges related to the transactions contemplated by the
Contribution and Merger Agreement (including fees to Vestar); PLUS
(6) the amount of non-recurring charges (including any one-time costs
incurred in connection with acquisitions after the date of the Indenture)
deducted in such period in computing Consolidated Net Income; PLUS
(7) the amount of any minority interest expense deducted in calculating
Consolidated Net Income; PLUS
(8) special charges and unusual items during any period ending on or prior
to the second anniversary of the date of the Indenture not to exceed
$15.0 million in the aggregate; PLUS
(9) the amount of (a) management, consulting, monitoring and advisory fees
paid to Vestar and its Affiliates during such period not to exceed $1.0
million during any four quarter period and (b) amounts payable (excluding
any payments of salary) pursuant to the Assumption Agreement, dated as of
the date of the Indenture, among the Company, Holdings and Reid Plastics
Holdings, MINUS
(10) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business, in
each case, on a consolidated basis and determined in accordance with
GAAP.
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Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash expenses
of, a Restricted Subsidiary of the Company shall be added to Consolidated Net
Income to compute Consolidated Cash Flow of the Company only to the extent that
a corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Restricted
Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, unless such
restriction with respect to the payment of dividends or similar
distributions has been legally waived;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(4) the cumulative effect of a change in accounting principles shall be
excluded;
(5) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the specified Person or one of
its Restricted Subsidiaries;
(6) the net after-tax extraordinary gains or losses (less all fees and
expenses related thereto) shall be excluded;
(7) any increase in the cost of sales or other incremental expenses
resulting from purchase accounting in relation to any acquisition, net of
taxes, shall be excluded;
(8) any net after-tax income (loss) from discontinued operations and any net
after-tax gains or losses on disposal of discontinued operations shall be
excluded; and
(9) any net after-tax gains or losses (less all fees and expenses relating
thereto) attributable to asset dispositions other than in the ordinary
course of business (as determined in good faith by the Company) shall be
excluded.
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"CONTINUING MANAGERS" means, as of any date of determination, any member of
the Management Committee of the Company who:
(1) was a member of such Management Committee on the date of the Indenture;
or
(2) was nominated for election or elected to such Management Committee with
the approval of a majority of the Continuing Managers who were members of
such Committee at the time of such nomination or election.
"CONTRIBUTION AND MERGER AGREEMENT" means the Contribution and Merger
Agreement, date as of April 29, 1999, among Suiza Foods Corporation, Franklin
Plastics, Inc., Plastic Containers Holding, Inc., the companies owned by Suiza
identified therein, Vestar Packaging LLC, Reid Plastics Holdings, Inc., the
companies owned by Reid identified therein, Holdings and the Company.
"CREDIT AGREEMENT" means that certain Credit Agreement, dated as of the date
of the indenture, by and among Holdings, the Company, Bankers Trust Company, as
administrative agent, Morgan Guaranty Trust Company of New York, as
documentation agent, Donaldson Lufkin & Jenrette Securities Corporation, as
syndication agent, and the other lenders party thereto, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Subsidiaries
of the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
"CREDIT FACILITIES" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables), swingline loans or letters of credit, in each case,
as amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.
"DEFAULT" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means the fair market value of noncash
consideration (as determined in good faith by the principal financial officer of
the Company) received by the Company or any of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, less the amount of cash or Cash Equivalents received in
connection with a subsequent sale of such Designated Noncash Consideration.
"DESIGNATED PREFERRED STOCK" means preferred stock of the Company (other
than Disqualified Stock) that is issued for cash (other than to a Restricted
Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an
Officers' Certificate, on the issuance date thereof, the cash proceeds of which
are excluded from the calculation set forth in the second clause (3) of the
first paragraph of the covenant described above under "--Covenants--Restricted
Payments."
"DESIGNATED SENIOR DEBT" means:
(1) any Indebtedness outstanding under the Credit Agreement; and
(2) any other Senior Debt permitted under the Indenture the principal amount
of which is $25.0 million or more and that has been designated by the
Company as "Designated Senior Debt."
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"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature; PROVIDED that if such Capital Stock is issued to
any employee or to any plan for the benefit of employees of the Company or any
of its Subsidiaries or by any such plan to such employees, such Capital Stock
shall not constitute Disqualified Stock solely because it may be required to be
repurchased by the Company or such Subsidiary in order to satisfy applicable
statutory or regulatory obligations or as a result of such employee's death or
disability. Notwithstanding the preceding sentence, any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
change of control or an asset sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with the covenant described above under the section
"--Covenants--Restricted Payments."
"DOMESTIC SUBSIDIARY" means any Restricted Subsidiary that was formed under
the laws of the United States or any state thereof or the District of Columbia
or that guarantees or otherwise provides direct credit support for any
Indebtedness of the Company.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EQUITY OFFERING" means an offering of the Equity Interests (other than
Disqualified Stock) of the Company or Holdings, other than (1) public offerings
with respect to the Equity Interests registered on Form S-8 and (2) any such
offering of Equity Interests the proceeds of which have been designated by the
Company as an Excluded Contribution.
"EXCLUDED CONTRIBUTIONS" means the net cash proceeds received by the Company
after the date of the Indenture from (a) contributions to its common equity
capital and (b) the sale (other than to a Subsidiary or to any management equity
plan or stock option plan or any other management or employee benefit plan or
agreement of the Company or any of its Subsidiaries) of Capital Stock (other
than Disqualified Stock) of the Company, in each case designated within 60 days
of the receipt of such net cash proceeds as Excluded Contributions pursuant to
an Officers' Certificate, the cash proceeds of which are excluded from the
calculation set forth in the second clause (3) of the first paragraph of the
covenant described above under the "--Covenants--Restricted Payments."
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its Restricted
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of the Indenture, until such amounts are repaid.
"FIXED CHARGE COVERAGE RATIO" means with respect to any specified Person and
its Restricted Subsidiaries for any period, the ratio of the Consolidated Cash
Flow of such Person and its Restricted Subsidiaries for such period to the Fixed
Charges of such Person and its Restricted Subsidiaries for such period. In the
event that the specified Person or any of its Restricted Subsidiaries incurs,
assumes, Guarantees, repays, repurchases or redeems any Indebtedness (other than
ordinary working capital borrowings) or issues, repurchases or redeems preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated and on or prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.
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In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) Investments, acquisitions, dispositions, discontinued operations,
mergers and consolidations that have been made by the specified Person or
any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during
the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be given pro forma effect
as if they had occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be
calculated on a pro forma basis as determined in good faith by a
responsible financial or accounting officer of the Company, without
giving effect to clause (3) of the proviso set forth in the definition of
Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded;
(3) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior
to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations
of the specified Person or any of its Restricted Subsidiaries following
the Calculation Date; and
(4) if since the beginning of such period any Person that subsequently
became a Restricted Subsidiary or was merged with or into the Company or
any Restricted Subsidiary since the beginning of such period shall have
made any Investment, acquisition, disposition, discontinued operation,
merger or consolidation that would have required adjustment pursuant to
this definition, then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect thereto for such period as if such Investment,
acquisition, disposition, discontinued operation, merger or consolidation
had occurred at the beginning of the applicable four-quarter period.
"FIXED CHARGES" means, with respect to any specified Person for any period,
the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including, without
limitation, amortization of debt issuance costs incurred in connection
with the Transactions, the Notes and the Credit Agreement and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect
to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance
financings, and net of the effect of all payments made or received
pursuant to Hedging Obligations; PLUS
(2) the consolidated interest of such Person and its Restricted Subsidiaries
that was capitalized during such period; PLUS
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon; PLUS
(4) the product of (a) all cash dividend payments or other distributions
(and non-cash dividend payments in the case of a Person that is a
Restricted Subsidiary) on any series of preferred equity of such Person
and its Restricted Subsidiaries, times (b)(i) if such Person is not a
taxable entity for U.S. federal income tax purposes, one, and (ii) if
such Person is a taxable entity for U.S. federal income tax purposes, a
fraction, the numerator of which is one and the denominator of which is
one minus the then current combined federal, state and local
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statutory tax rate of such Person and its Restricted Subsidiaries,
expressed as a decimal, in each case, on a consolidated basis and in
accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture. For the purposes
of the Indenture, the term "consolidated" with respect to any Person shall mean
such Person consolidated with its Restricted Subsidiaries and shall not include
any Unrestricted Subsidiary.
"GUARANTEE" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, letters of credit or
reimbursement agreements in respect thereof, of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates or currency exchange or
commodity prices.
"HOLDINGS" means Consolidated Container Holdings LLC, a Delaware limited
liability company and the parent of the Company.
"INDEBTEDNESS" means, with respect to any specified Person, any indebtedness
of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense
or trade payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of the specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(2) the principal amount thereof, in the case of any other Indebtedness.
"INVESTMENT GRADE SECURITIES" means
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(1) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
(other than Cash Equivalents),
(2) debt securities or debt instruments with a rating of BBB- or higher
by S&P or Baa3 or higher by Moody's or the equivalent of such rating
by such rating organization, or, if no rating of S&P or Moody's then
exists, the equivalent of such rating by any other nationally
recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances between and
among the Company and its Subsidiaries, and
(3) investments in any fund that invests exclusively in investments of
the type described in clauses (1) and (2), which fund may also hold
immaterial amounts of cash pending investment and/or distribution.
"INVESTMENTS" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding accounts receivable, trade credit, advances to
customers, commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP. If the Company or any Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a Subsidiary of the Company, the
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of the covenant described above under the section
"--Covenants--Restricted Payments." The acquisition by the Company or any
Subsidiary of the Company of a Person that holds an Investment in a third Person
shall be deemed to be an Investment by the Company or such Subsidiary in such
third Person in an amount equal to the fair market value of the Investment held
by the acquired Person in such third Person in an amount determined as provided
in the final paragraph of the covenant described above under the section
"--Covenants--Restricted Payments."
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction; PROVIDED that in
no event shall an operating lease be deemed to constitute a Lien.
"MANAGEMENT COMMITTEE" means:
(1) for so long as the Company is a limited liability company, the
Management Committee of the Company, or the Management Committee of
Holdings if acting on behalf of the Company; and
(2) otherwise the Board of Directors of the Company.
"NET INCOME" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of dividends on preferred interests, excluding, however:
(1) any gain (but not loss), together with any related provision for
taxes or Tax Distributions on such gain (but not loss), realized in
connection with: (a) any Asset Sale or (b) the disposition of any
securities by such Person or any of its Restricted Subsidiaries or
the
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extinguishment of any Indebtedness of such Person or any of its
Restricted Subsidiaries; PLUS
(2) any extraordinary gain (but not loss), together with any related
provision for taxes or Tax Distributions on such extraordinary gain
(but not loss).
"NET PROCEEDS" means the total cash proceeds received by the Company or any
of its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any
Designated Noncash Consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale and the sale or disposition of such Designated
Noncash Consideration, including, without limitation, legal, accounting and
investment banking fees, and sales commissions, and any relocation expenses
incurred as a result thereof, taxes or Tax Distributions paid or payable as a
result thereof, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, and amounts required to
be applied to the repayment of Indebtedness, other than Senior Debt under the
Credit Agreement, secured by a Lien on the asset or assets that were the subject
of such Asset Sale and any reserve established in accordance with GAAP for
adjustment in respect of any liabilities associated with such asset or assets
and retained by the Company after such sale or other disposition thereof,
including, without limitation, pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with such transaction.
"NON-RECOURSE DEBT" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable as a guarantor or
otherwise, or (c) constitutes the lender;
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit upon notice, lapse of time or
both any holder of any other Indebtedness (other than the Notes) of
the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of
its Restricted Subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"PERMITTED AGREEMENTS" means (1) the Supply Agreement, dated as of the date
of the Indenture, between Holdings and Suiza Foods Corporation, (2) the
Assumption Agreement, dated as of the date of the Indenture, among Holdings, the
Company and Reid Plastics Holdings, (3) the Registration Rights Agreement to be
entered into among Holdings, Reid Plastic Holdings and the holders of member
units in Holdings, in substantially the form which is an exhibit to the Limited
Liability Company Agreement of Holdings, and (4) the Trademark License
Agreement, dated as of the date of the Indenture, among the Company, Holdings
and Continental Can Company, Inc.
"PERMITTED BUSINESS" means any of the lines of business conducted by the
Company and its Restricted Subsidiaries on the date hereof and any business
similar, ancillary or related thereto or that constitutes a reasonable extension
or expansion thereof, including in connection with the Company's existing and
future technology, trademarks and patents.
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"PERMITTED INVESTMENTS" means:
(1) any Investment in the Company or in a Restricted Subsidiary of the
Company;
(2) any Investment in Cash Equivalents or Investment Grade Securities;
(3) any Investment by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the Company; or
(b) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the
Company;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the section
"--Repurchase at the Option of Holders--Asset Sales";
(5) any Investments the payment for which solely consists of Equity
Interests (other than Disqualified Stock) of the Company, PROVIDED
that such Equity Interests will not increase the amount available for
Restricted Payments under the second clause (3) of the first
paragraph of the covenant described above under
"-- Covenants -- Restricted Payments";
(6) Hedging Obligations;
(7) other Investments in any Person other than Holdings or an Affiliate
of Holdings that is not also a Restricted Subsidiary of the Company
having an total fair market value (measured on the date each such
Investment was made and without giving effect to subsequent changes
in value), when taken together with all other Investments made
pursuant to this clause (7) that are at the time outstanding not to
exceed $15.0 million;
(8) Investments in Unrestricted Subsidiaries having an total fair market
value not to exceed at any one time outstanding $15.0 million
(measured on the date each such Investment was made and without
giving effect to subsequent changes in value);
(9) any Investment existing on the date of the Indenture;
(10) advances to employees and officers not in excess of $10.0 million in
the total outstanding at any one time;
(11) any Investment acquired by the Company or any of its Restricted
Subsidiaries:
(a) in exchange for any other Investment or accounts receivable held
by the Company or any such Restricted Subsidiary in connection
with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or
accounts receivable, or
(b) as a result of a foreclosure by the Company or any of its
Restricted Subsidiaries with respect to any secured Investment or
other transfer of title with respect to any secured Investment in
default;
(12) any Investment in a Permitted Business (other than an Investment in
an Unrestricted Subsidiary) having an total fair market value, taken
together with all other Investments made pursuant to this clause (12)
that are at that time outstanding, not to exceed 10% of the Total
Assets at the time of such Investment (measured on the date each such
Investment was made and without giving effect to subsequent changes
in value);
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(13) any transaction to the extent it constitutes an Investment that is
permitted by and made in accordance with the provisions of clauses
(7) and (13) of the second paragraph of the covenant described above
under "-- Covenants -- Transactions with Affiliates";
(14) Investments consisting of the licensing or contribution of
intellectual property pursuant to joint marketing arrangements with
other Persons;
(15) Investments consisting of purchase and acquisitions of inventory,
supplies, materials and equipment or licenses or leases of
intellectual property, in any case, in the ordinary course of
business; and
(16) Investments by the Company or a Restricted Subsidiary in a
Receivables Subsidiary or any Investment by a Receivables Subsidiary
in any other Person, in each case, in connection with a Qualified
Receivables Transaction.
"PERMITTED JUNIOR SECURITIES" means debt or equity securities of the Company
or any successor corporation issued pursuant to a plan of reorganization of the
Company that are subordinated to the payment of all then outstanding Senior Debt
of the Company at least to the same extent that the Notes are subordinated to
the payment of all Senior Debt of the Company on the date of the Indenture, so
long as:
(1) the effect of the use of this defined term in the subordination
provisions contained in the Indenture is not to cause the Notes to be
treated as part of:
(a) the same class of claims as the Senior Debt of the Company; or
(b) any class of claims PARI PASSU with, or senior to, the Senior
Debt of the Company for any payment or distribution in any case
or proceeding or similar event relating to the liquidation,
insolvency, bankruptcy, dissolution, winding up or reorganization
of the Company; and
(2) to the extent that any Senior Debt of the Company outstanding on the
date of consummation of any such plan of reorganization is not paid
in full in cash or Cash Equivalents (other than Cash Equivalents of
the type referred to in clauses (3) and (4) of the definition
thereof) on such date, either:
(a) the holder of any such Senior Debt not so paid in full in cash or
Cash Equivalents (other than Cash Equivalents of the type
referred to in clauses (3) and (4) of the definition thereof)
have consented to the terms of such plan of reorganization; or
(b) such holders receive securities which constitute Senior Debt of
the Company (which are guaranteed pursuant to guarantees
constituting Senior Debt of each Subsidiary Guarantor) and which
have been determined by the relevant court to constitute
satisfaction in full in money or money's worth of any Senior Debt
of the Company (and any related Senior Debt of the Subsidiary
Guarantors) not paid in full in cash or Cash Equivalents (other
than Cash Equivalents of the type referred to in clauses (3) and
(4) of the definition thereof).
"PERMITTED LIENS" means:
(1) Liens of the Company and any Subsidiary Guarantor securing Senior
Debt that was permitted by the terms of the Indenture to be incurred;
(2) Liens in favor of the Issuers or the Subsidiary Guarantors;
(3) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any
Restricted Subsidiary of the Company; PROVIDED that such Liens were
in existence prior to the contemplation of such merger or
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consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company or the Restricted
Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by the
Company or any Restricted Subsidiary of the Company, PROVIDED that
such Liens were in existence prior to the contemplation of such
acquisition;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (4) of the second paragraph of the covenant
entitled "-- Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock" covering only the assets acquired with such
Indebtedness;
(7) Liens existing on the date of the Indenture;
(8) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
PROVIDED that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(9) Liens incurred in the ordinary course of business of the Company or
any Restricted Subsidiary of the Company with respect to obligations
that do not exceed $5.0 million at any one time outstanding;
(10) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings
that may have been duly initiated for the review of such judgment
shall not have been finally terminated or the period within which
such proceedings may be initiated shall not have expired;
(11) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person
to facilitate the purchase, shipment or storage of such inventory or
other goods;
(12) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed
by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall
have been made in respect thereof;
(13) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and
other types of Social Security, including any Lien securing letters
of credit issued in the ordinary course of business consistent with
past practice in connection therewith;
(14) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements,
including rights of offset and set off; and
(15) Liens or assets of a Receivables Subsidiary arising in connection
with a Qualified Receivables Transaction.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend,
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refinance, renew, replace, defease or refund other Indebtedness of the Company
or any of its Restricted Subsidiaries (other than intercompany Indebtedness);
PROVIDED that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal
amount (or accreted value, if applicable) of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus
all accrued interest thereon and the amount of all expenses and
premiums incurred in connection therewith) and with such refinancing;
(2) such Permitted Refinancing Indebtedness has a Weighted Average Life
to Maturity equal to or greater than the remaining Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded, PROVIDED, that this clause
(2) shall not apply to Senior Debt;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness has a final maturity
date equal to or later than the final maturity date of, and is
subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by the Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"PRINCIPALS" means Vestar and its Affiliates, Suiza Foods Corporation and
its Affiliates, Ronald V. Davis, William L. Estes, Ronald E. Justice, Henry
Carter, Timothy W. Brasher and David M. Stulman.
"PURCHASE MONEY NOTE" means a promissory note evidencing a line of credit,
or evidencing other Indebtedness owed to the Company or any Restricted
Subsidiary in connection with a Qualified Receivables Transaction, which note
shall be repaid from cash available to the maker of such note, other than
amounts required to be established as reserves pursuant to agreement, amounts
paid to investors in respect of interest, principal and other amounts owing to
such investors and amounts paid in connection with the purchase of newly
generated receivables.
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series of
transactions that may be entered into by the Company or any Restricted
Subsidiary pursuant to which the Company or any Restricted Subsidiary may sell,
convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a
transfer by the Company or any Restricted Subsidiary) and (b) any other Person
(in the case of a transfer by a Receivables Subsidiary), or may grant a security
interest in, any accounts receivable (whether now existing or arising in the
future) of the Company or any Restricted subsidiary and any asset related
thereto, including, without limitation, all collateral securing such accounts
receivable, and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets that are
customarily transferred, or in respect of which security interests are
customarily granted, in connection with an asset securitization transaction
involving accounts receivable.
"RECEIVABLES SUBSIDIARY" means a Wholly Owned Restricted Subsidiary (other
than a Subsidiary Guarantor) that engages in no activities other than in
connection with the financing of accounts receivables and that is designated by
the Management Committee of the Company (as provided below) as a Receivables
Subsidiary (a) no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which (i) is guaranteed by the Company or any other
Restricted Subsidiary (excluding guarantees of obligations (other than the
principal of, and interest on, Indebtedness) pursuant to
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Standard Securitization Undertakings), (ii) is recourse to or obligates the
Company or any other Restricted Subsidiary in any way other than pursuant to
standard Securitization Undertakings or (iii) subjects any property or asset of
the Company or any other Restricted Subsidiary, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings, (b) with which neither the Company nor any
other Restricted Subsidiary has any material contract, agreement, arrangement or
understanding (except in connection with a Purchase Money Note or Qualified
Receivables Transaction) other than on terms no less favorable to the Company or
such other Restricted Subsidiary than those that might be obtained at the time
from Persons that are not Affiliates of the Company, other than fees payable in
the ordinary course of business in connection with servicing accounts
receivable, and (c) to which neither the Company nor any other Restricted
Subsidiary has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve a specified level of operating
results. Any such designation by the Management Committee of the Company shall
be evidenced to the Trustee by filing with the Trustee a certified copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying, to the best of such
officer's knowledge and belief after consulting with counsel, that such
designation complied with the foregoing conditions.
"RELATED PARTY" means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any
Principal;
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 80% or more controlling interest o
(3) any limited partner general partner.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"SENIOR DEBT" means:
(1) all Indebtedness of an Issuer or any Subsidiary Guarantor outstanding
under Credit Facilities and all Hedging Obligations with respect
thereto, whether outstanding on the date of the Indenture or incurred
thereafter;
(2) any other Indebtedness of an Issuer or any Subsidiary Guarantor
permitted to be incurred under the terms of the Indenture, unless the
instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of
payment
to the Notes or any Subsidiary Guarantee; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2) (including any interest accruing subsequent to
the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest
is an allowed claim under applicable law).
Notwithstanding anything to the contrary in the preceding, Senior Debt will
not include:
(1) any liability for federal, state, local or other taxes owed or owing
by an Issuer;
(2) any Indebtedness of an Issuer to any of its Subsidiaries or other
Affiliates;
(3) any trade payables;
(4) the portion of any Indebtedness that is incurred in violation of the
Indenture (but only to the extent so incurred); or
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(5) Non-Recourse Debt.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations, warrantees,
covenants and indemnities entered into by the Company or any Restricted
Subsidiary that are reasonably customary in an accounts receivable transaction.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBSIDIARY" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at
the time owned or controlled, directly or indirectly, by such Person
or one or more of the other Subsidiaries of that Person (or a
combination thereof); and
(2) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"SUBSIDIARY GUARANTORS" means each subsidiary that executes a Subsidiary
Guarantee in accordance with the provisions of the Indenture and their
respective successors and assigns.
"TAX AMOUNT" means:
(1) for so long as Holdings is a pass-through entity for income tax
purposes and the sole asset of Holdings is its membership interest in
the Company (and prior to any distribution of any Tax Amount, the
Company delivers an officers' certificate to such effect), the tax
amount that Holdings is required to distribute to its members
pursuant to Section 6.4 of its Limited Liability Company Agreement as
in effect on the date of the Indenture, or
(2) if Holdings holds other assets in addition to its member interest in
the Company, the tax amount that Holdings is required to distribute
to its members pursuant to Section 6.4 of its Limited Liability
Company Agreement less any amounts for taxes related to assets other
than the membership interests in the Company, or
(3) if Holdings is no longer a pass-through entity for income tax
purposes, the combined federal, state and local income taxes that
would be paid by the Company if it were a separate entity and a
Delaware corporation filing separate tax returns with respect to its
Taxable Income for such Period; PROVIDED, HOWEVER, that in
determining the Tax Amount, the effect thereon of any net operating
loss carryforwards or other carryforwards or tax attributes, such as
alternative minimum tax carryforwards, that would have arisen if the
Company were a Delaware corporation shall be taken into account.
Notwithstanding anything to the contrary, for purposes of this clause
(3), Tax Amount shall not include taxes resulting from the Company's
reorganization as or change in the status to a corporation.
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"TAX DISTRIBUTION" means a distribution in respect of taxes to the members
of the Company pursuant to clause (7) of the second paragraph of the covenant
described above under the section "Covenants -- Restricted Payments."
"TAXABLE INCOME" means, with respect to any Person for any period, the
hypothetical taxable income or loss of such Person for such period for federal
income tax purposes computed on the hypothetical assumption that such person is
a separate entity and a Delaware corporation.
"TOTAL ASSETS" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company (other than
Capital or any successor to Capital) that is designated by the Management
Committee of the Company as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless
the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company;
(3) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or
preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its
Restricted Subsidiaries; and
(5) has at least one director on its Board of Directors that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the section
"-- Covenants -- Restricted Payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
and, if such Indebtedness is not permitted to be incurred as of such date under
the covenant described under the section "-- Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock," the Company shall be in default
of such covenant. The Management Committee of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1) such
Indebtedness is permitted under the covenant described under the section
"-- Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock,"
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (2) no Default or Event of
Default would be in existence following such designation.
"VESTAR" means Vestar Capital Partners, a New York general partnership.
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"VOTING EQUITY INTERESTS" of any Person as of any date means the Capital
Stock of such Person that is at the time, or would be if such Person were a
Delaware corporation, entitled to vote in the election of the Management
Committee, Board of Directors or other governing body of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or
other required payments of principal, including payment at final
maturity, in respect thereof, by (b) the number of years (calculated
to the nearest one-twelfth) that will elapse between such date and
the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
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U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The following summary describes the material United States federal income
tax consequences of the exchange offer. The exchange of outstanding notes for
exchange notes in the exchange offer will not constitute a taxable event to
holders. Consequently, no gain or loss will be recognized by a holder upon
receipt of an exchange note, the holding period of the exchange notes will
include the holding period of the outstanding note and the basis of the exchange
notes will be the same as the basis of the outstanding note immediately before
the exchange.
IN ANY EVENT, PERSONS CONSIDERING THE EXCHANGE OF OUTSTANDING NOTES FOR
EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS
AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING
JURISDICTION.
95
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account pursuant
to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of the exchange notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of exchange notes received in exchange for outstanding
notes where the outstanding notes were acquired as a result of market-making
activities or other trading activities. To the extent that any broker-dealer
participates in the exchange offer and notifies us of this participation, or
causes us to be notified in writing, we have agreed that for a period of 180
days after the date of this prospectus, that we will make this prospectus, as
amended or supplemented, available to such broker-dealer for use in connection
with any resale, and will promptly send additional copies of this prospectus and
any amendment or supplement to this prospectus to any broker-dealer that
requests these documents in the letter of transmittal.
We will not receive any proceeds from the sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions through any of the following methods:
- in the over-the-counter market;
- in negotiated transactions;
- through the writing of options on the exchange notes; or
- a combination of these methods of resale, at prevailing market prices at
the time of resale, at prices related to such prevailing market prices or
at negotiated prices.
Any resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer or the purchasers or any such exchange notes. Any
broker-dealer that resells exchange notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of the exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933, and any profit
on any such resale of exchange notes and any commissions or concessions received
by these persons may be deemed to be underwriting compensation under the
Securities Act of 1933. The letter of transmittal states that, by acknowledging
that it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933.
We have agreed to pay all expenses incident to the exchange offer, other
than commissions and concessions of any broker-dealers, subject to specified
prescribed limitations. In addition, we have agreed to indemnify the holders of
the outstanding notes against specified liabilities, including specified
liabilities that may arise under the Securities Act of 1933.
By its acceptance of the exchange offer, any broker-dealer that receives
exchange notes pursuant to the exchange offer hereby agrees to notify us prior
to using the prospectus in connection with the sale or transfer of exchange
notes, and acknowledges and agrees that, upon receipt of notice from us of the
happening of any event which makes any statement in this prospectus untrue in
any material respect or which requires the making of any changes in this
prospectus in order to make the statements in this prospectus not misleading or
which may impose upon us disclosure obligations that may have a material adverse
effect on us which notice we agree to deliver promptly to such broker-dealer,
that broker-dealer will suspend its use of this prospectus until we have
notified that broker-dealer that delivery of this prospectus may resume and has
furnished copies of any amendment or supplement to the prospectus to that
broker-dealer.
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CONSOLIDATED CONTAINER COMPANY LLC
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information gives effect to the
transactions as if they had occurred on or at the beginning of the periods
presented. For more information on the transactions, see "The Transactions."
The contributions and mergers of the equity interest or assets of Reid
Plastics, Franklin Plastics, Plastic Containers and each of their subsidiaries
into Consolidated Container Company and its subsidiaries have been accounted for
using the purchase method of accounting. We refer to U.S. plastics packaging
assets of Franklin Plastics, Plastic Containers and each of their subsidiaries
as "Suiza Packaging." Under this method, Reid Plastics is considered the
"acquiror" for accounting purposes. Accordingly, in the unaudited pro forma
financial information of Consolidated Container Company contained in this
prospectus, we refer to the contributions and mergers referred to above as the
acquisition of Suiza Packaging by Consolidated Container Company, which is the
successor to Reid Plastics for accounting purposes.
The unaudited pro forma statements of operations for the year ended December
31, 1998 and the six months ended June 30, 1999 and 1998 give effect to the
acquisition of Suiza Packaging and the other transactions as if they had
occurred on January 1, 1998.
The pro forma adjustments are based on preliminary estimates of purchase
price allocations, available information and assumptions that the management of
Consolidated Container Company deems appropriate but which may be revised as we
receive additional information. The pro forma financial information does not
purport to represent what the results of operations of Consolidated Container
Company would actually have been if the transactions had, in fact, occurred on
the dates assumed and is not necessarily representative of Consolidated
Container Company's results of operations for any future period. The unaudited
pro forma financial information should be read in conjunction with the other
financial statements and notes to them included in this prospectus.
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<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
HISTORICAL
-------------------------- ACQUISITION
SUIZA AND OFFERING
REID PLASTICS PACKAGING ADJUSTMENTS PRO FORMA
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
(IN MILLIONS)
INCOME STATEMENT:
Net sales..................................................... $ 85.4 $ 263.5 -- $ 348.9
Cost of goods sold............................................ 67.4 198.7 -- 266.1
----- ----------- ------------ -----------
Gross profit.................................................. 18.0 64.8 -- 82.8
Selling, general and administrative expenses.................. 7.5 26.9 -- 34.4
Amortization of goodwill...................................... 1.5 3.4 2.0(a) 6.9
----- ----------- ------------ -----------
Operating income.............................................. 9.0 34.5 (2.0) 41.5
Other income.................................................. 0.5 0.3 -- 0.8
Interest expense, net (b)..................................... 4.5 18.6 2.8(c) 25.9
----- ----------- ------------ -----------
Income before income taxes.................................... 5.0 16.2 (4.8) 16.4
Income tax expense............................................ 2.9 7.7 (10.6)(d) --
Minority interest in subsidiaries............................. (0.3) -- -- (0.3)
----- ----------- ------------ -----------
Income before extraordinary item.............................. $ 2.4 $ 8.5 $ 5.8 $ 16.7
----- ----------- ------------ -----------
----- ----------- ------------ -----------
OTHER DATA:
EBITDA (e).................................................... $ 17.0 $ 49.6 $ -- $ 66.6
Depreciation and amortization................................. 7.2 14.8 2.0 24.0
Capital expenditures.......................................... 5.1 16.0 -- 21.1
Cash interest expense, net (f)................................ 4.5 19.0 0.7 24.2
</TABLE>
98
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(a) Pro forma adjustments to record the amortization of the additional goodwill
of approximately $163.5 million associated with the acquisition of Suiza
Packaging by Consolidated Container Company, over an amortization period of
40 years, which resulted in additional amortization expense for the period
of approximately $2.0 million.
(b) Represents interest expense, net of interest income.
(c) Pro forma adjustment to interest expense reflects interest on the proceeds
of the offering of the outstanding notes used to repay substantially all the
outstanding debt of Suiza Packaging and Reid Plastics, as follows:
<TABLE>
<CAPTION>
AMOUNT
-------------
<S> <C>
(IN MILLIONS)
Interest expense on borrowings under the senior credit facility at an assumed
weighted average rate of 7.03%............................................. $ 14.5
Interest expense on the outstanding notes at a rate of 10 1/8% per annum..... 9.4
Amortization of deferred financing costs..................................... 1.7
Less existing pro forma interest expense on debt repaid...................... (22.8)
-----
Total.................................................................... $ 2.8
-----
-----
</TABLE>
The effect of a 0.125% change in the interest rate on borrowings under
the senior credit facility would have resulted in an approximately $0.3
million change in the pro forma interest expense adjustment.
(d) Pro forma adjustment to eliminate the amount of historical income taxes.
Consolidated Container Company is a limited liability company that is not
subject to corporate income taxes. Consolidated Container Company expects to
distribute cash to its sole member, Consolidated Container Holdings, to
allow its members to pay income taxes to the extent required.
(e) EBITDA represents earnings, including minority interest and other income,
before interest, income taxes, depreciation and amortization and
extraordinary items. EBITDA is presented because it is a widely accepted
financial indicator used by some investors and analysts to analyze and
compare companies on the basis of operating performance. EBITDA is not
intended to represent cash flows for the periods presented, nor has it been
presented as an alternative to operating income as an indicator of operating
performance. It should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles and is not indicative of operating income or cash flow
from operations as determined under generally accepted accounting
principles. In addition, our calculation of EBITDA is not necessarily
comparable to other similarly titled captions of other companies due to
potential inconsistencies between methods of calculating it.
(f) Cash interest expense, net excludes amortization of deferred financing fees.
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<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HISTORICAL PRE-ACQUISITION HISTORICAL
------------------------ ------------------------------
<CAPTION>
PLASTIC ACQUISITION
REID SUIZA CONTAINERS OTHER PRO FORMA AND OFFERING
PLASTICS PACKAGING (a) BUSINESSES (b) ADJUSTMENTS ADJUSTMENTS
----------- ----------- ------------- --------------- ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT:
Net sales......................... $ 91.9 $ 114.6 $ 108.9 $ 28.4 $ -- $ --
Cost of goods sold................ 75.4 89.4 92.2 23.8 (1.2)(c)
----- ----------- ------ ----- ----- -----
Gross profit...................... 16.5 25.2 16.7 4.6 1.2 --
Selling, general and
administrative expenses......... 7.7 11.2 11.4 2.5 (1.2)(d) --
Amortization of goodwill.......... 1.5 1.8 0.2 -- 1.4(e) 2.0(f)
----- ----------- ------ ----- ----- -----
Operating income.................. 7.3 12.2 5.1 2.1 1.0 (2.0)
Other income...................... 0.6 -- -- 0.3 (0.2) 0.7
Interest expense, net (g)......... 5.2 8.4 5.0 0.3 4.2(h) 2.8(i)
----- ----------- ------ ----- ----- -----
Income (loss) before income tax... 2.7 3.8 0.1 2.1 (3.4) (4.8)
Income tax (benefit) expense...... 1.8 1.5 (1.6) -- (0.2)(j) (1.5)(k)
Minority interest in
subsidiaries.................... -- -- -- -- -- --
----- ----------- ------ ----- ----- -----
Net income (loss)................. $ 0.9 $ 2.3 $ 1.7 $ 2.1 $ (3.2) $ (3.3)
----- ----------- ------ ----- ----- -----
----- ----------- ------ ----- ----- -----
OTHER DATA:
EBITDA (l)........................ $ 15.7 $ 17.1 $ 10.7 $ 3.7 $ 0.7 $ --
Depreciation and amortization..... 7.8 4.9 5.6 1.4 -- 2.0
Capital expenditures.............. 8.0 17.8 6.8 -- -- --
Cash interest expense, net (m).... 5.2 8.5 4.8 0.3 3.8 1.6
<CAPTION>
<S> <C>
PRO
FORMA
---------
<S> <C>
INCOME STATEMENT:
Net sales......................... $ 343.8
Cost of goods sold................ 279.6
---------
Gross profit...................... 64.2
Selling, general and
administrative expenses......... 31.6
Amortization of goodwill.......... 6.9
---------
Operating income.................. 25.7
Other income...................... --
Interest expense, net (g)......... 25.9
---------
Income (loss) before income tax... 0.5
Income tax (benefit) expense...... --
Minority interest in
subsidiaries.................... --
---------
Net income (loss)................. $ 0.5
---------
---------
OTHER DATA:
EBITDA (l)........................ $ 47.9
Depreciation and amortization..... 21.7
Capital expenditures.............. 32.6
Cash interest expense, net (m).... 24.2
</TABLE>
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CONSOLIDATED CONTAINER COMPANY LLC
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(a) Represents the pre-acquisition results of operations of Suiza Packaging's
1998 acquisition of Plastic Containers for the five months ended May 29,
1998.
(b) Represents the pre-acquisition results of operations of Suiza Packaging's
acquisitions in 1998 of (1) Vanguard Plastics for the two months ended
February 28, 1998, (2) California Plastics for the three months ended March
31, 1998 and (3) Hartford Plastics, Ocean Park Plastics, Double R Plastics,
Florence Plastics, New York Plastics, Consolidated Plastechs and Quality
Container for the six months ended June 30, 1998. We refer to these other
businesses which Suiza Packaging acquired in 1998 collectively as "Other
Businesses."
(c) Pro forma adjustments to eliminate (1) the excess of historical depreciation
expense of Plastic Containers and the Other Businesses over the pro forma
depreciation of the fair value of property and equipment and (2) rent
expense on acquired property previously leased from former shareholders,
which resulted in a decrease for the period of approximately $0.9 million
and $0.3 million in amounts charged to cost of goods sold.
(d) Pro forma adjustments to eliminate salaries and other benefits paid
primarily to former shareholders and officers of the Other Businesses, whose
employment was either terminated or salaries and other benefits were reduced
or eliminated in contemplation of the purchase transaction and
reclassification of intangible assets, resulting in a reduction of
historical selling, general and administrative costs of approximately $1.2
million.
(e) Pro forma adjustments to record the amortization of goodwill associated with
Plastic Containers and the Other Businesses over an amortization period of
40 years, which resulted in additional amortization expense for the period
of approximately $1.4 million.
(f) Pro forma adjustment to record the amortization of the additional goodwill
of approximately $163.5 million associated with the acquisition of Suiza
Packaging by Consolidated Container Company over an amortization period of
40 years, which resulted in additional amortization expense for the period
of approximately $2.0 million.
(g) Represents interest expense, net of interest income.
(h) Pro forma adjustment to interest expense on the senior notes and mezzanine
notes of Franklin Plastics owed to Suiza Foods to fund the purchases of
Plastic Containers and the Other Businesses, at assumed interest rates of
9.0% and 13.2% net of the reduction of historical interest expense, related
to the historical debt of the Other Businesses repaid, along with the
reduction of interest expense on Plastic Containers' fixed rate debt to a
current market yield of 8.6%, as follows:
<TABLE>
<CAPTION>
AMOUNT
---------------
<S> <C>
(IN MILLIONS)
Interest expense on mezzanine notes of Franklin Plastics and Plastic Containers............ $ 3.7
Interest expense on senior notes of Franklin Plastics...................................... $ 1.2
Effective reduction of interest rate on 10% Senior Secured Notes due 2006 of Plastic
Containers............................................................................... (0.4)
Less existing historical interest expense on debt repaid................................... (0.3)
---
Total................................................................................ $ 4.2
---
---
</TABLE>
101
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(i) Pro forma adjustment to interest expense to reflect interest on the proceeds
of the offering of the outstanding notes used to repay substantially all the
outstanding borrowings of Suiza Packaging and Reid Plastics, as follows:
<TABLE>
<CAPTION>
AMOUNT
-------------
<S> <C>
(IN MILLIONS)
Interest expense on borrowings under the senior credit facility at an assumed weighted
average rate of 7.03%.................................................................... $ 14.5
Interest expense on the outstanding notes at a rate of 10 1/8% per annum................... 9.4
Amortization of deferred financing costs................................................... 1.7
Less existing pro forma interest expense on debt repaid.................................... (22.8)
-----
Total................................................................................ $ 2.8
-----
-----
</TABLE>
The effect of a 0.125% change in the interest rate on borrowings under
the senior credit facility would have resulted in an approximately $0.3
million change in the pro forma interest expense adjustment.
(j) Pro forma adjustments to reflect pro forma income taxes for the acquisition
of Plastic Containers at an estimated effective tax rate of 38%, excluding
the effects of non-deductible goodwill, and to reflect pro forma income
taxes for the Other Businesses at an estimated effective tax rate of 40%, as
follows:
<TABLE>
<CAPTION>
AMOUNT
-------------
<S> <C>
(IN MILLIONS)
Income tax adjustment for Plastic Containers............................................... $ (0.8)
Income tax adjustment for Other Businesses................................................. 0.6
-----
Total................................................................................ $ (0.2)
-----
-----
</TABLE>
(k) Pro forma adjustment to eliminate the amount of income taxes. Consolidated
Container Company is a limited liability company that is not subject to
corporate income taxes. Consolidated Container Company expects to distribute
cash to its sole member, Consolidated Container Holdings, to allow its
members to pay income taxes to the extent required.
(l) EBITDA represents earnings, including minority interest and other income,
before interest, income taxes, depreciation and amortization. EBITDA is
presented because it is a widely accepted financial indicator used by some
investors and analysts to analyze and compare companies on the basis of
operating performance. EBITDA is not intended to represent cash flows for
the periods presented, nor has it been presented as an alternative to
operating income as an indicator of operating performance. It should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles and is
not indicative of operating income or cash flow from operations as
determined under generally accepted accounting principles. In addition, our
calculation of EBITDA is not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies between
methods of calculating it.
(m) Cash interest expense, net excludes amortization of deferred financing fees.
102
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HISTORICAL PRE-ACQUISITION HISTORICAL
-------------------------- ----------------------------------
<CAPTION>
ACQUISITION
SUIZA PLASTIC OTHER PRO FORMA AND OFFERING
REID PLASTICS PACKAGING CONTAINERS (a) BUSINESSES (b) ADJUSTMENTS ADJUSTMENTS
------------- ----------- --------------- ----------------- ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT:
Net sales................... $ 175.2 $ 367.9 $ 108.9 $ 35.3 $ -- $ --
Cost of goods sold.......... 144.7 283.1 92.2 29.5 (1.4)(c) --
------ ----------- ------ ----- ----- ------
Gross profit................ 30.5 84.8 16.7 5.8 1.4 --
Selling, general and
administrative expenses.... 15.2 33.1 11.4 3.2 (1.5)(d) --
Amortization of goodwill.... 2.9 5.1 0.2 -- 1.4(e) 4.1(f)
------ ----------- ------ ----- ----- ------
Operating income............ 12.4 46.6 5.1 2.6 1.5 (4.1)
Other income (expense)...... 1.3 (0.1) -- 0.4 (0.2)(g) --
Interest expense, net (h)... 10.5 26.8 5.0 0.3 4.8(i) 4.2(j)
------ ----------- ------ ----- ----- ------
Income (loss) before income
taxes...................... 3.2 19.7 0.1 2.7 (3.5) (8.3)
Income tax (benefit)
expense.................... 2.8 9.5 (1.6) -- (0.1)(k) (10.6)(l)
Minority interest in
subsidiaries............... 0.1 -- -- -- -- --
------ ----------- ------ ----- ----- ------
Net income (loss)........... $ 0.3 $ 10.2 $ 1.7 $ 2.7 $ (3.4) $ 2.3
------ ----------- ------ ----- ----- ------
------ ----------- ------ ----- ----- ------
OTHER DATA:
EBITDA (m).................. $ 29.6 $ 63.8 $ 10.7 $ 4.7 $ 1.2 $ --
Depreciation and
amortization............... 16.0 17.3 5.6 1.7 (0.1) 4.1
Capital expenditures........ 12.7 63.7 6.8 -- -- --
Cash interest expense, net
(n)........................ 10.5 27.3 4.8 0.3 3.9 1.2
<CAPTION>
<S> <C>
PRO FORMA
-----------
<S> <C>
INCOME STATEMENT:
Net sales................... $ 687.3
Cost of goods sold.......... 548.1
-----------
Gross profit................ 139.2
Selling, general and
administrative expenses.... 61.4
Amortization of goodwill.... 13.7
-----------
Operating income............ 64.1
Other income (expense)...... 1.4
Interest expense, net (h)... 51.6
-----------
Income (loss) before income
taxes...................... 13.9
Income tax (benefit)
expense.................... --
Minority interest in
subsidiaries............... 0.1
-----------
Net income (loss)........... $ 13.8
-----------
-----------
OTHER DATA:
EBITDA (m).................. $ 110.0
Depreciation and
amortization............... 44.6
Capital expenditures........ 83.2
Cash interest expense, net
(n)........................ 48.3
</TABLE>
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<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
(a) Represents the pre-acquisition results of operations of Suiza Packaging's
acquisition of Plastic Containers in 1998 for the five months ended May 29,
1998.
(b) Represents the pre-acquisition results of operations of Suiza Packaging's
acquisitions in 1998 of (1) Vanguard Plastics for the two months ended
February 28, 1998, (2) California Plastics for the quarter ended March 31,
1998, (3) Hartford Plastics and Ocean Park Plastics for the six months ended
June 30, 1998, (4) Double R Plastics, Florence Plastics and New York
Plastics for the seven months ended July 31, 1998, (5) Consolidated
Plastechs for the nine months ended September 30, 1998 and (6) Quality
Container for the eleven months ended November 30, 1998.
(c) Pro forma adjustments to eliminate (1) the excess of historical depreciation
expense of Plastic Containers and the Other Businesses over the pro forma
depreciation of the fair value of property and equipment and (2) rent
expense on acquired property previously leased from former shareholders,
which resulted in a decrease for the period of approximately $1.0 million
and $0.4 million in amounts charged to cost of goods sold.
(d) Pro forma adjustments to eliminate salaries and other benefits paid
primarily to former shareholders and officers of the Other Businesses, whose
employment was either terminated or salaries and other benefits were reduced
or eliminated in contemplation of the purchase transaction and
reclassification of intangible assets, resulting in a reduction of
historical selling, general and administrative costs of approximately $1.5
million.
(e) Pro forma adjustments to record the amortization of goodwill associated with
Plastic Containers and the Other Businesses over an amortization period of
40 years, which resulted in additional amortization expense for the period
of approximately $1.4 million.
(f) Pro forma adjustments to record the amortization of the additional goodwill
of approximately $163.5 million associated with the acquisition of Suiza
Packaging by Consolidated Container Company over an amortization period of
40 years, which resulted in additional annual amortization expense for the
period of approximately $4.1 million.
(g) Pro forma adjustment of approximately $0.2 million to eliminate gains on the
sale of assets by some of the Other Businesses.
(h) Represents interest expense, net of interest income.
(i) Pro forma adjustment to interest expense on the senior notes and mezzanine
notes of Franklin Plastics payable to Suiza Foods to fund the purchases of
Plastic Containers and the Other Businesses, at assumed interest rates of
9.0% and 13.2%, net of the reduction of historical interest expense related
to the historical debt of the Other Businesses repaid, along with the
reduction of interest expense for Plastic Container's fixed rate debt to a
current market yield of 8.6%, as follows:
<TABLE>
<CAPTION>
AMOUNT
---------------
<S> <C>
(IN MILLIONS)
Interest expense on mezzanine notes of Franklin Plastics and Plastic Containers.......... $ 4.6
Interest expense on senior notes of Franklin Plastics.................................... 1.6
Effective reduction of interest rate on the 10% Senior Secured Notes due 2006 of Plastic
Containers............................................................................. (0.8)
Less existing historical interest expense on debt repaid................................. (0.6)
---
Total................................................................................ $ 4.8
---
---
</TABLE>
104
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
(j) Pro forma adjustment to interest expense to reflect interest on the proceeds
of the offering of the outstanding notes used to repay substantially all the
outstanding debt of Suiza Packaging and Reid Plastics, as follows:
<TABLE>
<CAPTION>
AMOUNT
-------------
<S> <C>
(IN MILLIONS)
Interest expense on borrowings under the senior credit facility at an assumed weighted
average rate on 7.03%.................................................................. $ 29.0
Interest expense on the outstanding notes at a rate of 10 1/8% per annum................. 18.7
Amortization of deferred financing costs................................................. 3.3
Less existing pro forma interest expense on debt repaid.................................. (46.8)
-----
$ 4.2
-----
-----
</TABLE>
The effect of a 0.125% change in the interest rate on borrowings under the
senior credit facility would have resulted in an approximately $0.5 million
change in the pro forma interest expense adjustment.
(k) Pro forma adjustment to reflect pro forma income taxes for the acquisition
of Plastic Containers at an estimated effective tax rate of 38%, excluding
the effects of non-deductible goodwill, and to reflect pro forma income
taxes for the Other Businesses at an estimated effective tax rate of 40%, as
follows:
<TABLE>
<CAPTION>
AMOUNT
-------------
<S> <C>
(IN MILLIONS)
Income tax adjustment for Plastic Containers............................................... $ (0.8)
Income tax adjustment for Other Businesses................................................. 0.7
-----
Total................................................................................ $ (0.1)
-----
-----
</TABLE>
(l) Pro forma adjustment to eliminate the amount of income taxes. Consolidated
Container Company is a limited liability company that is not subject to
corporate income taxes. Consolidated Container Company expects to distribute
cash to its sole member, Consolidated Container Holdings, to allow its
members to pay income taxes to the extent required.
(m) EBITDA represents earnings, including minority interest and other income,
before interest, income taxes, depreciation and amortization. EBITDA is
presented because it is a widely accepted financial indicator used by some
investors and analysts to analyze and compare companies on the basis of
operating performance. EBITDA is not intended to represent cash flows for
the periods presented, nor has it been presented as an alternative to
operating income as an indicator of operating performance. It should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles and is
not indicative of operating income or cash flow from operations as
determined under generally accepted accounting principles. In addition, our
calculation of EBITDA is not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies between
methods of calculating it.
(n) Cash interest expense, net excludes amortization of deferred financing fees.
105
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND PRO FORMA RESULTS OF OPERATIONS OF
CONSOLIDATED CONTAINER COMPANY LLC
OVERVIEW
In connection with the transactions, Consolidated Container Company was
created as a new limited liability company to own, directly or through its
subsidiaries, all of the plastic packaging assets of Reid Plastics, a Delaware
corporation indirectly controlled by Vestar Capital Partners III, and
substantially all of the U.S. plastic packaging assets of Suiza Foods, which
consisted of Franklin Plastics and Plastic Containers. As a result of this
combination, we are a leading domestic developer, manufacturer and marketer of
rigid plastic containers for many of the world's largest branded consumer
products and beverage companies.
Our broad container product line ranges in size from two ounce to six gallon
containers consisting of single and multiple layer plastic containers made from
a variety of plastic resins, including high density polyethylene ("HDPE"),
polycarbonate ("PC"), polypropylene ("PP"), polyethylene terephthalate ("PET")
and polyvinyl chloride ("PVC"). Because our broad range of product lines serves
customers in diverse industries and regions in the United States, we believe
that our net sales and cash flow are relatively stable, reducing our exposure to
particular market or regional economic cycles. We have grown net sales through
acquisitions and internal growth between 1996 and 1998 at a compounded annual
growth rate of approximately 58.0%. For the six months ended June 30, 1999, we
generated pro forma net sales of $348.9 million and pro forma EBITDA of $66.6
million.
The plastic container industry has been undergoing consolidation for a
number of years, and we believe that the incentives favoring consolidation will
continue. As a leader in consolidation in the U.S. rigid plastic packaging
business, we made twelve acquisitions, including the acquisition of Plastic
Containers, in 1998 which increased our pro forma 1998 net sales by $365.4
million and our pro forma 1998 EBITDA by $55.0 million.
Our primary raw materials consist of HDPE, PC, PP, PET and PVC resins.
Although net sales are affected by fluctuations in resin prices, our gross
profit is, in general, substantially unaffected by these fluctuations because
industry practice and contractual arrangements with our customers permit or
require us, over time, to pass through changes in resin prices by means of
changes in product pricing. Consequently, we believe that an analysis of gross
profit as a percentage of sales basis is not meaningful.
We plan to capitalize on our significant industry position to become the
preeminent supplier of rigid plastic containers in North America with a presence
in selected international markets. Our strategies for achieving this objective
include:
- expansion within the current customer base by cross-selling product and
service capabilities among our complementary customer bases of Reid
Plastics and Suiza Packaging;
- realizing substantial cost reductions and operating synergies through the
combination of Reid Plastics and Suiza Packaging;
- capitalizing on the continuing trend toward the conversion of glass, metal
and paper containers to plastic containers;
- entering new markets, which can now be serviced by our broad geographic
reach; and
- pursuing strategic acquisitions.
As a limited liability company, we will not pay U.S. federal income taxes
under the Internal Revenue Code. Similarly, as a limited liability company, our
parent, Consolidated Container Holdings, will not pay U.S. federal income taxes
under the provisions of the Internal Revenue Code. The
106
<PAGE>
applicable income or loss is included in the tax returns of the members of
Consolidated Container Holdings. We will make tax distributions to Consolidated
Container Holdings to enable it to reimburse its members for their tax
obligations.
PRO FORMA RESULTS OF OPERATIONS
We list in the table below our pro forma results of operations,and related
percentages of net sales for the years ended December 31, 1997 and 1998 and for
the six months ended June 30, 1998 and 1999. The financial table and related
discussion should be read in conjunction with the "Unaudited Pro Forma Financial
Data" and the notes related to them appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
PRO FORMA RESULTS OF OPERATIONS
--------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------------ ------------------------------------------
1997 1998 1998 1999
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(IN MILLIONS)
Net sales............................. $ 682.7 100.0% $ 687.3 100.0% $ 343.8 100.0% $ 348.9 100.0%
Cost of goods sold.................... 578.8 84.8 548.1 79.7 279.6 81.3 266.1 76.3
--------- --------- --------- --------- --------- --------- --------- ---------
Gross profit.......................... 103.9 15.2 139.2 20.3 64.2 18.7 82.8 23.7
Selling, general and administrative... 68.2 10.0 74.9 10.9 38.5 11.2 41.3 11.8
--------- --------- --------- --------- --------- --------- --------- ---------
Operating income...................... 35.7 5.2 64.3 9.4 25.7 7.5 41.5 11.9
Other expense (income)................ 8.2 1.2 (1.4) (0.2) (0.7) (0.2) (0.8) (0.2)
Interest expense, net................. 46.4 6.8 51.5 7.5 25.9 7.5 25.9 7.4
--------- --------- --------- --------- --------- --------- --------- ---------
Income before income taxes............ (18.9) (2.8) 14.2 2.1 0.5 0.1 16.4 4.7
Income tax expense (benefit).......... -- -- -- -- -- -- -- --
Minority interest in subsidiary....... 0.4 -- 0.1 -- -- -- (0.3) (0.1)
--------- --------- --------- --------- --------- --------- --------- ---------
Income (loss) before extraordinary
item................................ $ (19.3) (2.8)% $ 14.1 2.1% $ 0.5 0.1% $ 16.7 4.8%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Pro forma EBITDA...................... $ 77.1 11.3% $ 110.0 16.0% $ 47.9 13.9% $ 66.6 19.0%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>
Pro forma EBITDA represents pro forma earnings, including minority interest
and other income) before interest, income taxes, depreciation and amortization.
EBITDA is presented because it is a widely accepted financial indicator used by
some investors and analysts to analyze and compare companies on the basis of
operating performance. EBITDA is not intended to represent cash flows for the
periods presented, nor has it been presented as an alternative to operating
income as an indicator of operating performance. It should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with generally accepted accounting principles and is not indicative of operating
income or cash flow from operations as determined under generally accepted
accounting principles. In addition, our calculation of EBITDA is not necessarily
comparable to other similarly titled captions of other companies due to
potential inconsistencies between methods of calculating it.
PRO FORMA SIX MONTHS PERIOD ENDED JUNE 30, 1999 COMPARED TO SIX MONTH PERIOD
ENDED JUNE 30, 1998
NET SALES. Net sales increased by 1.5% to $348.9 million for the six month
period ended June 30, 1999 from $343.8 million for the comparable period for
1998 on a pro forma basis. The increase was due to increased sales at Suiza
Packaging of $11.6 million primarily from operations which commenced beginning
in the second quarter of 1998. This increase was, in part, offset by a decline
in sales of $6.5 million at Reid Plastics.
107
<PAGE>
GROSS PROFIT. Gross profit increased by 29.0% to $82.8 million for the six
month period ended June 30, 1999 from $64.2 million for the comparable period in
1998 on a pro forma basis. The increase was due to cost reduction programs
initiated at all locations in late 1998 together with synergies recognized from
acquisitions made in 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 7.3% to $41.3 million for the six month
period ended June 30, 1999 from $38.5 million for the comparable period in 1999
on a pro forma basis. The increase was due to expenses incurred in connection
with the addition to senior management, the relocation of Reid Plastics'
corporate offices, higher delivery costs associated with opening new geographic
markets and costs related to integrating the twelve operations acquired by
Franklin Plastics in 1998.
OPERATING INCOME. Operating income increased by 61.5% to $41.5 million for
the six month period ended June 30, 1999 from $25.7 million for the comparable
period in 1998 on a pro forma basis as a result of the factors discussed above.
INTEREST EXPENSE, NET. Interest expense, net of $25.9 million for the six
month period ended June 30, 1999 was unchanged from the comparable period in
1998 on a pro forma basis.
PRO FORMA YEAR ENDED DECEMBER 31, 1998 COMPARED TO PRO FORMA YEAR ENDED
DECEMBER 31, 1997
NET SALES. Net sales increased by 0.7% to $687.3 million in 1998 from
$682.7 million in 1997. The increase in net sales was primarily a result of new
plant openings in 1998, the inclusion for a full year of the operations of five
plants, which opened during 1997, and increased unit volume, particularly from
the increase in unit volume sold to dairy customers. This increase was partially
offset by a reduction in the price of HDPE in 1998 that was passed through to
customers, thus lowering net sales. In addition, the product mix sold in 1998
was comprised of a higher percentage of lighter-weight, lower priced containers
than in 1997. This resulted from container light-weighting programs with several
customers by which the total weight of customers' container products was
reduced, requiring less raw material which, in turn, resulted in a reduced
selling price to the customer.
GROSS PROFIT. Gross profit increased by 34.0% to $139.2 million in 1998
from $103.9 million in 1997. This increase was principally due to the inclusion
of new plant openings which occurred in 1997 and 1998, benefits from production
and purchasing efficiency programs implemented in 1998 and the reduction of
labor and overhead expenses from plant rationalization programs implemented in
late 1997 and 1998. Gross profit was also positively impacted in 1998 by the
changes in product mix with new product introductions in 1998 having higher
margins on average compared to products which experienced unit volume declines.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 9.8% to $74.9 million in 1998 from $68.2
million in 1997. The increase resulted primarily from additions to senior
management, the relocation of Reid Plastics' corporate offices, the use of
outside consultants and an increase in overhead expenses associated with an
increase in the number of plants operating in 1998. The increase was partially
offset by cost reductions realized from the closing of Plastic Containers'
corporate office in the third quarter of 1998 and the effects of cost reduction
initiatives that were undertaken in most plants in the second half of 1998.
OPERATING INCOME. Operating income increased by 80.1% to $64.3 million in
1998 from $35.7 million in 1997. The increase in operating income is primarily
attributable to the factors discussed above.
INTEREST EXPENSE, NET. Interest expense, net increased by 11.0% to $51.5
million in 1998 from $46.4 million in 1997. This increase was primarily the
result of higher borrowings under our credit facilities in 1998.
108
<PAGE>
SEASONALITY
Due to the large portion of our business that is derived from the sale of
water, dairy and other beverage products, our financial results are typically
stronger in the second and third quarters of the year during the spring and
summer months when there is higher consumption of the end products related to
these sectors.
LIQUIDITY AND CAPITAL RESOURCES
Our principal uses of cash are for capital expenditures, working capital,
debt service and acquisitions. Funds for these purposes are primarily generated
from operations and borrowings under existing credit facilities. We generated
net cash from operating activities of approximately $52.1 million in 1998 and
approximately $21.3 million for the first six months of 1999.
We made capital expenditures of approximately $83.2 million in 1998 and
approximately $21.1 million in the six months ended June 30, 1999. For 1999, we
estimate that our capital expenditures will be approximately $49.8 million, of
which approximately $15.5 million will be for ongoing maintenance.
As a limited liability company, we will not be liable for U.S. federal
income taxes under the Internal Revenue Code. Similarly, as a limited liability
company, our parent, Consolidated Container Holdings, will not be liable for
U.S. federal income taxes under the Internal Revenue Code. The applicable income
or loss will be included in the tax returns of the members of Consolidated
Container Holdings. We will make tax distributions to Consolidated Container
Holdings to enable it to reimburse its members for their tax obligations.
In connection with the transactions, we incurred substantial amounts of
debt. At July 2, 1999, we had total debt of $603.9 million, not including unused
commitments, and member's equity of $256.0 million and had a ratio of total debt
to pro forma EBITDA of 4.7x for the twelve months ended June 30, 1999. Subject
to restrictions in our senior credit facility and the indenture, we may incur
more debt for working capital, capital expenditures, acquisitions and for other
purposes. Our high level of combined debt could have important consequences for
you, including the following:
- it may make it more difficult for us to satisfy or refinance our
obligations regarding the outstanding notes and exchange notes and our
other debt;
- we may have difficulty borrowing money in the future for working capital,
capital expenditures, acquisitions or other purposes;
- we will need to use a large portion of the money that we earn to pay
principal and interest on borrowings under the senior credit facility, the
notes and on our other debt, which will reduce the amount of money
available to us to finance our operations, capital expenditures and other
business activities;
- we may have a much higher level of debt than our competitors, which may
put us at a competitive disadvantage;
- some of our debt has a variable rate of interest, which exposes us to the
risk of increased interest rates;
- borrowings under our senior credit facility will be secured and will
mature prior to the outstanding notes and the exchange notes;
- our high debt level makes us more vulnerable to economic downturns and
adverse developments in our business;
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<PAGE>
- our high debt level reduces our flexibility in responding to changing
business and economic conditions, including increased competition and
demand for new products which may require new technology and know-how in
the sectors in which we operate, which are undergoing consolidation and
other changes; and
- our high debt level limits our ability to implement our business strategy.
See "Risk Factors--Substantial Leverage and Debt Service," "--Contractual
Subordination" and "--Structural Subordination."
The senior credit facility consists of a committed tranche A term loan
totaling $150.0 million, a committed tranche B term loan totaling $235.0
million, an uncommitted tranche C term loan totaling $100.0 million, which will
only be available to us under some circumstances, and a committed $90.0 million
revolving credit facility. At July 2, 1999, we had $27.5 million available for
borrowings under the revolving credit facility, subject to customary borrowing
conditions. The revolving credit facility will mature on July 2, 2005. The
amortization schedule of the tranche A term loan will require us to repay $3.75
million in 1999, $11.25 million in 2000, $18.75 million in 2001, $26.25 million
in 2002, $33.75 million in 2003, $37.5 million in 2004 and $18.75 million in
2005. The tranche B term loan requires amortization payments in equal annual
installments of 1% of its initial principal amount for each of the first six
years after July 2, 1999 and the amortization of the remaining amount in eight
quarterly payments in the seventh and eighth years after the closing of the
senior credit facility. See "Description of Senior Credit Facility."
Borrowings under the senior credit facility bear interest, at our option, at
either:
- a base rate, which will be the higher of 1/2 of 1% in excess of the
overnight federal funds rate and the prime lending rate of Bankers Trust
Company, plus a margin; or
- a eurodollar rate on deposits for one, two, three or six month periods or,
if and when available to all of the relevant lenders, nine or twelve month
periods, which are offered to Bankers Trust Company in the interbank
eurodollar market, plus the applicable interest margin.
The margin on base rate and eurodollar loans is based on a schedule that
corresponds to the leverage ratio of Consolidated Container Holdings and its
subsidiaries on a consolidated basis. Currently, we are paying the following
margins on amounts that we have borrowed:
- 0.75% for base rate loans and 1.75% for eurodollar rate loans for tranche
A term loans and revolving credit loans;
- 1.25% for base rate loans and 2.25% for eurodollar rate loans for tranche
B term loans; and
- a rate to be determined for tranche C terms loans, based on the agreement
between Consolidated Container Company and the lender or lenders providing
that loan.
In addition, Consolidated Container Company:
- pays a commitment fee on the unused commitments under the revolving credit
facility, ranging from 0.25% to 0.50% on an annual basis depending on the
same schedule of leverage ratios, payable quarterly in arrears;
- pays an annual administration fee to Bankers Trust Company, as
administrative agent; and
- paid, on the closing date of the senior credit facility, a commitment fee
equal to 3/8 of 1% per annum of the total committed amount of the senior
credit facility from April 29, 1999 to and including that closing date.
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<PAGE>
RECENTLY ISSUED ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivatives and Hedging
Activities ("SFAS No. 133"). SFAS No. 133 is effective for all fiscal quarters
of all fiscal years beginning after June 15, 2000. SFAS No. 133 requires
companies to recognize all derivative instruments on their balance sheet as
either assets or liabilities measured at fair value. SFAS No. 133 also specifies
a new method of accounting for hedging transactions, prescribes the type of
items and transactions that may be hedged, and specifies detailed criteria to be
met to qualify for hedge accounting. We have not completed our evaluation of the
impact that the adoption of SFAS No. 133 will have on our financial statements.
YEAR 2000 COMPLIANCE
The Year 2000 problem is the result of computer programs and embedded chips
being written with two instead of four digits to define the applicable year. As
a result, computer programs and embedded chips that use date sensitive
information may recognize a date using "00" as the year 1900 rather than the
year 2000. If we, or third parties with whom we have a material relationship, do
not correct a material Year 2000 problem, the result could be an interruption
in, or a failure of, some normal business activities.
STATE OF READINESS
To manage the process of becoming Year 2000 compliant, we have taken the
following steps:
- We have identified the significant business areas, including for both
information technology and embedded systems, that required assessment,
remediation and testing, and have completed the testing of a majority of
these areas.
- We retained a software consultant to remediate and test the company-wide
software and management information system.
We summarize below each of these major business areas and our state of
readiness for them.
The first major area is our information technology infrastructure, including
hardware platforms, telecommunications equipment, plant equipment and security
systems, and our software, including operating systems, supporting software,
enterprise software and electronic commerce. We have completed the majority of
our assessment of this area and, as of May 1, 1999, had remediated 95% of it,
including embedded applications and the networking of the hardware and software
systems throughout our manufacturing plants and offices. We have replaced
antiquated hardware and have designed, executed and tested the addition of new
platforms and remote networking for all systems.
In addition, we have consolidated essentially all of our business
information systems to two third-party enterprise resource planning software
platforms with little or no customization. We are expecting to receive full
certification of Year 2000 compliance by the applicable vendors. We have
implemented these platforms in most remote sites and have completed the testing
of this system.
The second major area is our manufacturing facilities. We have concluded the
assessment phase and are in the process of remediating this area. Because most
of our manufacturing facilities are not automated with date sensitive equipment,
we do not believe that this area poses a material threat of interruption. Based
on current information, we believe this area will be remediated by the end of
October 1999. The identification and remediation of plant specific Year 2000
compliance issues is substantially complete.
The final major area comprises our relationships with third parties,
including customers and suppliers of raw materials. We are continuing to conduct
an assessment of this area. While we have not
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<PAGE>
completed the assessment and remediation, if any, of this area, we believe that
many of our material third party relationships are with large companies who are
aware of the Year 2000 issue.
CONTINGENCY PLANS
We have been developing contingency plans to address the most reasonably
likely worst case scenario resulting from the Year 2000 problem. These plans
include the retention of a limited number of outside consultants to assist our
need to respond to unforeseen issues and the implementation of contingency
plans. We have developed contingency plans for most of our plants. But, we have
not been able to formulate these plans in their entirety or to forecast the
total cost of completing contingency plans for each of our major areas. We
expect to continue to develop these contingency plans until they are completed.
COSTS TO ADDRESS YEAR 2000 ISSUES
We estimate that the total cost of completing the Year 2000 project will be
approximately $4.4 million. This amount includes implementation, training, and
testing costs related to the enterprise-wide software system and the full
replacement of antiquated hardware, software, and local/ wide area network
infrastructure. As of June 30, 1999, we had spent approximately $3.9 million on
the Year 2000 project. We estimate that the remaining budgeted amount of $0.5
million will be adequate to complete the Year 2000 project on a timely basis. We
expect to fund the cost of completing the Year 2000 project from cash flow from
operations.
RISKS OF YEAR 2000 ISSUES
Our failure or the failure of material third party vendors and customers to
make our or their systems Year 2000 compliant could have a material adverse
impact on our results of operations and financial condition. Although we
recognize the risks involved, we believe that the steps we have taken and expect
to take will reduce our exposure to Year 2000 problems. The Year 2000 problem
has, however, inherent risks that are difficult to measure, including our
ability to test all material remediated systems in a timely fashion, the
readiness of third party vendors and customers and our ability to fashion
contingency plans. Accordingly, we cannot assure you that we will foresee all
Year 2000 problems or remediate them on a timely basis.
MARKET RISK SENSITIVE INSTRUMENTS
Our primary exposure to market risk is changing interest rates due to some
of our debt bearing a floating rate of interest. Our policy is to manage
interest rate risk by using a combination of fixed and floating rate debt. We
have not entered into any hedging or derivative transactions to hedge this debt
or otherwise. A 10% increase in interest rates at July 2, 1999 would not have a
material adverse effect on our results of operations, financial condition or
cash flows.
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SELECTED HISTORICAL FINANCIAL DATA OF REID PLASTICS, INC.
The following table presents selected historical financial data of Reid
Plastics, preceding the acquisition of Reid Plastics Holdings, the parent of
Reid Plastics, by affiliates of Vestar Capital Partners III on October 15, 1997,
for each of the three years in the period ended December 31, 1996 and the period
from January 1, 1997 to October 14, 1997 and the selected historical
post-acquisition financial data for the period from October 15, 1997 to December
31, 1997, the year ended December 31, 1998 and the six months ended June 30,
1998 and 1999. The selected historical post-acquisition financial data for the
six months ended June 30, 1998 are unaudited, and, in the opinion of the
management of Consolidated Container Company, reflect all adjustments consisting
of normal recurring adjustments that are necessary to present fairly the
financial results for this period. The selected historical financial data do not
purport to indicate results of operations as of any future date or for any
future period. The selected historical consolidated financial data have been
derived from and should be read in conjunction with the audited and unaudited
financial statements of Reid Plastics and the notes to them, "Use of Proceeds"
and "Management's Discussions and Analysis of Financial Condition and Results of
Operations of Reid Plastics, Inc."
<TABLE>
<CAPTION>
PRE-ACQUISITION
---------------------------------- POST-ACQUISITION
PERIOD FROM --------------------------------------------
JANUARY 1, PERIOD FROM
YEAR ENDED DECEMBER 1997 OCTOBER 15,
31, THROUGH 1997 THROUGH YEAR ENDED SIX MONTHS
--------------------- OCTOBER 13, DECEMBER 31, DECEMBER 31, --------------
1994 1995 1996 1997 1997 1998 1998 1999
----- ------ ------ ----------- ------------ ------------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
) (IN MILLIONS
INCOME STATEMENT DATA:
Net sales............................... $43.8 $105.5 $136.6 $164.7 $ 33.2 $175.2 $ 91.9 $ 85.4
Cost of goods sold...................... 36.7 89.9 116.3 144.5 31.8 144.7 75.4 67.4
----- ------ ------ ----------- ------ ------ ------ ------
Gross profit............................ 7.1 15.6 20.3 20.2 1.4 30.5 16.5 18.0
Selling, general and administrative
expenses.............................. 4.6 10.3 13.3 14.1 3.4 18.1 9.2 9.0
Nonrecurring charges (a)................ -- -- -- 9.1 -- -- -- --
----- ------ ------ ----------- ------ ------ ------ ------
Operating income (loss)................. 2.5 5.3 7.0 (3.0) (2.0) 12.4 7.3 9.0
Other income (expense).................. (0.3) 0.8 0.6 0.6 -- 1.3 0.6 0.5
Interest expense, net (b)............... 1.3 4.0 4.8 6.3 1.9 10.5 5.2 4.5
----- ------ ------ ----------- ------ ------ ------ ------
Income (loss) before income taxes....... 0.9 2.1 2.8 (8.7) (3.9) 3.2 2.7 5.0
Income tax expense (benefit)............ 0.6 1.3 2.2 (1.2) (0.1) 2.8 1.8 2.9
Minority interest in subsidiaries....... (0.1) 0.2 0.2 0.3 0.1 0.1 -- (.3)
----- ------ ------ ----------- ------ ------ ------ ------
Income (loss) before extraordinary
item.................................. 0.4 0.6 0.4 (7.8) (3.9) 0.3 0.9 2.4
Extraordinary item...................... -- (0.1) -- -- -- -- -- (1.2)
----- ------ ------ ----------- ------ ------ ------ ------
Net income (loss)....................... $ 0.4 $ 0.5 $ 0.4 $ (7.8) $ (3.9) $ 0.3 $ 0.9 $ 1.2
----- ------ ------ ----------- ------ ------ ------ ------
----- ------ ------ ----------- ------ ------ ------ ------
OTHER DATA:
EBITDA (c).............................. $ 3.7 $ 10.6(d) $ 14.8 $ 19.0(d) $ 2.0 $ 29.6 $ 15.7 $ 17.0(d)
Net cash provided by (used in) operating
activities............................ 2.6 7.1 10.8 5.5 1.7 11.4 (3.1) --
Net cash used in investing activities... (3.5) (33.9) (43.2) (8.5) (4.5) (11.1) (6.2) (5.0)
Net cash provided by financing
activities............................ 1.0 29.0 35.3 (2.9) 6.6 0.7 9.8 4.4
Depreciation and amortization........... 1.4 4.9 7.7 12.6 4.1 16.0 7.8 7.2
Capital expenditures.................... 2.9 5.7 5.9 9.3 4.8 12.7 8.0 5.1
Cash interest expense, net (e).......... 1.3 3.8 4.5 6.3 1.9 10.5 5.2 4.5
Ratio of earnings to fixed charges
(f)................................... 1.6x 1.5x 1.5x -- -- 1.3x 1.4x 1.9x
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents............... $ 1.6 $ 3.7 $ 6.7 $ 0.7 $ 4.4 $ 5.4 $ 5.0 $ --
Working capital......................... 0.8 5.9 10.8 -- 20.6 14.0 32.1 --
Total assets............................ 23.5 82.4 165.9 -- 235.4 219.9 237.2 --
Total debt.............................. 12.9 37.7 98.0 -- 123.9 121.5 131.2 --
Total stockholders' equity (deficit).... (0.5) 19.9 19.8 -- 54.5 51.2 55.4 --
</TABLE>
(FOOTNOTES APPEAR ON THE FOLLOWING PAGE)
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<PAGE>
(FOOTNOTES FOR TABLE ON PRIOR PAGE)
(a) Nonrecurring charges consisted of the write-off of some assets in connection
with consolidation of plants, which occurred prior to October 14, 1997. This
amount has not been included in EBITDA for the same period.
(b) Represents interest expense, net of interest income.
(c) EBITDA represents earnings,including minority interest and other income
before interest, income taxes, and depreciation and amortization. EBITDA is
presented because it is a widely accepted financial indicator used by some
investors and analysts to analyze and compare companies on the basis of
operating performance. EBITDA is not intended to represent cash flows for
the periods presented, nor has it been presented as an alternative to
operating income as an indicator of operating performance. It should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles and is
not indicative of operating income or cash flow from operations as
determined under generally accepted accounting principles. In addition, our
calculation of EBITDA is not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies between
methods of calculating it.
(d) Represents Adjusted EBITDA for the period. Adjusted EBITDA represents EBITDA
as adjusted to give effect to extraordinary items in connection with the
early extinguishment of debt for the year ended December 31, 1995 and the
six months ended June 30, 1999 and nonrecurring charges in connection with
the consolidation of plants, which occurred prior to October 14, 1997, for
the period from January 1, 1997 through October 14, 1997. We have calculated
Adjusted EBITDA as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM JANUARY 1, 1997 SIX MONTHS ENDED
DECEMBER 31, 1995 THROUGH OCTOBER 14, 1997 JUNE 30, 1999
--------------------- ------------------------------- -----------------
<S> <C> <C> <C>
EBITDA...................... 10.5 9.9 15.8
Consolidation Savings....... -- 9.1 --
Extraordinary Item.......... 0.1 -- 1.2
--- --- ---
Adjusted EBITDA........... 10.6 19.0 17.0
--- --- ---
--- --- ---
</TABLE>
(e) Cash interest expense excludes amortization of deferred financing fees.
(f) For purposes of determining the ratio of earnings to fixed charges,
"earnings" is defined as income (loss) before income taxes and extraordinary
item plus fixed charges. "Fixed charges" consist of interest expense on all
debt, amortization of deferred financing costs and one-third of rental
expense on operating leases, representing that portion of rental expense
which Reid Plastics deemed to be attributable to interest. Earnings were
insufficient to cover fixed charges for the year ended December 31, 1997 by
$12.6 million.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF REID PLASTICS, INC.
OVERVIEW
Prior to the consummation of the transactions, Reid Plastics was a leading
developer, manufacturer and marketer of rigid plastic containers for bottled
water, milk and fruit juices and also manufactures plastic containers for the
institutional food, chemical and automotive sectors of the U.S. plastic
packaging industry. Reid Plastics has over 1,000 customers, including well known
companies, such as McKesson Water Products, Perrier Group of America, Procter &
Gamble and Suntory Water Group. In 1998, Reid Plastics sold over 1.0 billion
containers using primarily three resins, HDPE, PC and PET. Its product line
included:
- one, three, five and six gallon PC water bottles;
- HDPE bottles in sizes ranging from half pint to ten quarts for water,
milk, juice and industrial chemicals;
- PET containers for bottled water, food and other beverages; and
- dispensing valves and other injection molded water cooler components.
Reid Plastics operated 25 facilities in North America with eight located
throughout California, three in Canada and the balance throughout the United
States and Mexico.
Between 1996 and 1998, the financial results of Reid Plastics were affected
by several factors. In 1996, Reid Plastics completed two strategic acquisitions.
In November 1996, Reid Plastics acquired Stewart Walker, expanding Reid
Plastics' offering of HDPE containers to the food and automotive sectors and PET
bottles for the other beverage and food sectors. Also in November 1996, Reid
Plastics purchased PCI Demopolis, a leading regional supplier of HDPE blow
molded plastic containers to the dairy, juice, water, industrial and other
sectors.
In October 1997, an affiliate of Vestar Capital Partners III purchased a
controlling interest in Reid Plastics Holdings, the parent and owner of Reid
Plastics. During this sale process, which began in early 1997, Reid Plastics'
net sales and gross profit decreased.
Following the acquisition by an affiliate of Vestar Capital Partners III,
Reid Plastics undertook a reorganization to cut costs, optimize its plant
network and integrate various prior acquisitions. As a result, in the fourth
quarter of 1997 and in 1998, Reid Plastics began to consolidate and rationalize
its manufacturing plants, increase capacity utilization of its plants and
distribution system, resulting, in part, in lower transportation costs, hire
senior managers and retain outside consultants to manage the process described
above.
In 1998 and the first six months of 1999, Reid Plastics' net sales decreased
due to decreases in the price of HDPE, one of its principal plastic resins.
Although net sales are affected by fluctuations in resin prices, Reid Plastics'
gross profit is, in general, substantially unaffected by these fluctuations
because industry practice and contractual arrangements with customers permit or
require Reid Plastics over time to pass through changes in resin prices by means
of changes in product pricing.
RESULTS OF OPERATIONS
SIX MONTH PERIOD ENDED JUNE 30, 1999 COMPARED TO SIX MONTH PERIOD ENDED JUNE
30, 1998
NET SALES. Net sales decreased by 7.1% to $85.4 million for the six month
period ended June 30, 1999 from $91.9 million in the comparable period for 1998.
The decrease was due to (1) lower HDPE
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<PAGE>
prices, which were passed on to Reid Plastics' customers in the form of lower
selling prices, and (2) lower sales volume at plants in Albuquerque, New Mexico,
Calgary, Alberta and Riverside, California.
GROSS PROFIT. Gross profit increased by 9.1% to $18.0 million for the six
month period ended June 30, 1999 from $16.5 million for the comparable period in
1998. The increase was due to plant rationalizations and operating efficiency
improvements.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased by 2.2% to $9.0 million for the six month
period ended June 30, 1999 from $9.2 million for the comparable period in 1998.
The decrease was due to the renegotiation of a non-compete agreement with a
senior manager of Reid Plastics and the amortization of payments under that
agreement.
OPERATING INCOME. Operating income increased by 23.3% to $9.0 million for
the six month period ended June 30, 1999 from $7.3 million for the comparable
period in 1998. The increase was the result of the factors discussed above.
OTHER INCOME. Other income decreased by 16.7% to $0.5 million for the six
month period ended June 30, 1999 from $0.6 million for the comparable period in
1998. The decrease was due to a decrease in profitability of Reid Plastics'
joint ventures in Columbia and the Dominican Republic.
INTEREST EXPENSE, NET. Interest expense, net decreased by 13.5% to $4.5
million for the six month period ended June 30, 1999 from $5.2 million for the
comparable period in 1998. The decrease was due to lower interest rates and
lower borrowings under its credit agreement.
EXTRAORDINARY ITEM. In connection with the repayment of its bank loans,
Reid Plastics wrote-off unamortized debt issuance costs of $2.0 million. This
loss was reduced by $0.8 million representing the tax benefit associated with
this write-off.
NET INCOME. Net Income increased by 33.3% to $1.2 million for the six month
period ended June 30, 1999 from $0.9 million for the comparable period in 1998.
The decrease was primarily the result of the factors discussed above.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
NET SALES. Net sales decreased by 11.5% to $175.2 million in 1998 from
$197.9 million in 1997. The decrease was partially due to a reduction in the
price of HDPE resin in 1998, which was passed on over time to customers in the
form of lower selling prices, lower sales volume in connection with the closure
of plants in Calgary, Alberta and Riverside, California and a reduction in
business at the Albuquerque, New Mexico facility.
GROSS PROFIT. Gross profit increased by 41.2% to $30.5 million in 1998 from
$21.6 million in 1997. The increase was primarily attributable to improved
management of operating expenses following the acquisition of a controlling
interest in Reid Plastics Holdings by an affiliate of Vestar Capital Partners
III, including a reduction of $2.5 million in labor and overhead expenses
associated with the consolidation of several manufacturing facilities. In
particular, Reid Plastics consolidated its Monrovia, California facility into
its Samuelson, California facility, closed its Calgary, Alberta facility (moving
its equipment into the City of Industry (Willow), California facility), closed
its Sacramento, California facility (moving its business into its Tracy,
California facility) and reduced activity at its Albuquerque, New Mexico and
Riverside, California facilities. In connection with the 1997 acquisition of a
controlling interest in Reid Plastics Holdings by an affiliate of Vestar Capital
Partners III, Reid Plastics established a reserve to account for some leases and
plants which it expected to eliminate, close or consolidate with others, which
had the effect of reducing cost of sales by $1.1 million. The lease and other
expenses associated with these facilities had been expensed in the prior period.
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<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased by 3.4% to $18.1 million in 1998 from $17.5
million in 1997. The increase resulted primarily from increased costs of hiring
management, the relocation of corporate offices to Diamond Bar, California and
the cost of hiring consulting services in 1998.
NONRECURRING CHARGES. In October 1997, Reid Plastics recorded $9.1 million
of nonrecurring charges related to the consolidation and closure of some
warehousing, manufacturing and administrative facilities.
OPERATING INCOME (LOSS). Operating income (loss) increased to $12.4 million
in 1998 from ($5.0) million in 1997. The increase was the result of the factors
discussed above.
OTHER INCOME. Other income increased by 116.7% to $1.3 million in 1998 from
$0.6 million in 1997. The increase was primarily attributable to an increase in
profitability of Reid Plastics' joint ventures in Colombia and the Dominican
Republic.
INTEREST EXPENSE, NET. Interest expense, net increased by 28.0% to $10.5
million in 1998 from $8.2 million in 1997. The increase was due to higher
average outstanding borrowings under its credit agreement.
NET INCOME (LOSS). In 1998, Reid Plastics recorded net income of $0.3
million compared to a net loss of ($11.7) million in 1997. The increase was
primarily the result of the factors discussed above.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
NET SALES. Net sales increased by 44.9% to $197.9 million in 1997 from
$136.6 million in 1996. The increase was due primarily to (1) the inclusion of
the full year results for Stewart Walker and PCI Demopolis, which were acquired
in November 1996, and (2) higher purchase prices for HDPE resin, which resulted
in higher selling prices to customers. The acquisitions referred to above were
accounted for using the purchase method of accounting, under which the financial
results of an acquired entity are included from the date of acquisition.
GROSS PROFIT. Gross profit increased by 6.4% to $21.6 million in 1997 from
$20.3 million in 1996. The increase was due primarily to the inclusion of the
full year results for Stewart Walker and PCI Demopolis which was offset, in
part, by an increase in depreciation expense to $11.7 million in 1997 from $5.1
million in 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased by 31.6% to $17.5 million in 1997 from $13.3
million in 1996. The increase was due primarily to the addition of overhead
expenses associated with Stewart Walker and PCI Demopolis and a $2.6 million
increase in amortization expense resulting from additional goodwill associated
with these acquisitions.
NONRECURRING CHARGES. In October 1997, Reid Plastics recorded $9.1 million
of nonrecurring charges related to the rationalization and closing of some
warehousing, manufacturing and administrative facilities.
OPERATING INCOME (LOSS). Operating income (loss) decreased to ($5.0)
million in 1997 from $7.0 million in 1996. The decrease was the result of the
factors discussed above.
OTHER INCOME. Other income of $0.6 million in 1997 was unchanged from the
same amount in 1996.
INTEREST EXPENSE, NET. Interest expense, net increased by 70.8% to $8.2
million in 1997 from $4.8 million in 1996. The increase was due to increased
borrowings primarily to fund the
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November 1996 acquisitions of Stewart Walker and PCI Demopolis, and the
acquisition of a controlling interest in Reid Plastics Holdings by an affiliate
of Vestar Capital Partners III in October 1997.
NET INCOME (LOSS). Reid Plastics recorded a net loss of ($11.7) million in
1997 and net income of $0.4 million in 1996. The change was primarily a result
of the factors discussed above.
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SELECTED HISTORICAL FINANCIAL DATA OF SUIZA PACKAGING
The following table presents selected historical financial data of Suiza
Packaging preceding the acquisition of Plastics Management Group, the
predecessor of Franklin Plastics, by Suiza Foods for each of the three years in
the period ended September 30, 1996 and for the ten months ended July 31, 1997,
and the selected historical post-acquisition financial data of Suiza Packaging
for the five months ended December 31, 1997, for the year ended December 31,
1998 and for the six months ended June 30, 1998 and 1999. The selected
historical post-acquisition financial data for the year ended December 31, 1998
and the six months ended June 30, 1998 and 1999 include the operations of twelve
businesses purchased by Suiza Packaging in 1998 from the respective acquisition
dates (including the significant acquisition of Plastic Containers on May 29,
1998). Franklin Plastics was purchased by Suiza Foods on July 31, 1997.
Financial data subsequent to that date is referred to as post-acquisition. The
selected historical post-acquisition financial data for the six months ended
June 30, 1998 and 1999 are unaudited, and, in the opinion of management of
Consolidated Container Company, reflect all adjustments consisting of normal
recurring adjustments that are necessary to present fairly the financial results
for these periods. The selected historical financial data do not purport to
indicate results of operations as of any future date or for any future period.
The selected historical financial data have been derived from and should be read
in conjunction with the audited and unaudited financial statements of Suiza
Packaging and the notes to them, "Use of Proceeds" and "Management's Discussions
and Analysis of Financial Conditions and Results of Operations of Suiza
Packaging."
<TABLE>
<CAPTION>
POST-ACQUISITION
PRE-ACQUISITION --------------------------------------------
-----------------------------------
TEN MONTHS FIVE MONTHS
SEPTEMBER 30 JULY 31,
YEAR ENDED SEPTEMBER THROUGH JULY THROUGH YEAR ENDED SIX MONTHS
30, 31, DECEMBER 31, DECEMBER 31, ENDED JUNE 30,
-------------------- ------------- ------------ ------------ --------------
1994 1995 1996 1997 1997 1998 1998 1999
----- ----- ------ ------------- ------------ ------------ ------ ------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................. $38.4 $67.1 $ 80.1 $ 89.6 $ 49.7 $367.9 $114.6 $263.5
Cost of goods sold........................ 33.0 61.4 67.6 79.7 39.0 83.1 89.4 198.7
----- ----- ------ ------ ------ ------ ------ ------
Gross profit.............................. 5.4 5.7 12.5 9.9 10.7 84.8 25.2 64.8
Selling, general and administrative
expenses................................ 1.2 1.0 2.6 1.9 6.3 38.2 13.0 30.3
----- ----- ------ ------ ------ ------ ------ ------
Operating income.......................... 4.2 4.7 9.9 8.0 4.4 46.6 12.2 34.5
Other income (expense).................... 0.1 0.3 (0.4) (0.2) -- (0.1) -- .3
Interest expense, net (a)................. 0.3 0.6 1.1 1.5 4.7 26.8 8.4 18.6
----- ----- ------ ------ ------ ------ ------ ------
Income (loss) before income taxes......... 4.0 4.4 8.4 6.3 (0.3) 19.7 3.8 16.2
Income tax expense........................ 0.1 0.1 0.2 0.4 0.2 9.5 1.8 7.7
----- ----- ------ ------ ------ ------ ------ ------
Net income (loss)......................... $ 3.9 $ 4.3 $ 8.2 $ 5.9 $ (0.5) $ 10.2 2.0 8.5
----- ----- ------ ------ ------ ------ ------ ------
----- ----- ------ ------ ------ ------ ------ ------
OTHER DATA:
EBITDA (b)................................ $ 6.6 $ 7.1 $ 13.6 $ 12.8 $ 6.6 $ 63.8 17.1 49.6
Net cash provided by (used by) operating
activities.............................. 5.8 5.7 13.1 9.0 9.2 26.7 2.1 21.2
Net cash used in investing activities..... (0.6) (3.3) (29.5) (14.8) (145.4) (142.5) (59.6) (14.8)
Net cash provided by (used in) financing
activities.............................. (5.3) (2.4) 17.1 5.0 136.4 117.1 58.2 (3.5)
Depreciation and amortization............. 2.3 2.1 4.1 5.0 2.2 17.3 4.9 14.8
Capital expenditures...................... 11.8 8.2 29.4 14.7 9.3 63.7 17.8 16.0
Cash interest expense, net (c)............ 0.3 0.6 1.1 1.5 4.7 27.3 8.5 19.0
Ratio of earnings to fixed charges (d).... 5.0x 3.5x 4.4x 3.0x -- 1.6x 1.4x 1.8x
</TABLE>
(TABLE CONTINUED AND FOOTNOTES APPEAR ON THE FOLLOWING PAGE)
119
<PAGE>
(TABLE CONTINUED FROM AND FOOTNOTES FROM TABLE ON PRIOR PAGE)
<TABLE>
<CAPTION>
POST-ACQUISITION
PRE-ACQUISITION --------------------------------------------
-----------------------------------
TEN MONTHS FIVE MONTHS
SEPTEMBER 30 JULY 31,
YEAR ENDED SEPTEMBER THROUGH JULY THROUGH YEAR ENDED SIX MONTHS
30, 31, DECEMBER 31, DECEMBER 31, ENDED JUNE 30,
-------------------- ------------- ------------ ------------ --------------
1994 1995 1996 1997 1997 1998 1998 1999
----- ----- ------ ------------- ------------ ------------ ------ ------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (at end of period):
Cash and cash equivalents................. $ 0.1 $ 0.2 $ 0.8 $ -- $ 0.3 $ 1.7 $ 0.9 $ --
Working capital........................... (5.8) (4.3) (23.1) 2.5 (5.7) (22.2) 6.7 --
Total assets.............................. 13.5 17.6 46.3 57.9 158.9 591.9 540.9 --
Total debt................................ 6.3 7.0 27.7 38.7 108.8 404.7 372.8 --
Total preferred stock..................... -- -- -- -- 22.7 72.6 65.8 --
Total common stockholders' equity......... 1.8 3.9 7.5 9.2 3.0 13.3 11.3 --
</TABLE>
- ------------------------
(a) Represents interest expense, net of interest income.
(b) EBITDA represents earnings (including minority interest and other income)
before interest, income taxes, depreciation and amortization. EBITDA is
presented because it is a widely accepted financial indicator used by some
investors and analysts to analyze and compare companies on the basis of
operating performance. EBITDA is not intended to represent cash flows for
the period, nor has it been presented as an alternative to operating income
as an indicator of operating performance. It should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles and is not
indicative of operating income or cash flow from operations as determined
under generally accepted accounting principles. In addition, our calculation
of EBITDA is not necessarily comparable to other similarly titled captions
of other companies due to potential inconsistencies between methods of
calculating it.
(c) Cash interest expense, net excludes amortization of deferred financing fees
and other non-cash interest expense.
(d) For purposes of determining the ratio of earnings to fixed charges,
"earnings" is defined as income (loss) before income taxes plus fixed
charges. "Fixed charges" consist of interest expense on all debt,
amortization of deferred financing costs and one-third of rental expense on
operating leases, representing that portion of rental expense which Suiza
Packaging deemed to be attributable to interest. Earnings were insufficient
to cover fixed charges for the five months ended December 31, 1997 by $0.3
million.
120
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF SUIZA PACKAGING
OVERVIEW
Prior to the consummation of the transactions, Suiza Packaging included the
operations of Franklin Plastics and Plastic Containers. Franklin Plastics was
acquired by Suiza Foods in July 1997. Plastic Containers and its immediate
parent, Continental Can Company, were acquired by Suiza Foods in May 1998. Both
of these acquisitions were accounted for using the purchase method of
accounting, and the related accounting adjustments, including goodwill, were
pushed down and are reflected in the combined financial statements of Suiza
Packaging as of their respective acquisition dates. The combined financial
statements of Suiza Packaging for the periods before July 31, 1997 were prepared
using the historical basis of accounting for Plastics Management Group, the
predecessor of Suiza Packaging. Because of the application of the purchase
method of accounting, as of the respective acquisition dates of Franklin
Plastics and Plastic Containers, the operating results of Suiza Packaging and
its predecessor are presented using different bases of accounting that affect
the comparability of their operating results.
Prior to the consummation of the transactions, Suiza Packaging was a leading
domestic developer, manufacturer and marketer of rigid plastic containers for
many of the world's largest branded consumer products and beverage companies.
Suiza Packaging's product line consisted of single and multi-layer containers
made from a variety of plastic resins including HDPE, PP, PET and PVC in sizes
ranging from two ounces to five gallons.
Suiza Packaging's primary raw materials consisted of HDPE, PP, PET and PVC
resins. Although net sales were affected by fluctuations in resin prices, Suiza
Packaging's gross profit was, in general, substantially unaffected by these
fluctuations because industry practice and its contractual arrangements with
customers permitted or required it, over time, to pass through changes in resin
prices by means of changes in product pricing. Consequently, Suiza Packaging
believed that an analysis of the gross profit on a percentage of sales basis was
not meaningful.
During 1998, in addition to the Plastic Containers acquisition, Suiza
Packaging completed the acquisition of 11 other plastic packaging businesses
funded primarily with borrowings from Suiza Foods.
The year ended December 31, 1997 results of operations data has been derived
from the unaudited pre-acquisition financial records of Suiza Packaging for the
quarter ended March 31, 1997 and the audited pre and post acquisition financial
statements of Suiza Packaging for the four months ended July 31, 1997 and the
five months ended December 31, 1997.
RESULTS OF OPERATIONS
SIX MONTHS PERIOD ENDED JUNE 30, 1999 COMPARED TO SIX MONTH PERIOD ENDED
JUNE 30, 1998
NET SALES. Net sales increased by 219.9% to $263.5 million for the six
month period ended June 30, 1999 from $114.6 million for the comparable period
for 1998. The increase was primarily attributable to the inclusion of entities
which Suiza Packaging acquired after March 31, 1998, including Plastic
Containers, Liquitane, Rostan Corporation and Consolidation Plastechs and as the
commencement of operations at six new locations after March 31, 1998.
GROSS PROFIT. Gross profit increased by 157.1% to $64.8 million of the six
month period ended June 30, 1999 from $25.2 million for the comparable period in
1998. The increase is primarily a result of the inclusion of Plastic Containers
in 1999, which accounted for $26.1 million of the gross profit for that period.
Gross profit for the Franklin Plastics operations increased from $20.1 million
in the first six
121
<PAGE>
months of 1999 to $38.7 million compared to the first months of 1998 due to the
inclusion of the businesses which were acquired after March 31, 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 133.1% to $30.3 million for the six month
period ended June 30, 1999 from $13.0 million for the comparable period in 1998.
The increase was due to the inclusion of $12.4 million of operating expenses of
Plastic Containers that were included in the first six months of 1999, together
with $1.7 million of amortization of the goodwill recorded in connection with
the acquisitions completed after March 31, 1998. Operating expenses related to
the Franklin Plastics operations were $5.4 million higher due to expenses
related to the integration of the acquired businesses.
OPERATING INCOME. Operating income increased by 182.7% to $34.5 million for
the six month period ended June 30, 1999 from $12.2 million for the comparable
period in 1998. The increase was due to the factors described above.
INTEREST EXPENSE, NET. Interest expense, net increased by 121.4% to $18.6
million for the six month period ended June 30, 1999 from $ 8.4 million for the
comparable period in 1998. The increase was due to the increase level of debt
incurred in connection with the business acquired, including Plastic Containers.
NET INCOME. Net income increased by 325% to $8.5 million for the six month
period ended June 30, 1999 from $2.0 million for the six month period ended June
30, 1998. The increase was due to the factors described above.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
NET SALES. Net sales increased by 218.0% to $367.9 million in 1998 from
$115.7 million in 1997. The increase in net sales is primarily attributable to
the inclusion of Plastic Containers, which was acquired in May 1998, together
with the acquisition of eleven additional plastic packaging businesses during
1998. Net sales attributable to acquired businesses, including Plastic
Containers, were $221.1 million. In addition, $4.4 million of the increase in
net sales resulted from new plant openings in 1998, and $6.2 million of the
increase from 1997 to 1998 was due to the inclusion for a full year of the
operations of four plants that we opened during 1997.
GROSS PROFIT. Gross profit increased by 371.1% to $84.8 million in 1998
from $18.0 million in 1997. The increase in gross profit was attributable to the
inclusion of the operations acquired during 1998 as well as the inclusion for a
full year in 1998 of plants that we opened during 1997. Of the total gross
profit of $84.8 million in 1998, $30.7 million was from Plastic Containers.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 409.3% to $38.2 million in 1998 from $7.5
million in 1997. The increase resulted primarily from the addition of the
businesses acquired, including $15.0 million of operating expenses at Plastic
Containers and $3.3 million of plant rationalization and realignment costs
related to the integration of the businesses acquired and $5.1 million related
to the amortization of goodwill recorded in connection with the businesses
acquired.
OPERATING INCOME. Operating income increased by 343.8% to $46.6 million in
1998 from $10.5 million in 1997. The increase in operating income is primarily
attributable to the factors discussed above.
INTEREST EXPENSE, NET. Interest expense, net increased by 362.1% to $26.8
million in 1998 from $5.8 million in 1997 due to the interest expense relating
to the debt incurred with respect to the businesses acquired in 1998. Interest
expense attributable to the Plastic Containers acquisition was $11.4 million.
122
<PAGE>
NET INCOME. Net income increased by 148.8% to $10.2 million in 1998 from
$4.1 million in 1997 due to the factors discussed above.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED SEPTEMBER 30, 1996
NET SALES. Net sales increased by 44.4% to $115.7 million in 1997 from
$80.1 million in 1996. The increase in net sales was due primarily to the
inclusion of a full year's results of operation in 1997 of four operating
facilities that we acquired in late 1996.
GROSS PROFIT. Gross profit increased by 44.0% to $18.0 million in 1997 from
$12.5 million in 1996. The increase resulted primarily from the inclusion of the
full year of operations for four new facilities in 1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 188.5% to $7.5 million in 1997 from $2.6
million in 1996. The increase was due primarily to the increase in the number of
plants operating in 1997 compared to 1996 and the amortization of goodwill
related to acquisitions. These increases were offset, part, by reduced corporate
charges due to the establishment of a corporate administrative function in 1997,
which costs were less than the amounts previously charged by the predecessor
parent company.
OPERATING INCOME. Operating income increased by 6.1% to $10.5 million in
1997 from $9.9 million in 1996. The $0.6 million increase in 1998 was
attributable to the factors discussed above.
INTEREST EXPENSE, NET. Interest expense, net increased by 427.3% to $5.8
million in 1997 from $1.1 million in 1996 due to the interest on the debt in
connection with Suiza Foods' acquisition of Franklin Plastics and the formation
of Suiza Packaging.
NET INCOME. For reasons discussed above, net income decreased by 50.0% to
$4.1 million in 1997 from $8.2 million in 1996.
123
<PAGE>
SELECTED HISTORICAL PRE-ACQUISITION FINANCIAL DATA
OF PLASTIC CONTAINERS, INC.
The following table presents selected historical financial data of Plastic
Containers, preceding its acquisition by Suiza Foods on May 29, 1998, for each
of the four years in the period ended December 31, 1997 and the five months
ended May 29, 1998. The post-acquisition historical financial data of Plastic
Containers for the seven month period ended December 31, 1998 and the unaudited
six months ended June 30, 1999 is included in the historical financial data of
Suiza Packaging for those periods. The selected historical pre-acquisition
financial data do not purport to indicate results of operations as of any future
date or for any future period. The selected historical pre-acquisition financial
data have been derived from and should be read in conjunction with the audited
financial statements of Plastic Containers and the notes to them, "Use of
Proceeds" and "Management's Discussions and Analysis of Financial Conditions and
Results of Operations of Suiza Packaging."
<TABLE>
<CAPTION>
FIVE MONTHS
YEAR ENDED DECEMBER 31, ENDED MAY 29,
------------------------------------------ ---------------
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
INCOME STATEMENT DATA:
Net sales................................................. $ 230.5 $ 277.1 $ 267.8 $ 279.6 $ 108.9
Cost of goods sold........................................ 192.6 237.7 224.8 234.2 92.2
Gross profit.............................................. 37.9 39.4 43.0 45.4 16.7
--------- --------- --------- --------- ------
Selling, general and administrative expenses.............. 29.3 30.0 35.3 27.8 11.6
--------- --------- --------- --------- ------
Operating income.......................................... 8.6 9.4 7.7 17.6 5.1
Other expense............................................. 0.4 0.3 0.4 0.6 --
Interest expense, net (a)................................. 11.6 11.6 12.8 12.1 5.0
--------- --------- --------- --------- ------
Income (loss) before income taxes and extraordinary
item.................................................... (3.4) (2.5) (5.5) 4.9 0.1
Income tax benefit........................................ 1.6 2.5 1.9 1.0 1.6
--------- --------- --------- --------- ------
Income (loss) before extraordinary item................... (1.8) -- (3.6) 5.9 1.7
Extraordinary item -- loss on early extinguishment of
debt.................................................... (0.2) (0.2) (7.3) -- --
Cumulative effect of accounting change.................... (0.5) -- -- -- --
--------- --------- --------- --------- ------
Net income (loss)......................................... $ (2.5) $ (0.2) $ (10.9) $ 5.9 $ 1.7
--------- --------- --------- --------- ------
--------- --------- --------- --------- ------
OTHER DATA:
EBITDA (b)................................................ $33.3(c) $33.1(c) $28.7(c) $29.9 $ 10.7
Net cash provided by operating activities................. 17.6 12.5 24.5 21.3 14.0
Net cash provided by (used in) investing activities....... (14.9) (30.3) (10.5) (29.7) (13.9 )
Net cash provided by (used in) financing activities....... (5.5) 16.5 (3.3) (1.3) (0.3 )
Depreciation and amortization............................. 25.1 24.0 21.4 12.9 5.6
Capital expenditures...................................... 15.0 30.7 21.2 11.1 6.8
Cash interest expense, net (d)............................ 11.6 11.6 12.7 11.4 4.8
Ratio of earnings to fixed charges (e).................... -- -- -- 1.3x 1.0 x
BALANCE SHEET DATA (at end of period):
Cash and cash equivalents................................. $ 2.7 $ 1.4 $ 12.2 $ 2.5 $ 2.3
Working capital........................................... 24.2 0.2 25.3 29.9 23.4
Total assets.............................................. 209.3 219.6 205.7 204.9 207.3
Total debt................................................ 105.5 105.4 130.0 129.0 128.7
Total stockholders' equity................................ 37.7 37.5 14.2 20.1 16.5
</TABLE>
(FOOTNOTES TO TABLE APPEAR ON FOLLOWING PAGE)
124
<PAGE>
(FOOTNOTES FROM TABLE ON PRIOR PAGE)
(a) Represents interest expense, net of interest income.
(b) EBITDA represents earnings, including minority interest and other income,
before interest, income taxes, depreciation and amortization and
extraordinary items and the cumulative effect of an accounting change.
EBITDA is presented because it is a widely accepted financial indicator used
by some investors and analysts to analyze and compare companies on the basis
of operating performance. EBITDA is not intended to represent cash flows for
the periods presented, nor has it been presented as an alternative to
operating income as an indicator of operating performance. It should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles and is
not indicative of operating income or cash flow from operations as
determined under generally accepted accounting principles. In addition, our
calculation of EBITDA is not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies between
methods of calculating it.
(c) Represents Adjusted EBITDA for the period. Adjusted EBITDA represents EBITDA
as adjusted to give effect to extraordinary items in connection with the
early extinguishment of debt for the years ended December 31, 1994, 1995,
and 1996 and the cumulative effect of an accounting change for the year
ended December 31, 1994. We have calculated Adjusted EBITDA as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1996
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
EBITDA.............................. 32.6 32.9 21.4
Extraordinary item.................. 0.2 0.2 7.3
Cumulative effect of accounting
change............................ 0.5 -- --
--- --- ---
Adjusted EBITDA................... 33.3 33.1 28.7
--- --- ---
--- --- ---
</TABLE>
(d) Cash interest expense, net excludes amortization of deferred financing fees.
(e) For purposes of determining the ratio of earnings to fixed charges,
"earnings" is defined as income (loss) before income taxes plus fixed
charges. "Fixed charges" consist of interest expense on all debt,
amortization of deferred financing costs and one-third of rental expense on
operating leases, representing that portion of rental expense which Plastic
Containers deemed to be attributable to interest. Earnings were insufficient
to cover fixed charges for the years ended December 31, 1994, 1995, and 1996
by $3.4 million, $2.5 million and $5.5 million.
125
<PAGE>
BUSINESS
We are a leading domestic developer, manufacturer and marketer of rigid
plastic containers for many of the world's largest branded consumer products and
beverage companies. In 1998, we sold over 4 billion containers to the dairy,
water, other beverage, food, household chemical and personal care, automotive
and agricultural and industrial chemical sectors. Our broad container product
line ranges in size from two ounce to six gallon containers and consists of
single and multi-layer plastic containers made from a variety of plastic resins,
including HDPE, PC, PP, PET and PVC. Because our broad range of product lines
serves customers in diverse industries and regions in the United States, we
believe that our net sales and cash flow are relatively stable, reducing our
exposure to particular market or regional economic cycles. We have grown net
sales through acquisitions and internal growth between 1996 and 1998 at a
compounded annual growth rate of approximately 58.0%.
We serve our customers with a wide range of manufacturing capabilities and
services through a nationwide network of 71 strategically located manufacturing
facilities and through a nationally recognized research, development and
engineering center. In addition, we have five international manufacturing
facilities in Canada, Puerto Rico and Mexico. Twenty-eight of our manufacturing
facilities are located on-site at our customers' plants. On-site facilities
enable us to work more closely with these customers, to facilitate just-in-time
inventory management, to eliminate costly shipping and handling charges, to
reduce working capital needs and to foster the development of long-term
manufacturing and distribution relationships. Our nationally recognized
research, development and engineering center creates innovative product designs
for our customers and process improvements in the manufacture of our containers.
Our customers rely on our design and technical expertise because package design
is a critical component in many of their marketing programs. Having been among
the first to use the higher output wheel manufacturing process, we continue to
be an industry leader in production technologies for plastic containers by:
- innovating new products, such as patented insulated handle designs for
microwaveable table syrup bottles, containers for liquid juice
concentrates and reformable containers, which permit reheating after being
filled without distortion to the container; and
- efficiently manufacturing containers with specialized features, such as
multiple barrier layers, in-mold labeling and "window-stripes," which are
see-through stripes that permit visual measurement of the container's
contents.
Approximately 74% of our pro forma net sales for the quarter ended March 31,
1999 were from products in which, we believe, we had a leading position. We
summarize in the table below operating information about the principal plastic
products in which we held a leading position in the United States in the first
quarter of 1999.
126
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA
NET SALES FOR
THE QUARTER
ENDED PERCENTAGE PRINCIPAL PRODUCTS
MARCH 31, OF TOTAL RESIN TOP TEN PACKAGED
PRODUCT CATEGORY 1999 NET SALES TYPES CUSTOMERS IN OUR PLASTIC CONTAINERS
- ------------------------- ------------- ------------- ----------------- ------------- -------------------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN
MILLIONS)
Dairy................ $ 38.2 22.9% HDPE, PET Dean Foods, - 1 gallon milk
Suiza Foods - 1 quart milk
- Half gallon milk
- Single-serve milk
Water................ 23.5 14.1 HDPE, PC, McKesson, - 1, 3, 5, and 6 gallon
PET Perrier, water
Suntory - 10 quart water
Other Beverages...... 26.0 15.6 HDPE, PET Minute Maid - Chilled juices
- Fruit drinks
Food................. 17.6 10.5 HDPE, PP, Procter & - Condiments
PET Gamble
Household Chemical &
Personal Care...... 23.8 14.2 HDPE, Procter & - Dishwashing soap
PVC, PET Gamble - Household cleaners
- Haircare products
Automotive........... 14.8 8.9 HDPE Mobil, - 1 quart motor oil
Pennzoil- - 1 gallon anti-freeze
Quaker State - 1 gallon windshield
wash fluid
Agricultural,
Industrial &
Other.............. 23.2 13.8 HDPE, PP Scotts - Insect repellants
Company - Weed killers
- Fertilizers
Total................ $ 167.1 100.0%
------ -----
------ -----
</TABLE>
COMPETITIVE STRENGTHS
We believe the following contribute to our position as a leading domestic
developer, manufacturer and marketer of rigid plastic containers:
LEADING SHARES IN STABLE MARKETS. We believe that we are a leading domestic
supplier of HDPE and PC containers to the dairy, water, other beverage, food,
household chemical and personal care, automotive and agricultural and industrial
and other sectors. Our customers operate, in general, in developed and stable
businesses that industry analysts believe will enjoy moderate but steady growth
for the next several years. We attribute our leadership positions primarily to
our broad and innovative product lines, well-established customer relationships,
high level of customer service, low-cost manufacturing capabilities,
technological expertise and ability to offer value-added services, such as
logistics support, inventory management, warehousing and advanced planning
assistance.
ADVANCED MANUFACTURING, DESIGN AND ENGINEERING CAPABILITIES. Our national
network of 71 manufacturing plants and over 600 operating lines permit us to
apply our broad range of manufacturing and design capabilities across a wide
geographic area to provide our customers with products targeted to their
specific needs. Our national manufacturing network enables us to:
- compete effectively for contracts that require low or high volume runs,
multiple distribution points and varied product and resin types;
127
<PAGE>
- make frequent, timely product deliveries to our customers, many of which
have implemented just-in-time inventory management techniques;
- respond quickly to our customers' frequently changing needs for production
capacity in new product and resin types and in new regions; and
- minimize transportation costs.
We believe our sophisticated manufacturing capabilities are characterized by
varied and flexible manufacturing technologies, as evidenced by our broad
product offering which ranges from single layer HDPE bottles for the water and
dairy sectors to multiple layer containers manufactured with a high degree of
design and engineering complexity. In addition, our nationally recognized
research, development and engineering center has provided us with over 100
patents for bottle designs, increased process output at selected plants by 25%,
designed automatic on-line testing equipment and robotic product handling
equipment, developed advanced bottle trimming techniques and brought to market
many innovative products.
SIGNIFICANT ON-SITE PRESENCE. We have 28 on-site manufacturing facilities
at customer locations. On-site plants enable us to work more closely with
customers at these plants, to facilitate just-in-time inventory management, to
generate significant savings opportunities through process re-engineering, to
eliminate costly packing, shipping and handling charges, to reduce working
capital and to foster the development of long-term customer relationships.
Further, we generally install additional capacity at our on-site facilities that
permits us to service additional local customers.
LONG-TERM CUSTOMER RELATIONSHIPS. We enjoy long-term relationships
averaging over 20 years with our ten largest customers, which accounted for
approximately 48% of our pro forma net sales in 1998. We believe our strong
record of maintaining customers is attributable to our design and technical
manufacturing capabilities, high level of customer service and competitive
pricing. In 1998, we renewed 13 of our 14 long-term, contractual arrangements
which were subject to renewal.
ECONOMIES OF SCALE. We believe that our competitive success is due, in
part, to our having capitalized on economies of scale to lower costs in a number
of critical functions as a result of:
- our manufacturing and technology expertise and large volume of production,
allowing us to manufacture at a lower unit cost than many of our
competitors;
- our position as one of the largest purchasers of bottle-grade plastic
resins in the world, providing us with a reliable supply of resins and
allowing us to offer our customers competitively priced products; and
- our nationwide network of geographically diverse manufacturing plants,
giving us greater opportunities to optimize transportation costs and
realize distribution efficiencies.
EXPERIENCED AND MOTIVATED MANAGEMENT TEAM. We are lead by an experienced
team of senior officers and managers with a record of achieving profitable
growth, maintaining long relationships with blue chip customers, integrating
acquisitions and successfully bringing to market new container designs and
manufacturing processes. Our top eight senior officers and managers average over
20 years of experience in the packaging and consumer packaged goods industries.
Our top eight senior officers and managers directly or indirectly hold, or have
options to acquire, a total of approximately 13% of the equity interests in
Consolidated Container Holdings and will have the opportunity to acquire up to
an additional 5.5% of the equity interests in Consolidated Container Holdings
through a management option plan.
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<PAGE>
BUSINESS STRATEGY
We intend to capitalize on our significant industry position to become the
preeminent supplier of rigid plastic containers in North America with a presence
in selected international markets. We seek to achieve this objective through the
continued implementation of the following strategies:
BROADEN OUR CUSTOMER RELATIONSHIPS. The combination of Reid Plastics and
Suiza Packaging into Consolidated Container Company provides us with the
opportunity to increase our customer base by selling a broader line of products
across a wider geographic network. In addition, we plan to expand our position
with existing customers by cross-selling our broad product and service
capabilities among the complementary customer bases of Reid Plastics and Suiza
Packaging. For example, we believe that we will be able to effectively
cross-sell Reid Plastics' ten quart water bottle to Suiza Packaging's customer
base. We intend to take advantage of our national manufacturing capabilities to
grow with our existing customers as they expand their businesses domestically,
and we also plan to grow with our existing customers in selected international
markets. In addition, we believe that our vendor management programs foster
long-term customer relationships, and we will seek opportunities to initiate
these programs with new and existing customers.
REALIZE COST SAVINGS AND OPERATING SYNERGIES. By combining Reid Plastics
and Suiza Packaging into Consolidated Container Company, we expect to realize
substantial cost savings and operating synergies by:
- rationalizing manufacturing facilities and eliminating redundant corporate
functions;
- optimizing our nationwide manufacturing network to lower transportation
costs, maximize capacity utilization and expand product distribution;
- sharing the best practices of our most efficient manufacturing facilities,
which we believe will lead to increased efficiencies and lower
company-wide costs; and
- leveraging our nationally recognized research, development and engineering
center to improve designs and process engineering throughout the newly
combined entity.
CAPITALIZE ON PLASTIC CONVERSION TRENDS. We intend to take advantage of our
position as a leading manufacturer and marketer of plastic containers to
continue to capitalize on the industry trend toward the conversion of glass,
metal and paper containers to plastic containers. We believe that opportunities
exist to convert half gallon milk containers and consumer single-serve milk
bottles, each of which is still mainly packaged in paper cartons. Similarly, we
expect that demand for plastic containers for food products will grow as new
barrier technologies and other innovations permit plastic to supplant glass and
metal in many applications, such as for the packaging of mayonnaise, soups,
tomato based products and jams and jellies. In addition, we believe that we are
well positioned to capitalize on the growth of hot-fill PET containers for food
and beverages. Currently, we are working with several customers to develop new
HDPE and PET containers for food and beverage products that have traditionally
been packaged in other materials, such as paper, metal and glass.
PURSUE STRATEGIC ACQUISITIONS. Strategic acquisitions have been, and, we
believe, will continue to be an important element in our growth and in our
efforts to capitalize on consolidation trends in the plastic packaging industry.
We plan to pursue selected strategic acquisitions to strengthen our customer
base, broaden our geographic presence and product lines, enhance our production
capabilities and provide significant operating synergies. We believe that we can
apply our core manufacturing strengths, broad product line, distribution
capabilities and experienced management team to improve the results of the
acquired entities. As a leading consolidator in the U.S. rigid plastic packaging
business, we made twelve acquisitions, including the acquisition of Plastic
Containers, in 1998 that increased our pro forma net sales by $365.4 million and
our pro forma EBITDA by $55.0 million.
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PRINCIPAL PRODUCT CATEGORIES
We summarize below our seven principal product categories.
DAIRY. We believe that we are a leading manufacturer of dairy containers
using HDPE and PET. Our principal products in this sector include one gallon and
half gallon HDPE bottles, which we sell primarily to dairies for sale through
retail channels. We have worked with our customers to innovate several products
in this sector, including single-serve HDPE and PET milk containers and
"sleeved" milk bottles. On a pro forma basis, our dairy products generated
approximately 22.9% of our net sales for the quarter ended March 31, 1999.
WATER. We believe that we are a leading manufacturer of water containers
using HDPE and PC in the United States and Canada. Our principal products in
this sector include one and ten quart HDPE bottles, which we sell primarily to
water producers for sale through retail channels, and three, five and six gallon
PC bottles for the bulk packaging of water for water coolers. On a pro forma
basis, our water products generated approximately 14.1% of our net sales for the
quarter ended March 31, 1999.
OTHER BEVERAGE. We believe that we are a leading manufacturer of plastic
containers for other beverages, including chilled juices. We also manufacture a
wide variety of containers for other beverage products using HDPE and PET,
consisting of high value-added technically advanced containers for products such
as fruit juices and fruit drinks. We manufacture a wide array of products in
this sector, ranging from six to 96 ounce HDPE bottles for fruit drinks and
multiple layer one gallon HDPE containers for fruit juice. On a pro forma basis,
our other beverage products generated approximately 15.6% of our net sales for
the quarter ended March 31, 1999.
FOOD. We manufacture a wide range of food containers using HDPE, PP and PET
for a variety of food products, such as ketchup, maple syrup, edible oil and
salsa. We have manufactured many innovative products, such as squeezable ketchup
bottles, high-gloss salsa containers and reformable containers, which permit
reheating after the filling process without distortion to the container and
which are used for infant formula. In 1998, our food and other beverage
containers consisted of approximately 56% single layer containers and 44%
multiple layer containers with barrier properties. On a pro forma basis, our
food products generated approximately 10.5% of our net sales for the quarter
ended March 31, 1999.
HOUSEHOLD CHEMICALS & PERSONAL CARE. Our containers for household chemicals
products, made mainly from HDPE and also from PET, are used for laundry
detergents, hard surface cleaners, dishwashing liquids, bleaches and fabric
softeners. Our containers for personal care products, made from HDPE and PVC,
are used for containers for shampoos, conditioners and other hair care products.
On a pro forma basis, our household chemicals and personal care products
generated approximately 14.2% of our net sales for the quarter ended March 31,
1999.
AUTOMOTIVE. We believe that we are a leading supplier of plastic containers
to the automotive industry. We manufacture primarily one quart HDPE bottles for
motor oil and one gallon HDPE containers for anti-freeze and windshield wash
solvent. On a pro forma basis, our automotive products generated approximately
8.9% of our net sales for the quarter ended March 31, 1999.
AGRICULTURAL, INDUSTRIAL & OTHER. We manufacture containers for use by
industrial and agricultural manufacturers for products such as insect
repellents, high strength cleaners packaged for commercial and industrial use
and fertilizers. Our Conolene-TM- process creates chemical-resistant
Conolene-TM- containers, which are leading products in this sector. Our other
products in this category include containers for medical supplies and
pharmaceutical supplies, shipping crates, water cooler valves and bottle caps.
On a pro forma basis, our agricultural, industrial and other products generated
approximately 13.8% of our net sales for the quarter ended March 31, 1999.
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INDUSTRY
Industry analysts estimate that the U.S. rigid plastic containers segment of
the total U.S. packaging industry had sales of approximately $10 billion in
1997. In 1997, 27.5 billion units of plastic bottles and jars for the sectors in
which we compete, were shipped by U.S. manufacturers, having grown by an annual
rate of 5.8% from 15.7 billion units in 1987. Industry analysts estimate that
shipments of plastic bottles and jars in the sectors in which we compete, will
increase by 4.5% annually to 34.2 billion units in 2002. The plastic containers
segment consists of the packaging of soft drinks, dairy products, water, fruit
beverages (principally juices made from frozen concentrate, shelf stable juices
and chilled ready-to-serve juices), alcoholic beverages, other non-alcoholic
beverages (such as iced teas and isotonic sports drinks), food, household
chemicals, pharmaceuticals, automotive chemicals and personal care products. In
general, these sectors are mature and are characterized by moderate but stable
unit growth, increasing competition, increasing emphasis on technological
innovations and product line extensions and pricing pressure which is manifested
in customer demand for lower unit costs. Growth in these sectors is influenced
largely by macroeconomic factors, the state of the general economy and the
demand for consumer staples, such as food and beverages, which account for over
three quarters of the demand for plastic containers. In 1997, plastic bottles
and jars were made 46% from HDPE, 44% from PET and 10% from other resins.
INDUSTRY TRENDS. Over the past several years, the plastic container
business has been characterized by two major trends: the conversion of
containers made from glass, metal and paper products to containers made from
plastic resins, and the consolidation of container manufacturers and the
customers they serve. Although many products which were previously packaged in
glass, metal or paper containers have converted to the use of plastic
containers, such as many food and beverage products and one quart motor oil, we
believe that opportunities exist for continued conversion for select products,
such as half gallon, quart and single-serve milk products, chilled juice
products, mayonnaise, tomato-based products, soups and jams and jellies. We
believe this trend is a result of several factors, including increasing consumer
preference for plastic containers due to their lighter weight, shatter
resistance, resealability and ease of opening and dispensing, container product
innovations and product line extensions by branded consumer products companies
which use unique plastic containers to differentiate their products to
consumers. As a result, container customers often seek new technologies, such as
multiple layer plastic containers with strong barrier properties, improved
performance features, such as squeezable plastic bottles, and innovative resins.
In addition, there is evidence to suggest that there is increasing competition
between HDPE and PET, as some containers made from HDPE are now being made with
PET.
Although the U.S. rigid plastic container industry has been undergoing
consolidation for a number of years, we believe that this trend will continue
for two reasons. First, the industry remains largely fragmented. In 1997, there
remained approximately 120 non-captive plastic container blow-molders in the
United States with annual revenues of at least $5 million each, of which ten had
revenues in excess of $250 million. Second, we believe that the incentives
favoring consolidation will continue. These incentives include economies of
scale in manufacturing and purchasing, an increasing preference by customers to
reduce the number of their suppliers, an increased demand for manufacturing
capacity across a broadening range of product and resin types, the need to
reduce the cost of transportation and the increasing technical, design and
manufacturing sophistication required to produce high quality containers at
competitive prices. We believe that the U.S. rigid plastic container business
will continue to evolve to support fewer participants who can provide a broad
range of container and resins types, innovations in products and technologies
and related services to regional, national and international customers.
MAJOR SECTORS OF THE U.S. RIGID PLASTIC CONTAINER MARKET. We summarize
below each of the sectors of the U.S. rigid plastic container business in which
we compete, except for our agricultural, industrial
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and other sectors, for which industry data is not readily available. All
estimates and forecasts that we note below were made in 1997 or were based on
1997 data, unless otherwise indicated.
DAIRY. In 1997, 6.3 billion units of plastic milk bottles were shipped by
U.S. manufacturers, having increased from approximately 5.0 billion units in
1987. While per capita consumption of milk is expected to decrease, industry
data suggests that shipments of milk containers will increase by 2.4% annually
to 7.1 billion units in 2002. Industry analysts also forecast that plastic
containers will continue to supplant paper and glass containers in this sector
because of their light weight, resistance to breaking, convenient handles,
easily resealable caps and reduced leakage problems, although paperboard cartons
continue to have cost advantages over plastic bottles in general. As a result,
we anticipate that plastic containers will be increasingly used to package milk
in half gallon, quart, pint and half pint sizes. HDPE is the favored plastic in
this sector because of its processing ease, low cost and suitable barrier
properties, but PET is making noticeable inroads, particularly in the smaller
sized containers. This sector is also highly fragmented, with captive production
by regional dairies accounting for the majority of the supply. Industry data
indicates that consolidation of plastic container manufacturers will continue to
be an important trend.
WATER. In 1997, 3.4 billion units of plastic bottled water were shipped by
U.S. manufacturers, having increased from 300 million units in 1987. Data for
this sector does not include information regarding bulk refillable PC water
dispensers. Industry analysts estimate that sales of plastic water containers
will increase by 8.4% annually to 5.1 billion units in 2002, a higher growth
rate than most other sectors of the plastic containers market. Industry data
suggests that this growth will be supported by two principle factors. First, per
capita consumption of bottled water is expected to grow from twelve gallons per
person in 1997 to fourteen gallons per person by 2002, increasing the demand for
all types of bottled water packaging. Industry analysts suggest that this
forecast is based on concerns about contamination of municipal water supplies,
growing awareness of the superior taste of bottled water, an increase in the
popularity of bottled water as a healthy alternative beverage, its rising
availability in vending machines and other new outlets and new product
introductions. Second, sales of plastic water bottles will continue to increase
due to the growing popularity of PET bottles in smaller sizes and the
expectation that plastic containers will continue to supplant glass containers
because of their superior strength, reusability and light weight. Factors that
could limit the growth of bottled water include competition from bottled water
in reusable bulk containers, water purified by home devices and a slowdown in
the general economy. PC and HDPE containers have largely captured the water
market for one gallon sizes and larger. PET is used primarily for single-serve
bottles.
OTHER BEVERAGE. The portion of this sector in which we compete principally
consists of containers for fruit beverages, which include packaging for
refrigerated fruit juices, shelf-stable juice drinks and juices made from frozen
concentrate (collectively, "fruit beverages"). In 1997, there were approximately
1.1 billion units of plastic containers for fruit beverages shipped by U.S.
manufacturers, having increased from approximately 500 million units in 1987.
Industry analysts estimate that sales of plastic containers for fruit beverages
will increase by 6.4% annually to 1.5 billion units in 2002, slightly above the
estimated growth rate of 4.5% for shipments of fruit beverages themselves.
Factors supporting the growth of plastic containers for fruit juices include the
popularity of fruit juices as healthy beverages, the expansion of fruit drinks
which consumers have been more readily accepting as "anytime" yet healthy
beverages and the conversion of non-plastic containers for shelf-stable fruit
juices, particularly in larger sizes, where plastics are most cost effective.
Factors limiting growth include the continued popularity of glass containers for
some beverage products, the insufficiency of some barrier and hot-fill
technologies for fruit drinks and the cost of resins compared to glass. HDPE is
the primary resin used to package orange juice, which is the most widely
consumed fruit beverage on a per capita basis. PET is the primary resin used to
package shelf-stable fruit drinks because of its clarity, impact resistance and
hot-fill applications.
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FOOD. In 1997, 6.9 billion units of plastic containers for food products,
including plastic bottles and jars, were shipped by U.S. manufacturers, having
increased from 2.4 billion units in 1987. This is a mature sector whose growth
is, in general, affected by macroeconomic factors and gradual changes in
consumer preferences. Industry analysts estimate that sales of these plastic
containers for food products will increase by 6.8% annually to 9.6 billion units
in 2002. Factors supporting this growth include sales increases of underlying
food products (such as prepared and ethnic foods, soups and canned specialties),
export sales and advances in multiple layer and barrier technology and other
product innovations. We believe that there will be further conversions to
plastic containers for selected food products, such as condiments, toppings,
mayonnaise, tomato-based products, soups and jams and jellies. Factors
constraining growth in this sector include the maturity of their end-use markets
and the already high degree of penetration of plastics.
AUTOMOTIVE. In 1997, 3.3 billion units of plastic containers for automotive
chemicals were shipped by U.S. manufacturers, having increased from 2.7 billion
in 1987. This sector includes containers for motor oil (which constituted
approximately 2.1 billion of the total 3.3 billion units shipped in 1997),
antifreeze, coolants, transmission fluids, engine treatments, waxes, windshield
washer fluids and other external care products. Industry data estimates that
sales of plastic containers for this sector will increase by 1.2% annually to
3.5 billion units in 2002. Industry analysts believe that sales of plastic
containers for motor oil are expected to decline to 2.0 billion units by 2002
due to several factors, including consumers' increased use of longer lasting
motor oils, which must be changed less frequently, and the proliferation of
affordable, quick lube chains and other convenience oriented channels, which
purchase engine oils in bulk containers. Industry analysts expect, however, that
these declines will be offset in large part by slightly increasing sales of
plastic containers for other automotive products. This sector has largely
converted to HDPE containers from composite cans.
HOUSEHOLD CHEMICALS AND PERSONAL CARE. The household chemicals portion of
this sector includes plastic containers for detergents, various household
cleaners, polishes and waxes. In 1997, 4.9 billion units of plastic containers
for these products were shipped by U.S. manufacturers, having increased from 3.8
billion in 1987. Industry data estimates that sales of plastic containers for
these products will increase by 2.3% annually to 5.5 billion units in 2002.
Industry analysts estimate that this slow rate of growth is due to the maturity
of the end-use markets for these products and the fact that plastics have
largely supplanted other packaging media in most applications. Industry data
suggests that HDPE will remain the primary resin in our portion of this sector
because of its superior stress crack and chemical resistance.
The personal care business in which we participate consists primarily of
plastic packaging for hair care products, such as shampoos, conditioners and
other products. In 1997, 1.6 billion units of plastic containers for these
products were shipped, having increased from 1.0 billion units in 1987. Industry
data estimates that containers for these products will grow by 3.5% annually to
1.9 billion units in 2002. Factors supporting growth include the increasing
popularity of smaller sized containers and hair colorant kits which incorporate
several small plastic bottles. Factors limiting growth include the popularity of
larger sized containers, rising demand for reusable containers and the fact that
plastics have largely supplanted other packaging media in most applications.
Industry analysts expect that HDPE will remain the most widely used resin,
although PVC and PET appear to be continuing to make advances.
PRODUCTS
We currently design, manufacture and market containers for the dairy, water,
other beverage, food, household chemical and personal care, automotive and
agricultural, industrial and other businesses with HDPE, PC, PP, PET and PVC. We
summarize below the uses of these resins and some of their major
characteristics.
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HDPE. We manufacture beverage containers for dairy, water, other beverage,
automotive and household chemical, such as laundry detergents and dishwashing
liquids, products in HDPE. HDPE is relatively durable and flexible, moisture,
stress crack resistant and translucent in its natural state yet can be colored
easily. Our HDPE containers can be made with a single layer or up to six layers
of plastic for specialized uses. Multiple layer containers can have a layer of
resin with barrier properties. They can also include a layer of recycled
materials or may reduce cost by limiting the use of colorant to the single
exterior layer. Our Conolene-TM- processed HDPE containers are treated with
fluorine/ nitrogen gas, making them suitable for storing insecticides and
chemicals which would otherwise cause a standard HDPE container to degrade over
time. Our Lamicon-TM- brand of HDPE container consists of up to six layers,
including a barrier layer of ethyl vinyl alcohol, reducing oxygen permeability
and making it suitable for use for food products, which are subject to spoiling
or deterioration if exposed to oxygen.
PC. We principally manufacture three, five and six gallon water bottles in
PC. PC is a hard, clear, strong, long-lasting, reusable and scratch resistant
plastic. Due to their unique strength and durability, PC products are the most
highly engineered and most expensive of the plastic resin products used in our
containers.
PP. We manufacture containers for food products, such as ketchup, maple
syrup, salad dressing and salsa in PP. PP is naturally translucent, moisture,
heat and impact resistant, light weight and has strong barrier and performance
properties. PP containers can be manufactured either with a single layer or with
multiple layers with barrier properties.
PET. We manufacture single-serve milk containers, smaller water bottles,
other beverages and selected food containers in PET. PET is clear, light weight,
shatter-resistant and has strong barrier properties. We expect that PET
containers will continue to replace metal and glass packaging due, in part, to
the discovery of new processing techniques compatible with the hot-fill process.
PVC. We manufacture bottles for some personal care products in PVC. PVC is
moderately oxygen-permeable, highly abrasion resistant, versatile, elastic,
glossy, chemical resistant and is used for containers requiring clarity.
CUSTOMERS
Our customers include many of the major branded consumer products companies
and most bottled water companies, national juice producers, large food concerns,
regional dairies, chemical and automotive product manufacturers in the United
States. For the year ended December 31, 1998, our largest customer, Procter &
Gamble, accounted for approximately 15% of our pro forma net sales and our
largest ten customers accounted for approximately 48% of our pro forma net
sales.
For the year ended December 31, 1998, on a pro forma basis, our top ten
customers were Dean Foods, McKesson Water Products, Minute Maid, Mobil Oil,
Pennzoil Products/Quaker State, Perrier Group of America, Procter & Gamble,
Scotts Company, Suiza Foods and Suntory Water Group. We estimate that we have
done business with each such customer (or their predecessors) for over ten
years, except Dean Foods, which has been a customer for seven years, and Suiza
Foods, which has been a customer for four years, and that we have enjoyed
long-term relationships with these customers for over 20 years on average.
In many cases, we are the sole supplier of substantially all of our
customers' container requirements for specific products or particular container
sizes. In addition, we often have more than one contract with a particular
customer because we have individual contracts for specific products or container
sizes or, in some circumstances, separate contracts with one or more operating
divisions of a single customer. See "Risk Factors -- Concentration of
Customers."
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COMPETITION
We face substantial competition throughout our product lines from a number
of well-established businesses operating nationally and from firms operating
regionally. Our primary national competitors include American National Can,
Crown Cork & Seal, Graham Packaging, Liquid Container, Liqui-Box,
Owens-Illinois, Plastipak and Silgan. Several of these competitors are larger
and have greater financial and other resources than us. In addition, we face
substantial competition from a number of captive packaging operations with
significant in-house bottling and blow-molding capacity, such as Perrier Group
of America, Kroger and Dean Foods.
We believe that our long-term success is largely dependent on our ability to
continue to:
- attract and maintain new customers;
- develop product innovations and improve our production technology;
- offer our customers competitively priced products that meet their design
and performance criteria;
- provide superior service to our customers;
- accurately anticipate and respond to important trends in the packaging
industry, which is continuing to undergo conversion to plastic from other
materials and consolidation; and
- reduce our cost structure.
MARKETING
Substantially all of our sales are made through the direct efforts of our
sales personnel. We conduct sales activities from our corporate headquarters in
Dallas, Texas and from various field sales offices located throughout the
geographic territories in which we operate. In addition to our other sales and
marketing efforts, we provide our customers with in-house support staff and
24-hour, seven days a week, year round customer service.
RESEARCH, DEVELOPMENT AND ENGINEERING
Research, development and engineering constitute an important part of our
business. We undertake these efforts through approximately 70 employees at our
research, development and engineering center in Elk Grove, Illinois. We believe
that the research, development and engineering center makes us a leader in the
innovation and design of new products, product enhancements and manufacturing
technologies and processes. As a result of this effort, we:
- hold over 100 patents for bottle designs;
- have increased process output by 25% in some plants over the past five
years;
- have substantially improved our quality controls; and
- have innovated several new products and processes, such as:
-- reformable design containers;
-- Conolene-TM- fluorine treated barrier bottles, for use in
applications where the contents would otherwise permeate an untreated
plastic containers;
-- Lamicon-TM- multiple layer oxygen barrier bottles, for use in
applications where the contents would be harmed by prolonged exposure
to oxygen;
-- in-mold labeling; and
-- layer engineering.
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We spent approximately $9.0 million on research, development and engineering
on a pro forma basis in 1998. We believe that continuing product and
manufacturing innovations are important to meeting customers' needs and lowering
unit costs, thus permitting us to remain competitive in the plastic container
market. We expect to spend approximately $8.5 million on research, development
and engineering in 1999 and have spent approximately $4.1 in the first six
months of 1999.
INTELLECTUAL PROPERTY
We have developed a number of trademarks and patents for use in our business
and are continually developing new trademarks and patents. In addition, we also
hold licenses for the use of several registered trademarks from third parties.
Because our trademarks, brand names and patented packaging designs create
goodwill and results in product differentiation, we believe that these assets
are important to our business. Although we hold various trademarks and patents,
we believe that our business is not dependent on any one of these patents or
trademarks. In addition, we rely on proprietary know-how, continuing
technological innovation and other trade secrets to develop products and
maintain our competitive position. We attempt to protect our proprietary
know-how and our other trade secrets by executing, when appropriate,
confidentiality agreements with our customers and employees. Although we cannot
assure you that our competitors will not discover comparable or the same
knowledge and techniques through independent development or by other, legal
means, we believe that our business, as a whole, is not dependent on these
matters.
MANUFACTURING AND DISTRIBUTION
MANUFACTURING At June 30, 1999, we operated over 600 blow-molding
production lines and six injection molding machines (which are used to produce
closures, water cooler parts, crates, overcaps, valves and collars).
Blow molding is the technique used to convert plastic into bottles and
containers by either extrusion or stretch blow molding, depending on the desired
container attributes. In the extrusion blow-molding production process, resin
pellets are blended with colorants or other necessary additives and fed into an
extrusion machine, which uses heat and pressure to form the resin into a round
hollow tube of molten plastic called a parison. Bottle molds are mounted to
capture the parisons as they leave the extruder. Once inside the mold, air
pressure is used to blow the parison into the bottle shape of the mold.
Extrusion blow molding can be used to process many different resin types. By
contrast, stretch blow molding is either a one-stage or a two-stage process by
which a test-tube type pre-form is made by injection molding and then heated,
stretched and filled with compressed air to fill the mold and form the bottle.
This process provides enhanced physical clarity and gas barrier properties and
is generally used for PET bottles but can also be used for PP bottles. This
technique can be adapted for either low volume production runs of specialty
applications, such as widemouthed jars, or high volume runs of commodity
applications.
Thirty of our production lines are set up so that multiple extruders deposit
a single parison into a single mold, thus producing a multiple layer bottle.
Most of these lines are also capable of applying an in-mold label. We were among
the first to develop and use a wheel manufacturing technology that permits our
wheels to operate at higher speeds and to more efficiently manufacture
containers with one or more special features, such as multiple layers, in-mold
labeling and fluorination. In most cases, we are actively involved with our
customers in the design and manufacture of new packaging features, including for
special wheel molds.
Twenty-eight of our manufacturing facilities are located on-site at customer
plants. On-site plants enable us to work more closely with customers at these
plants, to facilitate just-in-time inventory management, to generate significant
savings opportunities through process re-engineering, to eliminate costly
packing, shipping and handling charges, to reduce working capital and to foster
the development
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of long-term customer relationships. Further, we generally install additional
capacity at our on-site facilities that permits us to service additional local
customers.
We believe that capital investment to maintain and upgrade property, plant
and equipment is important to remain competitive. We spent $16.4 million in 1998
on a pro forma basis on capital expenditures. We estimate that the annual
capital expenditure required to maintain our current facilities will be
approximately $15.5 million for each year, and additional capital expenditures
beyond this amount will be required to expand capacity.
DISTRIBUTION At our 43 stand-alone domestic plants, we ship our products by
common carrier to our customers. In general, these plants are located within a
250 to 300 mile radius of the customers for which we manufacture containers. At
each of our 28 on-site plants, our operations are usually integrated with the
customer's manufacturing operations so that we can make deliveries, as needed,
directly to the customer's conveyor lines.
RAW MATERIALS
Our principal raw materials include HDPE, PC, PP, PET and PVC resins, and we
use other materials in our manufacturing operations, such as ethyl vinyl
alcohol, resin colorant, corrugated boxes, shipping materials, pallets and
labels, among others, and inks. It is our practice to obtain raw materials from
several sources in order to ensure an economical, adequate and timely supply,
and we are not dependent on any single supplier for any of these materials.
Although we believe our access to raw materials is generally reliable, we cannot
assure you that we will have an uninterrupted supply of raw materials at
competitive prices. While our net sales are affected by fluctuations in resin
prices, our gross profit over time is substantially unaffected by these changes
because industry practice and our contractual arrangements with our customers
permit or require us to pass through these changes. We may not, however, always
be able to pass through these changes in a timely manner. Based on our
experience, we believe that adequate quantities of these materials will be
available to supply our customers' needs, but we cannot assure you of that. See
"Risk Factors -- Exposure to Fluctuations in Resin Prices and Dependence on
Resin Supplies."
FACILITIES
We use various owned and leased properties located throughout the United
States, Puerto Rico, Mexico and Canada for our manufacturing plants, corporate
headquarters, technical center and sales offices. At June 30, 1999, we had 76
manufacturing plants, 17 of which we owned and 59 of which we leased.
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We list in the table below the location of our active manufacturing and
other facilities (by region in the United States and by country and, within
region and country, in alphabetical order) and some related information at June
30, 1999.
<TABLE>
<CAPTION>
SIZE IN OWNED OR
LOCATION OF FACILITIES SQUARE FEET LEASED PRINCIPAL USE ON-SITE
- --------------------------------------- ----------- ----------- --------------------------------------- -------------
<S> <C> <C> <C> <C>
NORTHEAST
Monroe, Connecticut.................. 1,000 Leased Sales Office
New Britain, Connecticut............. 5,500 Leased Manufacturing X
Windsor, Connecticut................. 58,000 Leased Manufacturing
Poland Springs, Maine................ 13,000 Leased Manufacturing X
Franklin, Massachusetts.............. 55,000 Leased Manufacturing
Franklin, Massachusetts.............. 24,300 Leased Manufacturing X
Lynn, Massachusetts.................. 12,000 Leased Manufacturing X
Marlborough, Massachusetts........... 4,600 Leased Manufacturing X
Hampstead, New Hampshire............. 42,000 Owned Manufacturing
Burlington, New Jersey............... 6,500 Leased Manufacturing X
Elizabeth, New Jersey................ 40,000 Owned Manufacturing
Hillside, New Jersey................. 34,200 Leased Manufacturing
Cranbury, New Jersey................. 62,000 Owned Manufacturing
Batavia, New York.................... 21,700 Leased Manufacturing
Rensselaer, New York................. 4,500 Leased Manufacturing X
Rochester, New York.................. 65,000 Owned Manufacturing
Allentown, Pennsylvania.............. 80,000 Leased Manufacturing X
Berwick, Pennsylvania................ 197,000 Owned Manufacturing
Brenigsville, Pennsylvania........... 8,500 Leased Manufacturing
Lancaster, Pennsylvania.............. 18,100 Leased Manufacturing X
Leetsdale, Pennsylvania.............. 42,000 Leased Manufacturing
New Castle, Pennsylvania............. 92,000 Owned Manufacturing
Oil City, Pennsylvania............... 96,000 Owned Manufacturing
Penn Township Kelton, Pennsylvania... 36,400 Leased Manufacturing
Verona, Pennsylvania................. 90,200 Leased Manufacturing
York, Pennsylvania................... 30,900 Leased Manufacturing
MID-ATLANTIC
Baltimore, Maryland.................. 151,000 Owned Manufacturing
Newell, West Virginia................ 50,000 Leased Manufacturing X
SOUTHEAST
Lakeland, Florida.................... 218,000 Leased Manufacturing
Miami, Florida....................... 4,800 Leased Manufacturing
St. Petersburg, Florida.............. 2,500 Leased Manufacturing X
Tampa, Florida....................... 22,500 Leased Manufacturing
Zephyr Hills, Florida................ 7,400 Leased Manufacturing X
Greensboro, North Carolina........... 30,000 Leased Manufacturing
Mechanicsville, Virginia............. 11,000 Leased Manufacturing X
Atlanta, Georgia..................... 85,000 Leased Manufacturing
McDonough, Georgia................... 4,000 Leased Manufacturing X
SOUTH
Demopolis, Alabama................... 4,000 Leased Warehouse
Demopolis, Alabama................... 98,000 Owned Manufacturing
Fort Smith, Arkansas................. 150 Leased Sales Office
West Memphis, Arkansas............... 67,000 Leased Manufacturing
</TABLE>
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<TABLE>
<CAPTION>
SIZE IN OWNED OR
LOCATION OF FACILITIES SQUARE FEET LEASED PRINCIPAL USE ON-SITE
- --------------------------------------- ----------- ----------- --------------------------------------- -------------
<S> <C> <C> <C> <C>
Louisville, Kentucky................. 4,000 Owned Manufacturing
Kentwood, Louisiana.................. 10,000 Leased Manufacturing X
Monroe, Louisiana.................... 3,300 Leased Manufacturing X
Conroe, Texas........................ 3,000 Leased Manufacturing X
Dallas, Texas (2 facilities)......... 31,000 Leased Manufacturing X
Dallas, Texas........................ 9,000 Leased Corporate Office
Fort Worth, Texas.................... 8,000 Leased Manufacturing X
Houston, Texas....................... 80,000 Leased Manufacturing
Katy, Texas.......................... 10,000 Leased Manufacturing X
Sherman, Texas....................... 110,000 Leased Manufacturing
The Woodlands, Texas................. 1,000 Leased Sales Office
MID-WEST
Caseyville, Illinois................. 11,700 Leased Manufacturing
Chicago, Illinois.................... 27,000 Leased Manufacturing X
DuPage, Illinois..................... 104,000 Leased Manufacturing
Elk Grove, Illinois.................. 183,000 Leased Manufacturing
Elk Grove, Illinois.................. 79,000 Leased RD&E Center
Hutchinson, Kansas................... 2,000 Leased Manufacturing X
Lenexa, Kansas....................... 173,000 Leased Manufacturing
Omaha, Nebraska...................... 6,000 Leased Accounting Center
Springdale, (Cincinnati), Ohio....... 130,000 Leased Manufacturing X
Cincinnati, Ohio..................... 1,000 Leased Sales Office
Columbus, Ohio....................... 8,600 Leased Manufacturing X
WEST
Phoenix, Arizona..................... 59,760 Leased Manufacturing
Phoenix Warehouse, Arizona........... 44,000 Owned Warehouse
Anaheim, California.................. 59,000 Leased Manufacturing
City of Industry (Railroad), Manufacturing
California......................... 22,000 Leased X
City of Industry (Samuelson), Manufacturing
California......................... 135,100 Leased
City of Industry (Willow), Manufacturing
California......................... 56,000 Leased
Diamond Bar, California.............. 19,000 Leased Corporate Office
Fairfield, California................ 66,000 Owned Manufacturing
Ontario, California.................. 40,000 Leased Manufacturing X
Riverside, California................ 17,000 Leased Manufacturing X
Santa Ana, California................ 103,000 Owned Manufacturing
Tracy, California.................... 160,000 Owned Manufacturing
Union City, California............... 15,000 Leased Manufacturing X
Westminister, California............. 11,100 Leased Manufacturing
Albuquerque, New Mexico.............. 33,000 Owned Manufacturing
Tukwila, Washington.................. 50,700 Leased Manufacturing
Vancouver, Washington................ 43,800 Owned Manufacturing
Vancouver, Washington................ 35,000 Leased Warehouse
</TABLE>
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<TABLE>
<CAPTION>
SIZE IN OWNED OR
LOCATION OF FACILITIES SQUARE FEET LEASED PRINCIPAL USE ON-SITE
- --------------------------------------- ----------- ----------- --------------------------------------- -------------
<S> <C> <C> <C> <C>
CANADA
Richmond, British Columbia........... 35,203 Leased Manufacturing
Winnipeg, Manitoba................... 7,400 Leased Manufacturing
Mississauga, Ontario................. 34,800 Leased Manufacturing
MEXICO
Mexico City.......................... 24,300 Leased Manufacturing
PUERTO RICO
Caguas............................... 47,000 Owned Manufacturing
</TABLE>
SEASONALITY
Our shipment volume of containers for bottled water, and our employment of
temporary/seasonal workers, is typically higher in the second and third quarters
principally due to the seasonal nature of the bottled water industry, in which
demand is stronger between May and September. Consequently, we normally build
inventory of products for our water products during the first quarter in
anticipation of seasonal demand during the second and third quarters. To a
lesser extent, our shipment volume of containers for milk and other beverage
products is also seasonal.
EMPLOYEES
At July 2, 1999, we employed over 4,800 people. Approximately 1,150 of these
employees were hourly workers covered by collective bargaining agreements, which
expire between 1999 and 2002. We have renewed five of the six collective
bargaining agreements that had or have expirations in 1999 and expect to renew
the sixth agreement which covers approximately 90 employees. Given the
seasonality of the bottled water industry, we expect to continue to employ full
time and temporary and seasonal workers during the peak production months of May
through September. We have not had any material labor disputes in the past five
years and consider our relations with employees to be good.
ENVIRONMENTAL MATTERS
In the United States and in the other countries in which we operate, we are
subject to national, state, provincial and/or local laws and regulations that
impose limitations and prohibitions on the discharge and emission of, and
establish standards for the use, disposal, and management of, some kinds of
materials and waste, and impose liability for the costs of investigating and
cleaning up, and damages resulting from, present and past spills, disposals, or
other releases of hazardous substances or materials. Environmental laws and
regulations can be complex and may change often. Compliance with these laws and
regulations can require significant capital expenditures, and violations may
result in substantial fines and penalties. In addition, environmental laws in
the United States, such as the Comprehensive Environmental Response,
Compensation and Liability Act, impose liability on several grounds for the
investigation and cleanup of contaminated soil, groundwater, and buildings, and
for damages to natural resources, at a wide range of properties. For example,
contamination at properties formerly owned or operated by us, as well as at
properties we currently own or operate, and properties to which hazardous
substances were sent by us, may result in liability for us under these
environmental laws and regulations. As a manufacturer, we also have an inherent
risk of liability under environmental laws and regulations regarding ongoing
operations.
In addition, a number of governmental authorities in the United States and
in other countries have considered or are expected to consider legislation aimed
at reducing the amount of disposed plastic wastes. These programs have included,
for example, mandating rates of recycling and/or the use of recycled materials,
imposing deposits or taxes on plastic packaging material, and/or requiring
retailers or manufacturers to take back packaging used for their products. This
legislation, as well as voluntary
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initiatives similarly aimed at reducing the level of plastic wastes, could
reduce the demand for some plastic packaging, result in greater costs for
plastic packaging manufacturers or otherwise impact our business. Some consumer
products companies (including some of our customers) have responded to these
governmental initiatives and to perceived environmental concerns of consumers
by, for example, using bottles made in whole or in part of recycled plastic.
Although compliance with environmental laws and regulations requires ongoing
expenditures and remediation activities, our capital expenditures for property,
plant and equipment for environmental control activities and other expenditures
for compliance with environmental laws and regulations were not material in 1998
and are not expected to be material in 1999. We believe that we are in material
compliance with all federal, state and local environmental laws and regulations
and are currently not engaged in any remediation activities required by
governmental regulatory authorities.
LEGAL PROCEEDINGS
We are a party to various litigation matters arising in the ordinary course
of our business. We cannot estimate with certainty the ultimate legal and
financial liability with respect to this litigation but believe, based on our
examination of these matters, experience to date and discussions with counsel,
that the ultimate liability will not be material to our business or results of
operations.
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THE TRANSACTIONS
OVERVIEW
The private offering of the outstanding notes was part of a series of
simultaneous transactions which closed on July 2, 1999. These transactions
resulted in the creation of Consolidated Container Company, a new Delaware
limited liability company and its parent, Consolidated Container Holdings, a
Delaware limited liability company. Pursuant to the contributions and mergers
described below, Consolidated Container Company now owns, or holds directly or
through subsidiaries, all of the assets of Reid Plastics, formerly controlled by
Vestar Capital Partners III and substantially all of the U.S. plastic packaging
assets of Suiza Foods. Before the consummation of the transactions, Suiza Foods
operated its plastics packaging business as a division, known as Suiza
Packaging, which consisted of a majority owned subsidiary, Franklin Plastics,
its subsidiaries and Plastic Containers.
The transactions consisted of the following:
- the following contributions and mergers:
-- the contribution by Reid Plastics Holdings of its subsidiary, Reid
Plastics, and Reid Plastics' subsidiaries to a new subsidiary of
Consolidated Container Company, Reid Plastics Group LLC and its
subsidiaries, and the merger of these entities;
-- the contribution by Suiza Foods of substantially all of the plastic
packaging assets of Franklin Plastics, its subsidiary, to
Consolidated Container Company by the merger of the subsidiaries of
Franklin Plastics into Consolidated Container Company; and
-- the merger of Plastic Containers into a new subsidiary of
Consolidated Container Company, Plastic Containers LLC;
- the contribution of $60.8 million in cash by Vestar Packaging, a newly
formed Delaware limited liability company controlled by Vestar Capital
Partners III, to Consolidated Container Holdings;
- the offering of the outstanding notes;
- the execution by Consolidated Container Company of a new senior credit
facility and the borrowing of $412.5 million under it;
- the consent solicitation and tender offer by Plastic Containers for its
outstanding 10% Senior Secured Notes due 2006, of which approximately
$121.3 million in total principal amount were outstanding at March 31,
1999, in which all of the holders of these notes tendered them;
- the repayment of substantially all of the outstanding debt of Reid
Plastics and Franklin Plastics, the redemption of the preferred stock of
Franklin Plastics plus the payment of a portion of accrued interest and
dividends on the debt and preferred stock of Franklin Plastics; and
- the payment of fees and expenses in connection with the above, including
the fees and expenses of the initial purchasers, the lenders, the trustee
and our lawyers, accountants and printing company.
As a result of the consummation of the transactions, Vestar Packaging owns
20.5% and Reid Plastics Holdings owns 30.5% of Consolidated Container Holdings,
and Suiza Foods and minority shareholders of Franklin Plastics, through Franklin
Plastics, together own 49% of Consolidated Container Holdings. Consolidated
Container Holdings owns all of the member units in Consolidated Container
Company, which itself owns the former packaging assets of Franklin Plastics and
its subsidiaries. The remainder of the combined businesses are held through two
subsidiaries of Consolidated Container Company, Reid Plastics Group LLC and
Plastic Containers LLC and their subsidiaries.
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CONTRIBUTION AND MERGER AGREEMENT
Prior to the contributions and mergers described above, Suiza Foods
restructured the ownership of its U.S. plastic packaging subsidiaries by taking
the following steps (in order):
- Suiza Foods contributed the capital stock of Franklin Plastics to
Continental Can Company, Inc.
- Continental Can Company contributed the stock of Plastic Containers to
Franklin Plastics to allow Franklin Plastics to acquire the ownership of
Plastic Containers.
- After obtaining the consents of the holders of the 10% Senior Secured
Notes due 2006 of Plastic Containers in the consent solicitation, Plastic
Containers merged into Plastic Containers LLC, a Delaware limited
liability company, and Continental Plastic Containers Inc., merged into
Continental Plastic Containers LLC, a Delaware limited liability company.
The contributions and mergers were made pursuant to a Contribution and
Merger Agreement dated as of April 29, 1999 among Suiza Foods, Franklin
Plastics, Suiza Foods' domestic plastics subsidiaries, Vestar Packaging, Reid
Plastics Holdings, Reid Plastics' domestic plastic subsidiaries, Reid Plastics
Group LLC, Consolidated Container Holdings and Consolidated Container Company.
We summarize below the contributions, mergers and related payments:
- Vestar Packaging, which is controlled by Vestar Capital Partners III,
received 20.5% of the member units in Consolidated Container Holdings in
exchange for its contribution of $60.8 million in cash to Consolidated
Container Holdings.
- Reid Plastics Holdings, which is indirectly controlled by Vestar Capital
Partners III, received 30.5% of the member units in Consolidated Container
Holdings in exchange for causing:
-- Reid Plastics and each of its domestic subsidiaries to merge into
Reid Plastics Group;
-- Reid Plastics' Canadian subsidiaries to become wholly owned
subsidiaries of Reid Plastics Group; and
-- Reid Plastics' equity interest in its Mexican joint venture, Reid
Mexico, S.A. de C.V., to become interests of Reid Plastics Group.
- Franklin Plastics, which is controlled by Suiza Foods, received 49% of the
member units in Consolidated Container Holdings in exchange for:
-- its contribution of the limited liability company interests of
Plastic Containers to Consolidated Container Company;
-- the contribution of substantially all of the plastic packaging assets
of Franklin Plastics to Consolidated Container Company by the merger
of the subsidiaries of Franklin Plastics into Consolidated Container
Company;
- the repayment of substantially all of the outstanding debt of Franklin
Plastics, the redemption of the preferred stock of Franklin Plastics and
the payment of a portion of the accrued interest and dividends on these
amounts, which collectively totaled $372.5 million, based on amounts owed
to Suiza Foods and minority shareholders of Franklin Plastics.
As a result of these contributions and mergers:
- Consolidated Container Holdings owns all of the interests in Consolidated
Container Company;
- Consolidated Container Company owns the former packaging assets of
Franklin Plastics and its subsidiaries; and
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- Reid Plastics Group and Plastic Containers, two new subsidiaries of
Consolidated Container Company, contains the former subsidiaries and joint
venture investments of Reid Plastics and Plastic Containers and its former
subsidiaries.
The contribution and merger agreement contains various customary
representations, warranties, covenants and conditions. Most representations and
warranties expire eighteen months after the closing of the transactions. Those
representations and warranties pertaining to violations of legal or regulatory
requirements terminate upon the tolling of the applicable statute of
limitations. Representations and warranties relating to the capitalization of
the parties that are being contributed and merged into Consolidated Container
Company or its subsidiaries (Reid Plastics and its domestic subsidiaries,
Franklin Plastics and Plastics Containers), brokers and finders fees and the
absence of liabilities of Consolidated Container Holdings and Consolidated
Container Company terminate upon the tolling of the applicable statute of
limitations.
For claims related to a breach of some representations, warranties,
covenants or obligations contained in the contribution and merger agreement,
indemnification will be available to some parties suffering damages. Subject to
some limitations and qualifications, an indemnified party will receive, at the
option of the party required to provide indemnification, either cash, which will
be mandatory in some specified circumstances, or preferred units issued by
Consolidated Container Holdings, in each case only if these damages in total
exceed $5 million. The preferred units of Consolidated Container Holdings are
described under "Certain Relationships and Related Party Transactions--Limited
Liability Company Agreement of Consolidated Container Holdings."
Consolidated Container Holdings and/or Consolidated Container Company have
entered into the following agreements:
- an amended and restated limited liability company agreement of
Consolidated Container Holdings regarding its governance and related
matters, including the form of a registration rights agreement among Reid
Plastics Holdings and the holders of the member units in Consolidated
Container Holdings in the event that there is a possible initial public
offering of equity interests in Consolidated Container Holdings;
- a limited liability company agreement of Consolidated Container Company
regarding its governance and related matters;
- four supply agreements with Suiza Foods to supply Suiza Foods with some
HDPE bottles, PET bottles and bottle components in the continental United
States and Canada;
- a trademark license agreement with Continental Can Company, a wholly owned
subsidiary of Suiza Foods, granting Consolidated Container Company a
non-exclusive license to use some of its trademarks in connection with its
plastic operations;
- an assumption agreement under which Consolidated Container Holdings and
Consolidated Container Company will assume some obligations of Reid
Plastics Holdings;
- an option plan under which Consolidated Container Holdings to provide its
senior managers with options to acquire member units in itself;
- an option plan to replace options that some persons, including former
employees of Suiza Packaging, held in Franklin Plastics with new options
to purchase member units in Consolidated Container Holdings; and
- a transition services agreement with Suiza Foods for the supply of office
and other services before we obtain these services from other sources.
In addition, on April 29, 1999, Consolidated Container Holdings,
Consolidated Container Company and Vestar Capital Partners, a New York general
partnership and an affiliate of Vestar
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Capital Partners III, entered into an agreement relating to the management of
Consolidated Container Holdings and Consolidated Container Company, which
contemplates the payment of fees and expenses owed to Vestar Capital Partners
following the closing of the Transactions. For a more complete description of
the agreements listed above, see "Management" and "Certain Relationships and
Related Party Transactions."
FRANKLIN REPLACEMENT OPTIONS. Following the closing of the transactions,
Consolidated Container Holdings offered the holders of options to purchase
shares of common stock in Franklin Plastics replacement options to purchase
member units in Consolidated Container Holdings. These holders accepted the
offer. The Franklin Plastics options were exchanged at their equivalent economic
value for options to purchase member units in Consolidated Container Holdings.
If the replaced options are exercised, a corresponding number of member units of
Consolidated Container Holdings then held by Franklin Plastics will be
cancelled. If these options are exercised, they would represent approximately
4.65% of the total member units of Consolidated Container Holdings on a fully
diluted basis. Peter M. Bernon, William L. Estes, Ronald E. Justice, Henry
Carter, Timothy W. Brasher and David M. Stulman, each of whom received replaced
options which, in total, represent options to purchase 268,878 member units of
Consolidated Container Holdings, have become members of the management committee
and/or officers of Consolidated Container Holdings and Consolidated Container
Company. For more information regarding the beneficial ownership of the member
units of Consolidated Container Holdings, see "Security Ownership of Certain
Beneficial Owners and Management," and for more information regarding other
options to purchase member units of Consolidated Container Holdings, see
"Management -- Option Plan."
CONSENT SOLICITATION AND TENDER OFFER FOR 10% SENIOR SECURED NOTES DUE 2006
Concurrently with the offering of the outstanding notes, Plastic Containers
conducted a consent solicitation and a tender offer for its outstanding 10%
Senior Secured Notes due 2006, $121.3 million in total principal amount of which
were outstanding at March 31, 1999. Holders of all of these notes tendered their
notes on the closing of the consent solicitation and tender offered for them. As
a result, all of these notes have been retired and cancelled.
FINANCINGS
Simultaneously with the closing of the contributions and mergers, the
Consolidated Container Company and Consolidated Container Capital issued the
outstanding notes and Consolidated Container Company entered into the $475.0
million senior credit facility and borrowed $412.5 million under it at the
closing of the transactions. See "Capitalization" and "Description of Senior
Credit Facility."
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MANAGEMENT
MANAGEMENT COMMITTEE AND EXECUTIVE OFFICERS
Consolidated Container Company is managed by its sole member, Consolidated
Container Holdings. Consolidated Container Holdings is managed by a management
committee consisting of eight members. Two of the members were appointed by
Vestar Packaging, two of the members were appointed by Reid Plastics Holdings,
Vestar Packaging and Reid Plastics Holdings mutually appointed a fifth member,
one of the members was appointed by Franklin Plastics, one of whom is Peter M.
Bernon, one member is the chief executive officer of Consolidated Container
Holdings, who currently is William L. Estes, and one member is B. Joseph Rokus,
currently the Chairman of the Boards of Directors of Reid Plastics Holdings and
Reid Plastics. In addition, Franklin Plastics has the right to designate one
additional member of the management committee under the limited liability
company agreement of Consolidated Container Holdings. See "Certain Relationships
and Related Party Transactions -- Limited Liability Company Agreement of
Consolidated Container Holdings -- Management."
The executive officers and members of the management committee of
Consolidated Container Holdings and their ages and positions are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Ronald V. Davis...................................... 52 Chairman of the Management Committee
Peter M. Bernon...................................... 47 Vice Chairman of the Management Committee
B. Joseph Rokus...................................... 45 Vice Chairman of the Management Committee
William L. Estes..................................... 52 President and Chief Executive Officer and a
Member of the Management Committee
Ronald E. Justice.................................... 54 Executive Vice President of Operations
Henry Carter......................................... 49 Executive Vice President of Sales and Marketing
Timothy W. Brasher................................... 40 Senior Vice President, Chief Financial Officer
and Secretary
David M. Stulman..................................... 52 Vice President of Human Resources
William G. Bell...................................... 52 Member of the Management Committee
James P. Kelley...................................... 44 Member of the Management Committee
Leonard Lieberman.................................... 70 Member of the Management Committee
John R. Woodard...................................... 35 Member of the Management Committee
</TABLE>
RONALD V. DAVIS has served as Chairman of the management committee since the
closing of the transactions. Prior to the transactions and since December 1998,
Mr. Davis has served as President and Chief Executive Officer of Reid Plastics
Holdings. Currently, Mr. Davis is also Chairman of Davis Capital LLC, a private
equity investment company, which he founded in 1994. Mr. Davis founded The
Perrier Group of America and, between 1979 and 1992, he served as its President
and Chief Executive Officer. From 1992 to 1994, he served as Chairman of the
Board of Directors for Perrier Group of America, Inc. He currently serves on the
Boards of Directors of Celestial Seasonings and FMAC. Mr. Davis received a B.A.
from California State University and an M.B.A. from the University of Southern
California.
PETER M. BERNON has served a Vice Chairman of the management committee since
the closing of the transactions. Prior to the transactions and since 1997, Mr.
Bernon served as Vice Chairman of Suiza Packaging. Mr. Bernon is the founder of
Franklin Plastics and has been its President since 1997. From 1986 to 1997, Mr.
Bernon served as Chairman of Garelick Farms. Mr. Bernon received a B.A. from
Babson College.
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B. JOSEPH ROKUS has served as a Vice Chairman of the management committee
since the closing of the transactions. Prior to the transactions and since
December 1998, Mr. Rokus has served as Chairman of the Boards of Directors of
Reid Plastics Holdings and Reid Plastics. Between 1993 and December 1998, Mr.
Rokus served as President and Chief Executive Officer of Reid Plastics Holdings
and Reid Plastics. He serves on the Boards of Trustees of the International
Bottled Water Association and Pepperdine University and also serves as a
director of Corporate First Travel Agency. Mr. Rokus received a B.S. from
Pepperdine University and an M.B.A. from the University of Southern California.
WILLIAM L. ESTES has served as President and Chief Executive Officer of
Consolidated Container Holdings and as a member of the management committee
since the closing of the transactions. Prior to the transactions and since 1998,
Mr. Estes served as President and Chief Executive Officer of Suiza Packaging.
Between November 1996 and February 1998, Mr. Estes served as President and Chief
Operating Officer of McKesson Corporation's McKesson-Carrollton operations.
Between January 1994 and November 1996, Mr. Estes served in various capacities
with Foxmeyer Health Corporation, most recently as President and Chief Operating
Officer. Between October 1991 and December 1993, Mr. Estes served as Vice
President and Chief Operating Officer of The Body Shop, Inc. Between 1983 and
1991, Mr. Estes served in various capacities with Pepsico, Inc., primarily with
its Frito-Lay, Inc. subsidiary. Mr. Estes is also a director of Kevco Inc. Mr.
Estes received a B.A. in mechanical engineering from the University of Illinois
and an M.B.A. from the Wharton School of Business.
RONALD E. JUSTICE has served as Executive Vice President of Operations of
Consolidated Container Holdings since the closing of the transactions. Prior to
the transactions and since 1998, Mr. Justice served as Executive Vice President
of Suiza Packaging. Between July 1995 and September 1998, Mr. Justice served as
Senior Vice President of Operations of The Scotts Company. Between 1992 and
1995, Mr. Justice served as Corporate Vice President of Operations of
Continental Baking. Prior to joining Continental Baking, Mr. Justice served in
various operations positions with Frito-Lay, Inc. and Procter & Gamble. Mr.
Justice is also a director of Premium Standard Farms, a division of Continental
Grain. Mr. Justice received a B.S. from the University of Oklahoma and a M.S.
from the University of Texas at Dallas.
HENRY CARTER has served as Executive Vice President of Sales and Marketing
of Consolidated Container Holdings since the closing of the transactions. Prior
to the transactions and since 1998, Mr. Carter served as Executive Vice
President of Suiza Packaging. Mr. Carter served as President of Lawson Mardon
Wheaton Inc. between 1997 and 1998, Executive Vice President of Dorsey Trailers
Company between 1996 and 1997 and President and various other positions of
Constar International between 1977 and 1996. Mr. Carter received a B.S. from the
University of Illinois.
TIMOTHY W. BRASHER has served as Senior Vice President, Chief Financial
Officer and Secretary of Consolidated Container Holdings since the closing of
the transactions. Prior to the transactions and since February 1999, Mr. Brasher
has served as Chief Financial Officer of Suiza Packaging. From February 1998 to
February 1999, Mr. Brasher served as Chief Financial Officer and Chief Operating
Officer of Virtual Village Holdings, Inc. Between 1993 and 1998, Mr. Brasher
served as Vice President and Chief Financial Officer of Buena Vista Home
Entertainment, a division of The Walt Disney Company. Prior to 1993, Mr. Brasher
served as Executive Vice President and Chief Financial Officer of Hinderliter
Industries, Inc. Mr. Brasher received a B.B.A. from the University of North
Texas.
DAVID M. STULMAN has served as Vice President of Human Resources of
Consolidated Container Holdings since the closing of the transactions. Prior to
the transactions and since 1996, Mr. Stulman has served as Vice President-Human
Resources of Continental Plastic Containers and Continental Carribean
Containers. Between 1973 and 1987, he worked for Continental Can in various
human resources positions. Between 1988 and June 1993, Mr. Stulman served as
Corporate Director of Human Resources of Amphenol Corporation. Between June 1993
and November 1995, he served as Vice
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President-Human Resources of Pirelli Armstrong Tire Corporation. Mr. Stulman
received a B.S. from Towson State University.
WILLIAM G. BELL has served as a member of the management committee since the
closing of the transactions. Mr. Bell is the owner and President of Aqua Filter
Fresh, Inc. and Bell Sales, Inc. and the Executive Vice President of Tyler
Mountain Water Co. Inc. Mr. Bell is a director of Reid Plastics Holdings, Aqua
Filter Fresh, Alpine Spring Water, Inc., Wissahickon Spring Water Company and
Bell Sales, Inc. Mr. Bell currently serves as Secretary and Treasurer of the
International Bottled Water Association.
JAMES P. KELLEY has served as a member of the management committee since the
closing of the transactions. Mr. Kelley is a Managing Director of Vestar Capital
Partners and was a founding partner of Vestar Capital Partners at its inception
in 1988. Mr. Kelley is a director of Celestial Seasonings, Reid Plastics
Holdings and Westinghouse Air Brake Company, companies in which Vestar Capital
Partners III or an affiliate has or had a significant equity interest. Mr.
Kelley received a B.S. from the University of Northern Colorado, a J.D. from the
University of Notre Dame and an M.B.A. from Yale University.
LEONARD LIEBERMAN has served as a member of the management committee since
the closing of the transactions. Mr. Lieberman is a former Chief Executive
Officer of Supermarkets General Corporation and Outlet Communications Inc. Mr.
Lieberman is also a director of Advanced Organics, Russell-Stanley Holdings,
Celestial Seasonings, Republic New York Corporation, Republic National Bank of
New York, Sonic Corp. and Nice Pak Products, Inc. and, before the transactions,
was a director of Reid Plastics. Vestar Capital Partners III or an affiliate has
or had a significant equity interest in Advanced Organics, Celestial Seasonings,
Russell-Stanley Holdings and Reid Plastics. Mr. Lieberman received a B.A. from
Yale University, a J.D. from Columbia University and participated in the
Advanced Management Program at Harvard Business School.
JOHN R. WOODARD has served as a member of the management committee since the
closing of the transactions. Mr. Woodard is a Managing Director of Vestar
Capital Partners and joined Vestar Capital Partners in 1998. Between March 1996
and February 1998, he served as a Managing Director of The Blackstone Group.
From 1990 to March 1996, Mr. Woodard was a Vice President of Vestar Capital
Partners. Mr. Woodard is also a director of Reid Plastics Holdings, a company in
which Vestar Capital Partners III has a significant equity interest. Mr. Woodard
received a B.A. from Williams College.
Except as described in this section, there are no arrangements or
understandings between any member of the management committee or executive
officer and any other person pursuant to which that person was elected or
appointed to his position.
MANAGEMENT COMMITTEE COMPENSATION
All members of the management committee are reimbursed for their usual and
customary expenses incurred in attending all management committee and committee
meetings. Members of the management committee who are also employees of
Consolidated Container Holdings, Vestar Capital Partners or Suiza Foods do not
receive remuneration for serving as members of the management committee. Each
other member of the management committee will receive customary compensation of:
- $2,500 for each meeting of the management committee attended in person;
and
- $3,750 for each calendar quarter of service as a member of the management
committee.
Following the closing of the transactions, the management committee
established a compensation committee, comprised of Messrs. Davis, as chairman,
Bell, Kelley and the additional member of the management committee that Franklin
Plastics will designate in the future. In addition, the management committee
established an audit committee, comprised of Messrs. Lieberman, as chairman,
Bernon, Rokus and Woodard.
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OPTION PLAN
Following the closing of the transactions, Consolidated Container Holdings
adopted a 1999 Unit Option Plan to provide some of its senior managers and other
key employees with options to acquire up to 596,206, or 5.5% on a fully diluted
basis of the, member units of Consolidated Container Holdings. Under the option
plan, Consolidated Container Holdings granted options to some of these senior
managers that represent that right to acquire, in total, 573,953 member units of
Consolidated Container Holdings. The exact pricing, performance criteria,
vesting terms and redemption of options granted under this plan are governed by
individual unit option agreements between the employee and Consolidated
Container Holdings and, if the options are exercised, the terms of the options
will be governed by special unit acquisition, ownership and redemption
agreements. In addition to the options to purchase member units in Consolidated
Container Holdings that were granted to some of our senior managers under the
option plan, these senior managers also hold options to purchase, in total,
276,315 member units of Consolidated Container Holdings that were exchanged for
their Franklin Plastics options as described under "The
Transactions--Contribution and Merger Agreement--Franklin Replacement Options."
The compensation committee will administer the option plan.
LIQUIDITY EVENT BONUS PLAN
Following the closing of the transactions, the management committee of
Consolidated Container Holdings adopted a bonus plan for some of its officers,
other key employees and outside consultants. If a liquidity event, as defined in
the bonus plan, were to occur, then the management committee of Consolidated
Container Holdings will establish a bonus pool of cash equal to a formula based
on the appreciation in value of the member units of Consolidated Container
Holdings. As defined in the bonus plan, a liquidity event includes:
- the sale of substantially all of the member units of Consolidated
Container Holdings held by Vestar Packaging and its affiliates;
- the sale of substantially all of the assets of Consolidated Container
Holdings; or
- an initial public offering of 50% or more of the member units of
Consolidated Container Holdings.
Those awarded grants under the bonus plan will share the bonus pool.
Consolidated Container Holdings will make bonus payments, however, only if (1) a
liquidity event occurs and (2) specified rates of return are realized by Vestar
Packaging and its affiliates on their investment in Consolidated Container
Holdings. The management committee or the compensation committee of Consolidated
Container Holdings will administer the bonus plan. To date, Consolidated
Container Holdings has not made any awards under the bonus plan.
EMPLOYMENT AGREEMENTS
As of July 5, 1999, Consolidated Container Company entered into an
employment agreement with Peter M. Bernon. The employment agreement provides
that Mr. Bernon will be employed as an Executive Vice President of Consolidated
Container Company at an annual base salary of $325,000 for a term of two years,
subject to his earlier termination without "cause", which includes willful
misconduct, refusal to perform his duties and his conviction of a felony, or his
resignation for "good reason," which includes a reduction in his salary, annual
bonus opportunity or other benefits, a relocation of his principal place of
employment and his removal from his position with Consolidated Container
Company. Mr. Bernon is entitled to a bonus of up to 100% of his base salary at
the discretion of the management committee of Consolidated Container Holdings
and to participate in any executive bonus plan and all employee benefit plans
maintained by Consolidated Container Company.
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In the event that Consolidated Container Company terminates Mr. Bernon without
cause or he resigns for good reason before the employment agreement expires, Mr.
Bernon will be entitled to receive:
- any payments and benefits provided under any plans or programs in which he
participated before the termination;
- the salary and bonus he would otherwise have received through the end of
his term of employment;
- a cash lump sum payment for unused vacation and unpaid other compensation;
and
- continued employee medical and life insurance plans for the remainder of
the term of the employment agreement.
In the event of his death or permanent disability, Mr. Bernon will be
entitled to a reduced compensation package. In addition, Mr. Bernon has agreed
not to disclose any confidential information regarding Consolidated Container
Company and its affiliates.
As of July 2, 1999, Consolidated Container Company entered into an
employment agreement with William L. Estes. The employment agreement provides
that Mr. Estes will be employed as the Chief Executive Officer of Consolidated
Container Company at an annual base salary of $400,000 for a term of five years,
subject to his earlier termination without "cause", which includes willful
misconduct and his conviction of a felony, or his resignation for "good reason,"
which includes a reduction in his salary or other benefits and his removal from
his position with Consolidated Container Company. Mr. Estes is entitled to a
bonus of up to 100% of his base salary at the discretion of the management
committee of Consolidated Container Holdings, to participate in any executive
bonus plan and all employee benefit plans maintained by Consolidated Container
Company and, under some circumstances, an additional payment to offset negative
tax effects on his benefits. In the event that Consolidated Container Company
terminates Mr. Estes without cause or he resigns for good reason before the
employment agreement expires, Mr. Estes will be entitled to receive:
- any payments and benefits provided under any plans or programs in which he
participated before the termination;
- the salary and bonus he would otherwise have received;
- a cash lump sum payment for unused vacation and unpaid other compensation;
and
- continued employee medical and life insurance plans for the remainder of
the term of the employment agreement.
In the event of his death or permanent disability, Mr. Estes will be
entitled to a reduced compensation package. In addition, Mr. Estes agreed not to
disclose any confidential information regarding Consolidated Container Company
and its affiliates and not to be engaged in, in any capacity, in any business
that competes with Consolidated Container Company or solicit any person who was
employed by Consolidated Container Company and its affiliates during the twelve
months preceding that solicitation for a period of eighteen months after the
date of his termination of employment. In exchange for agreeing to be bound by
these covenants, Mr. Estes will receive payments during the eighteen month
period equal to one and one-half times the executive's base salary and an annual
target bonus.
As of July 5, 1999, Consolidated Container Company entered into an
employment agreement with Ronald E. Justice. The employment agreement provides
that Mr. Justice will be employed as an Executive Vice President of Consolidated
Container Company at an annual base salary of $230,000 for a term of two years,
subject to his earlier termination without "cause", which includes willful
misconduct, failure to perform his duties and his conviction of a felony, or his
resignation for "good reason," which includes a reduction in his salary, annual
bonus opportunity or other benefits, a
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relocation of his principal place of employment and his removal from his
position with Consolidated Container Company. Mr. Justice is entitled to a bonus
of up to 80% of his base salary at the discretion of the management committee of
Consolidated Container Holdings, to participate in any executive bonus plan and
all employee benefit plans maintained by Consolidated Container Company and,
under some circumstances, an additional payment to offset negative tax effects
on his benefits. In the event that Consolidated Container Company terminates Mr.
Justice without cause or he resigns for good reason before the employment
agreement expires, Mr. Justice will be entitled to receive:
- any payments and benefits provided under any plans or programs in which he
participated before the termination;
- the salary and bonus he would otherwise have received over a twelve month
period;
- a cash lump sum payment for unused vacation and unpaid other compensation;
and
- continued employee medical and life insurance plans for the remainder of
term of the employment agreement.
In the event of his death or permanent disability, Mr. Justice will be
entitled to a reduced compensation package. In addition, Mr. Justice agreed not
to disclose any confidential information regarding Consolidated Container
Company and its affiliates and not to be engaged in, in any capacity, in any
business that competes with Consolidated Container Company or solicit any person
who was employed by Consolidated Container Company and its affiliates during the
twelve months preceding that solicitation for a period of twenty four months
after the date of his termination of employment. In exchange for agreeing to be
bound by these covenants, Mr. Justice will receive payments during the two year
period equal to one times the executive's base salary and an annual target
bonus.
As of July 5, 1999, Consolidated Container Holdings entered into an
employment agreement with Henry Carter. The employment agreement provides that
Mr. Carter will be employed as the Executive Vice President of Consolidated
Container Company at an annual base salary of $230,000 for a term of two years,
subject to his earlier termination without "cause", which includes willful
misconduct, failure to perform his duties and his conviction of a felony, or his
resignation for "good reason," which includes a reduction in his salary, annual
bonus opportunity or other benefits, a relocation from his principal place of
employment and his removal from his position with Consolidated Container
Company. Mr. Carter is entitled to a bonus of up to 80% of his base salary at
the discretion of the management committee of Consolidated Container Holdings,
to participate in any executive bonus plan and all employee benefit plans
maintained by Consolidated Container Company and, under some circumstances, an
additional payment to offset negative tax effects on his benefits. In the event
that Consolidated Container Company terminates Mr. Carter without cause or he
resigns for good reason before the employment agreement expires, Mr. Carter will
be entitled to receive:
- any payments and benefits provided under any plans or programs in which he
participated before the termination;
- the salary and bonus he would otherwise have received over a twelve month
period;
- a cash lump sum payment for unused vacation and unpaid other compensation;
and
- continued employee medical and life insurance plans for the remainder of
the term of the employment agreement.
In the event of his death or permanent disability, Mr. Carter will be
entitled to a reduced compensation package. In addition, Mr. Carter agreed not
to disclose any confidential information regarding Consolidated Container
Company and its affiliates and not to be engaged in, in any capacity, in any
business that competes with Consolidated Container Company or solicit any person
who was employed by Consolidated Container Company and its affiliates during the
twelve months preceding
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that solicitation for a period of twenty four months after the date of his
termination of employment. In exchange for agreeing to be bound by these
covenants, Mr. Carter will receive payments during the two year period equal to
one times the executive's base salary and an annual target bonus.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Consolidated Container Holdings is the beneficial owner of all of the member
units of Consolidated Container Company, and its address is 2515 McKinney
Avenue, Suite 850, Dallas, Texas 75201. Consolidated Container Company is the
beneficial owner of all of the shares of common stock of Consolidated Container
Capital, and its address is 2515 McKinney Avenue, Suite 850, Dallas, Texas
75201.
We provide below information concerning the beneficial ownership of the
member units and the economic interest in Consolidated Container Holdings at
September 30, 1999 by:
- each person known by us to be the beneficial owner of more than 5% of the
member units of Consolidated Container Holdings;
- each member of the management committee who is a holder of member units in
Consolidated Container Holdings; and
- the officers and members of the management committee of Consolidated
Container Holdings as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF MEMBER
NAME AND ADDRESS OF BENEFICIAL OWNER UNITS OUTSTANDING (a)
- ------------------------------------------------------------------ NUMBER OF MEMBER UNITS -----------------------
BENEFICIALLY OWNED (a)
-------------------------
(UNITS IN THOUSANDS)
<S> <C> <C>
5% EQUITY HOLDERS:
Vestar Packaging LLC (b)........................................ 2,050 20.5%
Seventeenth Street Plaza 1225 17th Street, Suite 1660
Denver, Colorado 80202
Reid Plastics Holdings, Inc. (c)................................ 3,050 30.5%
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202
Franklin Plastics, Inc. (d)..................................... 4,900 49.0%
1199 West Central Street
Franklin, Massachusetts 02038
OFFICERS AND MANAGEMENT COMMITTEE MEMBERS:
Ronald V. Davis (b)(c).......................................... -- --
Peter M. Bernon (d)(e).......................................... -- --
B. Joseph Rokus (c)............................................. -- --
William L. Estes (e)(f)......................................... -- --
Ronald E. Justice (e)........................................... -- --
Henry Carter (e)................................................ -- --
Timothy W. Brasher (e).......................................... -- --
David M. Stulman (g)............................................ -- --
William G. Bell................................................. -- --
James P. Kelley (b)............................................. -- --
Leonard Lieberman (b)........................................... -- --
John R. Woodard (b)............................................. -- --
ALL OFFICERS AND MEMBERS OF THE MANAGEMENT COMMITTEE AS A GROUP
(12 persons)(h):................................................ -- --
</TABLE>
(FOOTNOTES APPEAR ON THE FOLLOWING PAGE)
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(FOOTNOTES TO TABLE ON PRIOR PAGE)
- ------------------------
(a) The amounts and percentage of member units beneficially owned are
reported on the basis of regulations of the Securities and Exchange Commission
governing the determination of beneficial ownership of securities. Under the
regulations, a person is deemed to be a "beneficial owner" of a security if that
person has or shares "voting power," which includes the power to vote or to
direct the voting of that security, or "investment power," which includes the
power to dispose of or to direct the disposition of that security. A person is
also deemed to be a beneficial owner of any securities of which that person has
a right to acquire beneficial ownership within 60 days. Under these rules, more
than one person may be deemed a beneficial owner of the same securities and a
person may be deemed to be a beneficial owner of securities as to which he has
no economic interest.
(b) Vestar Packaging LLC, a Delaware limited liability company, is 69.4%
owned by Vestar Capital Partners III, L.P., 4.9% owned by Vestar Reid LLC, 1.1%
owned by Davis Capital LLC, 8.0% owned by BT Capital Investors, L.P., an
affiliate of Deutsche Bank Securities Inc., 8.0% by DLJ Private Equity Partners
Fund, L.P., DLJ Fund Investment Partners II, L.P., DLJ Private Equity Employees
Fund, L.P. and DLJ Capital Partners I, LLC, each an affiliate of Donaldson,
Lufkin & Jenrette Securities Corporation, and some employees of Donaldson,
Lufkin & Jenrette Securities Corporation, 0.16% owned by Leonard Lieberman,
0.05% owned by John R. Woodard and 8.4% owned by other persons. Vestar Reid LLC,
a Delaware limited liability company, is 94.2% owned by Vestar Capital Partners
III, L.P., 3.3% owned by Davis Capital LLC and 2.5% owned by other persons.
Davis Capital LLC, a Delaware limited liability company, is 100% owned by Ronald
V. Davis and his affiliates. In addition, each of James P. Kelley and John R.
Woodard is a Vice President of Vestar Associates Corporation III. Vestar
Associates Corporation III is the sole general partner of Vestar Associates III,
L.P. Vestar Associates III, L.P. is the sole general partner of Vestar Capital
Partners III, L.P. and Vestar Capital Partners III, L.P. controls Vestar
Packaging LLC, which owns 20.5% of the member units in Consolidated Container
Holdings, and is the 94.2% owner of Vestar Reid LLC, which owns 82.6% of Reid
Plastics Holdings, Inc., which, in turn, owns 30.5% of the member units in
Consolidated Container Holdings. Mr. Lieberman owns 0.03% of Vestar Capital
Partners III, L.P., in addition to his ownership of 0.16% of Vestar Packaging
LLC. Mr. Davis, as an owner of Vestar Packaging LLC, Mr. Lieberman, as an owner
of Vestar Capital Partners III, L.P. and an owner of Vestar Packaging LLC, Mr.
Kelley, as an executive officer of Vestar Associates Corporation III, and Mr.
Woodard, as an executive officer of Vestar Associates Corporation III and as an
owner of Vestar Packaging LLC, may be deemed to share beneficial ownership of
Vestar Packaging LLC's member units of Consolidated Container Holdings LLC. Each
of these individuals disclaims this beneficial ownership.
(c) Reid Plastics Holdings, Inc., a Delaware corporation, is 82.6% owned by
Vestar Reid LLC, 13.8% owned by B. Joseph Rokus, with options to purchase an
additional 2.4% on a fully diluted basis, 2.8% owned by Davis Capital LLC, with
options to purchase an additional 2.6% on a fully diluted basis, and 3.6% owned
by others. Vestar Reid LLC, a Delaware limited liability company, is 94.2% owned
by Vestar Capital Partners III, L.P., 3.3% owned by Davis Capital LLC and 2.5%
owned by other persons. Davis Capital LLC, a Delaware limited liability company,
is 100% owned by Ronald V. Davis and his affiliates. Mr. Rokus, as a direct
owner of Reid Plastic Holdings Inc., and Mr. Davis, as a direct and as an
indirect owner of Reid Plastics Holdings, Inc., may be deemed to share
beneficial ownership of Reid Plastic Holdings, Inc.'s member units of
Consolidated Container Holdings LLC. Messrs. Rokus and Davis disclaim this
beneficial ownership.
(d) Franklin Plastics, Inc., a Delaware corporation, is 88% owned by Suiza
Foods Corporation, 6% owned by Peter M. Bernon and 6% owned by Alan J. Bernon,
the brother of Peter M. Bernon. Peter M. Bernon, as an owner of Franklin
Plastics, Inc., may be deemed to share beneficial ownership of Franklin
Plastics, Inc.'s member units of Consolidated Container Holdings LLC. Mr. Bernon
disclaims this beneficial ownership.
(FOOTNOTES CONTINUED ON THE FOLLOWING PAGE)
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(FOOTNOTES CONTINUED FROM PRIOR PAGE)
(e) Peter M. Bernon, William L. Estes, Ronald E. Justice, Henry Carter,
Timothy W. Brasher and David M. Stulman were among a group of former employees
of Suiza Packaging who were granted options to purchase the member units of
Consolidated Container Holdings LLC as a replacement for options of an
equivalent economic value in common stock of Franklin Plastics, Inc. as
described under "The Transactions -- Contribution and Merger Agreement
- --Franklin Replacement Options." Mr. Bernon holds presently exercisable options
to purchase 18,334 member units of Consolidated Container Holdings LLC. Mr.
Estes holds presently exercisable options to purchase 55,018 member units of
Consolidated Container Holdings LLC. Mr. Justice holds presently exercisable
options to purchase 9,802 member units of Consolidated Container Holdings LLC.
Mr. Carter holds presently exercisable options to purchase 4,901 member units of
Consolidated Container Holdings LLC.
(f) William L. Estes owns 6,000 shares of common stock of Suiza Foods
Corporation, or less than 0.01% of the common stock of Suiza Foods Corporation
at September 30, 1999. Suiza Foods Corporation owns 88% of the common stock of
Franklin Plastics, Inc. As an indirect owner of Franklin Plastics, Inc., Mr.
Estes may be deemed to share beneficial ownership of Franklin Plastics, Inc.'s
member units of Consolidated Container Holdings LLC. Mr. Estes disclaims this
beneficial ownership.
(g) David M. Stulman owns presently exercisable options to purchase 4,572
shares of common stock of Suiza Foods Corporation, or less than 0.01% of the
common stock of Suiza Foods Corporation at September 30, 1999. Suiza Foods
Corporation owns 88% of the common stock of Franklin Plastics, Inc. As an
indirect owner of Franklin Plastics, Inc., Mr. Stulman may be deemed to share
beneficial ownership of Franklin Plastics, Inc.'s member units of Consolidated
Container Holdings LLC. Mr. Stulman disclaims this beneficial ownership.
(h) The officers and members of the management committee of Consolidated
Container Holdings LLC as a group own, in total, presently exercisable options
to purchase 88,055 member units of Consolidated Container Holdings LLC.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
WE SUMMARIZE BELOW THE MATERIAL TERMS AND PROVISIONS OF SOME AGREEMENTS AND
ARRANGEMENTS OF CONSOLIDATED CONTAINER COMPANY AS WELL AS THOSE IN EXISTENCE
PRIOR TO THE CONSUMMATION OF THE TRANSACTIONS THAT RELATE TO THE BUSINESSES
WHICH WERE CONTRIBUTED TO CONSOLIDATED CONTAINER COMPANY IN CONNECTION WITH THE
TRANSACTIONS.
LIMITED LIABILITY COMPANY AGREEMENT OF CONSOLIDATED CONTAINER HOLDINGS
Simultaneously with the consummation of the transactions, Vestar Packaging,
Reid Plastics Holdings and Franklin Plastics entered into a limited liability
agreement of Consolidated Container Holdings, the sole member of Consolidated
Container Company. The limited liability company agreement of Consolidated
Container Holdings provides for its management, non-compete arrangements,
transfer restrictions and related matters. We summarize its material provisions
below.
MANAGEMENT
The management committee of Consolidated Container Holdings has general
powers of supervision, direction and control over the business of Consolidated
Container Holdings and, through Consolidated Container Holdings, Consolidated
Container Company and its subsidiaries. The management committee consists of
eight members, two of whom were appointed by Vestar Packaging, two of whom were
appointed by Reid Plastics Holdings, one of whom was appointed mutually by
Vestar Packaging and Reid Plastics Holdings, one of whom was appointed by
Franklin Plastics, Peter M. Bernon, one of whom is the chief executive officer
of Consolidated Container Holdings, who currently is William Estes, and one of
whom is B. Joseph Rokus, currently the Chairman of the Boards of Directors of
Reid Plastics Holdings and Reid Plastics. In addition, Franklin Plastics has the
right to designate one additional member of the management committee under the
limited liability company agreement of Consolidated Container Holdings. The
management committee may be expanded to appoint independent members, so long as
Vestar Packaging and Reid Plastics Holdings continue to designate a majority of
the members of the management committee.
A majority of the members of the management committee and the affirmative
vote of at least one Suiza Foods-appointed member of the management committee
and one Vestar Packaging-appointed member of the management committee is
required for some decisions by the management committee. These decisions
include:
- issuing any equity securities, other than private offerings for less than
$50 million and issuances under Consolidated Container Holdings' option
plan;
- accepting or requiring additional capital contributions;
- incurring debt, other than amounts permitted as of the closing date of the
transactions, in excess of $80 million;
- selling or pledging all or substantially all of Consolidated Container
Company's assets;
- acquiring any business or assets in excess of $80 million;
- selling any operations or assets in excess of $80 million;
- entering into or amending any agreement with a member or its affiliate;
and
- expanding the scope of business beyond the plastic packaging business.
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NON-COMPETITION ARRANGEMENTS
Each of the members of Consolidated Container Holdings is subject to a
non-competition arrangement limiting its ability to compete in the business for
plastic packaging products and plastic bottles for dairy, water or juice in the
same geographical area served by Consolidated Container Holdings and its
subsidiaries. In general, these geographic areas are in the United States and
Canada. The non-competition arrangements will terminate after five years or, if
earlier, upon either of Vestar Packaging (together with Reid Plastics Holdings)
or Franklin Plastics owning less than 10% of the member units of Consolidated
Container Holdings. The following exceptions apply to these non-competition
arrangements:
- Suiza Foods may continue to operate its Puerto Rico plastic operations,
which it currently owns and which are not being contributed to
Consolidated Container Company.
- Affiliates of Suiza Foods may manufacture plastic packaging products
solely for their own use.
- In connection with future acquisitions, Suiza Foods may operate any
plastic packaging operations that it acquires and that constitute 50% or
less of the revenue of that acquired business, provided that Suiza Foods:
-- offers to sell the competing plastic packaging operations to
Consolidated Container Company within six months of that acquisition;
and
-- sells the competing plastic packaging operations to an unaffiliated
third party within twelve months of that acquisition, if an agreement
with Consolidated Container Company cannot be reached.
- Affiliates of Vestar Packaging may continue to own and operate
Russell-Stanley Holdings. Russell-Stanley Holdings is a manufacturer and
marketer of plastic and steel industrial containers and a provider of
related container services in the United States and Canada. It is
controlled by Vestar Capital Partners III and its affiliates.
- Vestar Packaging and its affiliates may make (a) a non-controlling equity
investment in a competing business if that equity investment is for less
than $75 million and (b) a non-controlling, non-equity investment in a
competing business.
- Vestar Packaging and its affiliates, excluding Reid Plastics Holdings, may
operate any plastic packaging operations that either:
-- constitute 50% or less of the revenue of that acquired business and
generate less than $25 million in revenue for the twelve month period
prior to that acquisition;
-- constitute 50% or less of the revenue of that acquired business,
provided that Vestar Packaging or its appropriate affiliate (a) offers
to sell the competing plastic packaging operations to Consolidated
Container Company within six months of that acquisition and (b) sells
the competing plastic packaging operations to an unaffiliated
third-party within twelve months of that acquisition, if an agreement
with Consolidated Container Company cannot be reached; or
-- is in a product category for which Consolidated Container Company and
its subsidiaries have less than $25 million in revenues.
PREFERRED UNITS
Consolidated Container Holdings may issue preferred units to its members to
compensate them for the payment of some tax distributions to other members, to
satisfy some indemnification claims, as described under "The Transactions --
Contribution and Merger Agreement," and in other
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circumstances. If issued, the preferred units will be issued at a liquidation
value determined by reference to the value of the event causing the issuance of
the preferred units and will accrue distribution rights at an annual rate of
12.5%. Upon the issuance of the preferred units, the capital contributions of
all of the holders of member units of Consolidated Container Holdings will be
reduced retroactively and proportionally by the amount of the total liquidation
value of the preferred units which are issued.
Consolidated Container Holdings may optionally redeem any preferred units
which are issued at a redemption price equal to the liquidation value plus any
accrued but unpaid distribution rights of these preferred units, subject to the
restrictions contained in the agreements governing our debt. Consolidated
Container Holdings is required to redeem all issued preferred units prior to any
redemption of other units upon:
- a sale of all or substantially all of the assets of Consolidated Container
Holdings;
- an initial public offering of Consolidated Container Holdings; or
- the merger of Consolidated Container Holdings into Reid Plastics Holdings
in anticipation of an initial public offering of Reid Plastics Holdings as
described below, causing the issuance of the preferred units.
Subject to some limitations, Reid Plastics Holdings, Vestar Packaging or
Franklin Plastics may choose to convert any preferred units that they hold into
member units upon the exercise of Reid Plastics Holdings' or Vestar Packaging's
right of first offer or Franklin Plastics' tag-along rights discussed below
under "-- Transfer Restrictions -- Right of First Offer/Tag-Along Rights."
Any amendment of the limited liability company agreement of Consolidated
Container Holdings which would adversely affect the rights of holders of
preferred units requires the approval of a majority of the holders of any
outstanding preferred units. Holders of preferred units, if any, will have no
other voting rights.
PREEMPTIVE AND ANTI-DILUTION RIGHTS
Each of Franklin Plastics, Reid Plastics Holdings and Vestar Packaging has
preemptive rights, subject to some exceptions, to allow it to maintain its
percentage ownership in the event Consolidated Container Holdings issues
additional equity interests. Franklin Plastics, Reid Plastics Holdings and
Vestar Packaging also have anti-dilution rights, subject to some exceptions, in
the event Consolidated Container Holdings issues any equity interests for less
than fair market value. The preemptive and anti-dilution rights will terminate
upon an initial public offering of Consolidated Container Holdings or any
successor to it.
TRANSFER RESTRICTIONS
The members of Consolidated Container Holdings are restricted in
transferring their interests in Consolidated Container Holdings prior to four
years after the execution of the limited liability company agreement, except for
some limited exceptions which permit transfers to affiliates and pledges to some
lenders. After the fourth anniversary of the execution of the limited liability
company agreement, these parties will have the following rights:
- RIGHT OF FIRST OFFER/TAG-ALONG RIGHTS. If either Reid Plastics Holdings or
Vestar Packaging desires to sell any of its member units and preferred
units, it will be required to offer the member units and the preferred
units first to Franklin Plastics. If Franklin Plastics declines to
purchase these units, Reid Plastics Holdings or Vestar Packaging, as the
case may be, can sell these units to a third party on substantially
similar terms. Franklin Plastics will then have tag-along rights in
connection with that sale for a proportionate number of these units.
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- DRAG-ALONG RIGHTS. If either Reid Plastics Holdings or Vestar Packaging
proposes to sell all of its member units and Franklin Plastics declines to
exercise first offer rights, Reid Plastics Holdings or Vestar Packaging,
as the case may be, can compel Franklin Plastics to sell all of its member
units to the proposed purchaser.
- PUT RIGHTS. If an initial public offering of Consolidated Container
Holdings has not occurred within four years after the closing of the
transactions, then Franklin Plastics will have the right to offer to sell
all of its member units and preferred units, if any, to Reid Plastics
Holdings or Vestar Packaging at fair market value. If Reid Plastics
Holdings or Vestar Packaging declines to purchase these member units,
Franklin Plastics will have the right to offer to sell all of its member
units and preferred units, if any, to Consolidated Container Holdings. If
Consolidated Container Holdings declines to purchase the units,
Consolidated Container Holdings will be obligated to cause a sale of the
business or consummate an initial public offering of Consolidated
Container Holdings as soon as practicable. If Consolidated Container
Holdings is unable to sell the business or consummate an initial public
offering of Consolidated Container Holdings within 180 days, Franklin
Plastics will be free to sell its member units without restriction. Each
of Reid Plastics Holdings and Vestar Packaging will have comparable put
rights but only in circumstances where it has been proposed that
Consolidated Container Holdings consummate an initial public offering and
that offering was vetoed by Franklin Plastics.
In connection with an initial public offering, Consolidated Container
Holdings and Franklin will be merged into Reid Plastics Holdings and each
membership interest in Consolidated Container Holdings and Franklin will be
converted into common stock of Reid Plastics Holdings.
MANAGEMENT AGREEMENT
Consolidated Container Holdings, Consolidated Container Company and Vestar
Capital Partners entered into a management agreement on April 29, 1999 relating
to the management of Consolidated Container Company and Consolidated Container
Holdings. Pursuant to this agreement, Consolidated Container Holdings or
Consolidated Container Company has paid Vestar Capital Partners a fee of $5
million and has reimbursed Vestar Capital Partners for all out-of-pocket
expenses incurred by it in connection with the consummation of the transactions.
In addition, Vestar Capital Partners has been providing on-going management
services to Consolidated Container Holdings and Consolidated Container Company
since the closing of the transactions, including strategic, financial planning
and advisory services. For these services, Consolidated Container Holdings or
Consolidated Container Company pays Vestar Capital Partners an annual fee of the
greater of $500,000 or 0.42% of the earnings before interest and taxes plus
depreciation and amortization, as defined in the management agreement, of the
prior year of Consolidated Container Holdings, Consolidated Container Company
and their subsidiaries on a consolidated basis and reimburses Vestar Capital
Partners for all out-of-pocket expenses incurred by it in connection with these
services. The management agreement will terminate when Vestar Packaging, its
members, Vestar Capital Partners III, its partners and their affiliates
collectively own less than 25% of the member units of Consolidated Container
Holdings or, if earlier, following the consummation of an initial public
offering of Consolidated Container Holdings. Consolidated Container Holdings and
Consolidated Container Company have also agreed to indemnify Vestar Capital
Partners against some of the liabilities and costs incurred in connection with
its engagement.
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REGISTRATION RIGHTS AGREEMENT OF REID PLASTICS HOLDINGS
In connection with a possible future initial public offering of equity
interests in Consolidated Container Holdings, Reid Plastics Holdings and the
holders of member units in Consolidated Container Holdings will enter into a
registration rights agreement. In connection with that initial public offering,
Consolidated Container Holdings and Franklin Plastics will be merged into Reid
Plastics Holdings as described under the section "Limited Liability Company
Agreement of Consolidated Container Holdings" above. If executed, the
registration rights agreement will provide that Reid Plastics Holdings will
grant rights to holders of its common stock to have that common stock registered
under the Securities Act of 1933 following the mergers described above. To the
extent that owners of options to purchase common stock of Franklin Plastics
replace these options with options to purchase member units in Consolidated
Container Holdings held by Suiza Foods, these parties will also be entitled to
the registration rights described here. Stockholders will have the right,
subject to some limitations, to one demand registration for every 10% of Reid
Plastics Holdings owned by them following the initial public offering, rounded
to the nearest 10%, provided that none of them shall have any registration
rights if their ownership is below 5%. Reid Plastics Holdings will not be
required to effect any registration demanded unless the stockholders request it
to register common stock with a fair market value of at least $20 million.
Stockholders will also have piggyback registration rights, subject to some
limitations.
LIMITED LIABILITY COMPANY AGREEMENT OF CONSOLIDATED CONTAINER COMPANY
Simultaneously with the closing of the transactions, Consolidated Container
Holdings, as the sole member of Consolidated Container Company, entered into a
limited liability company agreement for Consolidated Container Company. As its
sole member, Consolidated Container Holdings manages Consolidated Container
Company under this agreement.
SUPPLY AGREEMENTS
On July 2, 1999, Consolidated Container Holdings and Suiza Foods entered
into four separate supply agreements, one for HDPE bottles, one for PET bottles
and two one for bottle components.
Under the supply agreement for HDPE bottles, specified and existing
affiliates of Suiza Foods in the continental United States and Canada have
agreed to purchase their outside HDPE bottle requirements from Consolidated
Container Holdings or its subsidiaries. The prices for these bottles are based
on prices in effect at the time of the agreement and are subject to adjustment
based on changes in raw material costs, bottle design or specification and
delivery or packaging specification. During specified years, Suiza Foods may
conduct market tests to confirm that bottle prices remain competitive within an
applicable market. If the prices are not competitive and Consolidated Container
Company chooses not to lower its prices, then Suiza Foods may purchase its
bottle requirements in that market from a third party at a price no greater than
the price rejected by Consolidated Container Company. In addition, we have the
right to supply bottles to existing and newly acquired Suiza Foods affiliates
which do not currently purchase bottles from us at prices to be mutually agreed
upon, consistent with the then current market conditions. This supply agreement
has a term of seven years.
Under the supply agreement for PET bottles, specified and existing Suiza
Foods entities in the continental United States and Canada have agreed to
purchase their outside PET bottle requirements from Consolidated Container
Holdings or its subsidiaries. The prices for these bottles are based on prices
in effect at the time of the agreement and are subject to adjustments based on
changes in raw material costs, bottle design or specification and delivery or
packaging specification. In addition, we will have the right to supply bottles
to existing or newly acquired Suiza Foods affiliates which do not currently
purchase bottles from us at prices to be mutually agreed upon, consistent with
the then current market conditions. During specified years, Suiza Foods may
conduct market tests to confirm that bottle prices remain competitive within an
applicable market. If the prices are not competitive and
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Consolidated Container Company chooses not to lower its prices, then Suiza Foods
may elect to purchase its bottle requirements in that market from a third party
at a price no greater than the price rejected by Consolidated Container Company.
This supply agreement has a term of seven years.
Under the two supply agreements for bottle components, the Suiza Foods
affiliates which purchased their bottle component requirements from Franklin
Plastics or Plastics Containers before July 2, 1999 will continue to do so. The
prices for the bottle components will be based on market prices. One of these
supply agreements has a term of three years, and the other has a term of five
years.
TRADEMARK LICENSE AGREEMENT
Simultaneously with the closing of the transactions, Consolidated Container
Holdings and Consolidated Container Company entered into a trademark license
agreement with Continental Can Company, Inc., a wholly owned subsidiary of Suiza
Foods. Continental Can Company granted Consolidated Container Holdings and
Consolidated Container Company a non-exclusive license to use some of its
trademarks in the United States. The trademark license will be royalty free as
long as Suiza Foods directly or indirectly owns 10% or more of Consolidated
Container Holdings. Consolidated Container Holdings and Consolidated Container
Company will be required to pay Continental Can Company an annual trademark
licensing fee of $100,000 if Suiza Foods directly or indirectly owns less than
10% of Consolidated Container Holdings.
ASSUMPTION AGREEMENT
Simultaneously with the closing of the transactions, Consolidated Container
Holdings and Consolidated Container Company entered into an assumption agreement
with Reid Plastics Holdings to assume all of the obligations of Reid Plastics
Holdings to B. Joseph Rokus. Currently, Reid Plastics Holdings is obligated to
make some payments to Mr. Rokus which relate to the 1997 acquisition of a
controlling interest in Reid Plastics Holdings by Vestar Reid. These payments
include $400,000 each year, additional amounts up to $3.4 million if specified
investment returns of Reid Plastics are achieved and up to $4.8 million upon an
initial public offering of Reid Plastics Holdings, if specified investment
returns are achieved, or specified qualified sales of Reid Plastics Holdings by
Vestar Reid, the parent of Reid Plastics Holdings and a controlled affiliate of
Vestar Capital Partners III. Consolidated Container Holdings has agreed to
indemnify Suiza against some of these payments.
TRANSITION SERVICES AGREEMENT
Simultaneously with the closing of the transactions, Suiza Foods Corporation
entered into a transition services agreement with Consolidated Container
Holdings and Consolidated Container Company. Under the agreement, Suiza Foods
and its affiliates agreed to continue to supply office and other services to
Consolidated Container Holdings, Consolidated Container Company and their
affiliates on the same basis that they had provided these services to Suiza
Packaging prior to the closing of the transactions. These services include:
- the lease of office space for our offices at 2515 McKinney Avenue, Dallas,
Texas;
- telephone, computer and electricity services;
- medical insurance policies and employee benefits for some of our senior
officers; and
- payments under insurance policies, letters of credit and related
performance or payment guarantees regarding equipment leases, workers'
compensation claims and related matters.
We will pay our share of the applicable charges or cost allocations for the
services described above. The transition services agreement is scheduled to
terminate on December 31, 1999, except regarding
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the insurance policies, letters of credit and related payments, which will
terminate when we replace these obligations.
ADDITIONAL MATTERS
Aqua Filter Fresh, of which William G. Bell is the 75% owner, President and
a director, has purchased containers from Reid Plastics at market terms. In
1998, these purchases amounted to over $2.0 million.
Corporate First Travel Agency, of which B. Joseph Rokus was a 16.7% owner,
was paid approximately $60,000 by Reid Plastics in 1998 in connection with
customary travel arrangements made through Corporate First Travel Agency.
Subsequently, Mr. Rokus sold his interest in Corporate First Travel Agency.
Further, an affiliate of Mr. Rokus received rent payments of approximately
$220,000 from Reid Plastics in 1998 for its Monrovia, California facility, which
was subsequently consolidated with another one of our facilities.
In addition, Peter M. Bernon and some of his family members are
beneficiaries of a family trust which leases property to a subsidiary of Suiza
Foods which subleases a portion of this property to Franklin Plastics. In 1998,
sublease payments on this portion of the property totaled approximately $80,000.
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DESCRIPTION OF SENIOR CREDIT FACILITY
WE SUMMARIZE BELOW THE MATERIAL TERMS AND PROVISIONS OF THE SENIOR CREDIT
FACILITY. THIS SUMMARY IS NOT A COMPLETE DESCRIPTION OF ALL OF THE TERMS AND
PROVISIONS OF THE AGREEMENTS GOVERNING THIS DEBT.
SENIOR CREDIT FACILITY
OVERVIEW
In connection with the transactions, we entered into a senior credit
facility with Bankers Trust Company, as administrative agent, lead arranger and
book manager, Donaldson, Lufkin & Jenrette Securities Corporation, as
syndication agent, Morgan Guaranty Trust Company of New York, as documentation
agent, and the other lenders that are a party to it. The senior credit facility
consists of:
- two committed term loan facilities in a total principal amount of $385
million;
- an uncommitted term loan facility of $100 million in total principal
amount, which will be available to us only upon our satisfaction of
specified conditions and the willingness of a lender or lenders to provide
this term loan; and
- a revolving credit facility in a total principal amount of up to $90
million.
Our obligations under the senior credit facility are secured and are
unconditionally and irrevocably guaranteed jointly and severally by Consolidated
Container Holdings and each of its domestic subsidiaries other than Consolidated
Container Company, in each case subject to customary exceptions. Each of the
lenders under the senior credit facility, or its affiliate, is an Initial
Purchaser.
SECURITY INTERESTS
Our borrowings under the senior credit facility are secured by a first
priority perfected security interest in:
- all of the limited liability company interests and stock of each direct
and indirect domestic subsidiary of Consolidated Container Holdings,
including Consolidated Container Company;
- 65% of the stock of each foreign subsidiary of Consolidated Container
Holdings, except Reid Mexico, S.A. de C.V.; and
- all other tangible and intangible assets of Consolidated Container
Holdings and each of its direct and indirect domestic subsidiaries,
including Consolidated Container Company.
TERM LOAN FACILITIES AND REVOLVING CREDIT FACILITY
The term loan facilities consists of three tranches of term loans in a total
principal amount of $485 million. We summarize each of these term loan
facilities below:
- The tranche A term loan totals $150 million in principal amount, all of
which we borrowed at the closing of the senior credit facility. The
amortization schedule of the tranche A term loan requires us to repay
$3.75 million in 1999, $11.25 million in 2000, $18.75 million in 2001,
$26.25 million in 2002, $33.75 million in 2003, $37.5 million in 2004 and
$18.75 million in 2005.
- The tranche B term loan totals $235 million in principal amount, all of
which we borrowed at the closing of the senior credit facility. We are
required to repay installments on this term loan in annual principal
amounts of 1% of its total principal amount for the first six years and
the remaining amount in eight quarterly payments in the seventh and eighth
years following the closing of the senior credit facility.
- The tranche C term loan totals $100 million in principal amount and is
uncommitted. Until three years following the closing of the senior
facility, we may request one or more lenders under the senior credit
facility to make one or more tranche C term loans, if we satisfy specified
financial ratios and other conditions. This facility may, alternatively,
take the form of additional
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revolving credit loans under the revolving credit facility or a
combination of one or more tranche C term loans and additional revolving
credit loans. The lenders are not required, however, to make any tranche C
term loans. Accordingly, we cannot assure you that the tranche C term
facility will be available to us.
The revolving credit facility consists of a revolving credit facility in a
total principal amount of $90 million. Consolidated Container Company is
entitled to draw amounts under it for working capital requirements and other
general corporate purposes. At the closing of the senior credit facility,
Consolidated Container Company borrowed $27.5 million under it and may borrow,
repay and reborrow the total amount of this facility until its maturity. In
addition, approximately $5.2 million of outstanding letters of credit, which
were issued under some of the credit facilities of Suiza Packaging, have been
replaced by new letters of credit issued for the benefit of Consolidated
Container Company and/or its subsidiaries under the revolving credit facility.
The issuance of these letters of credit uses availability under the revolving
credit facility. The revolving credit facility will mature on the sixth
anniversary of the closing of the senior credit facility.
INTEREST RATES
Borrowings under the senior credit facility bear interest, at our option, at
either:
- a base rate, which will be the higher of 1/2 of 1% in excess of the
overnight federal funds rate and the prime lending rate of Bankers Trust
Company, plus a margin; or
- a eurodollar rate on deposits for one, two, three or six month periods or,
if and when available to all of the relevant lenders, nine or twelve month
periods, which are offered to Bankers Trust Company in the interbank
eurodollar market, plus the applicable interest margin.
The margin on base rate and eurodollar loans is based on a schedule that
corresponds to the leverage ratio of Consolidated Container Holdings and its
subsidiaries on a consolidated basis. Currently, we are paying the following
margins on amounts that we have borrowed:
- 0.75% for base rate loans and 1.75% for eurodollar rate loans for tranche
A term loans and revolving credit loans;
- 1.25% for base rate loans and 2.25% for eurodollar rate loans for tranche
B term loans; and
- a rate to be determined for tranche C terms loans, based on the agreement
between Consolidated Container Company and the lender or lenders providing
that loan.
In addition, Consolidated Container Company:
- pays a commitment fee on the unused commitments under the revolving credit
facility, ranging from 0.25% to 0.50% on an annual basis depending on the
same schedule of leverage ratios, payable quarterly in arrears;
- pays an annual administration fee to Bankers Trust Company, as
administrative agent; and
- paid, on the closing date of the senior credit facility, a commitment fee
equal to 3/8 of 1% per annum of the total committed amount of the senior
credit facility from April 29, 1999 to and including that closing date.
MANDATORY AND OPTIONAL REPAYMENT
We are required to prepay outstanding loans under the term loan facilities,
subject to specified conditions and exceptions, with:
- 100% of the net proceeds of any incurrence of debt;
- 100% of the net proceeds of issuances of equity or capital contributions;
- 100% of the net proceeds of specified asset dispositions, subject to
specified reinvestment provisions;
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- 75% of annual excess cash flow of Consolidated Container Company and its
subsidiaries on a consolidated basis; and
- 100% of the net proceeds from specified condemnation and insurance
recovery events, subject to specified reinvestment provisions.
Subject to specified conditions and exceptions, the mandatory prepayments,
other than the excess cash flow prepayment, will be applied pro rata among the
term loan tranches and to installments of each tranche on a pro rata basis.
Subject to specified conditions and exceptions, the mandatory prepayment based
on excess cash flow will be applied first to reduce the principal amount of
tranche A term loans and, second, to reduce the principal amount of tranche B
term loans and tranche C term loans on a pro rata basis and to installments of
each tranche in direct order of its maturity. Mandatory prepayments in excess of
the amount of outstanding term loans will be applied to reduce the commitments
under the revolving credit facility.
We may voluntarily prepay loans under the senior credit facility, in whole
or in part, without penalty, subject to minimum prepayments. If we prepay
eurodollar rate loans, we will be required to reimburse lenders for their
breakage and redeployment costs, if any. In general, our voluntary prepayments
of the term loans will be applied pro rata among the tranches and to
installments of each tranche in the direct order of its maturity. However, we
may elect, at the time of any voluntary prepayment, first to prepay the tranche
A term loans in an amount up to the next four scheduled repayments of tranche A
term loans.
COVENANTS
The senior credit facility contains negative and affirmative covenants and
requirements affecting Consolidated Container Holdings and Consolidated
Container Company and its subsidiaries. The senior credit facility contains the
following negative covenants and restrictions, among others: restrictions on
debt, liens, guarantee obligations, mergers, asset dispositions, sale-leaseback
transactions, investments, loans, advances, acquisitions, capital expenditures,
dividends and other restricted junior payments, stock repurchases, transactions
with affiliates, issuances of equity, formation of subsidiaries, changes in
business conducted and prepayments and amendments of subordinated debt. The
senior credit facility also requires Consolidated Container Holdings and its
subsidiaries to meet specified financial covenants, including a leverage ratio
test, an interest coverage ratio test and a fixed charge coverage ratio test.
The senior credit facility contains the following affirmative covenants,
among others: mandatory reporting by Consolidated Container Holdings of
financial and other information to the administrative agent, notice by
Consolidated Container Holdings to the administrative agent upon the occurrence
of specified events of default and other events, and other standard obligations
that require Consolidated Container Holdings and its subsidiaries to operate
their business in an orderly manner and consistent with past practice and will
require the maintenance of insurance coverage and interest rate protection.
EVENTS OF DEFAULT
The senior credit facility specifies customary events of default, including
non-payment of principal, interest or fees, violation of covenants, inaccuracy
of representations and warranties in any material respect, bankruptcy and
insolvency events and change of control of Consolidated Container Holdings.
Among the events that constitute a change of control under the senior credit
facility is the occurrence of any change of control or similar event under any
documents relating to the issuance of the notes or evidencing or relating to the
outstanding notes and the exchange notes.
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LEGAL MATTERS
The validity of the exchange notes and the related guarantees will be passed
upon for Consolidated Container Company and Consolidated Container Capital and
the subsidiary guarantors by Simpson Thacher & Bartlett, New York, New York.
EXPERTS
The consolidated balance sheet of Consolidated Container Company LLC as of
July 2, 1999 included in this prospectus has been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report appearing herein and is
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
The consolidated financial statements of Reid Plastics, Inc. as of December
31, 1997 and 1998 and for each of the two years ended December 31, 1998 and the
six months ended June 30, 1999, included in this prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein and are included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited Reid Plastics, Inc.'s
consolidated financial statements of income, shareholders' equity and cash flows
for the year ended December 31, 1996, as set forth in their report. We have
included those financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.
The consolidated statements of operations, stockholders' equity and cash
flows of Plastics Management Group (the predecessor of Franklin Plastics and,
following the acquisition of Franklin Plastics by Suiza Foods Corporation, Suiza
Packaging) for the year ended September 30, 1996 and the six months ended March
31, 1997 have been audited by PricewaterhouseCoopers LLP, independent
accountants, as stated in their report appearing herein and are included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of Plastic Containers, Inc. as of May
29, 1998 and for the five months then ended included in this prospectus have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein and are included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Plastic Containers, Inc. as of
December 31, 1997 and for each of the years in the two-year period ended
December 31, 1997 included in this prospectus in reliance upon the report of
KPMG LLP, independent certified public accountants, appearing elsewhere herein,
and upon the authority of said firm as experts in accounting and auditing.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
CONSOLIDATED CONTAINER COMPANY LLC
Independent Auditors' Report............................................................................. F-3
Consolidated Balance Sheet as of July 2, 1999............................................................ F-4
Notes to Consolidated Balance Sheet...................................................................... F-5
REID PLASTICS, INC.
Independent Auditors' Reports............................................................................ F-15
Consolidated Balance Sheets as of December 31, 1997 and 1998............................................. F-17
Consolidated Statements of Operations for the year ended December 31, 1996, the period from January 1,
1997 through October 14, 1997, the period from October 15, 1997 through December 31, 1997, for the year
ended December 31, 1998 and for the six months ended June 30, 1999..................................... F-18
Consolidated Statements of Shareholders' Equity for the year ended December 31, 1996, the period from
January 1, 1997 through October 14, 1997, the period from October 15, 1997 through December 31, 1997,
for the year ended December 31, 1998 and for the six months ended June 30, 1999........................ F-19
Consolidated Statements of Cash Flows for the year ended December 31, 1996, the period from January 1,
1997 through October 14, 1997, the period from October 15, 1997 through December 31, 1997, for the year
ended December 31, 1998 and for the six months ended June 30, 1999..................................... F-20
Notes to Consolidated Financial Statements............................................................... F-22
SUIZA PACKAGING
Independent Auditors' Reports............................................................................ F-38
Combined Balance Sheets as of December 31, 1997 and 1998................................................. F-40
Combined Statements of Operations for the year ended September 30, 1996, the six-month period ended March
31, 1997, the four-month period ended July 31, 1997, the five-month period ended December 31, 1997 and
the year ended December 31, 1998....................................................................... F-41
Combined Statements of Stockholders' Equity for the year ended September 30, 1996, the six-month period
ended March 31, 1997, the four-month period ended July 31, 1997, the five-month period ended December
31, 1997 and the year ended December 31, 1998.......................................................... F-42
Combined Statements of Cash Flows for the year ended September 30, 1996, the six-month period ended March
31, 1997, the four-month period ended July 31, 1997, the five-month period ended December 31, 1997 and
the year ended December 31, 1998....................................................................... F-43
Notes to Combined Financial Statements................................................................... F-44
Unaudited Condensed Combined Statements of Operations for the Six Months Ended June 30, 1998 and 1999.... F-59
Unaudited Condensed Combined Statements of Cash Flows for the Six Months Ended June 30, 1998 and 1999.... F-60
Notes to Unaudited Condensed Combined Financial Statements............................................... F-61
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PLASTIC CONTAINERS, INC.
Independent Auditors' Reports............................................................................ F-62
Consolidated Balance Sheets as of December 31, 1997 and May 29, 1998..................................... F-64
Consolidated Statements of Operations for the years ended December 31, 1996 and 1997 and for the period
from January 1, 1998 through May 29, 1998.............................................................. F-65
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996 and 1997 and for
the period from January 1, 1998 through May 29, 1998................................................... F-66
Consolidated Statements of Cash Flows for the years ended December 31, 1996 and 1997 and for the period
from January 1, 1998 through May 29, 1998.............................................................. F-67
Notes to Consolidated Financial Statements............................................................... F-68
</TABLE>
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Consolidated Container Company LLC
Dallas, Texas
We have audited the accompanying consolidated balance sheet of Consolidated
Container Company LLC and subsidiaries (the "Company") as of July 2, 1999. This
consolidated financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this consolidated
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated balance sheet. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
balance sheet presentation. We believe that our audit of the consolidated
balance sheet provides a reasonable basis for our opinion.
In our opinion, such consolidated balance sheet presents fairly, in all
material respects, the financial position of Consolidated Container Company LLC
at July 2, 1999, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Dallas, Texas
August 25, 1999
F-3
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED BALANCE SHEET
JULY 2, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....................................................... $ 10,625
Temporary investments........................................................... 8,612
Accounts receivable, net of allowance for doubtful accounts of $5,439........... 86,393
Inventories..................................................................... 37,207
Prepaid expenses and other current assets....................................... 2,450
---------
Total current assets........................................................ 145,287
PROPERTY AND EQUIPMENT -- Net..................................................... 277,552
INTANGIBLE AND OTHER ASSETS....................................................... 561,134
---------
TOTAL ASSETS...................................................................... $ 983,973
---------
---------
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Accounts payable................................................................ $ 38,862
Accrued expenses................................................................ 43,536
Revolving credit facility....................................................... 27,500
Current portion of long-term debt............................................... 11,419
---------
Total current liabilities................................................... 121,317
LONG-TERM DEBT.................................................................... 565,007
OTHER LONG-TERM LIABILITIES....................................................... 41,251
MINORITY INTEREST................................................................. 427
COMMITMENTS AND CONTINGENCIES (Note 10)
MEMBER'S EQUITY................................................................... 255,971
---------
TOTAL LIABILITIES AND MEMBER'S EQUITY............................................. $ 983,973
---------
---------
</TABLE>
See notes to consolidated balance sheet.
F-4
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
NOTES TO CONSOLIDATED BALANCE SHEET JULY 2, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ORGANIZATION -- On July 2, 1999, Reid Plastics, Inc., a wholly
owned subsidiary of Reid Holdings, Inc., acquired substantially all of the U.S.
plastics packaging assets of Franklin Plastics, Inc. ("Franklin") and Plastic
Containers, Inc. ("PCI"), subsidiaries of Suiza Foods Corporation ("Suiza").
Suiza Foods managed the operations of Franklin and its subsidiaries and PCI and
its subsidiaries as one entity called Suiza Packaging ("Suiza Packaging").
Following the formation of Consolidated Container Company LLC, a Delaware
limited liability company (the "Company"), Reid Plastics, Inc. was merged into
the Company. The Company is a wholly owned subsidiary of Consolidated Container
Holdings LLC, a Delaware limited liability company ("Holdings"). As a result of
the merger, Vestar Capital Partners III ("Vestar III"), through its controlled
affiliates, received 51% of the member units of Holdings, and Suiza, through a
subsidiary, received 49% of the member units of Holdings.
In connection with the merger, the following transactions were consummated:
- capital contribution of $60,800,000 was made by Vestar Packaging LLC, a
newly formed Delaware limited liability company controlled by Vestar III,
through Holdings to the Company;
- private placement under Rule 144A of the Securities Act of 1933, as
amended, of $185,000,000 in aggregate principal amount of 10 1/8% Senior
Subordinated Notes due 2009 of the Company and Consolidated Container
Capital, Inc. ("Capital"), a Delaware corporation;
- the entering into of a new $485,000,000 senior credit facility;
- the consent solicitation and tender offer by PCI for its outstanding 10%
Senior Secured Notes due in 2006; and
- the repayment of substantially all of the outstanding debt of Reid
Plastics, Inc. and Franklin, the redemption of the preferred stock of
Franklin, plus the payment of certain accrued interest and dividends on
the debt and preferred stock of Franklin. In connection with the repayment
of the existing debt of Reid Plastics, Inc., approximately $2,000,000 of
unamortized deferred financing costs were written off and recorded as an
extraordinary loss on early extinguishment of debt.
The acquisition of Suiza Packaging has been accounted for using the purchase
method of accounting. The consolidated balance sheet as of July 2, 1999,
reflects the preliminary allocation of the purchase price and the related
accounting adjustments, including goodwill. Assets acquired and liabilities
assumed were as follows (in thousands):
<TABLE>
<S> <C>
Total purchase price, net of cash acquired........................ $ 140,723
Fair value of net liabilities acquired:
Fair value of assets acquired................................... 314,608
Fair value of liabilities assumed............................... (599,771)
---------
Total net liabilities acquired.................................... (285,163)
---------
Goodwill.......................................................... $ 425,886
---------
---------
</TABLE>
The excess of the purchase price over the fair value of the net assets was
$425,886,000, which has been recorded as goodwill and is being amortized on a
straight-line basis over 40 years. The purchase price allocation has not been
finalized, and accordingly, goodwill associated with the acquisition may change.
F-5
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
NOTES TO CONSOLIDATED BALANCE SHEET JULY 2, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BUSINESS OPERATIONS -- The Company develops, manufactures and distributes a
wide range of custom extrusion blow-mold plastic containers for the dairy, juice
and water industries, automotive products and motor oil, household chemicals,
industrial and agricultural chemicals and hair care products. Based on the
nature of the product, the production process, types of customers, and methods
used to distribute products, the Company operates in one reportable segment
under Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures
About Segments of an Enterprise and Related Information."
CONSOLIDATED AND FOREIGN OPERATIONS -- The Company maintains several wholly
owned subsidiaries in the United States and Canada. In addition, the Company
owns 51% of Reid Mexico S.A. de C.V., which operates exclusively in Mexico. The
Company's foreign operations are not significant.
All significant intercompany accounts and transactions have been eliminated
in consolidation.
TRANSLATION OF FOREIGN CURRENCIES -- The Company considers the functional
currency under SFAS No. 52, "Foreign Currency Translation," to be the local
currency for its Canadian subsidiaries and its Mexican subsidiary.
Assets and liabilities of the Company's Canadian subsidiaries are converted
to U.S. dollars using the current exchange rate at period-end, and revenues and
expenses of these subsidiaries are translated at the average exchange rate
during the period, with the resulting translation adjustment made to a separate
component of member's equity.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
revenues and expenses during the reporting period. Actual results could differ
from these estimates.
CASH AND CASH EQUIVALENTS -- Included in cash and cash equivalents are
highly liquid cash investments with remaining maturities at date of purchase of
three months or less.
TEMPORARY INVESTMENTS -- Temporary investments consist of available-for-sale
U.S. government obligations, certificates of deposit, eurodollar deposits and
highly rated commercial paper, all of which are due within one year. These
temporary investments are stated at amortized cost, which approximates market
value.
INVENTORIES -- Inventories consist of raw materials, spare parts and
supplies, and finished goods. Inventories and are stated at the lower of cost,
using the first-in, first-out ("FIFO") method, or market. Finished goods
inventories include raw materials, direct and indirect labor costs, and factory
overhead.
PROPERTY AND EQUIPMENT -- Property and equipment are stated at cost and are
depreciated or amortized using the straight-line method over the estimated
useful lives of the related assets. Plant and equipment held under capital
leases and leasehold improvements are amortized over the shorter of the lease
term or the estimated useful life of the asset.
F-6
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
NOTES TO CONSOLIDATED BALANCE SHEET JULY 2, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Estimated useful lives are as follows:
<TABLE>
<CAPTION>
ASSET USEFUL LIFE
- ------------------------------------------------------------------------------- -------------
<S> <C>
Buildings...................................................................... 25-40 years
Machinery and equipment........................................................ 5-20 years
Furniture and fixtures......................................................... 3-10 years
</TABLE>
Expenditures for repairs and maintenance that do not improve or extend the
life of the assets are expensed as incurred.
INTANGIBLE ASSETS -- Intangible assets include primarily goodwill and are
stated at cost and are amortized using the straight-line method over 40 years.
Deferred financing costs are amortized over the term of the related debt using
the effective interest method. Payments relating to noncompete agreements and
multiple-year management contracts are amortized over the term of the applicable
agreement or contract.
INSURANCE -- The Company purchases commercial insurance policies to cover
its insurance risks; however, certain of its subsidiaries are self-insured in
certain states for workers' compensation, general liability and property and
casualty coverages in excess of varying deductible amounts. Self-insurance
liabilities are accrued based on claims filed and estimates for claims incurred
but not reported.
INCOME TAXES -- As a limited liability company, the Company is not subject
to corporate income taxes. Accordingly, the Company expects to distribute cash
to its sole member, Holdings, to allow its members to pay income taxes to the
extent required.
IMPAIRMENT OF LONG-LIVED ASSETS -- The Company evaluates the impairment of
long-lived assets if circumstances indicate that the carrying value of those
assets may not be recoverable. Recoverability of the assets to be held and used
is measured by a comparison of the carrying amount of the asset to future
undiscounted cash flows expected to be generated by the asset.
CONCENTRATION OF CREDIT RISK -- Financial instruments that subject the
Company to credit risk consist primarily of temporary cash investments and
accounts receivable. The Company places its temporary cash investments with
high-credit qualified financial institutions and, by policy, limits the amount
of investment exposure to any one financial institution. Accounts receivable are
generally diversified due to the large number of entities comprising the
Company's customer base and their geographic dispersion. The Company performs
ongoing credit evaluations of its customers and maintains an allowance for
potential credit losses. Credit losses have been within management's
expectations.
FAIR VALUE OF FINANCIAL INSTRUMENTS -- The carrying amounts of cash and cash
equivalents, accounts receivable and accounts payable approximate fair value
because of the short maturities of these instruments. The carrying amounts of
the debt notes approximate their respective estimated fair values since floating
rates, which approximate current market rates, are charged on most of the notes
payable, and the fixed rate notes were issued on July 2, 1999.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS -- SFAS No. 133, "Accounting for
Derivative Financial Instruments and Hedging Activities," was issued in June
1998, and establishes standards for accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective for the year
ending December 31, 2000.
F-7
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
NOTES TO CONSOLIDATED BALANCE SHEET JULY 2, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At July 2, 1999, the Company does not have derivative instruments. The adoption
of SFAS No. 133 could have an impact on its future consolidated financial
statements.
2. INVENTORIES
<TABLE>
<CAPTION>
JULY 2, 1999
--------------
(IN THOUSANDS)
<S> <C>
Raw materials................................................................. $ 18,220
Parts and supplies............................................................ 2,031
Finished goods................................................................ 16,956
-------
$ 37,207
-------
-------
</TABLE>
3. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
JULY 2, 1999
--------------
(IN THOUSANDS)
<S> <C>
Land.......................................................................... $ 10,953
Buildings and improvements.................................................... 33,601
Machinery and equipment....................................................... 199,693
Facility and equipment held under capital lease............................... 8,971
Furniture and fixtures........................................................ 3,168
--------------
256,386
Less accumulated depreciation................................................. (17,678)
--------------
238,708
Construction in progress...................................................... 38,844
--------------
$ 277,552
--------------
--------------
</TABLE>
4. INTANGIBLE AND OTHER ASSETS
<TABLE>
<CAPTION>
JULY 2, 1999
--------------
(IN THOUSANDS)
<S> <C>
Goodwill...................................................................... $ 542,069
Deferred financing costs...................................................... 21,387
Noncompete agreement.......................................................... 1,300
Deposits and other............................................................ 1,512
--------------
566,268
Less accumulated amortization................................................. (5,134)
--------------
$ 561,134
--------------
--------------
</TABLE>
NONCOMPETE AGREEMENT -- In 1997, the Company entered into a five-year
noncompete agreement with a former management shareholder. During 1998, the
noncompete agreement was revised to
F-8
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
NOTES TO CONSOLIDATED BALANCE SHEET JULY 2, 1999
4. INTANGIBLE AND OTHER ASSETS (CONTINUED)
guarantee payments totaling $400,000 per year for five years. In addition, a
nonguaranteed portion of up to $8,193,000 will be paid based on the valuation of
the Company during future ownership changes. No amount has been recorded for
potential nonguaranteed payments.
5. ACCRUED EXPENSES
<TABLE>
<CAPTION>
JULY 2, 1999
--------------
(IN THOUSANDS)
<S> <C>
Employee compensation and benefits............................................ $ 19,062
Accrual for plant closings.................................................... 3,509
Accrued sales and property taxes.............................................. 2,272
Other......................................................................... 18,693
-------
$ 43,536
-------
-------
</TABLE>
6. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JULY 2, 1999
--------------
(IN THOUSANDS)
<S> <C>
Senior subordinated notes..................................................... $ 185,000
Senior credit facility -- term loans.......................................... 385,000
Capital lease obligations..................................................... 6,426
--------------
576,426
Less current portion.......................................................... (11,419)
--------------
$ 565,007
--------------
--------------
</TABLE>
SENIOR SUBORDINATED NOTES -- The senior subordinated notes (the "Notes")
were issued on July 2, 1999, and have an original par value of $185,000,000. The
Notes, which are due in 2009, bear interest at a fixed interest rate of 10 1/8%,
payable semiannually in July and January of each year.
SENIOR CREDIT FACILITY -- The Senior Credit Facility (the "Facility")
consists of three tranches of term loans in a total principal amount of
$485,000,000 and a $90,000,000 revolving credit facility (the "Revolver"). The
term loan facilities and Revolver are summarized below:
- Tranche A -- The tranche A term loan totals $150,000,000 in principal, all
of which was outstanding at July 2, 1999. The Company is required to repay
the tranche A term loan in quarterly installments through 2005.
- Tranche B -- The tranche B term loan totals $235,000,000 in principal, all
of which was outstanding at July 2, 1999. The Company is required to repay
installments on the tranche B term loan in annual principal amounts of 1%
of its total principal amount for the first six years and the remaining
amount in eight quarterly payments in the seventh and eighth years.
- Tranche C -- The tranche C term loan totals $100,000,000 in principal and
is uncommitted. Through July 2, 2002, the Company may request one or more
lenders under the Facility to make
F-9
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
NOTES TO CONSOLIDATED BALANCE SHEET JULY 2, 1999
6. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT (CONTINUED)
one or more tranche C term loans, if the Company satisfies specified
financial ratios and other conditions. The facility may, alternatively,
take the form of additional revolving credit loans under the Revolver or a
combination of one or more tranche C term loans and additional revolving
credit loans. The lenders are not required, however, to make any tranche C
term loans.
- REVOLVING CREDIT FACILITY -- At July 2, 1999, the Company had $27,500,000
outstanding under the Revolver, which matures in 2005. Additionally, the
Company had approximately $5,200,000 of outstanding letters of credit
under the Revolver.
The Company pays a commitment fee on the unused commitments under the
Revolver, ranging from 0.25% to 0.50% dependent on its leverage ratio,
payable quarterly in arrears, and an annual administration fee to Bankers
Trust Company.
Borrowings under the Facility bear interest at a base rate which is the
higher of 1/2 of 1% in excess of the overnight federal funds rate and the prime
lending rate of Bankers Trust Company, plus a margin; or a eurodollar rate on
deposits for one-, two-, three- or six-month periods; or, if and when available
to all the lenders, nine- or twelve-month periods, which are offered to Bankers
Trust Company in the interbank eurodollar market, plus the applicable interest
margin. The margin on base rate and eurodollar rate loans is based on the
leverage ratio of the Company. At July 2, 1999, the margin on base rate and
eurodollar rate loans was .75% and 1.75%, respectively, for tranche A and the
Revolver and 1.25% and 2.25%, respectively, for tranche B. Tranche A term loans
and the Revolver and tranche B term loans bear interest at 6.75% and 7.25%,
respectively, at July 2, 1999.
The obligations under the Facility are secured and are unconditionally and
irrevocably guaranteed jointly and severally by Holdings and each of its direct
and indirect domestic subsidiaries other than the Company and Capital and, in
each case, are subject to customary exceptions. The separate financial
statements of each guaranteeing subsidiary are not presented because the
Company's management has concluded that such financial statements are not
material to investors, as nonguarantor subsidiaries are considered
inconsequential.
SCHEDULED MATURITIES -- The scheduled annual maturities of long-term debt
(excluding capital leases) at July 2, 1999, were as follows (in thousands):
<TABLE>
<S> <C>
Period from July 2, 1999 through December 31, 1999................ $ 4,925
Year ending December 31,
2000.............................................................. 13,600
2001.............................................................. 21,100
2002.............................................................. 28,600
2003.............................................................. 36,100
Thereafter........................................................ 493,175
---------
$ 597,500
---------
---------
</TABLE>
F-10
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
NOTES TO CONSOLIDATED BALANCE SHEET JULY 2, 1999
7. OTHER LONG-TERM LIABILITIES
<TABLE>
<CAPTION>
JULY 2, 1999
--------------
(IN THOUSANDS)
<S> <C>
Provision for loss on closed facilities subject to operating leases........... $ 15,588
Insurance reserves............................................................ 8,763
Post-retirement benefits accrued.............................................. 5,063
Deferred income............................................................... 4,628
Advance from vendor........................................................... 1,849
Accrued terminated employee benefit plan obligation........................... 1,379
Obligation under noncompete agreement......................................... 1,300
Other......................................................................... 2,681
-------
$ 41,251
-------
-------
</TABLE>
8. MEMBER'S EQUITY
<TABLE>
<CAPTION>
JULY 2, 1999
--------------
(IN THOUSANDS)
<S> <C>
Member's equity............................................................... $ 256,439
Foreign currency translation adjustment....................................... (468)
--------------
$ 255,971
--------------
--------------
</TABLE>
In connection with the formation of the Company and Holdings, and the
acquisition of substantially all of the U.S. plastics packaging assets of Suiza
Packaging, Holdings issued (i) 20.5% of its member units to Vestar Packaging
LLC, which is controlled by Vestar III, for the contribution of $60.8 million in
cash, (ii) 30.5% of its member units to a subsidiary of Vestar III, which have
been valued based on net book value of the net assets of Reid Plastics, Inc.,
which were contributed to the Company, and (iii) 49% of its member units to a
subsidiary of Suiza, which have been valued at $147.3 million. Additionally,
fees of $2,640,000, related to the transaction, were included in member's equity
at July 2, 1999.
F-11
<PAGE>
9. EMPLOYEE BENEFITS
The Company sponsors both defined benefit and defined contribution
retirement plans on behalf of certain of its subsidiaries, and contributes to
various multiemployer union pension plans.
DEFINED BENEFIT PLANS--The Company succeeded to a defined benefit pension
plan for substantially all salaried employees of PCI hired prior to August 1,
1997. Plan benefits are based on all years of continuous service and the
employee's compensation during the highest five continuous years of the last ten
years of employment, minus a profit sharing annuity. The profit sharing annuity
is based on the amount of profit sharing contributions received for 1988 through
1992. Any employee who terminated employment prior to August 31, 1993, is
governed by the terms of the plan in effect at the time the termination
occurred. In addition, the Company maintains a benefit equalization plan for
salaried employees hired prior to August 1, 1997, whose compensation level
exceeds the limits within the defined benefit pension plan.
The Company also succeeded to a noncontributory defined benefit pension plan
for substantially all hourly employees of PCI hired prior to August 1, 1997, who
have attained 21 years of age. Plan benefits vary by location and by union
contract, but are based primarily on years of service and the employee's highest
wage classification for 12 consecutive months in the five-year period prior to
retirement. Normal retirement is at age 65, with at least a five-year period of
continuous service. However, employees may retire as early as age 55 and receive
reduced benefits.
Subject to the limitation on deductibility imposed by federal income tax
laws, the Company's policy is to contribute funds to the plans annually in
amounts required to maintain sufficient plan assets to provide for accrued
benefits. Plan assets are held in a master trust and are composed primarily of
common stock, corporate bonds and U.S. government and government agency
obligations.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--The Company provides certain
health care and life insurance benefits for retired PCI employees. Certain of
PCI's hourly and salaried employees became eligible for these benefits when they
became eligible for an immediate pension under a formal company pension plan. In
1993, the plan was amended to eliminate health care benefits for employees hired
after January 1, 1993. The Company's policy is to fund the cost of medical
benefits as claims are incurred.
At July 2, 1999, as part of the purchase accounting adjustments in
connection with the Suiza Packaging acquisition, the accrued pension liability
and accrued postretirement benefit liability were adjusted to fair value, and
all previously unrecognized gains and losses were recognized as part of the
purchase allocation.
DEFINED CONTRIBUTION PLAN--Employees of certain of the Company's
subsidiaries are eligible to participate in a 401(k) employees savings plan.
Employees who have completed one or more years of service and have met other
requirements pursuant to the plans are eligible to participate in the plan. The
employees participating in the plan can generally make contributions up to 15%
of their annual compensation, and the Company can elect to match such employee
contributions up to a maximum of 25% of the employee's contribution. The
matching contributions vest 100% after five years.
The Company succeeded to a defined contribution plan that covers
substantially all PCI's hourly employees who meet certain eligibility
requirements. Provisions regarding employee and employer contributions and the
benefits provided under the plan vary between PCI's manufacturing facilities.
The Company also succeeded to a contributory defined contribution 401(k)
savings plan that covers substantially all PCI's nonorganized salaried
employees. Employees may contribute up to 12% and 8% of compensation on a pretax
and after-tax basis, respectively. However, the total employee contribution rate
may not exceed 15% of compensation. The Company matches up to 3% of
F-12
<PAGE>
9. EMPLOYEE BENEFITS (CONTINUED)
employees' pretax contributions. Employees vest in the Company's contributions
at 25% per year, becoming fully vested after four years of employment. Employees
may make withdrawals from the plan prior to attaining age 59 1/2, subject to
certain penalties.
MULTIEMPLOYER PLANS--The Company's PCI subsidiary contributes to various
multiemployer union pension plans pursuant to its labor agreements.
STOCK OPTION PLAN--During 1998, Suiza Packaging adopted the Franklin
Plastics, Inc. 1998 Stock Option Plan, which reserved 187,089 shares of common
stock for grants and granted stock options to certain key employees at exercise
prices that approximated the fair market value of such shares at the date of
grant. Stock options granted under this plan were exercisable over a three-year
period from the date of grant and could become exercisable upon the termination
of an individual's employment following a change in control.
As a result of the Company's merger, participants were able to convert
options granted under the plan to the Modified Replacement Option Plan. As a
result, 116,944 shares outstanding under the plan were converted to the
Company's units, using a conversion rate of 2.9429, resulting in 344,766 options
outstanding July 2, 1999, none of which were exercisable at that date.
The following table summarizes the information about stock options
outstanding at July 2, 1999:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
REMAINING AVERAGE
CONTRACTUAL EXERCISE
SHARES LIFE PRICE
---------- ----------- -----------
<S> <C> <C> <C>
Range of exercise prices:
$3.40................................................... 264,382 10 years $ 3.40
$10.19.................................................. 80,384 10 years $ 10.19
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS--The Company is obligated under capital leases for a
manufacturing facility, which expire in December 2000, and certain machinery and
equipment, which expire in April 2000. Included in the consolidated balance
sheet are capital lease assets of $9,527,000 and accumulated amortization of
$2,493,000 at July 2, 1999.
The Company leases certain property, plant and equipment used in its
operations under noncancelable operating lease agreements. Such leases, which
are primarily for facilities, machinery and equipment and vehicles, have lease
terms ranging from two to nine years. Certain of the operating lease agreements
require the payment of additional rentals for maintenance, along with additional
rentals, based on miles driven or units produced.
F-13
<PAGE>
10. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Future minimum lease payments at July 2, 1999, are summarized below (in
thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
--------- -----------
<S> <C> <C>
Period from July 2, 1999 through December 31, 1999....................... $ 1,603 $ 10,633
Year ending December 31:
2000................................................................... 2,643 19,956
2001................................................................... 2,071 18,005
2002................................................................... 476 15,155
2003................................................................... 107 12,919
Thereafter............................................................. 128 20,684
--------- -----------
7,028 $ 97,352
-----------
-----------
Less portion representing interest....................................... (604)
---------
Present value of minimum lease payments.................................. $ 6,424
---------
---------
</TABLE>
CONTINGENCIES--The Company and its subsidiaries are parties, in the ordinary
course of business, to certain claims and litigation. In management's opinion,
the settlement of such matters is not expected to have a material impact on the
consolidated balance sheet.
In addition, the Company is a party to employment agreements with certain
officers which provided for minimum compensation levels and incentive bonuses
along with provisions for termination of benefits in certain circumstances.
11. RELATED PARTY TRANSACTIONS
MANAGEMENT AGREEMENT--In April 1999, the Company entered into a management
agreement with Vestar Capital Partners to provide ongoing management services.
The Company will pay an annual fee of the greater of $500,000 or 0.42% of the
earnings before interest and taxes plus depreciation and amortization of the
prior year and all out-of-pocket expenses incurred in connection with these
services.
Simultaneously with the closing of the transactions, the Company entered
into the following agreements:
- SUPPLY AGREEMENTS--The Company entered into bottle supply agreements with
Suiza. The prices for bottles are based on prices in effect in July 1999
and are subject to adjustment based on changes in raw material,
manufacturing and delivery costs.
- TRADEMARK LICENSE AGREEMENT--The Company entered into a trademark license
agreement with Continental Can Company, Inc. ("Continental Can"), a wholly
owned subsidiary of Suiza. Continental Can granted the Company a
nonexclusive license to use some of its trademarks in the United States.
The trademark license is royalty-free as long as Suiza directly or
indirectly owns 10% or more of Holdings.
- TRANSITION SERVICE AGREEMENT--The Company entered into a transition
service agreement with Suiza. Under the agreement, Suiza and its
affiliates agreed to continue to supply office space and other services to
the Company on the same basis that they had provided these services to
Suiza Packaging prior to the closing of the transactions.
F-14
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Reid Plastics, Inc.:
We have audited the accompanying consolidated balance sheets of Reid
Plastics, Inc. ("Reid") as of December 31, 1997 and 1998, and the related
consolidated statements of operations and comprehensive income (loss),
shareholders' equity, and cash flows for the period from January 1, 1997 through
October 14, 1997 (Predecessor Period), for the period from October 15, 1997
through December 31, 1997, for the year ended December 31, 1998, and for the six
month period ended June 30, 1999 (Successor Period). These financial statements
are the responsibility of Reid's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Reid Plastics, Inc. as of
December 31, 1997 and 1998, and the results of its operations and its cash flows
for the period from January 1, 1997 through October 14, 1997 (Predecessor
Period), for the period from October 15, 1997 through December 31, 1997, for the
year ended December 31, 1998, and for the six month period ended June 30, 1999
(Successor Period) in conformity with generally accepted accounting principles.
As more fully described in Note 1 to the consolidated financial statements,
an investment group led by Vestar Reid LLC acquired control of Reid as of
October 15, 1997 in a business combination accounted for as a purchase. As a
result of the acquisition, the consolidated financial statements for the
Successor Period are presented on a different basis of accounting than that of
the Predecessor Period and therefore are not directly comparable.
Deloitte & Touche LLP
Dallas, Texas
August 25, 1999
F-15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Reid Plastics, Inc.
We have audited the accompanying consolidated statements of income,
shareholders' equity, and cash flows of Reid Plastics, Inc. for the year ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and cash flows of
Reid Plastics, Inc. for the year ended December 31, 1996 in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Woodland Hills, California
March 20, 1997
F-16
<PAGE>
REID PLASTICS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1998
(SUCCESSOR) (SUCCESSOR)
----------- -----------
<S> <C> <C>
ASSETS (NOTE 10)
CURRENT ASSETS:
Cash and cash equivalents (Note 2).................................................... $ 4,437 $ 5,408
Accounts receivable, net of allowance for doubtful accounts of $1,689 and $1,366 (Note
2).................................................................................. 20,531 17,143
Inventories (Notes 2 and 5)........................................................... 12,891 10,001
Prepaid expenses...................................................................... 903 2,364
Other receivables..................................................................... 971 2,924
Income taxes receivable (Notes 2 and 12).............................................. 2,660 1,135
Deferred income taxes (Notes 2 and 12)................................................ 7,822 7,810
----------- -----------
Total current assets.............................................................. 50,215 46,785
PROPERTY AND EQUIPMENT -- Net (Notes 2 and 6)........................................... 57,340 55,416
GOODWILL -- Net of accumulated amortization of $653 and $3,517 (Notes 1 and 2).......... 118,388 112,665
FINANCING COSTS AND OTHER INTANGIBLE ASSETS -- Net of accumulated amortization of $393
and $941 (Notes 1, 2 and 10).......................................................... 7,638 4,164
OTHER ASSETS (Note 7)................................................................... 1,783 846
----------- -----------
TOTAL................................................................................... $ 235,364 $ 219,876
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable...................................................................... $ 16,665 $ 11,284
Accrued liabilities (Note 8).......................................................... 10,320 12,411
Current portion of long-term debt (Note 10)........................................... 2,633 9,046
----------- -----------
Total current liabilities......................................................... 29,618 32,741
DEFERRED INCOME TAXES (Notes 2 and 12).................................................. 7,822 7,810
REVOLVING LINE OF CREDIT (Note 10)...................................................... 23,500 23,500
LONG-TERM DEBT (Note 10)................................................................ 97,800 88,954
OTHER LIABILITIES (Note 9).............................................................. 21,493 14,948
MINORITY INTEREST (Note 2).............................................................. 623 677
COMMITMENTS (Note 11)
SHAREHOLDERS' EQUITY:
Preferred stock, no par value; 100,000 shares authorized; no shares issued or
outstanding
Common stock, Class A, no par value; 500,000 shares authorized; 14,500 shares issued
and outstanding..................................................................... 58,293 55,293
Common stock, Class B, no par value; 500,000 shares authorized; no shares issued or
outstanding
Accumulated deficit................................................................... (3,873) (3,507)
Foreign currency translation adjustment (Note 2)...................................... 88 (540)
----------- -----------
Total shareholders' equity.......................................................... 54,508 51,246
----------- -----------
TOTAL................................................................................... $ 235,364 $ 219,876
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-17
<PAGE>
REID PLASTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JANUARY 1, OCTOBER 15,
1997 1997 SIX MONTHS
YEAR ENDED THROUGH THROUGH YEAR ENDED ENDED JUNE 30, SIX MONTHS
DECEMBER 31, OCTOBER 14, DECEMBER 31, DECEMBER 31, 1998 ENDED JUNE 30,
1996 1997 1997 1998 (UNAUDITED) 1999
(PREDECESSOR) (PREDECESSOR) (SUCCESSOR) (SUCCESSOR) (SUCCESSOR) (SUCCESSOR)
------------- ------------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES...................... $ 136,573 $ 164,750 $ 33,236 $ 175,134 $ 91,939 $ 85,423
COST OF SALES.................. 116,328 144,520 31,832 144,712 75,446 67,411
------------- ------------- ------------- ------------- --------------- -------
GROSS PROFIT................... 20,245 20,230 1,404 30,422 16,493 18,012
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES...... (13,261) (14,072) (3,439) (18,016) (9,161) (9,001)
NONRECURRING CHARGES (Notes 8
and 9)....................... (9,162) -- --
INTEREST EXPENSE -- Net........ (4,849) (6,337) (1,909) (10,497) (5,199) (4,484)
OTHER INCOME................... 628 624 27 1,347 640 478
------------- ------------- ------------- ------------- --------------- -------
INCOME (LOSS) BEFORE INCOME
TAXES........................ 2,763 (8,717) (3,917) 3,256 2,773 5,005
INCOME TAX (EXPENSE) BENEFIT
(Notes 2 and 12)............. (2,245) 1,199 105 (2,836) (1,846) (2,890)
MINORITY INTEREST IN
SUBSIDIARIES................. (124) (285) (61) (54) 26 250
------------- ------------- ------------- ------------- --------------- -------
INCOME (LOSS) BEFORE EXTRA
ORDINARY ITEM................ 394 (7,805) (5,873) 366 901 2,365
EXTRAORDINARY ITEM, EARLY
EXTINGUISHMENT OF DEBT, NET
OF INCOME TAX BENEFIT OF $781
(Note 10).................... -- -- -- -- -- (1,171)
------------- ------------- ------------- ------------- --------------- -------
NET INCOME (LOSS).............. 394 (7,803) (3,873) 366 901 1,194
OTHER COMPREHENSIVE INCOME
(LOSS) -- Foreign currency
translation adjustment....... (94) (7) 88 (628) -- 72
------------- ------------- ------------- ------------- --------------- -------
COMPREHENSIVE INCOME (LOSS).... $ 300 $ (7,810) $ (3,785) $ (262) $ 901 $ 1,266
------------- ------------- ------------- ------------- --------------- -------
------------- ------------- ------------- ------------- --------------- -------
</TABLE>
See notes to consolidated financial statements.
F-18
<PAGE>
REID PLASTICS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
OTHER
COMMON ACCUMULATED COMPREHENSIVE
STOCK DEFICIT INCOME (LOSS) TOTAL
--------- ------------ -------------- ---------
<S> <C> <C> <C> <C>
PERIOD FROM JANUARY 1, 1996 THROUGH OCTOBER 14, 1997
(PREDECESSOR)
BALANCE, JANUARY 1, 1996...................................... $ 20,132 $ (231) $ (2) $ 19,899
Net income.................................................. 394 394
Dividends paid.............................................. (353) (353)
Foreign currency translation adjustment..................... (94) (94)
--------- ------------ ------- ---------
BALANCE, DECEMBER 31, 1996.................................... 20,132 (190) (96) 19,846
Net loss.................................................... (7,803) (7,803)
Dividends paid.............................................. (257) (257)
Foreign currency translation adjustment..................... (7) (7)
--------- ------------ ------- ---------
BALANCE, OCTOBER 14, 1997..................................... $ 20,132 $ (8,250) $ (103) $ 11,779
--------- ------------ ------- ---------
--------- ------------ ------- ---------
PERIOD FROM OCTOBER 15, 1997 THROUGH DECEMBER 31, 1998
(SUCCESSOR)
NEW CAPITALIZATION, OCTOBER 15, 1997.......................... $ 58,293 $ -- $ -- $ 58,293
Net loss.................................................... (3,873) (3,873)
Foreign currency translation adjustment..................... 88 88
--------- ------------ ------- ---------
BALANCE, DECEMBER 31, 1997.................................... 58,293 (3,873) 88 54,508
Net income.................................................. 366 366
Escrow payments returned to shareholders (Note 1)........... (3,000) (3,000)
Foreign currency translation adjustment..................... (628) (628)
--------- ------------ ------- ---------
BALANCE, DECEMBER 31, 1998.................................... $ 55,293 $ (3,507) $ (540) $ 51,246
Net income.................................................. 1,194 1,194
Foreign currency translation adjustment..................... 72 72
--------- ------------ ------- ---------
BALANCE, JUNE 30, 1999........................................ $ 55,293 $ (2,313) $ (468) $ 52,512
--------- ------------ ------- ---------
--------- ------------ ------- ---------
</TABLE>
See notes to consolidated financial statements.
F-19
<PAGE>
REID PLASTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JANUARY 1, OCTOBER 15,
1997 1997 SIX MONTHS
YEAR ENDED THROUGH THROUGH YEAR ENDED ENDED JUNE 30, SIX MONTHS
DECEMBER 31, OCTOBER 14, DECEMBER 31, DECEMBER 31, 1998 ENDED JUNE 30,
1996 1997 1997 1998 (UNAUDITED) 1999
(PREDECESSOR) (PREDECESSOR) (SUCCESSOR) (SUCCESSOR) (SUCCESSOR) (SUCCESSOR)
------------- ------------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)............ $ 394 $ (7,803) $ (3,873) $ 366 $ 901 1,194
Adjustment to reconcile net
income (loss) to net cash
provided by operating
activities:
Minority interest.......... 124 (250)
Depreciation and
amortization............. 7,673 12,620 4,121 15,918 7,770 7,173
Early extinguishment of
debt..................... 1,171
Provision for bad debts.... 462
Loss on disposal of
assets................... 6
Deferred income taxes...... 517
Changes in operating assets
and liabilities:
Accounts receivable...... 757 (4,002) 1,859 3,040 (4,204) (8,988)
Inventories.............. (6,496) 8,338 (1,044) 2,506 1,238 534
Prepaid expenses......... 75 (531) 637 (2,218) (425) 697
Other receivables........ (2,720) 2,712 1,193 (2,253) (3,890) (61)
Other assets and
management contracts... (1,518) 674 (58) -- --
Accounts payable......... 10,251 (8,987) (1,339) (5,381) (6,037) 804
Accrued liabilities...... (225) 869 (4,182) (591) 464 (1,774)
Other liabilities........ 5,864 811 319 (673) (996)
Income taxes and other... (2,069) 2,824 (297) 1,833 525
------------- ------------- ------------- ------------- --------------- ---------------
Net cash provided by
operating
activities........... 10,818 5,493 1,681 11,351 (3,023) 29
------------- ------------- ------------- ------------- --------------- ---------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures......... (5,864) (9,313) (4,785) (12,708) (8,006) (5,129)
Proceeds from disposal of
property and equipment..... 93 801 280 1,651 1,651 58
Cash paid for acquisitions... (37,680)
Translation adjustment....... (94)
Other assets................. 298 93 96
------------- ------------- ------------- ------------- --------------- ---------------
Net cash used in
investing
activities........... (43,247) (8,512) (4,505) (11,057) (6,262) (4,975)
------------- ------------- ------------- ------------- --------------- ---------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net proceeds from (payments
on) revolving line of
credit..................... 3,856 2,500 7,000 -- 8,500 (23,500)
Borrowing under notes payable
to banks................... 36,143 27,000 --
Principal payments on notes
payable to banks........... (3,612) (10,608) (647) (182) (89,856)
Payments on other notes
payable and capital
leases..................... (442) (1,570) (4,662) (1,709) (1,060) (4,312)
Payment of deferred financing
costs and other acquisition
costs...................... (3,768) (8,328) (867)
Issuance of new common
stock...................... 60,000
Repurchase of old common
stock...................... (35,139)
Escrow deposits.............. (7,000) 4,000 2,561
Redemption of senior
preferred stock............ (18,421)
Redemption of Series A
preferred stock............ (1,769)
Dividends paid............... (353) (257)
</TABLE>
F-20
<PAGE>
REID PLASTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JANUARY 1, OCTOBER 15,
1997 1997 SIX MONTHS
YEAR ENDED THROUGH THROUGH YEAR ENDED ENDED JUNE 30, SIX MONTHS
DECEMBER 31, OCTOBER 14, DECEMBER 31, DECEMBER 31, 1998 ENDED JUNE 30,
1996 1997 1997 1998 (UNAUDITED) 1999
(PREDECESSOR) (PREDECESSOR) (SUCCESSOR) (SUCCESSOR) (SUCCESSOR) (SUCCESSOR)
------------- ------------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Payments on noncompete
agreements................. (1,516) (100)
Capital contribution......... 122,117
Other liabilities............ (89)
------------- ------------- ------------- ------------- --------------- ---------------
Net cash provided by
(used in) financing
activities........... 35,347 (2,939) 6,557 677 9,819 4,449
------------- ------------- ------------- ------------- --------------- ---------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS......... 2,918 (5,958) 3,733 971 534 (497)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD.......... 3,744 6,662 704 4,437 4,437 5,408
------------- ------------- ------------- ------------- --------------- ---------------
CASH AND CASH EQUIVALENTS, END
OF PERIOD.................... $ 6,662 $ 704 $ 4,437 $ 5,408 $ 4,971 $ 4,911
------------- ------------- ------------- ------------- --------------- ---------------
------------- ------------- ------------- ------------- --------------- ---------------
SUPPLEMENTAL CASH FLOW
INFORMATION:
Cash paid during the period
for interest............... $ 5,770 $ 6,299 $ 1,763 $ 10,664 $ 4,694 $ 4,517
------------- ------------- ------------- ------------- --------------- ---------------
------------- ------------- ------------- ------------- --------------- ---------------
Net cash (received) paid
during the period for
income taxes............... $ 1,866 $ 1,420 $ 215 $ (41) $ 424 $ 506
------------- ------------- ------------- ------------- --------------- ---------------
------------- ------------- ------------- ------------- --------------- ---------------
</TABLE>
See notes to consolidated financial statements.
F-21
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
1. ACQUISITION
On October 15, 1997, an investment group led by Vestar Reid LLC ("Vestar")
acquired 12,000 newly issued shares, representing 83% of the new common stock of
Reid Plastics Holdings, Inc. ("Holdings"), the parent company of Reid
Intermediate Holdings, Inc. ("RIH") and its wholly owned subsidiary, Reid
Plastics, Inc. ("Reid" or the "Company") for $60,000,000. Continuing
shareholders exchanged old Holdings common stock for new Holdings common stock,
thereby retaining 2,500 shares, or 17%, of Holdings.
Holdings utilized the $60,000,000 invested cash plus a $27,000,000 new loan
facility (Tranche C, see Note 10) to repurchase and retire 100% of its existing
(old) Class A common stock, as well as to repay a portion ($10,608,000) of an
existing loan facility (Tranche A).
The acquisition also resulted in the following redemptions:
- 1,842.15 shares of senior preferred stock (RIH) were redeemed, and
outstanding dividends were paid totaling $18,421,000.
- 1,725.095 shares of Series A preferred stock (Holdings) were redeemed, and
outstanding dividends were paid totaling $1,769,000.
- 1 share of special voting preferred stock (Holdings) was redeemed.
- 10,466.2 shares of Class A common stock (Holdings) were repurchased for
$18,165,000 (including escrow deposits).
- Stock purchase warrants were exercised for 7,636.3636 and 545.4545 shares
of Holdings Class A common stock and immediately repurchased for
$23,974,000 (including escrow deposits).
- A warrant to purchase 3.098 shares of RIH common stock was canceled.
- Holdings' and Reid's notes payable to shareholders (including accrued
interest) were repaid for $3,271,000 and $564,000, respectively.
Additionally, Holdings entered into a five-year noncompete agreement with a
management shareholder, which resulted in a payment of $1,516,000 at October 15,
1997, and subsequent payments totaling $6,394,000 not to exceed $2,000,000 in
any fiscal year. These payments included imputed interest calculated at 11.15%,
and the present value of such payments ($6,516,000) was included in other
intangible assets in the accompanying balance sheet at December 31, 1997. During
1998, the noncompete agreement was revised to guarantee payments totaling
$400,000 per year for five years. Accordingly, the liability recorded in 1997 of
$5,000,000 was reduced during 1998 to $2,000,000 (see Note 9), with a
corresponding reduction in the related intangible asset. In addition, a
nonguaranteed portion of up to $8,195,000 will be paid based on the valuation of
Holdings during future ownership changes. No amount has been accrued for
potential nonguaranteed payments.
In October 1997, $7,000,000 of the $60,000,000 Vestar investment was placed
into escrow accounts for the benefit of the selling shareholders. In accordance
with the finalization of the purchase price, $4,000,000 was released to Holdings
during 1998, and the balance of $3,000,000 was returned to Vestar.
Immediately after the acquisition, Reid was merged into RIH, and RIH was
renamed Reid Plastics, Inc.
Inasmuch as a significant majority of Holdings' common stock was acquired by
a new controlling shareholder (Vestar), and Holdings has no operations other
than its investment in Reid, management
F-22
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
1. ACQUISITION (CONTINUED)
has elected to "push down" the new basis of accounting in the accompanying
financial statements. Accordingly, Holdings' shareholders' equity (as of
December 31, 1998) comprises Vestar's $57,000,000 net investment less the
carryover 17% interest in the historical shareholders' capital deficiency as of
October 14, 1997 (or $1,707,000).
The acquisition was accounted for using the purchase method. The 1997
financial statements reflect the preliminary allocation of purchase price based
on the completion of certain appraisals. During 1998, the Company finalized the
purchase price allocation and reduced goodwill by $2,859,000. The excess of
purchase price over the fair value of the net assets was $116,182,000, which has
been recorded as goodwill and is being amortized on a straight-line basis over
40 years.
On October 14, 1997, the Company recorded a nonrecurring charge of
$9,162,000 representing a provision for loss on closed facilities subject to
operating leases. This loss related to the closure of a manufacturing facility,
a warehouse and an administrative facility in Southern California and a
warehouse in Northern California. These facilities were consolidated in order to
make more efficient use of leased facilities. As a result of these
consolidations, approximately 148,000 square feet of leased facilities were
closed and consolidated into neighboring facilities.
In connection with the October 1997 acquisition, the Company began
formulating a restructuring plan to improve its competitive position through
expense reduction by streamlining operations. The Company accrued the estimated
cost associated with this restructuring plan in connection with the recording of
the acquisition under the purchase method. The components of the restructuring
charges were primarily closed facilities subject to operating leases;
severances; unfavorable leases and contracts; legal, underwriting and other
direct transaction costs. During 1998, the Company finalized its plan and
purchase accounting entries.
The provision for closed facilities subject to operating leases reflected in
the allocation of purchase price included the closure of manufacturing
facilities in Northern California, New Jersey and Canada. As a result of these
consolidations, approximately 90,000 square feet of additional leased facilities
were closed and consolidated into neighboring facilities.
The Company expected staff reductions related to the restructuring plan of
approximately 73 employees. During 1998, all but four of the employee
separations had occurred under this plan. The four remaining employee
separations are planned to be completed during 1999.
F-23
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
1. ACQUISITION (CONTINUED)
Reconciliations of the restructuring and transaction-related expenses and
accrual activity during 1997 and 1998 were as follows:
<TABLE>
<CAPTION>
1997 1997 1997 1997 DECEMBER 31,
NONRECURRING PURCHASE TOTAL CHARGED 1997,
EXPENSE ACCRUAL ACCRUAL TO ACCRUAL BALANCE
------------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Closed facilities subject to operating
leases....................................... $ 9,162 $ 300 $ 9,462 $ (766) $ 8,696
Severances..................................... 2,299 2,299 2,299
Unfavorable leases and contracts............... 5,000 5,000 5,000
Legal, underwriting and other direct
transaction costs............................ 859 859 859
Other.......................................... 1,923 1,923 (1,809) 114
------ --------- --------- ----------- ------------
$ 9,162 $ 10,381 $ 19,543 $ (2,575) $ 16,968
------ --------- --------- ----------- ------------
------ --------- --------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998 1998 1998 DECEMBER 31,
1997, INCREASE IN REDUCTION IN CHARGED 1998,
BALANCE ACCRUAL ACCRUAL TO ACCRUAL BALANCE
------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Closed facilities subject to operating
leases.................................. $ 8,696 $ 2,523 $ $ (1,329) $ 9,890
Severances................................ 2,299 571 (1,330) 1,540
Unfavorable leases and contracts.......... 5,000 (2,847) (1,129) 1,024
Legal, underwriting and other direct
transaction costs....................... 859 869 (1,489) 239
Other..................................... 114 475 (109) 480
------------ ----------- ------------ ----------- ------------
$ 16,968 $ 4,438 $ (2,847) $ (5,386) $ 13,173
------------ ----------- ------------ ----------- ------------
------------ ----------- ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
1999
1999 1999 CHARGED JUNE 30,
DECEMBER 31, INCREASE IN REDUCTION IN AGAINST 1999,
1998 ACCRUAL ACCRUAL ACCRUAL BALANCE
------------ ----------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Closed facilities subject to
operating leases................... $ 9,880 $ -- $ -- $ (1,246) $ 8,644
Severances........................... 1,540 -- -- (363) 1,177
Unfavorable leases and contracts..... 1,024 -- -- (729) 295
Legal, underwriting and other direct
transaction costs.................. 239 -- -- (88) 151
Other................................ 480 -- -- (262) 218
------------ ----------- ------------ ------- ------------
$ 13,173 $ -- $ -- $ (2,688) $ 10,485
------------ ----------- ------------ ------- ------------
------------ ----------- ------------ ------- ------------
</TABLE>
2. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reid manufactures plastic containers for major water, dairy and juice
bottling companies and other container-related products.
F-24
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
2. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
CONSOLIDATED AND FOREIGN OPERATIONS -- Reid maintains several wholly owned
subsidiaries in the United States and Canada. In addition, Reid owns 51% of Reid
Mexico S.A. de C.V., which operates exclusively in Mexico. Reid formerly owned
74% of Reid Plastics (Israel) Limited ("Reid Israel"). The common stock of Reid
Israel was sold to the management of that former subsidiary in November 1997. No
significant gain or loss was recognized on the sale.
Condensed combined financial information of the Company's operations before
the elimination of intercompany balances and profits were total assets of
$10,380,000, net sales of $16,881,000 and net income of $536,000 as of and for
the year ended December 31, 1996. The Company's foreign operations were not
significant for 1997 and 1998, and for the six months ended June 30, 1999.
All significant intercompany accounts and transactions have been eliminated
in consolidation.
TRANSLATION OF FOREIGN CURRENCIES -- Reid considers the functional currency
under Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign
Currency Translation," to be the local currency for its Canadian subsidiaries
and the U.S. dollar for its Mexican subsidiary through December 31, 1998, and
the local currency beginning January 1, 1999.
Assets and liabilities of Reid's Canadian subsidiaries are converted into
U.S. dollars using the current exchange rate at period-end, and revenues and
expenses of these subsidiaries are translated at the average exchange rate
during the period, with the resulting translation adjustment made to a separate
component of shareholders' equity.
Realized and unrealized transaction gains and losses resulting from
transactions denominated in a currency other than the functional currency are
included in net income in the period in which they occur.
Reid is subject to financial risk from the future changes in exchange rates
of currencies other than the functional currencies of its subsidiaries. These
changes in exchange rates create exchange gains and losses that are reflected in
the consolidated financial statements. In addition, Mexico was considered a
hyper-inflationary economy under SFAS No. 52 through December 31, 1998. For
periods beginning after December 31, 1998, Mexico ceased to be considered a
hyper-inflationary economy.
CASH EQUIVALENTS -- Cash in excess of daily requirements is invested in
marketable securities consisting of money market funds and certificates of
deposit with original maturities of three months or less.
INVENTORIES -- Inventories are stated at the lower of cost or market. Reid
uses the first-in, first-out method for determining cost. The cost components of
inventories are raw materials, labor and factory overhead.
PROPERTY AND EQUIPMENT -- Property and equipment are carried at cost and are
depreciated or amortized using the straight-line method over the estimated
useful lives of the related assets or the terms of the related leases as
follows:
<TABLE>
<S> <C>
Leasehold improvements......................................... Lease term
3 to 7
Machinery and equipment........................................ years
3 to 5
Transportation equipment....................................... years
3 to 7
Office furniture and equipment................................. years
</TABLE>
F-25
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
2. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Major additions and improvements are capitalized while maintenance and
repairs are charged to expense.
Equipment in acquisition (see Note 6) includes certain deposits on fixed
assets currently being constructed. No depreciation is recorded until the fixed
assets are placed in service.
INTANGIBLE ASSETS -- Financing costs are amortized over the term of the
related debt using the effective interest method. Payments relating to
multiple-year management contracts and non-compete agreements are amortized over
the term of the applicable contract or agreement.
IMPAIRMENT OF LONG-LIVED ASSETS -- Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The recoverability test is
performed based upon projected, undiscounted net cash flows.
INCOME TAXES -- Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and income tax bases of
assets and liabilities. Such deferred income tax asset and liability
computations are based on enacted tax laws and rates applicable to periods in
which the differences are expected to reverse. A valuation allowance is
established, when necessary, to reduce deferred income tax assets to the amount
expected to be realized.
DERIVATIVE FINANCIAL INVESTMENTS -- Reid entered into interest-rate floor
and cap agreements to reduce the impact of fluctuations in interest rates on its
floating-rate long-term debt. At December 31, 1997 and 1998, Reid had two
interest-rate cap agreements and an interest-rate collar agreement outstanding.
At June 30, 1999 these agreements were canceled. The fair value of these
agreements at December 31, 1997 and 1998, respectively, was not material.
CONCENTRATION OF CREDIT RISK -- Financial instruments that subject the
Company to credit risk consist primarily of temporary cash investments and
accounts receivable. The Company places its temporary cash investments with
high-credit qualified financial institutions and, by policy, limits the amount
of investment exposure to any one financial institution. Accounts receivable are
generally diversified due to the large number of entities comprising the
Company's customer base and their geographic dispersion. The Company performs
ongoing credit evaluations of its customers and maintains an allowance for
potential credit losses. Credit losses have been within management's
expectations.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS -- The carrying amounts of cash and cash
equivalents, accounts receivable and accounts payable approximate fair value
because of the short maturities of these instruments. The carrying amounts of
the debt notes approximate their respective estimated fair values since floating
rates, which approximate current market rates, are charged on most of the notes
payable.
RECLASSIFICATIONS -- Certain reclassifications have been made to the prior
years' financial statements in order for them to conform to the current
presentation.
F-26
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
2. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
NEW PRONOUNCEMENTS -- In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivatives and Hedging Activities." SFAS No. 133 is effective
for the year ending December 31, 2000, and requires companies to recognize all
derivative instruments on their balance sheet as either assets or liabilities
measured at fair value. SFAS No. 133 also specifies a new method of accounting
for hedging transactions, prescribes the type of items and transactions that may
be hedged, and specifies detailed criteria to be met to qualify for hedge
accounting. At June 30, 1999, the Company does not have derivative instruments.
The adoption of SFAS No. 133 could have an impact on its future consolidated
financial statements.
3. BUSINESS ORGANIZATION AND RESTRUCTURING
On February 16, 1995, Holdings and RIH were formed in connection with the
100% acquisition of Propak California Corp. ("Propak"). In connection therewith,
the shareholders of Reid transferred their ownership interest in Reid and
approximately $3,600,000 of their outstanding notes to Holdings. Holdings in
turn contributed the $3,600,000 downstream through RIH to Reid as common equity.
On February 17, 1995, RIH received an additional $15,000,000 of equity
capital from an investor through a series of related transactions. In exchange
for the investment, the investor received 1,500 shares of senior preferred stock
of RIH, one share of special voting preferred stock of Holdings and warrants to
purchase 7,636 shares of Class A common stock of Holdings. RIH in turn
contributed the $15,000,000 as equity to Reid. Reid and RIH redeemed the senior
preferred stock and warrants of RIH in connection with the acquisition. The
redemption price of the preferred stock in the face amount was $15,000,000 and
unpaid cumulative dividends at a compound rate of 7.9215% per year totaled
$3,421,000 at October 14, 1997.
On February 17, 1995, Reid entered into a loan agreement with a bank. In
connection with this agreement, the bank received a warrant to purchase (a)
545.4545 shares of Class A or, at the option of the bank, Class B common stock
from Holdings at $.01 per share, or (b) 3.098 shares of common stock of RIH at
$.01 per share (see Note 1).
4. MERGERS AND ACQUISITIONS
In March 1995, Reid purchased all of the outstanding shares of Propak. The
acquisition was accounted for under the purchase method of accounting. The
purchase price and related acquisition costs amounting to $27,323,000 were
allocated to the estimated fair market value of the underlying assets acquired
and liabilities assumed, resulting in approximately $24,395,000 of goodwill.
In May 1995, Reid purchased the assets and assumed the outstanding debt of
Crystal Clear Container Corp. and Crystal Clear, Inc. Both operate as divisions
of Reid. The acquisition was accounted for under the purchase method of
accounting. The purchase price and related acquisition costs amounting to
$4,222,000 were allocated to the estimated fair market value of the underlying
assets acquired and liabilities assumed, resulting in approximately $534,000 of
goodwill.
In November 1996, Reid purchased all of the outstanding shares of
Stewart/Walker Co. ("SWC"). The acquisition was accounted for under the purchase
method of accounting. The purchase price and related acquisition costs amounting
to $51,064,000, including the payment of $18,789,000 of certain debt
F-27
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
4. MERGERS AND ACQUISITIONS (CONTINUED)
of SWC at the acquisition date, were allocated to the estimated fair market
value of the underlying assets acquired and liabilities assumed, resulting in
approximately $29,974,000 of goodwill.
In November 1996, Reid purchased all of the outstanding shares of Plastic
Containers, Inc. The acquisition was accounted for under the purchase method of
accounting. The purchase price and related acquisition costs amounting to
$8,437,000 were allocated to the estimated fair market value of the underlying
assets acquired and liabilities assumed, resulting in approximately $1,182,000
of goodwill.
In connection with Vestar's acquisition, the goodwill associated with the
prior acquisitions discussed above was eliminated as of October 15, 1997 (see
Note 1).
5. INVENTORIES
Inventories consist of the following at December 31, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Raw materials........................................................... $ 8,245 $ 6,037
Work in process......................................................... 17 36
Finished goods.......................................................... 4,629 3,928
--------- ---------
$ 12,891 $ 10,001
--------- ---------
--------- ---------
</TABLE>
6. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1997 and
1998:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Land.................................................................... $ 3,579 $ 3,573
Buildings............................................................... 5,543 5,911
Leasehold improvements.................................................. 3,016 4,479
Machinery and equipment................................................. 35,088 36,593
Equipment under capital leases.......................................... 6,766 6,766
Furniture and equipment................................................. 539 2,470
--------- ---------
54,531 59,792
Accumulated depreciation and amortization............................... 3,075 12,674
--------- ---------
51,456 47,118
Equipment in acquisition................................................ 5,884 8,298
--------- ---------
$ 57,340 $ 55,416
--------- ---------
--------- ---------
</TABLE>
F-28
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
7. OTHER ASSETS
Other assets consist of the following at December 31, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Deposits..................................................................... $ 978 $ 565
Other receivables............................................................ 805 281
--------- ---------
$ 1,783 $ 846
--------- ---------
--------- ---------
</TABLE>
8. ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Provision for severances................................................ $ 2,299 $ 1,288
Provision for unfavorable leases and contracts.......................... 1,024
Provision for loss on closed facilities subject to operating leases..... 1,547 1,443
Provision for other transaction related costs........................... 859 239
Salaries and wages...................................................... 2,616 2,640
Vacation................................................................ 1,234 1,287
Accrued 401(k) contributions............................................ 195 225
Accrued commissions..................................................... 232 582
Interest................................................................ 326
Other................................................................... 1,012 3,683
--------- ---------
$ 10,320 $ 12,411
--------- ---------
--------- ---------
</TABLE>
9. OTHER LIABILITIES
Other liabilities consist of the following at December 31, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Provision for loss on closed facilities subject to operating leases..... $ 7,149 $ 8,447
Provision for unfavorable leases and contracts.......................... 5,000
Advance from vendor..................................................... 1,300 2,500
Obligation under noncompete agreement................................... 5,000 1,500
Accrued terminated employee benefit plan obligation..................... 1,277 1,345
Other................................................................... 1,767 1,156
--------- ---------
$ 21,493 $ 14,948
--------- ---------
--------- ---------
</TABLE>
F-29
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
10. DEBT
On October 15, 1997, Reid amended its loan agreement with a bank (the
"Restated Loan Agreement"). The Restated Loan Agreement provides four senior
bank facilities and was created in conjunction with the acquisition.
J.P. Morgan Securities arranged a $27,000,000 Term Loan C (Tranche C), (the
"New Facility"), maturing on December 31, 2004, to be added to Reid's current
facilities. The current facilities comprise a $40,000,000 revolver and a
$45,600,000 Term Loan A (Tranche A) (which was paid down to approximately
$34,900,000 at closing on October 15, 1997), both maturing on November 12, 2002,
and a $32,000,000 Term Loan B (Tranche B), maturing on November 12, 2003.
The four senior bank facilities are collateralized by substantially all
assets of Reid. The New Facility is secured by liens on substantially all
domestic assets as well as the stock of the Canadian and Mexican subsidiaries.
At December 31, 1997 and 1998, $23,500,000 was outstanding under the revolver,
which has been classified as a long-term obligation because management intends
to maintain at least those amounts outstanding under the line of credit
agreement for uninterrupted periods of more than one year after the balance
sheet date. Reid is the sole borrower under the Restated Loan Agreement. All
four senior bank facilities are guaranteed by Holdings and all domestic
subsidiaries of Reid.
The Restated Loan Agreement was amended as of April 15, 1998. The agreement
provides the Company with an option to pay interest at a bank-based rate (7.75%
at December 31, 1998) or a LIBOR (London Interbank Offered Rate)-based rate
(5.31% at December 31, 1998) plus the margins identified below. The margin rate
varies quarterly based on a covenant ratio.
<TABLE>
<CAPTION>
BANK-BASED LIBOR-BASED
RATE MARGIN RATE MARGIN
------------------ ------------------
<S> <C> <C>
Tranche A and Revolver............................... 0.00% -- 1.50% 1.00% -- 2.50%
Tranche B............................................ 1.25% -- 1.75% 2.25% -- 2.75%
Tranche C............................................ 1.50% -- 2.00% 2.50% -- 3.00%
</TABLE>
The Restated Loan Agreement limits the amount of dividends that may be paid
and contains certain financial covenants. At December 31, 1998, Reid was in
compliance with such covenants.
F-30
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
10. DEBT (CONTINUED)
Reid's long-term debt consists of the following at December 31, 1997 and
1998:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Note payable to a bank (Tranche A), interest payable quarterly at LIBOR plus 2%,
principal due in quarterly installments through November 2002..................... $ 34,945 $ 34,945
Note payable to a bank (Tranche B), interest payable quarterly at LIBOR plus 2.25%,
principal due in quarterly installments through November 2003..................... 32,058 31,681
Note payable to a bank (Tranche C), interest payable quarterly at LIBOR plus 2.5%,
principal due in quarterly installments through December 2004..................... 27,000 26,730
Capital lease obligations, various interest rates (ranging from 7.6% to 9.43%),
payable in equal monthly installments through various dates....................... 6,430 4,644
--------- ---------
100,433 98,000
Less current portion................................................................ 2,633 9,046
--------- ---------
$ 97,800 $ 88,954
--------- ---------
--------- ---------
</TABLE>
Maturities of long-term debt for the years ending December 31 are as follows
(dollars in thousands):
<TABLE>
<S> <C>
1999............................................................... $ 9,046
2000............................................................... 10,403
2001............................................................... 11,731
2002............................................................... 10,725
2003............................................................... 30,592
Thereafter......................................................... 25,503
---------
$ 98,000
---------
---------
</TABLE>
In connection with the 1997 refinancing and 1998 amendment, Reid incurred
approximately $2,604,000 in costs, which have been capitalized and are being
amortized over the life of the debt.
Deferred financing costs consists of the following at December 31, 1997 and
1998:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Deferred financing costs................................................... $ 1,515 $ 2,604
Less accumulated amortization.............................................. (58) (450)
--------- ---------
$ 1,457 $ 2,154
--------- ---------
--------- ---------
</TABLE>
F-31
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
10. DEBT (CONTINUED)
On July 2, 1999 (effective as of June 30, 1999), all of the outstanding
debt, excluding capital lease obligations, was repaid with a capital
contribution from Consolidated Container Holdings LLC (Note 15). In connection
with this repayment, approximately $1,952,000 of unamortized deferred financing
costs, net of an income tax benefit of $781,000, were written-off and recorded
as an extraordinary item in the consolidated statement of operations and
comprehensive income (loss).
11. COMMITMENTS
LEASE COMMITMENTS -- Reid leases its manufacturing facilities at most
locations and certain manufacturing equipment; the leases are accounted for as
operating leases. These lease agreements contain renewal options and/or purchase
options.
Future minimum rental commitments under leases for the years ended December
31 are as follows (dollars in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
--------- -----------
<S> <C> <C>
1999..................................................................... $ 2,034 $ 4,700
2000..................................................................... 1,724 3,959
2001..................................................................... 1,200 2,531
2002..................................................................... 127 1,996
2003..................................................................... 107 1,709
Thereafter............................................................... 128 6,904
--------- -----------
5,320 $ 21,799
-----------
-----------
Less amount representing interest at various rates (ranging from 7.6% to
9.43%)................................................................. 676
---------
Present value of minimum lease payments (including current portion of
$1,717)................................................................ $ 4,644
---------
---------
</TABLE>
Rent expense under operating leases was approximately $2,981,000 for the
year ended December 31, 1996, $6,694,000 for the period from January 1, 1997
through October 14, 1997, $774,000 for the period from October 15, 1997 through
December 31, 1997, $5,283,000 for the year ended December 31, 1998, and
$3,225,000 for the six months ended June 30, 1999.
F-32
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
12. INCOME TAXES
Significant components of Reid's deferred income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1998
---------------------- ----------------------
FEDERAL STATE FEDERAL STATE
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Deferred income tax assets:
AMT credit.................................................... $ 255 $ 11 $ 359 $ 185
Accrued compensation.......................................... 518 267 306 157
Allowance for doubtful accounts............................... 324 167 245 126
Accrued liabilities........................................... 5,046 2,599 6,171 3,179
NOL carryforward.............................................. 1,140 587 265 137
Other......................................................... 940 442 707 365
----------- --------- ----------- ---------
Total deferred income tax assets................................ 8,223 4,073 8,053 4,149
Less valuation allowance........................................ (3,060) (1,414) (2,898) (1,494)
----------- --------- ----------- ---------
Net deferred income tax assets.................................. $ 5,163 $ 2,659 $ 5,155 $ 2,655
----------- --------- ----------- ---------
----------- --------- ----------- ---------
Deferred income tax liabilities --
Property and equipment........................................ $ (5,163) $ (2,659) $ (5,155) $ (2,655)
----------- --------- ----------- ---------
----------- --------- ----------- ---------
</TABLE>
The provision for income taxes attributable to the earnings before income
taxes and extraordinary item consists of the following (dollars in thousands):
<TABLE>
<CAPTION>
PERIOD PERIOD
FROM FROM
JANUARY 1, OCTOBER 15,
YEAR 1997 1997
ENDED THROUGH THROUGH YEAR
DECEMBER 31, OCTOBER 15, DECEMBER 31, ENDED SIX MONTHS
1996 1997 1997 DECEMBER 31, ENDED JUNE 30,
(PREDECESSOR) (PREDECESSOR) (SUCCESSOR) 1998 1999
------------- ------------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Current...................... $ (1,035) $ (1,578) $ 105 $ (276) $ (635)
Deferred..................... (517) 2,777 (2,025) (1,926)
Foreign...................... (693) (535) (329)
------------- ------------- ----- ------------ -------
Income tax (expense)
benefit.................... $ (2,245) $ 1,199 $ 105 $ (2,836) $ (2,890)
------------- ------------- ----- ------------ -------
------------- ------------- ----- ------------ -------
</TABLE>
Provision has not been made for U.S. taxes on $5,243,000 of cumulative
undistributed earnings of foreign subsidiaries since those earnings are intended
to be permanently reinvested. The tax benefit allocated to the 1999
extraordinary charge was $780,000.
F-33
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
12. INCOME TAXES (CONTINUED)
The tax expense (benefit) was different from the amount computed by applying
the federal statutory rate to the earnings before income taxes and extraordinary
item as follows (dollars in thousands):
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM YEAR ENDED SIX MONTHS
YEAR JANUARY 1, 1997 OCTOBER 15, 1997 DECEMBER 31, 1998 ENDED JUNE 30,
ENDED THROUGH THROUGH 1999
DECEMBER 31, OCTOBER 14, 1997 DECEMBER 31, 1997 -------------------- --------------------
1996 -------------------- -------------------- % %
% AMOUNT % AMOUNT % AMOUNT -- AMOUNT --
----------------- --------- --- --------- --- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax at federal
statutory rate.. 34% $ (3,051) (34)% $ (1,332) (34)% $ 1,107 34% $ 1,701 34%
Amortization of
goodwill and
other........... 25 1,373 15 336 8 1,398 43 575 12
State taxes....... 11 265 8 407 8
Valuation
allowance....... 394 5 869 22 (82) (3)
Other............. 11 85 1 22 1 148 5 207 4
-- -- -- -- --
--------- --------- --------- ---------
Effective tax
rate............ 81% $ (1,199) (13)% $ (105) (3)% $ 2,836 87% $ 2,890 58%
-- -- -- -- --
-- -- -- -- --
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The Company has been notified that the California Franchise Tax Board will
be examining its corporate income tax returns for the years ended December 31,
1995 and 1996. At December 31, 1998, the Company has a net operating loss
carryforward of $779,000 expiring in the tax year ending December 31, 2012. The
Company also has federal alternative minimum tax credits available of
approximately $544,000.
13. EMPLOYEE BENEFIT PLAN
Reid has a 401(k) defined contribution plan for the benefit of all employees
who are age 21 or older and who have completed at least 1,000 hours of service.
Reid will match every dollar of deferral to the plan by participants to a
maximum matching contribution of 3% of a participant's qualifying income per
plan year. For participants who earn less than $15,000 per year and make
contributions to the plan, Reid will also make an annual contribution of 2% of
the participant's compensation to the plan.
Reid may, at the discretion of the Board of Directors, make a profit sharing
contribution to be shared by all eligible participants and a discretionary
matching contribution to the plan for participants who make deferrals of more
than $2,000 a year. The amounts of Reid's profit sharing and matching
contributions are discretionary in each plan year, and Reid is not required to
make a profit sharing or discretionary matching contribution to the plan in any
plan year.
The expense associated with contributions to the plan made by Reid were
$144,000 for the year ended December 31, 1996, $154,000 for the period from
January 1, 1997 through October 14, 1997,
F-34
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
13. EMPLOYEE BENEFIT PLAN (CONTINUED)
$41,000 for the period from October 15, 1997 through December 31, 1997, $225,000
for the year ended December 31, 1998, and $138,000 for the six months ended June
30, 1999.
14. STOCK OPTION PLAN
In December 31, 1997, the Company's Board of Directors adopted the 1997
Stock Option Plan (the "Plan") under which stock options are granted to key
employees of the Company. Under the terms of the Plan 1,000 shares of common
stock are authorized for issuance upon exercise of options. Stock options have
been granted with an exercise price equal to $5,000 per share, which is deemed
to be the fair market value at the date of grant. These options vest over 60
months and expire 10 years after the grant date. The Board has granted options
for 600 shares. The Company elected to account for stock-based compensation in
accordance with the provisions of Accounting Principles Board (APB) Opinion No.
25. "Accounting for Stock Issued to Employees." Accordingly, no compensation
cost has been recognized because the option price equals the market price on the
date of grant.
If the Company had elected to follow the measurement provisions of SFAS No.
123, "Accounting for Stock-Based Compensation," in accounting for its stock
options compensation expense would be recognized based on the fair value of the
options at the date of grant. To estimate compensation expense that would be
recognized under SFAS No. 123, the Company used the modified Black-Scholes
option-pricing model with the following weighted average assumptions for options
granted in 1998: risk-free interest rate ranging from 5.6% to 5.83%; no expected
dividend yield; no volatility; and expected life of five years.
If SFAS No. 123 were used to account for the Company's stock based
compensation program, the pro forma net earnings would be as follows:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1997 PERIOD FROM
THROUGH OCTOBER 15, 1997 SIX MONTHS
OCTOBER 14, THROUGH YEAR ENDED ENDED JUNE 30,
1997 DECEMBER 31, 1997 DECEMBER 31, 1998 1999
(PREDECESSOR) (SUCCESSOR) (SUCCESSOR) (SUCCESSOR)
--------------- ----------------- ------------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net income (loss) - as
reported..................... $ (7,803) $ (3,873) $ 366 $ 1,194
Net income (loss) - pro
forma........................ $ (7,803) (3,878) 273 $ 1,145
</TABLE>
The pro forma effects of applying No. 123 may not be representative of the
effects on reported net income for future years since options vest over several
years and additional awards could be each year.
F-35
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
14. STOCK OPTION PLAN (CONTINUED)
Stock options activity for the Plan was as follows:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
SHARES EXERCISE PRICE
----------- -----------------
<S> <C> <C> <C>
Outstanding January 1, 1997......................... --
Granted............................................. 330 $ 5,000
Exercised...........................................
Canceled............................................
--- ------
Outstanding December 31, 1997....................... 330 5,000
Granted............................................. 270 5,000
Exercised...........................................
Canceled............................................
--- ------
Outstanding December 31, 1998......................... 600 $ 5,000
--- ------
--- ------
Weighted-average fair value of options granted during
the year -- 1997.................................... $ 1,249 per share
Weighted-average fair value of options granted during
the year -- 1998.................................... $ 1,221 per share
</TABLE>
The following table summarizes the information about stock options
outstanding at December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-----------------------------------------------------
WEIGHTED-AVERAGE
REMAINING
RANGE OF EXERCISE COMMERCIAL LIFE WEIGHTED-AVERAGE
PRICES SHARES (YEARS) EXERCISE PRICE
----------- ------------------- -------------------
<S> <C> <C> <C>
$5,000................................................. 600 9 $ 5,000
<CAPTION>
OPTIONS EXERCISABLE
RANGE OF EXERCISE -----------------------------------------------------
PRICES SHARES WEIGHTED-AVERAGE
----------- -------------------
<S> <C> <C> <C>
$5,000................................................. 120 $ 5,000
</TABLE>
No options were granted, exercised, or canceled during the six months ended
June 30, 1999.
15. SUBSEQUENT EVENT
On July 2, 1999, Reid acquired substantially all of the U.S. plastic
packaging assets of Suiza Packaging, a subsidiary of Suiza Foods Corporation
("Suiza"). Simultaneously, through the formation of Consolidated Container
Company LLC ("CCC"), Reid was merged into CCC. CCC is a wholly owned subsidiary
of Consolidated Container Holdings ("Holdings"). As a result of the merger,
Vestar Capital Partners III, through its controlled affiliates, received 51% of
the member units of Holdings, and Suiza, through a subsidiary, received 49% of
the member units of Holdings.
F-36
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997, 1998, AND
THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND 1999
15. SUBSEQUENT EVENT (CONTINUED)
The acquisition of Suiza Packaging has been accounted for using the purchase
method of accounting. Assets acquired and liabilities assumed were as follows
(in thousands):
<TABLE>
<S> <C>
Total purchase price, net of cash acquired....................... $ 140,723
Fair value of net liabilities acquired:
Fair value of assets acquired.................................. 314,608
Fair value of liabilities assumed.............................. (599,771)
---------
Total liabilities acquired....................................... (285,163)
---------
Goodwill......................................................... $ 425,886
---------
---------
</TABLE>
The excess of the purchase price over the fair value of the net assets was
$425,886,000, which will be amortized on a straight-line basis over 40 years.
The purchase price allocation has not been finalized, and accordingly, goodwill
associated with the acquisition may change.
In conjunction with the merger, a debt private placement offering of
$185,000,000 in senior subordinated notes and a new $485,000,000 senior credit
facility were executed. As a result, substantially all of the outstanding debt,
excluding capital lease obligations, was repaid and approximately $1,952,000 of
unamortized deferred financing costs, were written-off and recorded as an
extraordinary item.
16. ALLOWANCE FOR DOUBTFUL ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING RECOVERIES END
PERIOD ENDED OF PERIOD PROVISION (WRITE-OFFS) OTHER OF PERIOD
- ---------------------------------------------------------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
December 31, 1996......................................... $ 1,627 $ 462 $ (265) $ -- $ 1,824
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
December 31, 1997......................................... $ 1,824 $ 256 $ (648) $ 257 $ 1,689
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
December 31, 1998......................................... $ 1,689 $ 418 $ (896) $ 155 $ 1,366
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
June 30, 1999............................................. $ 1,366 $ 266 $ (160) $ -- $ 1,472
----------- ----- ----- ----- -----------
----------- ----- ----- ----- -----------
</TABLE>
F-37
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Suiza Foods Corporation
Dallas, Texas
We have audited the accompanying combined balance sheets of Franklin
Plastics, Inc. and subsidiaries ("Franklin") and Plastic Containers, Inc. and
subsidiaries ("PCI"), collectively "Suiza Packaging" or the "Company," as of
December 31, 1997 and 1998, and the related combined statements of operations,
stockholders' equity and cash flows for the five-month period from the date of
acquisition of Franklin (July 31, 1997) to December 31, 1997 and the year ended
December 31, 1998. The combined financial statements include the accounts of
Franklin from its date of acquisition on July 31, 1997, and PCI from its date of
acquisition on May 29, 1998, both of which are majority-owned subsidiaries of
Suiza Foods Corporation. We have also audited the combined statements of
operations, stockholders' equity and cash flows of the predecessor of Franklin,
Plastics Management Group, for the four-month pre-acquisition period from April
1, 1997 to July 30, 1997. These combined financial statements are the
responsibility of the companies' management. Our responsibility is to express an
opinion on these combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such combined financial statements present fairly, in all
material respects, the combined financial position of Suiza Packaging at
December 31, 1997 and 1998, and their combined results of operations and cash
flows for the five-month period ended December 31, 1997 and the year ended
December 31, 1998, in conformity with generally accepted accounting principles.
In addition, in our opinion, the combined predecessor financial statements
present fairly, in all material respects, the results of operations and cash
flows of Plastic Management Group for the four-month period ended July 30, 1997,
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Dallas, Texas
February 9, 1999
(April 30, 1999, as to Note 17)
F-38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
Plastics Management Group:
We have audited the accompanying combined statements of operations,
stockholders' equity and cash flows of Plastics Management Group for the six
month period ended March 31, 1997 and the year ended September 30, 1996. These
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, Plastics Management Group's results of
operations and cash flows for the six month period ended March 31, 1997 and the
year ended September 30, 1996 in conformity with generally accepted accounting
principles.
PricewaterhouseCoopers LLP
Boston, Massachusetts
July 1, 1997
F-39
<PAGE>
SUIZA PACKAGING
COMBINED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1998
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................................... $ 265 $ 1,681
Temporary investments................................................................... 9,216
Accounts receivable, net of allowance for doubtful accounts
of $118 and $2,078.................................................................... 10,887 44,714
Inventories............................................................................. 2,140 23,365
Prepaid expenses and other current assets............................................... 256 676
Deferred income taxes................................................................... 2,187 2,395
---------- ----------
Total current assets.................................................................. 15,735 82,047
PROPERTY, PLANT AND EQUIPMENT............................................................. 52,476 218,644
DEFERRED INCOME TAXES..................................................................... 23,937
INTANGIBLE AND OTHER ASSETS............................................................... 90,706 267,277
---------- ----------
TOTAL ASSETS.............................................................................. $ 158,917 $ 591,905
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses................................................... $ 20,007 $ 63,926
Dividends payable....................................................................... 1,417 7,906
Revolving credit facility............................................................... 26,370
Current portion of long-term debt....................................................... 6,032
---------- ----------
Total current liabilities............................................................. 21,424 104,234
LONG-TERM DEBT............................................................................ 108,822 372,339
DEFERRED INCOME TAXES..................................................................... 2,980 7,098
OTHER LONG-TERM LIABILITIES............................................................... 22,359
COMMITMENTS AND CONTINGENCIES (Note 14)
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, $1,000 stated value--1,000,000 shares authorized;
22,671 and 72,594 shares, respectively, issued and outstanding........................ 22,671 72,594
Common stock, $.001 par value, 5,000,000 shares authorized, 453,425 and 1,451,877
shares, respectively, issued and outstanding.......................................... 1
Additional paid-in capital.............................................................. 4,918 14,899
Retained deficit........................................................................ (1,898) (1,619)
---------- ----------
Total stockholders' equity............................................................ 25,691 85,875
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................................................ $ 158,917 $ 591,905
---------- ----------
---------- ----------
</TABLE>
See notes to combined financial statements.
F-40
<PAGE>
SUIZA PACKAGING
COMBINED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------- FIVE-MONTH
SIX-MONTH FOUR-MONTH PERIOD
YEAR ENDED PERIOD PERIOD ENDED YEAR ENDED
SEPTEMBER ENDED ENDED DECEMBER DECEMBER
30, MARCH 31, JULY 31, 31, 31,
1996 1997 1997 1997 1998
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET SALES......................... $ 80,057 $ 48,781 $ 40,847 $ 49,699 $ 367,903
COST OF SALES..................... 67,567 43,292 36,447 38,995 283,122
----------- ----------- ----------- ----------- -----------
Gross profit................ 12,490 5,489 4,400 10,704 84,781
OPERATING EXPENSES:
Selling, general and
administrative................ 2,442 1,115 706 5,347 33,075
Amortization of intangibles..... 71 48 32 947 5,126
----------- ----------- ----------- ----------- -----------
Total operating expenses.... 2,513 1,163 738 6,294 38,201
----------- ----------- ----------- ----------- -----------
INCOME FROM OPERATIONS............ 9,977 4,326 3,662 4,410 46,580
OTHER INCOME (EXPENSE):
Interest expense, net........... (1,079) (932) (618) (4,663) (26,847)
Other expense, net.............. (456) (176) (62)
----------- ----------- ----------- ----------- -----------
Total other income
(expense)................. (1,535) (1,108) (618) (4,663) (26,909)
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME
TAXES........................... 8,442 3,218 3,044 (253) 19,671
INCOME TAX EXPENSE................ 280 218 190 228 9,486
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS)................. $ 8,162 $ 3,000 $ 2,854 $ (481) $ 10,185
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
See notes to combined financial statements
F-41
<PAGE>
SUIZA PACKAGING
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED
STOCK COMMON STOCK ADDITIONAL RETAINED TOTAL
-------------------- ----------------------- PAID-IN EARNING STOCKHOLDER'S
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
--------- --------- ---------- ----------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR
BALANCE, OCTOBER 1, 1995.................. -- $ -- 960 $ 59 $ 1,548 $ 2,257 $ 3,864
Issuance of common stock.................. 700 84 84
Stockholders' distribution................ (4,630) (4,630)
Net income................................ 8,162 8,162
--------- --------- ---------- ----- ----------- --------- -------------
BALANCE, SEPTEMBER 30, 1996............... -- -- 1,660 143 1,548 5,789 7,480
Repurchase of common stock................ (200) (21) (21)
Stockholders' distribution................ (751) (751)
Net income................................ 3,000 3,000
--------- --------- ---------- ----- ----------- --------- -------------
BALANCE, MARCH 31, 1997................... -- -- 1,460 122 1,548 8,038 9,708
Stockholders' distribution................ (3,380) (3,380)
Net income................................ 2,854 2,854
--------- --------- ---------- ----- ----------- --------- -------------
BALANCE, JULY 31, 1997.................... -- $ -- 1,460 $ 122 $ 1,548 7,512 $ 9,182
--------- --------- ---------- ----- ----------- --------- -------------
--------- --------- ---------- ----- ----------- --------- -------------
SUIZA PACKAGING
Common stock issued....................... -- $ -- 453,425 $ -- $ 4,535 $ -- $ 4,535
Preferred stock issued.................... 22,671 22,671 22,671
Issuance of warrants...................... 383 383
Preferred dividends declared.............. (1,417) (1,417)
Net loss.................................. (481) (481)
--------- --------- ---------- ----- ----------- --------- -------------
BALANCE, DECEMBER 31, 1997................ 22,671 22,671 453,425 -- 4,918 (1,898) 25,691
Common stock issued....................... 998,452 1 9,981 9,982
Preferred stock issued.................... 49,923 49,923 49,923
Stockholder distribution.................. (2,000) (2,000)
Preferred dividends declared.............. (7,906) (7,906)
Net income................................ 10,185 10,185
--------- --------- ---------- ----- ----------- --------- -------------
BALANCE, DECEMBER 31, 1998................ 72,594 $ 72,594 1,451,877 $ 1 $ 14,899 ($ 1,619) $ 85,875
--------- --------- ---------- ----- ----------- --------- -------------
--------- --------- ---------- ----- ----------- --------- -------------
</TABLE>
See notes to combined financial statements.
F-42
<PAGE>
SUIZA PACKAGING
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
-------------------------------------------
SIX-MONTH FOUR-MONTH
YEAR ENDED PERIOD ENDED PERIOD FIVE-MONTH YEAR ENDED
SEPTEMBER 30, MARCH 31, ENDED PERIOD ENDED DECEMBER 31,
1996 1997 JULY 31, 1997 DECEMBER 31, 1997 1998
------------- ------------- ------------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................... $ 8,162 $ 3,000 $ 2,854 $ (481) $ 10,185
Adjustments to net income (loss):
Depreciation and amortization............ 4,136 2,820 2,149 2,233 17,333
Loss on disposal of assets............... 79 62
Deferred income taxes.................... 228 10,194
Changes in assets and liabilities, net of
acquisitions:
Receivables............................ (1,869) 1,063 (3,333) (727) (4,113)
Inventories............................ (672) (123) (120) (154) 2,154
Prepaid expenses and other assets...... (118) (477) 269 142 111
Accounts payable and accrued
expenses............................. 3,376 800 89 7,983 (9,160)
------------- ------------- ------------- ----------------- ------------
Net cash provided by (used in)
operating activities................. 13,094 7,083 1,908 9,224 26,766
------------- ------------- ------------- ----------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of temporary
investments............................ 26,740
Purchase of temporary investments........ (13,790)
Additions to property, plant and
equipment.............................. (29,329) (7,335) (7,402) (9,343) (63,721)
Cash paid for acquisitions, net of cash
acquired............................... (202) (45) (136,027) (91,700)
------------- ------------- ------------- ----------------- ------------
Net cash used in investing activities.. (29,531) (7,380) (7,402) (145,370) (142,471)
------------- ------------- ------------- ----------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid and stockholders'
distributions, net..................... (2,746) (2,571) (3,380) (3,417)
Net borrowings from parent company....... 8,874 108,822 100,097
Issuance of common and preferred
stocks................................. 27,206 25,343
Issuance of warrants..................... 383
Repayment of long-term debt.............. (919) (48) (4,902)
Borrowings on debt, net.................. 20,763 2,077
------------- ------------- ------------- ----------------- ------------
Net cash provided by (used in)
financing activities................. 17,098 (542) 5,494 136,411 117,121
------------- ------------- ------------- ----------------- ------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.............................. 661 (839) -- 265 1,416
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD................................... 178 839 265
------------- ------------- ------------- ----------------- ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD... $ 839 $ -- $ -- $ 265 $ 1,681
------------- ------------- ------------- ----------------- ------------
------------- ------------- ------------- ----------------- ------------
</TABLE>
See notes to combined financial statements.
F-43
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR 1996, 1997 AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS--Suiza Packaging (the "Company") includes the operations of
Franklin Plastics, Inc. and subsidiaries ("Franklin"), a majority-owned
subsidiary of Suiza Foods Corporation ("Suiza" or the "Parent") and its
predecessor, Plastic Management Group, and Plastics Containers, Inc. and
subsidiaries ("PCI"), an indirect majority-owned subsidiary of Suiza. On July
31, 1997, Franklin was acquired by Suiza and on May 29, 1998, PCI and its
immediate parent company, Continental Can Company, Inc. ("Continental Can"), was
acquired by Suiza. Both of these acquisitions have been accounted for using the
purchase method of accounting, and the related accounting adjustments, including
goodwill, have been pushed down and are reflected in the combined financial
statements of the Company as of their respective acquisition dates. The combined
financial statements of the Company for the periods before July 31, 1997, were
prepared using the predecessor's historical basis of accounting. Because of the
application of the purchase method of accounting, as of the respective
acquisition dates of Franklin and PCI, the operating results of Suiza Packaging
and its predecessor, Plastics Management Group, are presented using different
bases of accounting that affect the comparability of their operating results.
The Company develops, manufactures and distributes a wide range of custom
extrusion blow-mold plastic containers used primarily in the milk, juice and
water industries. Based on the nature of the product, the production process,
types of customers, and methods used to distribute products, the Company
operates in one reportable segment.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
revenues and expenses during the reporting period. Actual results could differ
from these estimates.
PRINCIPLES OF COMBINATION--The accompanying combined financial statements
include the accounts of Franklin and PCI and their wholly owned subsidiaries.
All significant intercompany balances and transactions are eliminated in
combination.
CASH AND CASH EQUIVALENTS--Included in cash and cash equivalents are highly
liquid cash investments with remaining maturities at date of purchase of three
months or less.
TEMPORARY INVESTMENTS--Temporary investments consist of available-for-sale
U.S. government obligations, certificates of deposit, Eurodollar deposits and
highly rated commercial paper, all of which are due within one year. These
temporary investments are stated at amortized cost, which approximates market
value.
INVENTORIES--Inventories consist of raw materials, spare parts and supplies,
and finished goods inventories and are stated at the lower of cost, using the
first-in, first-out ("FIFO") method, or market. Finished goods inventories
include raw materials, direct labor costs and indirect labor and overhead costs.
PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated at
cost. Depreciation and amortization are provided using the straight-line method
over the estimated useful lives of the assets, which range from three to forty
years. Plant and equipment held under capital leases and leasehold improvements
are amortized over the shorter of the lease term or the estimated useful life of
the asset.
F-44
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Expenditures for repairs and maintenance that do not improve or extend the life
of the assets are expensed as incurred.
INTANGIBLE ASSETS--Intangible assets include primarily goodwill and are
stated at cost and are amortized using the straight-line method over 40 years.
INSURANCE--The Company purchases commercial insurance policies to cover its
insurance risks; however, certain of its subsidiaries are self-insured in
certain states for worker's compensation, general liability and property and
casualty coverages in excess of varying deductible amounts. Self-insurance
liabilities are accrued based on claims filed and estimates for claims incurred
but not reported.
RESEARCH, DEVELOPMENT AND ENGINEERING--Expenditures for research,
development and engineering are expensed as incurred. Costs charged to
operations for research, development and engineering for the year ended December
31, 1998, were $5.1 million. There were no similar costs incurred prior to 1998.
REVENUE--Revenue is recognized when the product is shipped to the customer.
The Company provides credit terms to customers generally ranging up to 30 days,
performs ongoing credit evaluations of its customers and maintains allowances
for probable credit losses based on historical experience.
INCOME TAXES--Deferred income taxes are provided for temporary differences
in the financial statement and tax bases of assets and liabilities using current
tax rates. Deferred tax assets, including the benefit of net operating loss
carryforwards, are evaluated based on the guidelines for realization and may be
reduced by a valuation allowance if deemed necessary. Beginning with the
acquisition by Suiza on July 31, 1997, the Company has been included in the
consolidated federal income tax return of Suiza; however, income taxes in the
combined financial statements have been provided as if the Company filed a
separate income tax return. Prior to July 31, 1997, the predecessor was
organized as a group of affiliated companies under Subchapter S of the Internal
Revenue Code, and was not subject to corporate-level federal income taxes.
Accordingly, income generated by the predecessor was taxed to the stockholders
individually, and no federal income tax expense was recorded in the predecessor
financial statements.
ASSET IMPAIRMENT--In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-lived Assets
to Be Disposed Of," the Company evaluates the impairment of long-lived assets if
circumstances indicate that the carrying value of those assets may not be
recoverable. Recoverability of the assets to be held and used is measured by a
comparison of the carrying amount of the asset to future undiscounted cash flows
expected to be generated by the asset.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS--SFAS No. 133, "Accounting for
Derivative Financial Instruments and Hedging Activities," was issued in June
1998, and establishes standards for accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective for the year
ending December 31, 2001. The Company is currently analyzing the effect of this
standard and does not expect it to have a material effect on the combined
financial position, results of operations or cash flows.
F-45
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
2. ACQUISITIONS
On July 31, 1997, Suiza formed Suiza Packaging and purchased the net assets
of Plastics Management Group for approximately $136 million in cash, which was
funded primarily by borrowings under Suiza's senior credit facilities. In
connection with this acquisition, Suiza Packaging sold warrants to the former
stockholders of Plastics Management Group to acquire 91,880 shares of common
stock of Suiza Packaging (equal to 17.5% of the outstanding common stock) at an
exercise price of $10 per share in consideration for a cash payment of $383,000,
which approximated the fair market value of such warrants. Pursuant to a
stockholders' agreement, the purchase price of Plastics Management Group was
pushed down to Suiza Packaging with the following capital structure:
- 55% of the purchase price in the form of senior notes payable to Suiza
- 25% of the purchase price in the form of mezzanine notes payable to Suiza
- 16 2/3% of the purchase price in the form of preferred stock issued to
Suiza
- 3 1/3% of the purchase price in the form of common stock issued to Suiza
In addition to the push-down of the original purchase price of Plastics
Management Group, the stockholders' agreement also required any future
acquisitions of plastic packaging businesses by Suiza to be made on behalf of
Suiza Packaging, with the related purchase prices pushed down to Suiza Packaging
using the above-described capital structure. In addition, for future Suiza
Packaging acquisitions, the warrant holders were entitled to protective
participation rights whereby they could elect to purchase 17.5% of both the
preferred and common stock issued by Suiza Packaging in connection with these
future acquisitions.
On May 29, 1998, Suiza issued approximately 2.5 million shares of its common
stock or replacement stock options to the shareholders of Continental Can in
exchange for substantially all of the issued and outstanding shares of common
stock and stock options of Continental Can. The total purchase price for this
acquisition, including assumed debt, was approximately $354.4 million, of which
approximately $207.4 million of the purchase price was allocated to PCI based on
PCI's relative contribution to Continental Can's operations.
During 1998, in addition to the PCI acquisition, the Company completed the
acquisition of eleven other plastic packaging businesses. The aggregate purchase
price for the other acquisitions, none of which were individually significant,
was $89.3 million. All of the acquisitions were funded primarily with borrowings
under Suiza's senior credit facilities.
These acquisitions were all accounted for using the purchase method of
accounting as of their respective acquisition dates. Accordingly, only the
results of operations of the acquired companies subsequent to their respective
acquisition dates are included in the combined financial statements. At the
acquisition date, the purchase prices, which were pushed down to Suiza Packaging
based on the capital structure discussed above, were allocated to assets
acquired, including identifiable intangibles and liabilities assumed based on
their fair market values. The excess of the total purchase prices over
F-46
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
2. ACQUISITIONS (CONTINUED)
the fair values of the net assets acquired represented goodwill. In connection
with the 1997 and 1998 acquisitions, assets were acquired and liabilities were
assumed as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
----------------------
1997 1998
---------- ----------
<S> <C> <C>
(IN THOUSANDS)
Total purchase prices, net of cash acquired........................... $ 136,027 $ 292,161
Fair value of net assets acquired:
Fair value of assets acquired....................................... 57,654 216,868
Fair value of liabilities assumed................................... 12,588 106,561
---------- ----------
Total net assets acquired........................................... 45,066 110,307
---------- ----------
Goodwill.............................................................. $ 90,961 $ 181,854
---------- ----------
---------- ----------
</TABLE>
The following table presents the unaudited combined pro forma results of
operations of Suiza Packaging as if these acquisitions had occurred at the
beginning of each of the periods presented:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
----------------------
1997 1998
---------- ----------
<S> <C> <C>
(IN THOUSANDS)
Net Sales............................................................. $ 484,755 $ 512,151
---------- ----------
---------- ----------
Income (loss) before taxes............................................ $ (75) $ 18,858
---------- ----------
---------- ----------
Net income (loss)..................................................... $ (56) $ 11,053
---------- ----------
---------- ----------
</TABLE>
The unaudited combined pro forma results of operations are not necessarily
indicative of what the actual results of operations would have been had the
acquisitions occurred at the beginning of 1997, nor do they purport to be
indicative of the future results of operations of Suiza Packaging.
In connection with the acquisition of PCI, a liability of $2.2 million was
recognized relative to a plan to close PCI's Lima, Ohio, facility. This
liability included approximately $.8 million for employee severance costs
related to approximately 100 employees, including production, supervisory and
administrative personnel located at the facility, and approximately $1.4 million
for noncancelable lease obligations and related facility closing costs. The
liability at December 31, 1998 of $2.2 million is included in accounts payable
and accrued expenses. The Company remains obligated under the facility lease
through December 2000. In addition, the allocation of purchase price to fixed
assets included a reduction of approximately $5.7 million of carrying costs of
the Lima facility to reduce such costs to their estimated fair values. This
facility is expected to close by the end of the second quarter of 1999.
F-47
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
3. INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Raw materials............................................................ $ 1,151 $ 9,586
Parts and supplies....................................................... 599 3,045
Finished goods........................................................... 390 10,734
--------- ---------
Total.............................................................. $ 2,140 $ 23,365
--------- ---------
--------- ---------
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1998
--------- ----------
<S> <C> <C>
(IN THOUSANDS)
Land.................................................................... $ 350 $ 7,350
Buildings and improvements.............................................. 4,912 24,586
Machinery and equipment................................................. 48,203 189,587
Furniture and fixtures.................................................. 297 808
Construction in progress................................................ 9,913
--------- ----------
53,762 232,244
Less accumulated depreciation........................................... (1,286) (13,600)
--------- ----------
Total............................................................. 52,476 $ 218,644
--------- ----------
--------- ----------
</TABLE>
5. INTANGIBLE AND OTHER ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1998
--------- ----------
<S> <C> <C>
(IN THOUSANDS)
Goodwill............................................................... $ 90,961 $ 272,815
Deposits and other..................................................... 692 535
--------- ----------
91,653 273,350
Less accumulated amortization.......................................... (947) (6,073)
--------- ----------
Total............................................................ $ 90,706 $ 267,277
--------- ----------
--------- ----------
</TABLE>
F-48
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Accounts payable........................................................ $ 13,219 $ 27,980
Accrued interest payable to Suiza....................................... 2,775 9,499
Employee compensation and benefits...................................... 619 8,629
Accrual for plant closings.............................................. 3,585
Accrued rebates......................................................... 1,570 1,757
Other................................................................... 1,824 12,476
--------- ---------
Total............................................................. $ 20,007 $ 63,926
--------- ---------
--------- ---------
</TABLE>
7. DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1998
---------- ----------
<S> <C> <C>
(IN THOUSANDS)
Revolving credit facility with Suiza.................................. $ $ 26,370
---------- ----------
---------- ----------
Long-term debt:
Notes payable to Suiza:
Senior notes payable................................................ $ 74,815 $ 125,502
Mezzanine notes payable............................................. 34,007 118,749
Senior secured notes payable.......................................... 131,114
Capital lease obligations............................................. 3,006
---------- ----------
$ 108,822 378,371
Less current portion................................................ (6,032)
---------- ----------
Total........................................................... $ 108,822 372,339
---------- ----------
---------- ----------
</TABLE>
NOTES PAYABLE TO SUIZA--The Company has entered into various credit
arrangements with Suiza, which include a non-interest-bearing revolving credit
facility, payable on demand, to fund the Company's working capital and capital
expenditure requirements and senior and mezzanine notes payable to fund a
portion of the purchase prices for acquired businesses pursuant to the capital
structure required by the stockholders' agreement, as discussed in Note 2.
The senior notes payable that are unsecured notes, were issued in connection
with the Company's acquisitions, at various dates in 1997 and 1998, and require
quarterly principal installments of 2% of the initial principal balance
beginning September 30, 1999, and ending on their maturity date, June 30, 2004.
Amounts outstanding under the senior note bear interest, payable quarterly, at a
floating rate based on the London Interbank Offering Rate plus 300 basis points.
The interest rate in effect, including the applicable interest rate margin, was
8.78% and 8.63% at December 31, 1998 and 1997, respectively.
F-49
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
7. DEBT (CONTINUED)
The mezzanine notes payable that are unsecured notes, were issued in
connection with the Company's acquisitions, at various dates in 1997 and 1998,
and are due in full on their maturity date, June 30, 2007. Of the amounts
outstanding at December 31, 1998, approximately $57 million bear interest at
12.5%, while the remaining $61.7 million bear interest at 13.9%. Interest on
these notes are payable quarterly.
SENIOR SECURED NOTES--The senior secured notes were issued in December 1996
and have an original par value of $125 million. These notes, which are due in
2006, bear interest at a fixed interest rate of 10%, payable semiannually in
July and December of each year, and are secured by substantially all assets
other than inventory, receivables and certain equipment of PCI, along with the
stock of certain of PCI's subsidiaries. In connection with the acquisition of
PCI in 1998, these notes were revalued to fair value using a market yield of
8.6% resulting in a premium of $10.4 million at the acquisition date. This
premium is being amortized as an adjustment to interest expense over the life of
the notes. These notes are redeemable, in whole or in part, at the option of PCI
beginning on December 16, 2001, at an initial price of 105% of par value,
declining ratably each year to par value on December 15, 2004. In addition, the
indenture requires PCI to offer to redeem the notes at a redemption price of
101% of par value upon the occurrence of certain other events. The tender offer
to redeem these notes in connection with the acquisition of PCI resulted in the
redemption of $3.8 million of these notes. The indenture places certain
restrictions on the payment of dividends, additional liens, disposition of the
proceeds of asset sales, sale and leaseback transactions and additional
borrowings.
CAPITAL LEASE OBLIGATIONS--The Company is obligated under capital leases for
a manufacturing facility, which expires in December 2000, and certain machinery
and equipment, which expires in April 2002. The equipment lease arrangement
commenced on April 1, 1996, in connection with the issuance of tax-exempt
industrial development revenue bonds. Included in the combined balance sheet are
capital lease assets of $4.5 million and accumulated amortization of $.3 million
at December 31, 1998.
Future minimum lease payments under these capital leases are as follows (in
thousands):
<TABLE>
<CAPTION>
Year ending December 31:
- --------------------------------------------------------------------
<S> <C>
1999.......................................................... $ 1,172
2000.......................................................... 919
2001.......................................................... 871
2002.......................................................... 349
---------
Total future minimum lease payments................................. 3,311
Less portion representing interest.................................. (305)
---------
Net minimum lease payments.................................... $ 3,006
---------
---------
</TABLE>
F-50
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
7. DEBT (CONTINUED)
SCHEDULED MATURITIES--The scheduled annual maturities of long-term debt at
December 31, 1998, were as follows (in thousands):
<TABLE>
<CAPTION>
SUIZA
NOTES OTHER DEBT TOTAL
---------- ----------- ----------
<S> <C> <C> <C>
1999..................................................... $ 5,020 $ 1,012 $ 6,032
2000..................................................... 10,040 848 10,888
2001..................................................... 10,040 784 10,824
2002..................................................... 10,040 362 10,402
2003..................................................... 10,040 10,040
Thereafter............................................... 199,071 131,114 330,185
---------- ----------- ----------
$ 244,251 $ 134,120 $ 378,371
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
8. OPERATING LEASES
The Company leases certain property, plant and equipment used in its
operations under noncancelable operating lease agreements. Such leases, which
are primarily for facilities, machinery and equipment and vehicles, have lease
terms ranging from two to nine years. Certain of the operating lease agreements
require the payment of additional rentals for maintenance, along with additional
rentals, based on miles driven or units produced. Lease expense, including
additional rent, was $11.6 million for the year ended December 31, 1998, $1.3
million for the five-month period ended December 31, 1997, $0.7 million for the
four-month period ended July 31, 1997, $2.1 million for the six-month period
ended March 31, 1997, and $4.3 million for the year ended September 30, 1996.
Future minimum lease payments at December 31, 1998, under noncancelable
operating leases with terms in excess of one year are summarized below (in
thousands):
<TABLE>
<S> <C>
1999............................................................... $ 16,833
2000............................................................... 15,996
2001............................................................... 15,473
2002............................................................... 13,159
2003............................................................... 11,211
Thereafter......................................................... 12,283
---------
Total $ 84,955
---------
---------
</TABLE>
F-51
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
9. INCOME TAXES
The following table presents the provision for income taxes of Suiza
Packaging for the periods presented (in thousands):
<TABLE>
<CAPTION>
PREDECESSOR
-------------------------------------------------
SIX-MONTH FIVE-MONTH
YEAR ENDED PERIOD ENDED FOUR-MONTH PERIOD ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31, PERIOD ENDED DECEMBER 31, DECEMBER 31,
1996 1997 JULY 31, 1997 1997 1998
--------------- --------------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Current taxes payable
Federal...................... $ -- $ -- $ -- $ (869) $ (2,394)
State........................ 280 218 190 304 1,114
Deferred income taxes.......... 793 10,766
----- ----- ----- ----- ------------
Total.................... $ 280 $ 218 $ 190 $ 228 $ 9,486
----- ----- ----- ----- ------------
----- ----- ----- ----- ------------
</TABLE>
For the periods ended prior to July 31, 1997, the Company had elected to be
taxed as a Subchapter S Corporation whereby all of its income or losses passed
through to its stockholders. Accordingly, no provision for federal income taxes
is included in the combined financial statements for these periods. The
following is a reconciliation of income taxes reported in the combined
statements of operations (in thousands):
<TABLE>
<CAPTION>
PREDECESSOR
-------------------------------------------------------
SIX-MONTH FIVE-MONTH
YEAR ENDED PERIOD ENDED FOUR-MONTH PERIOD ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31, PERIOD ENDED DECEMBER 31, DECEMBER 31,
1996 1997 JULY 31, 1997 1997 1998
--------------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Tax expense at statutory
rates................... $ -- $ -- $ -- $ (89) $ 6,885
State income taxes, net of
federal tax effect...... 280 218 190 275 1,740
Tax effect of non-
deductible goodwill..... 653
Other..................... 42 208
----- ----- ----- ----- ------
Total............... $ 280 $ 218 $ 190 $ 228 $ 9,486
----- ----- ----- ----- ------
----- ----- ----- ----- ------
</TABLE>
F-52
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
9. INCOME TAXES (CONTINUED)
The tax effects of temporary differences giving rise to deferred income tax
assets and liabilities were:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1998
--------- ----------
<S> <C> <C>
(IN THOUSANDS)
Deferred income tax assets:
Net operating loss carry forwards..................................... $ 1,996 $ 18,022
Vacation reserves..................................................... 46 1,031
Self-insurance reserves............................................... 3,890
Plan rationalization reserve.......................................... 1,736
Postretirement benefit reserves....................................... 3,373
Premium on senior secured notes....................................... 3,748
Deferred financing costs.............................................. 1,826
Allowance............................................................. 48 1,034
Other................................................................. 97 2,426
--------- ----------
2,187 37,086
Deferred income tax liabilities- depreciation and amortization.......... (2,980) (17,852)
--------- ----------
Net deferred income tax assets (liabilities)...................... $ (793) $ 19,234
--------- ----------
--------- ----------
</TABLE>
These net deferred income tax assets (liabilities) are classified in the
combined balance sheets as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Current assets........................................................... $ 2,187 $ 2,395
Noncurrent assets........................................................ 23,937
Noncurrent liabilities................................................... (2,980) (7,098)
--------- ---------
Total.............................................................. $ (793) $ 19,234
--------- ---------
--------- ---------
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers
projected future taxable income, the scheduled reversal of deferred tax
liabilities and tax-planning strategies in making this assessment. Based upon
this assessment, management believes it is more likely than not the Company will
realize the benefits of these temporary differences at December 31, 1998.
At December 31, 1998, the Company has operating loss carryforwards for
federal income tax purposes of approximately $50 million, which are available to
offset future federal taxable income. The carryforward periods extend from 2007
through 2010. In addition, the Company has alternative minimum tax credit
carryforwards of approximately $132,000 that are available to reduce future
federal regular income taxes over an indefinite period, and research and
development credits of approximately $480,000 available to reduce future federal
income taxes through 2010.
F-53
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
10. STOCKHOLDERS' EQUITY
CAPITAL SHARES--Authorized capital shares of the Company include 1,000,000
shares of preferred stock with a par value and stated value of $.001 and $1,000
per share, respectively, and 5,000,000 shares of common stock with a par value
of $.001 per share. The rights and preferences of preferred stock are
established by the Company's board of directors upon issuance.
The shares of preferred stock outstanding include 22,671 and 72,594 shares
at December 31, 1997 and 1998, respectively. These preferred shares have a
cumulative dividend rate of 15% of their stated and have a liquidation
preference equal to $1,000 per shares plus accumulated unpaid dividends.
WARRANTS--In conjunction with the acquisition of the Plastics Management
Group on July 31, 1997, 91,880 warrants were sold for $383,000, which
approximated their fair value, to former stockholders of Plastics Management
Group, giving such holders the right to purchase equity interests in the Company
equal to 17.5% of the outstanding common stock at that date for $10 per share.
These warrants are exercisable, in whole or in part, at various dates through
July 31, 2007.
STOCK OPTIONS--Pursuant to the stockholders' agreement, Suiza Packaging was
authorized to grant stock options to key employees. During 1998, the Company
adopted the Franklin Plastics, Inc. 1998 Stock Option Plan, which reserved
187,089 shares of common stock for grants under the plan, and granted stock
options to certain key employees at exercise prices that approximated the fair
market value of such shares at the date of grant. Stock options granted under
this plan are exercisable over a three-year period from date of grant and may
become exercisable upon the termination of an individual's employment following
a change in control. At December 31, 1998, options for 89,836 shares had been
granted and were outstanding at an exercise price of $10 per share, none of
which were exercisable at that date. In addition, on February 1, 1999, the
Company granted stock options for 28,358 shares of common stock to certain key
employees at an exercise price of $30 per share, which approximated the fair
market value of such shares at that date.
11. EMPLOYEE BENEFITS
Suiza Packaging sponsors both defined benefit and defined contribution
retirement plans on behalf of certain of its subsidiaries, and contributes to
various multiemployer union pension plans. The following is a summary of amounts
expensed under these plans (in thousands):
<TABLE>
<CAPTION>
PREDECESSOR
-------------------------------------------------
SIX-MONTH FOUR-MONTH FIVE-MONTH
YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31, JULY 31, DECEMBER 31, DECEMBER 31,
--------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Defined benefit plans................... $ -- $ -- $ -- $ -- $ 194
Defined contributions plans............. 141 118 147 935
Multiemployer plans..................... -- -- -- 573
----- ----- ----- ----- ------
$ 141 $ 118 $ -- $ 147 $ 1,702
----- ----- ----- ----- ------
----- ----- ----- ----- ------
</TABLE>
F-54
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
11. EMPLOYEE BENEFITS (CONTINUED)
DEFINED BENEFIT PLANS--As of May 29, 1998, the Company succeeded to a
defined benefit pension plan for substantially all salaried employees of PCI
hired prior to August 1, 1997. Plan benefits are based on all years of
continuous service and the employee's compensation during the highest five
continuous years of the last ten years of employment, minus a profit sharing
annuity. The profit sharing annuity is based on the amount of profit sharing
contributions received for 1988 through 1992.
Any employee who terminated employment prior to August 31, 1993, is governed
by the terms of the plan in effect at the time the termination occurred. In
addition, the Company maintains a benefit equalization plan for salaried
employees hired prior to August 1, 1997, whose compensation level exceeds the
limits within the defined benefit pension plan.
The Company also succeeded to a noncontributory defined benefit pension plan
for substantially all hourly employees of PCI hired prior to August 1, 1997, who
have attained 21 years of age. Plan benefits vary by location and by union
contract, but are based primarily on years of service and the employee's highest
wage classification for 12 consecutive months in the five-year period prior to
retirement. Normal retirement is at age 65, with at least a five-year period of
continuous service. However, employees may retire as early as age 55 and receive
reduced benefits.
Subject to the limitation on deductibility imposed by federal income tax
laws, the Company's policy has been to contribute funds to the plans annually in
amounts required to maintain sufficient plan assets to provide for accrued
benefits. Plan assets are held in a master trust and are composed primarily of
common stock, corporate bonds and U.S. government and government agency
obligations.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--The Company provides certain
health care and life insurance benefits for retired PCI employees. Certain of
PCI's hourly and salaried employees became eligible for these benefits when they
became eligible for an immediate pension under a formal company pension plan. In
1993, the plan was amended to eliminate health care benefits for employees hired
after January 1, 1993. The Company's policy is to fund the cost of medical
benefits as claims are incurred.
At May 29, 1998, as part of the purchase accounting adjustments in
connection with the PCI acquisition, the accrued pension liability and accrued
postretirement benefit liability were adjusted to fair value, and all previously
unrecognized gains and losses were recognized as part of the purchase
allocation.
F-55
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
11. EMPLOYEE BENEFITS (CONTINUED)
The following table sets forth the funded status of the these plans and the
amounts recognized in the balance sheets at December 31, 1998 (in thousands):
<TABLE>
<CAPTION>
PENSION OTHER POST-RETIREMENT
BENEFITS BENEFITS
--------------- ---------------------
<S> <C> <C>
Change in benefit obligation:
Benefit obligations at acquisition date................................. $ 71,500 $ 5,900
Service cost............................................................ 865 49
Interest cost........................................................... 2,741 215
Actuarial loss.......................................................... 2,329 (63)
Curtailment............................................................. (142)
Benefit Paid............................................................ (2,423) (184)
------- -------
Benefit obligations at end of year........................................ 74,870 5,917
Change in plan assets:
Fair value of plan assets at acquisition date........................... 67,907
Actual return on plan assets............................................ 1,989
Employer contribution................................................... 1,165 184
Participant contributions............................................... 104
Benefits paid........................................................... (2,423) (288)
------- -------
Fair value of plan assets at end of year.................................. 68,638 --
------- -------
Funded status............................................................. (6,232) (5,917)
Unrecognized actuarial gains.............................................. 3,752 (63)
------- -------
Accrued benefits liability.......................................... $ (2,480) $ (5,980)
------- -------
------- -------
Weighted average assumptions as of December 31, 1998
Discount rate........................................................... 6.5% 6.5%
Expected asset return................................................... 9.0
Rate of compensation increase........................................... 5.0
</TABLE>
The components of net periodic benefit cost and net periodic postretirement
benefit cost for the period from the date of acquisition (May 29, 1998) through
December 31, 1998, were as follows (in thousands):
<TABLE>
<CAPTION>
OTHER
PENSION POST-RETIREMENT
BENEFITS BENEFITS
--------------- -----------------
<S> <C> <C>
Service costs............................................... $ 865 $ 49
Interest cost............................................... 2,741 215
Expected return on plan assets.............................. (3,412) --
------- -----
Net period benefit cost............................... $ 194 $ 264
------- -----
------- -----
</TABLE>
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in
assumed health care cost trend rates would change
F-56
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
11. EMPLOYEE BENEFITS (CONTINUED)
the amount of the service and interest components and the postretirement benefit
obligation by $37,000 and $535,000, respectively.
DEFINED CONTRIBUTION PLAN--Employees of certain of the Company's
subsidiaries are eligible to participate in a 401(k) employees savings plan
sponsored by Suiza and, prior to 1998, similar plans sponsored by individual
subsidiaries. Employees who have completed one or more years of service and have
met other requirements pursuant to the plans are eligible to participate in the
plan. The employees participating in the plan can generally make contributions
up to 15% of their annual compensation, and the Company can elect to match such
employee contributions up to a maximum of 25% of the employee's contribution.
The matching contributions vest 100% after five years.
The Company succeeded to a defined contribution plan that covers
substantially all PCI's hourly employees who meet certain eligibility
requirements. Provisions regarding employee and employer contributions and the
benefits provided under the plan vary between PCI's manufacturing facilities.
The Company also succeeded to a contributory defined contribution 401(k)
savings plan that covers substantially all PCI's nonorganized salaried
employees. Employees may contribute up to 12% and 8% of compensation on a pretax
and after-tax basis, respectively. However, the total employee contribution rate
may not exceed 15% of compensation. The Company matches up to 3% of employees'
pretax contributions. Employees vest in the Company's contributions at 25% per
year, becoming fully vested after four years of employment. Employees may make
withdrawals from the plan prior to attaining age 59 1/2, subject to certain
penalties.
MULTIEMPLOYER PLANS--The Company's PCI subsidiary contributes to various
multiemployer union pension plans pursuant to its labor agreements. Union
benefit plan expense during 1998 was $0.6 million for the period subsequent to
the acquisition date.
12. MAJOR CUSTOMERS
Sales to three customers comprised the following percentages of net sales
for each of the two years ended December 31, 1998:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Customer A...................................................................... -- 12.0%
Customer B...................................................................... 15.4% 4.6
Customer C...................................................................... 14.0 4.6
</TABLE>
For the six months ended March 31, 1997, two customers represented
approximately 22% and 13% of the combined sales. There were nine companies that
had customers whose sales were greater than 10% of their respective sales for
the year ended September 30, 1996. Concentration of credit risk with respect to
accounts receivable is limited due to the large number of customers and billing
and payment patterns.
In addition to the above major sales to third-party customers, the Company
sells finished products and raw materials to other Suiza subsidiaries. Sales to
these affiliates approximated 4.7% and 11.2% of the Company's net sales for the
years ended December 31, 1997 and 1998, respectively.
F-57
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FOR 1996, 1997 AND 1998
13. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
PREDECESSOR
--------------------------------------------- FIVE-MONTH
YEAR ENDED SIX-MONTH FOUR-MONTH PERIOD ENDED YEAR ENDED
SEPTEMBER 30, PERIOD ENDED PERIOD ENDED DECEMBER 31, DECEMBER 31,
1996 MARCH 31, 1997 JULY 31, 1997 1997 1998
------------- --------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Cash paid for interest....... $ 1,085 $ 933 $ 618 $ 1,807 $ 22,464
Cash paid for taxes.......... 118 301 4,314
Preferred dividends declared,
but not paid............... 7,906
Issuance of preferred stock
(non-cash)................. 34,561
</TABLE>
14. COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are parties, in the ordinary course of
business, to certain claims and litigation. In management's opinion, the
settlement of such matters is not expected to have a material impact on the
combined financial statements.
In addition, the Company is a party to employment agreements with certain
officers which provided for minimum compensation levels and incentive bonuses
along with provisions for termination of benefits in certain circumstances.
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
Pursuant to SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments," the Company is required to disclose an estimate of the fair value
of financial instruments as of December 31, 1998 and 1997. Differences between
the historical carrying values and estimated fair values of financial
instruments can occur for many reasons, including taxes, commissions, prepayment
penalties, make-whole provisions and other restrictions, as well as the inherent
limitations in any estimation techniques.
Due to their near-term maturities, the carrying amounts of accounts
receivable, temporary investments, accounts payable and the revolving credit
facility loans approximate their fair values. The Company's borrowings under the
senior notes payable to Suiza are at variable interest rates, and their fair
values approximate their carrying values. The Company's subordinated notes
payable to Suiza and the senior secured notes of PCI bear interest at fixed
interest rates. The subordinated notes payable to Suiza have a carrying value of
$118.7 million and $34.0 million at December 31, 1998 and 1997, respectively,
and the senior secured notes of PCI have a carrying value of $131.1 million at
December 31, 1998. The following table summarizes the estimated fair values of
these fixed rate notes:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1998
--------- ----------
<S> <C> <C>
(IN THOUSANDS)
Subordinated notes payable to Suiza.................................... $ 34,595 $ 124,688
Senior Secured Notes of PCI............................................ -- 127,470
</TABLE>
16. SUBSEQUENT EVENT
On July 2, 1999, Suiza was acquired by Reid Plastics, Inc. Simultaneously,
through the formation of Consolidated Container Company LLC ("CCC"). Reid
Plastics, Inc. was merged into CCC. CCC is a wholly owned subsidiary of
Consolidated Container Holdings ("Holdings"). As a result of the merger, Suiza,
through a subsidiary, received 49% of the member units of Holdings.
F-58
<PAGE>
SUIZA PACKAGING
CONDENSED COMBINED STATEMENTS OF OPERATIONS
SIX-MONTH PERIOD ENDED JUNE 30, 1998 AND 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX-MONTH
PERIOD ENDED
JUNE 30,
----------------------
1998 1999
---------- ----------
(UNAUDITED)
<S> <C> <C>
NET SALES................................................................................. $ 114,627 $ 263,539
COST OF SALES............................................................................. 89,430 97,382
---------- ----------
Gross profit............................................................................ 25,197 64,805
OPERATING EXPENSES:
Selling, general and administrative..................................................... 11,250 26,859
Amortization of intangibles............................................................. 1,730 3,413
---------- ----------
Total operating expenses.............................................................. 12,980 30,272
---------- ----------
INCOME FROM OPERATIONS.................................................................... 12,217 34,533
OTHER INCOME (EXPENSE):
Interest expense, net................................................................... (8,414) (18,632)
Other income............................................................................ 289
---------- ----------
Total other income (expense).......................................................... (8,414) (18,343)
---------- ----------
INCOME BEFORE INCOME TAXES................................................................ 3,803 16,190
INCOME TAX EXPENSE........................................................................ 1,533 7,678
---------- ----------
NET INCOME................................................................................ $ 2,270 $ 8,512
---------- ----------
---------- ----------
</TABLE>
See notes to condensed combined financial statements
F-59
<PAGE>
SUIZA PACKAGING
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
SIX-MONTH PERIOD ENDED JUNE 30, 1998 AND 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX-MONTH
PERIOD ENDED
JUNE 30,
----------------------
1998 1999
---------- ----------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................................. $ 2,270 $ 8,512
Adjustments to net income:
Depreciation and amortization......................................................... 4,888 14,752
Changes in assets and liabilities, net of acquisitions:
Receivables......................................................................... (4,036) (16,380)
Inventories......................................................................... 2,035 (3,038)
Prepaid expenses and other assets................................................... (440) 1,556
Accounts payable and accrued expenses............................................... (2,658) 15,788
---------- ----------
Net cash provided by (used in) operating activities............................... 2,059 21,190
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of temporary investments, net.................................... 5,157 603
Additions to property, plant and equipment.............................................. (17,774) (16,047)
Cash paid for acquisitions, net of cash acquired........................................ (46,965) --
Proceeds from disposal of assets........................................................ 654
---------- ----------
Net cash used in investing activities............................................. (59,582) (14,790)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from parent company...................................................... (49,425) (2,622)
Issuance of common and preferred stock.................................................. 10,269
Dividends paid.......................................................................... (1,417)
Repayment of long-term debt............................................................. (69) (854)
---------- ----------
Net cash provided by financing activities......................................... 58,208 (3,476)
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......................................... 685 2,924
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................................ 265 1,681
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................................................. $ 950 $ 4,605
---------- ----------
---------- ----------
</TABLE>
See notes to condensed combined financial statements.
F-60
<PAGE>
SUIZA PACKAGING
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
JUNE 30, 1998
1. CONDENSED COMBINED FINANCIAL STATEMENTS
The condensed combined financial statements contained in this report are
unaudited. In our opinion, we have made all necessary adjustments (which include
only normal recurring adjustments) in order to present fairly, in all material
respects, our results of operations and cash flows for the six-month periods
ended June 30, 1999 and 1998. Certain information and footnote disclosures
normally included in the annual financial statements have been omitted. Our
results of operations for the period ended June 30, 1999, may not be indicative
of our operating results for the full year. The financial statements should be
read in conjunction with our 1998 combined financial statements.
2. SUBSEQUENT EVENT
On July 2, 1999, Suiza was acquired by Reid Plastics, Inc. Simultaneously,
through the formation of Consolidated Container Company LLC ("CCC"). Reid
Plastics, Inc. was merged into CCC. CCC is a wholly owned subsidiary of
Consolidated Container Holdings ("Holdings"). As a result of the merger, Suiza,
through a subsidiary, received 49% of the member units of Holdings.
F-61
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Plastic Containers, Inc.:
We have audited the accompanying consolidated balance sheet of Plastic
Containers, Inc. and subsidiaries as of May 29, 1998, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the period from January 1, 1998 through May 29, 1998. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit. The consolidated financial statements of the
Company for the years ended December 31, 1996 and 1997 were audited by other
auditors whose report, dated February 6, 1998, expressed an unqualified opinion
on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such 1998 consolidated financial statements present fairly, in
all material respects, the financial position of Plastic Containers, Inc. and
subsidiaries as of May 29, 1998, and the results of their operations and their
cash flows for the period from January 1, 1998 through May 29, 1998, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Omaha, Nebraska
May 21, 1999
F-62
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Plastic Containers, Inc.:
We have audited the accompanying consolidated balance sheet of Plastic
Containers, Inc. and subsidiaries as of December 31, 1997, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the years in the two-year period ended December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly in all material respects, the financial position of Plastic Containers,
Inc. and subsidiaries as of December 31, 1997 and the results of their
operations and their cash flows for each of the years in the two-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
KPMG LLP
Omaha, Nebraska
February 6, 1998
F-63
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, MAY 29,
1997 1998
------------ ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................. $ 2,479 $ 2,297
Investment securities................................................................. 20,385 22,166
Accounts receivable:
Trade................................................................................. 21,483 22,871
Other................................................................................. 205 13
------------ ---------
21,688 22,884
Less allowance for doubtful accounts and accrued rebates.............................. 1,430 1,917
------------ ---------
Net accounts receivable............................................................. 20,258 20,967
Inventories........................................................................... 19,955 18,585
Deferred income taxes................................................................. 2,260 2,260
Prepaid expenses...................................................................... 590 733
------------ ---------
Total current assets................................................................ 65,927 67,008
------------ ---------
Property, plant and equipment:
Land, building and building improvements.............................................. 22,828 22,828
Manufacturing machinery and equipment................................................. 142,687 142,634
Construction in progress.............................................................. 6,857 12,563
------------ ---------
172,372 178,025
Less accumulated depreciation and amortization........................................ 72,281 77,276
------------ ---------
Net property, plant and equipment................................................... 100,091 100,749
------------ ---------
Goodwill and other intangible assets.................................................... 25,591 24,819
Other assets............................................................................ 13,303 14,710
------------ ---------
$ 204,912 $ 207,286
------------ ---------
------------ ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable -- trade............................................................. $ 18,285 $ 20,346
Current portion of long-term obligations.............................................. 996 996
Other current liabilities............................................................. 16,741 22,306
------------ ---------
Total current liabilities........................................................... 36,022 43,648
Long-term obligations, excluding current portion........................................ 128,007 127,663
Other liabilities....................................................................... 20,764 19,479
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Common stock, $1 par value. Authorized 1,000 shares;
100 shares issued and outstanding
Additional paid-in capital.............................................................. 79,833 80,758
Accumulated deficit..................................................................... (27,529) (25,852)
------------ ---------
52,304 54,906
Less note receivables from stockholders................................................. 32,185 38,410
------------ ---------
Total stockholders' equity........................................................ 20,119 16,496
------------ ---------
$ 204,912 $ 207,286
------------ ---------
------------ ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-64
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
YEARS ENDED JANUARY 1,
DECEMBER 31, 1998
---------------------- THROUGH
1996 1997 MAY 29, 1998
---------- ---------- --------------
<S> <C> <C> <C>
Net sales................................................................ $ 267,793 $ 279,565 $ 108,924
Cost of goods sold....................................................... 224,789 234,210 92,159
---------- ---------- --------------
Gross profit........................................................... 43,004 45,355 16,765
Selling, general and administrative expenses............................. 28,829 27,772 11,617
Plant rationalization and realignment.................................... 6,500 -- --
---------- ---------- --------------
Operating income......................................................... 7,675 17,583 5,148
---------- ---------- --------------
Other income (expenses):
Interest income........................................................ 102 1,451 604
Interest expense....................................................... (12,886) (13,535) (5,643)
Loss on disposal of assets............................................. (366) (555) (22)
---------- ---------- --------------
(13,150) (12,639) (5,061)
---------- ---------- --------------
Income (loss) before income taxes and extraordinary item................. (5,475) 4,944 87
Income tax expense (benefit)............................................. (1,876) (961) (1,590)
---------- ---------- --------------
Income (loss) before extraordinary item.................................. (3,599) 5,905 1,677
Extraordinary item--loss on early extinguishment of debt................. (7,305) -- --
---------- ---------- --------------
Net income (loss)........................................................ $ (10,904) $ 5,905 $ 1,677
---------- ---------- --------------
---------- ---------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-65
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
AND THE PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PLASTIC ADDITIONAL NOTE TOTAL
CONTAINERS, INC. PAID-IN RETAINED EARNINGS RECEIVABLE STOCKHOLDERS'
COMMON STOCK CAPITAL (DEFICIT) FROM STOCKHOLDER EQUITY
----------------- -------------- ----------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1995......... $ -- $ 60,000 $ (22,530) $ -- $ 37,470
Push-down accounting adjustment....... -- 17,648 -- -- 17,648
Loan to stockholder................... -- -- -- (30,000) (30,000)
Accrued interest on note receivable
from stockholder.................... -- 74 -- (74) --
Net loss.............................. -- -- (10,904) -- (10,904)
----- ------- -------- -------- -------------
Balances at December 31, 1996......... -- 77,722 (33,434) (30,074) 14,214
Accrued interest on note receivable
from stockholder.................... -- 2,111 -- (2,111) --
Net income............................ -- -- 5,905 -- 5,905
----- ------- -------- -------- -------------
Balances at December 31, 1997......... -- 79,833 (27,529) (32,185) 20,119
Loan to stockholder................... -- -- -- (5,300) (5,300)
Accrued interest on note receivable
from stockholder.................... -- 925 -- (925) --
Net income............................ -- -- 1,677 -- 1,677
----- ------- -------- -------- -------------
Balances at May 29, 1998.............. $ -- $ 80,758 $ (25,852) $ (38,410) $ 16,496
----- ------- -------- -------- -------------
----- ------- -------- -------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-66
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
1998
YEARS ENDED THROUGH
DECEMBER 31, MAY 29,
---------------------- --------------
1996 1997 1998
---------- ---------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................................................... $ (10,904) $ 5,905 $ 1,677
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization........................................ 21,309 12,946 5,589
Loss on disposal of assets........................................... 366 555 22
Deferred income taxes................................................ (1,896) (1,000) (1,600)
Extraordinary loss on debt extinguishment............................ 7,305 -- --
Changes in assets and liabilities:
Amounts receivable, net............................................ 5,366 7,444 (709)
Inventories........................................................ 585 (553) 1,370
Prepaid expenses................................................... 258 (44) (143)
Accounts payable................................................... (3,725) (1,522) 2,061
Other current liabilities.......................................... 3,581 (2,263) 5,565
Other asset and liabilities........................................ 2,301 (126) 195
---------- ---------- --------------
Net cash provided by operating activities........................ 24,546 21,342 14,027
---------- ---------- --------------
Cash flows from investing activities:
Proceeds from maturity of investment securities........................ 75 25,834 20,767
Purchase of investment securities...................................... (1,000) (45,009) (22,548)
Proceeds from disposal of assets....................................... 41,654 565 3
Purchases of property, plant and equipment............................. (21,240) (11,085) (6,787)
Loan to stockholder.................................................... (30,000) -- (5,300)
---------- ---------- --------------
Net cash used in investing activities............................ (10,511) (29,695) (13,865)
---------- ---------- --------------
Cash flows from financing activities:
Net repayments on notes payable to bank................................ (17,018) -- --
Proceeds from long-term obligations.................................... 130,100 -- --
Repayment of long-term obligations..................................... (105,471) (979) (344)
Premium on repurchase of bonds......................................... (5,382) -- --
Financing fees paid.................................................... (5,514) (367) --
---------- ---------- --------------
Net cash used in financing activities............................ (3,285) (1,346) (344)
---------- ---------- --------------
Net increase (decrease) in cash and cash equivalents..................... 10,750 (9,699) (182)
Cash and cash equivalents -- beginning................................... 1,428 12,178 2,479
---------- ---------- --------------
Cash and cash equivalents -- ending...................................... $ 12,178 $ 2,479 $ 2,297
---------- ---------- --------------
---------- ---------- --------------
Supplemental disclosures of cash flow information:
Interest paid............................................................ $ 15,240 $ 12,541 $ 171
---------- ---------- --------------
---------- ---------- --------------
Income taxes paid........................................................ $ 20 $ 523 $ 42
---------- ---------- --------------
---------- ---------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-67
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION -- The accompanying financial
statements include Plastic Containers, Inc. and its wholly-owned subsidiaries
("PCI" or "the Company"), Continental Plastic Containers, Inc. ("CPC") and
Continental Caribbean Containers, Inc. ("Caribbean"). All significant
intercompany transactions have been eliminated in consolidation.
PCI develops, manufactures and markets a wide range of custom extrusion
blow-molded plastic containers for food and juice, automotive products and motor
oil, household chemicals, industrial and agricultural chemicals and hair care
products. Based on the nature of the product, the production processes, types of
customers, and methods used to distribute products, the Company operates in one
reportable segment.
PCI is a subsidiary of Continental Can Company, Inc. ("Continental Can"). On
May 29, 1998, Continental Can was acquired by Suiza Foods Corporation ("Suiza")
in a transaction accounted for as a purchase. The consolidated financial
statements of PCI as of and for the periods ended before May 29, 1998 were
prepared using PCI's historical basis of accounting.
CPC and Caribbean constitute all of PCI's direct and indirect subsidiaries
and have fully and unconditionally guaranteed the Company's senior secured notes
on a joint and several basis. PCI is a holding company with no assets,
operations or cash flow separate from its investments in CPC and Caribbean.
CASH EQUIVALENTS -- Marketable securities that are highly liquid and have
maturities of three months or less at date of purchase are classified as cash
equivalents.
INVESTMENT SECURITIES -- Investment securities at December 31, 1997 and May
29, 1998 consist of available-for-sale U.S. government obligations, certificates
of deposit, Eurodollar deposits, and highly rated commercial paper, all of which
are due within one year. The fair value of investment securities approximates
their amortized cost.
INVENTORIES -- CPC's manufacturing inventories are stated at cost using the
last-in, first-out (LIFO) method, which is not in excess of market. All repair
parts, supplies inventories and Caribbean's inventories are stated at the lower
of cost, applied on the first-in, first-out (FIFO) method, or market.
PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment are stated at
cost. Depreciation is computed principally on a straight-line basis over
estimated useful lives of the assets, which range from three to thirty-five
years. Plant and equipment held under capital leases and leasehold improvements
are amortized straight-line over the shorter of the lease term or estimated
useful life of the asset.
Effective January 1, 1997, the Company revised its estimates of the useful
lives of certain machinery and equipment. These changes were made to better
reflect the estimated periods during which these assets remain in service. For
the year ended December 31, 1997, the change had the effect of decreasing
depreciation expense by $1,696, and after adjusting for an assumed tax rate of
38%, increasing net income by $1,052.
F-68
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INSURANCE -- PCI purchases commercial insurance policies, but remains
self-insured in certain states for the purposes of providing workers'
compensation, general liability and property and casualty insurance coverages up
to varying deductible amounts. Self-insurance liabilities are based on claims
filed and estimates for claims incurred but not reported and are included in
other liabilities on the consolidated balance sheets. Costs charged to
operations for self-insurance for the years ended December 31, 1996 and 1997 and
the period from January 1, 1998 through May 29, 1998, were $2,629, $1,784 and
$214, respectively.
RESEARCH, DEVELOPMENT AND ENGINEERING -- Expenditures for research,
development and engineering are expensed as incurred. Costs charged to
operations for research, development and engineering for the years ended
December 31, 1996 and 1997 and for the period from January 1, 1998 through May
29, 1998, were $8,318, $8,825 and $3,876, respectively.
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS -- Goodwill and other
identifiable intangible assets are stated on the basis of cost. Goodwill is
being amortized on a straight-line basis over 40 years. Customer contracts are
being amortized on a straight-line basis over 10 years and finance costs are
being amortized using the effective interest method over periods ranging from 6
to 10 years.
IMPAIRMENT OF LONG-LIVED ASSETS, GOODWILL AND CERTAIN IDENTIFIABLE
INTANGIBLE ASSETS -- Long-lived assets, including goodwill and certain
identifiable intangible assets, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.
INCOME TAXES -- Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Beginning in 1997 the Company filed a consolidated Federal income tax return
with Continental Can. Income taxes have been provided as if the Company files a
separate return.
USE OF ESTIMATES -- The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Although these
estimates are based on management's knowledge of current events and actions it
may undertake in the future, actual results could differ from the estimates.
F-69
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS -- Certain amounts have been reclassified to conform to
the current year's presentation.
2. INVENTORIES
Major classes of inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MAY 29,
1997 1998
------------ ---------
<S> <C> <C>
Raw materials........................................................ $ 9,566 $ 8,056
Finished goods....................................................... 11,835 12,020
------------ ---------
21,401 20,076
LIFO reserve......................................................... (3,578) (3,578)
------------ ---------
17,823 16,498
Continental Caribbean Containers, Inc................................ 554 467
Repair parts and supplies............................................ 1,578 1,620
------------ ---------
Total........................................................ $ 19,955 $ 18,585
------------ ---------
------------ ---------
</TABLE>
3. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MAY 29,
1997 1998
------------ ---------
<S> <C> <C>
Goodwill............................................................. $ 17,648 $ 17,648
Customer contracts................................................... 7,630 7,630
Financing and acquisition costs...................................... 6,228 6,228
------------ ---------
31,506 31,506
Less accumulated amortization........................................ 5,915 6,687
------------ ---------
Total........................................................ $ 25,591 $ 24,819
------------ ---------
------------ ---------
</TABLE>
F-70
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
4. OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MAY 29,
1997 1998
------------ ---------
<S> <C> <C>
Deferred income taxes................................................ $ 7,614 $ 9,214
Prefunded pension asset.............................................. 5,028 4,881
Other................................................................ 661 615
------------ ---------
Total........................................................ $ 13,303 $ 14,710
------------ ---------
------------ ---------
</TABLE>
5. NOTES PAYABLE TO BANK
PCI has a $50,000 revolving credit facility with a commercial bank with
interest on individual borrowings based on the bank's prime rate or LIBOR, at
the Company's option. Borrowings are secured by accounts receivable and
inventories. At May 29, 1998, there were no borrowings outstanding under this
facility. The Company is required to pay an annual commitment fee of 1/4% on the
unused facility up to $25,000 and 1/2% on the unused amount in excess of
$25,000. Commitment fees for the years ended December 31, 1996 and 1997 and for
the period January 1, 1998 through May 29, 1998 were $104, $167 and $70,
respectively.
The facility contains certain restrictive covenants, including the
maintenance of minimum levels of net worth, fixed charge coverage and interest
coverage, limitations on capital expenditures and additional indebtedness, and
restrictions on the payment of dividends. At May 29, 1998, the Company was in
compliance with these covenants.
The facility also provides for the issuance of letters of credit by the bank
on the Company's behalf. At May 29, 1998, letters of credit amounting to $4,610
had been issued to guarantee obligations carried on the consolidated balance
sheet.
6. OTHER CURRENT LIABILITIES
Other current liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MAY 29,
1997 1998
------------ ---------
<S> <C> <C>
Accrual for open credits............................................. $ 1,658 $ 1,277
Employee compensation and benefits................................... 6,994 6,831
Accrued real estate and personal property taxes...................... 1,493 1,545
Plant rationalization reserve........................................ 1,290 1,037
Accrued interest..................................................... 587 5,821
Other................................................................ 4,719 5,795
------------ ---------
Total........................................................ $ 16,741 $ 22,306
------------ ---------
------------ ---------
</TABLE>
F-71
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
7. LONG-TERM OBLIGATIONS
Long-term obligations consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MAY 29,
1997 1998
------------ ----------
<S> <C> <C>
Senior Secured Notes, due 2006, stated interest at 10%, effective
interest at 8.574%, payable semiannually on June 15 and December
15............................................................... $ 125,000 $ 125,000
Capital lease obligations.......................................... 4,003 3,659
------------ ----------
Total long-term obligations...................................... 129,003 128,659
Less current portion............................................... 996 996
------------ ----------
Long-term obligations, excluding current portion............... $ 128,007 $ 127,663
------------ ----------
------------ ----------
</TABLE>
The Senior Secured Notes are redeemable, in whole or in part, at the option
of PCI, beginning December 16, 2001, at an initial price of 105% of par value,
declining ratably each year to par value on December 15, 2004. In addition, the
indenture requires PCI to offer to redeem the notes at a redemption price of
101% of par value in the event of a change in control, and at 100% of par value
upon the occurrence of certain other events.
The Senior Secured Notes are collateralized by all the issued and
outstanding stock of CPC and Caribbean and substantially all of the assets and
properties owned by PCI other than inventories, accounts receivable and certain
equipment securing capital lease obligations. The indenture also places certain
restrictions on payment of dividends, additional liens, disposition of the
proceeds from asset sales, sale-leaseback transactions and additional
borrowings. At May 29, 1998, PCI was in compliance with these restrictions.
The Company is obligated under capital leases for a manufacturing facility
and certain machinery and equipment. The manufacturing facility has a cost of
$1,152, and accumulated amortization of $782 and $833 at December 31, 1997 and
May 29, 1998, respectively. The facility lease agreement expires on December 31,
2000 and has an interest rate of 9.364%.
The equipment lease arrangement commenced on April 1, 1996 in connection
with the issuance of tax-exempt industrial development revenue bonds bearing
interest at 5.8%. Principal and interest are payable monthly through April 2002.
The equipment has a cost of $5,100, and has accumulated
F-72
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
7. LONG-TERM OBLIGATIONS (CONTINUED)
depreciation of $665 and $830 at December 31, 1997 and May 29, 1998,
respectively. Future minimum lease payments under the capital leases are as
follows:
<TABLE>
<S> <C>
Seven Months Ending December 31, 1998............................... $ 790
Year Ending December 31, 1999....................................... 1,172
Year Ending December 31, 2000....................................... 919
Year Ending December 31, 2001....................................... 871
Year Ending December 31, 2002....................................... 349
---------
Total future minimum lease payments............................... 4,101
Less portion representing interest.................................. 442
---------
Net minimum lease payments........................................ $ 3,659
---------
---------
</TABLE>
8. OPERATING LEASES
PCI rents certain property and equipment used in connection with its
operations under noncancellable operating leases. Rental expense under these
leases was $8,054, $13,773 and $5,733 for the years ended December 31, 1996 and
1997 and the period from January 1, 1998 through May 29, 1998, respectively. On
December 17, 1996, CPC completed a sale to General Electric Capital Corporation
and certain other financial institutions, and the leaseback to CPC, of certain
equipment located in five of its facilities. The proceeds to the Company from
the sale/leaseback were $40,566, which approximated the book value of the
equipment.
Substantially all of the operating leases require PCI to pay taxes,
maintenance, insurance and certain operating expenses applicable to the lease.
The Company plans to renew or replace many of these leases as they expire.
Future minimum lease payments under noncancellable operating leases are as
follows:
<TABLE>
<S> <C>
Seven Months Ending December 31, 1998.............................. $ 8,065
Year Ending December 31, 1999...................................... 13,346
Year Ending December 31, 2000...................................... 12,751
Year Ending December 31, 2001...................................... 12,228
Year Ending December 31, 2002...................................... 10,312
Year Ending December 31, 2003...................................... 8,731
Thereafter......................................................... 12,283
---------
Total future minimum lease payments........................ $ 77,716
---------
---------
</TABLE>
F-73
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
9. OTHER LIABILITIES
Other liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MAY 28,
1997 1998
------------ ---------
<S> <C> <C>
Insurance reserves................................................... $ 8,896 $ 8,345
Postretirement benefits accrued...................................... 6,346 6,820
Other................................................................ 5,522 4,314
------------ ---------
Total........................................................ $ 20,764 $ 19,479
------------ ---------
------------ ---------
</TABLE>
10. NOTE RECEIVABLE FROM STOCKHOLDER
On December 17, 1996, the Company loaned Continental Can $30,000. The
Company loaned Continental Can additional amounts of $5,300 on May 29, 1998. The
note matures June 15, 2007 and accrues interest, payable at maturity, at an
annual rate of 6.9%, compounded semiannually. The note receivable and accrued
interest thereon have been presented as a reduction of stockholders' equity.
Proceeds from the $30,000 loan were used by Continental Can to acquire an
additional 34 shares of the Company's common stock from another stockholder,
increasing their ownership in PCI at that time to 84%. The acquisition was
accounted for by Continental Can under the purchase method of accounting and
resulted in the "push down" of goodwill and additional paid-in capital of
$17,648 in the accompanying consolidated financial statements of PCI.
F-74
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
11. INCOME TAXES
Total income tax expense (benefit) for the years ended December 31, 1996 and
1997 and for the period from January 1, 1998 through May 29, 1998 consists of
the following:
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1, 1998
1996 1997 TO MAY 28, 1998
------------------------------- --------------------------------- -------------------------------
FEDERAL STATE TOTAL FEDERAL STATE TOTAL FEDERAL STATE TOTAL
--------- --------- --------- ----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current.................... $ -- $ 20 $ 20 $ -- $ 39 $ 39 $ -- $ 10 $ 10
Deferred................... (1,746) (150) (1,896) (900) (100) (1,000) (1,432) (168) $ (1,600)
--------- --------- --------- ----- --- --------- --------- --------- ---------
$ (1,746) $ (130) $ (1,876) $ (900) $ (61) $ (961) $ (1,432) $ (158) $ (1,590)
--------- --------- --------- ----- --- --------- --------- --------- ---------
--------- --------- --------- ----- --- --------- --------- --------- ---------
</TABLE>
The income tax expense (benefit) for the years ended December 31, 1996 and
1997 and the period from January 1, 1998 through May 29, 1998 differed from the
"expected" income tax expense (benefit) computed by applying the Federal income
tax rate to income (loss) before income taxes and extraordinary item as a result
of the following:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1998
THROUGH MAY 29,
1996 1997 1998
--------- --------- ---------------
<S> <C> <C> <C>
Computed "expected" income tax expenses (benefit)........................... $ (1,862) $ 1,681 $ 30
Additional expense (benefit) resulting from:
Change in valuation allowance allocated to continuing operations............ 243 (2,745) (1,573)
State and local income taxes, net of Federal income tax benefit............. (86) (40) 3
Tax effect of nondeductible goodwill........................................ -- -- 63
Other....................................................................... (171) 143 (113)
--------- --------- -------
Income tax expense (benefit).......................................... $ (1,876) $ (961) $ (1,590)
--------- --------- -------
--------- --------- -------
</TABLE>
F-75
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
11. INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
<TABLE>
<CAPTION>
DECEMBER 31, MAY 29,
1997 1998
------------ ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carry forwards.................................... $ 18,811 $ 19,064
Vacation and incentive pay reserves.................................. 934 1,178
Self-insurance reserves.............................................. 3,730 3,520
Plant rationalization reserve........................................ 758 529
Postretirement benefit reserves...................................... 2,659 2,591
Other................................................................ 3,005 2,919
------------ ---------
Total gross deferred tax assets.................................. 29,897 29,801
Less valuation allowance............................................. 5,049 3,476
------------ ---------
Net deferred tax assets.......................................... 24,848 26,325
Deferred tax liabilities:
Book over tax basis of principally fixed assets...................... 13,067 12,996
Prefunded pension.................................................... 1,907 1,855
------------ ---------
Total gross deferred tax liabilities............................. 14,974 14,851
------------ ---------
Net deferred tax assets.............................................. $ 9,874 $ 11,474
------------ ---------
------------ ---------
</TABLE>
Net deferred tax assets are classified in the accompanying consolidated
balance sheets as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MAY 29,
1997 1998
------------- ---------
<S> <C> <C>
Current -- deferred income taxes..................................... $ 2,260 $ 2,260
Long-term -- other assets............................................ 7,614 9,214
------ ---------
$ 9,874 $ 11,474
------ ---------
------ ---------
</TABLE>
The valuation allowance for deferred tax assets as of January 1, 1997 was
$7,794. The net change in the total valuation allowance for the year ended
December 31, 1997 and for the period from January 1, 1998 through May 29, 1998
was a decrease of $2,745 and $1,573 respectively. In assessing the realizability
of deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences
become deductible. Management considers projected future taxable income, the
scheduled reversal of deferred tax liabilities and tax-planning strategies in
making this assessment. Based upon this assessment, management believes it is
more likely than not the Company will realize the benefits of these deductible
differences at May 29, 1998.
F-76
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
11. INCOME TAXES (CONTINUED)
At May 29, 1998, PCI has operating loss carry forwards for Federal income
tax purposes of approximately $50,000, which are available to offset future
Federal taxable income. The carry forward periods extend from 2007 through 2010.
In addition, the Company has alternative minimum tax credit carry forwards of
approximately $132 which are available to reduce future Federal regular income
taxes over an indefinite period and research and experimentation credits of
approximately $480 available to reduce future Federal income taxes through 2010.
12. EMPLOYEE BENEFITS
PENSION PLANS -- PCI maintains a defined benefit pension plan for
substantially all salaried employees hired prior to August 1, 1997. Plan
benefits are based on all years of continuous service and the employee's
compensation during the highest five continuous years of the last ten years of
employment, minus a profit-sharing annuity. The profit-sharing annuity is based
on the amount of profit-sharing contributions received for 1988 through 1992.
Any employee who terminated employment prior to August 31, 1993 is governed by
the terms of the plan in effect at the time the termination occurred. In
addition, PCI maintains a benefit equalization plan for salaried employees hired
prior to August 1, 1997 whose compensation level exceeds the limits within the
defined benefit pension plan. The plan was frozen for future accruals as of
September 1, 1998.
PCI maintains a noncontributory defined benefit pension plan for
substantially all hourly workers hired prior to August 1, 1997 who have attained
21 years of age. Plan benefits are variable by location/ contract but are based
primarily on years of service and the employee's highest wage classification for
twelve consecutive months in the five years prior to retirement. Normal
retirement is at age 65, with at least five years of continuous service.
However, employees may retire as early as age 55 and receive reduced benefits.
Subject to the limitation on deductibility imposed by Federal income tax
laws, PCI's policy has been to contribute funds to the plans annually in amounts
required to maintain sufficient plan assets to provide for accrued benefits.
Plan assets are held in a master trust and are comprised primarily of common
stock, corporate bonds and U.S. Government and government agency obligations.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS -- PCI provides certain health
care and life insurance benefits for retired PCI employees. Certain of PCI's
hourly and salaried employees became eligible for these benefits when they
became eligible for an immediate pension under a formal company pension plan. In
1993, the plan was amended to eliminate health care benefits for employees hired
after January 1, 1993. PCI's policy is to fund the cost of medical benefits as
claims are incurred.
F-77
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
12. EMPLOYEE BENEFITS (CONTINUED)
The following table provides a reconciliation of the benefit obligation,
plan assets and funded status of the pension and postretirement benefit plans:
<TABLE>
<CAPTION>
OTHER POSTRETIREMENT
PENSION BENEFITS
------------------------- BENEFITS
PERIOD FROM --------------------------
JANUARY 1, PERIOD FROM
1998 JANUARY 1, 1998
THROUGH THROUGH
1997 MAY 29, 1998 1997 MAY 29, 1998
--------- -------------- --------- ---------------
<S> <C> <C> <C> <C>
Change in benefit obligations:
Benefit obligation at January 1.......................... $ 56,582 $ 61,174 $ 5,107 $ 5,259
Service cost............................................. 1,208 494 83 39
Interest cost............................................ 4,246 1,865 380 154
Amendment................................................ 207 -- -- --
Actuarial loss (gain).................................... 2,781 972 51 630
Benefit paid............................................. (3,850) (1,658) (362) (182)
--------- ------- --------- -------
Benefit obligation at end of period........................ 61,174 62,847 5,259 5,900
Change in plan assets:
Fair value of plan assets at January 1................... 58,899 62,787 -- --
Actual return on plan assets............................. 7,283 3,246 -- --
Employer contribution.................................... 455 -- 362 182
Participant contributions................................ -- -- 177 72
Benefits paid............................................ (3,850) (1,658) (539) (254)
--------- ------- --------- -------
Fair value of plan assets at end of period................. 62,787 64,375 -- --
Funded status.............................................. 1,613 1,528 (5,259) (5,900)
Unrecognized actuarial loss (gain)......................... 3,474 3,518 (723) --
Unrecognized prior service cost............................ (59) (85) (364) --
--------- ------- --------- -------
Prepaid (accrued) benefit cost............................. $ 5,028 $ 4,961 ($ 6,346) $ (5,900)
--------- ------- --------- -------
--------- ------- --------- -------
Weighted average assumptions at end of period:
Discount rate.............................................. 7.35% 7.35% 7.35% 6.50%
Expected asset return...................................... 9.50% 9.00% 9.50% 9.00%
Rate of compensation increase.............................. 5.00% 5.00%
</TABLE>
F-78
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
12. EMPLOYEE BENEFITS (CONTINUED)
The components of net periodic benefit cost are as follows:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1998
THROUGH
1996 1997 MAY 29, 1998
--------- --------- ---------------
<S> <C> <C> <C>
Pension benefits:
Service cost................................................................ $ 1,362 $ 1,208 $ 494
Interest cost............................................................... 4,001 4,246 1,865
Expected return on plan assets.............................................. (4,910) (5,259) (2,330)
Amortization of prior service cost.......................................... 125 108 59
Recognized net actuarial loss............................................... 177 94 8
--------- --------- -------
Net periodic benefit cost............................................... 755 397 96
Other postretirement benefits:
Service cost................................................................ 87 83 39
Interest cost............................................................... 447 380 154
Amortization of prior service cost.......................................... (34) (34) (14)
Recognized net actuarial gain............................................... -- (19) (5)
--------- --------- -------
Net periodic benefit cost............................................... $ 500 $ 410 $ 174
--------- --------- -------
--------- --------- -------
</TABLE>
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in
assumed health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
1-PERCENTAGE 1-PERCENTAGE
POINT POINT
INCREASE DECREASE
-------------------- --------------------
1997 1998 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Effect on total of service and interest cost components.......................... $ 39 $ 37 $ (34) $ (32)
Effect on postretirement benefit obligation...................................... 416 535 (376) (483)
</TABLE>
RETIREMENT THRIFT PLAN -- PCI maintains a defined contribution plan which
covers substantially all hourly employees who meet eligibility requirements.
Provisions regarding employee and employer contributions and the benefits
provided under the plan vary between PCI's manufacturing facilities. PCI's
defined contribution plan's expense was $303, $302 and $122 for the years ended
December 31, 1996 and 1997 and the period from January 1, 1998 through May 29,
1998, respectively.
SAVINGS PLAN -- PCI maintains a contributory defined contribution 401(k)
savings plan which covers substantially all nonorganized salaried employees.
Employees may contribute up to 12% and 8% of pay on a pretax and after-tax
basis, respectively. However, the total employee contribution rate may not
exceed 15% of pay. PCI matches up to 3% of employees' pretax contributions.
Employees vest in PCI's contributions at 25% per year, becoming fully vested
after four years of employment. Employees
F-79
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
12. EMPLOYEE BENEFITS (CONTINUED)
may make withdrawals from the plan prior to attaining age 59 1/2, subject to
certain penalties. PCI's savings plan expense was $553, $560 and $262 for the
years ended December 31, 1996 and 1997 and for the period from January 1, 1998
through May 28, 1998, respectively.
UNION BENEFIT PLANS -- PCI contributes to various union pension plans
pursuant to its labor agreements. Union benefit plan expense was $1,083, $1,013
and $419 for the years ended December 31, 1996 and 1997 and for the period from
January 1, 1998 through May 29, 1998, respectively.
POSTEMPLOYMENT BENEFITS -- PCI provides certain postemployment benefits to
former and inactive employees, their beneficiaries and covered dependents. These
benefits include disability related benefits, continuation of health care
benefits and life insurance coverage. Additional costs charged to operations for
postemployment benefits in 1996, 1997 and 1998 were $38, $57 and $15,
respectively.
13. MAJOR CUSTOMERS
Sales to one customer represented approximately 29%, 31% and 28.5% of net
sales for the years ended December 31, 1996 and 1997 and for the period from
January 1, 1998 to May 29, 1998, respectively. Included in accounts receivable
are receivables from this customer of $8,332 and $10,442 at December 31, 1997
and May 29, 1998, respectively. A second customer represented approximately 13%,
15% and 17% of net sales for each of the years ended December 31, 1996 and 1997
and the period from January 1, 1998 through May 29, 1998, respectively, and
$1,131 and $1,516 of receivables from this customer are included in accounts
receivable at December 31, 1997 and May 29, 1998, respectively. A third customer
represented approximately 10%, 10%, and 11% of net sales for the years ended
December 31, 1996 and 1997 and the period from January 1, 1998 through May 29,
1998, respectively, and $860 and $781 of receivables from this customer are
included in accounts receivable at December 31, 1997 and May 29, 1998,
respectively.
14. PLANT CLOSINGS
In 1996, PCI recorded charges amounting to $6,500 for plant rationalization
and realignment in connection with a plan to consolidate certain manufacturing
operations. The Company closed one plant in 1996 and another plant in 1997. The
Company remains obligated under a noncancellable operating lease at one of the
facilities through June 1999. Accrued liabilities include $1,072 at May 29, 1998
related to plant rationalization and realignment. Payments made in 1998 against
the accrued liability amounted to approximately $603.
15. EXTRAORDINARY ITEM
In 1996, PCI incurred an extraordinary loss of $7,305 related to the
purchase and redemption of senior secured notes.
F-80
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(IN THOUSANDS)
16. CONTINGENCIES
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management and legal counsel, the
ultimate disposition of these matters will not have a material adverse effect on
the Company's consolidated financial statements.
17. FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial Accounting Standards Board's Statement No. 107, DISCLOSURES ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS, defines fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. Except for the senior secured notes at May
29, 1998, the carrying amount approximates fair value for financial instruments
included in the accompanying consolidated balance sheets at December 31, 1997
and May 29, 1998.
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable--trade and other current liabilities approximate fair value
because of the short maturity of those instruments. The fair value of investment
securities is based on the quoted market prices at the reporting date for those
or similar investments. The carrying value and fair value of the senior secured
notes at May 29, 1998 was $125,000 and $135,364, respectively. The fair value is
estimated based on quoted market prices for the notes.
F-81
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
[LOGO]
OFFER TO EXCHANGE
ALL OUTSTANDING 10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
FOR
10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
------------------------
PROSPECTUS
, 1999
-------------------------------
Until ______, 1999 (90 days after the date of this prospectus), all dealers
effecting transactions in the exchange notes, whether or not participating in
this distribution, may be required to deliver a prospectus. This is in addition
to the obligation of dealers to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
exchange the exchange notes for outstanding notes only under circumstances and
in jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
INDEMNIFICATION REGARDING CORPORATE REGISTRANTS
Summarized below are the provisions regarding the indemnification of
directors and officers required by Item 702 of Regulation S-K of the Securities
and Exchange Commission relating to Consolidated Container Capital, Inc.
("Capital") and Continental Caribbean Containers, Inc. ("Carribean" and,
together with Capital, the "Corporate Registrants").
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative, or
investigative (other than action by or in the right of the corporation a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, by-laws, disinterested director vote, stockholder vote, agreement or
otherwise.
Capital's by-laws provide that it will indemnify any person to the fullest
extent permitted by Delaware law who is or was made, or threatened to be made, a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, including, without
limitation, an action by or in the right of Capital to procure a judgment in its
favor, by reason of the fact that such person, or a person of whom such person
is the legal representative, is or was a director or officer of Capital or is or
was serving in any capacity at the request of Capital for any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against judgments, fines, penalties, excise taxes, amounts paid in settlement
and costs, charges and expenses (including attorneys' fees and disbursements).
Persons who are not directors or officers of Capital may be similarly
indemnified in respect of service to Capital or to any of the above other
entities at the request of Capital to the extent that its board of directors at
any time specifies that such persons are entitled to the benefits of such
indemnification. Pursuant to its by-laws, Capital also has the power to purchase
officers' and directors' liability insurance which insures against liabilities
its officers and directors of Capital, in such capacities, may incur.
Caribbean's by-laws provide that, except in the case of willful misconduct
by any such person, it will indemnify each director, officer, employee and agent
(PROVIDED, that, in the case of agents, Caribbean will indemnify only those
agents to whom its Board of Directors shall determine, before or after their
engagement, will be afforded the protection of these indemnification provisions)
of Caribbean who is a natural person and all other natural persons whom
Caribbean is authorized to indemnify under the provisions of the DGCL to whom
its Board of Directors shall determine will be afforded the protection of these
indemnification provisions to the fullest extent permitted by law, (i) against
all expense (including but not limited to attorneys' and other experts' fees and
disbursements), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with any actual or threatened
action, suit or other proceeding, whether civil, criminal, administrative,
investigative or an arbitration, or in connection with any appeal therein, or
II-1
<PAGE>
otherwise, and (ii) against all expenses (including but not limited to
attorneys' and other experts' fees and disbursements) actually and reasonably
incurred by such person in connection with the defense or settlement of any
action, suit or other proceeding by or in the right of Caribbean, or in
connection with any appeal therein, or otherwise.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duties as a director, except for liability (i) for any
transaction from which the director derives an improper personal benefit, (ii)
for acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) for improper payment of dividends or
redemptions of shares or (iv) for any breach of a director's duty of loyalty to
the company or its stockholders. Article Eight of the certificate of
incorporation of Capital includes such a provision.
Through the insurance policies of Consolidated Container Holdings LLC
("Holdings"), Holdings maintain policies of insurance under which the directors,
the officers, some of the employees and the subsidiaries of Holdings are
insured, subject to specific exclusions and deductible maximum amounts, against
loss arising from any civil claim which may be made against them, or any of
them, arising out of any misstatement, misleading statement, omission or other
act done or alleged to have been done, or wrongfully attempted, while acting in
their representative capacities.
Any agreement with underwriters or agents may contain provisions providing
for the indemnification of the Corporate Registrants and some of their directors
and officers in certain circumstances.
INDEMNIFICATION REGARDING LIMITED LIABILITY COMPANY REGISTRANTS
Summarized below are the provisions regarding the indemnification of
directors and officers required by Item 702 of Regulation S-K of the Securities
and Exchange Commission relating to Consolidated Container Company LLC, Reid
Plastics Group LLC, Plastic Containers LLC and Continental Plastic Containers
LLC (each individually, a "LLC Registrant" and, collectively, the "LLC
Registrants").
Section 18-101 of the Delaware Revised Limited Liability Company Act
provides that a limited liability company may, and shall have the power to,
indemnify and hold harmless any member or manager or other person from and
against any and all claims and demands whatsoever. Section 6.6 of the Limited
Liability Company Agreement of each of the LLC Registrants provides each LLC
Registrant indemnifies its sole member, managers and officers to the same extent
a corporation may indemnify its directors, officers and others under applicable
law.
Through the insurance policies of Holdings, Holdings maintains policies of
insurance under which the members of the management committee of Holdings,
acting for Holdings and each of the LLC Registrants, the officers and some
employees of the LLC Registrants and the subsidiaries of Holdings are insured,
subject to specific exclusions and deductible maximum amounts, against loss
arising from any civil claim which may be made against them, or any of them,
arising out of any misstatement, misleading statement, omission or other act
done or alleged to have been done, or wrongfully attempted, while acting in
their representative capacities.
Any agreement with underwriters or agents may contain provisions providing
for the indemnification of the LLC Registrants and some of the members of the
management committee and officers of the LLC Registrants in certain
circumstances.
II-2
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are being filed with this Registration Statement
pursuant to Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------------------------------
<S> <C>
1 Purchase Agreement dated June 24, 1999, as amended by the amendment dated July 1 thereto, among
Consolidated Container Company LLC, Consolidated Container Capital, Inc., the Subsidiary Guarantors
listed therein and Donaldson, Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co., Inc.,
Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc.
3.1(a) Certificate of Formation of Consolidated Container Company LLC.
3.1(b) Limited Liability Company Agreement of Consolidated Container Company LLC.
3.2(a) Certificate of Incorporation of Consolidated Container Capital, Inc.
3.2(b) By-laws of Consolidated Container Capital, Inc.
3.3(a) Certificate of Formation of Reid Plastics Group LLC.
3.3(b) Limited Liability Company Agreement of Reid Plastics Group LLC.
3.4(a) Certificate of Formation of Plastic Containers LLC.
3.4(b) Limited Liability Company Agreement of Plastic Containers LLC.
3.5(a) Certificate of Formation of Continental Plastic Containers LLC.
3.5(b) Limited Liability Company Agreement of Continental Plastic Containers LLC.
3.6(a) Certificate of Incorporation of Continental Caribbean Containers, Inc.
3.6(b) By-laws of Continental Caribbean Containers, Inc.
3.7(a) Certificate of Formation of Consolidated Container Holdings LLC.
3.7(b) Amended and Restated Limited Liability Company Agreement of Consolidated Container Holdings LLC.
4.1 Indenture dated as of July 1, 1999 among Consolidated Container Company LLC and Consolidated
Container Capital, Inc., as Issuers, the Subsidiary Guarantors listed therein and The Bank of New
York, as Trustee.
4.2 Form of 10 1/8% Senior Subordinated Note due 2009 and annexed Guarantees.
4.3 Registration Rights Agreement dated as of July 1, 1999 among Consolidated Container Company LLC,
Consolidated Container Capital Inc., the Subsidiary Guarantors listed therein and Donaldson, Lufkin
& Jenrette Securities Corporation, Bear, Stearns & Co., Inc., Deutsche Bank Securities Inc. and J.P.
Morgan Securities Inc.
5 Opinion of Simpson Thacher & Bartlett as to the legality of the 10 1/8% Senior Subordinated Notes
due 2009.
10.1 Credit Agreement dated as of July 1, 1999 among Consolidated Container Holdings LLC, Consolidated
Container Company LLC, various Banks, Bankers Trust Company, as Administrative Agent, Morgan
Guaranty Trust Company of New York, as Documentation Agent and Donaldson, Lufkin & Jenrette
Securities Corporation, as Syndication Agent.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------------------------------
<S> <C>
10.2 Pledge Agreement dated as of July 1, 1999 by Consolidated Container Holdings LLC, Consolidated
Container Company LLC, the Subsidiary Guarantors and each other Subsidiary of Consolidated Container
Company LLC that is required to execute a counterpart thereof and Bankers Trust Company as
Collateral Agent.
10.3 Security Agreement dated as of July 1, 1999 among Consolidated Container Holdings LLC, Consolidated
Container Company LLC, Various Subsidiaries and Bankers Trust Company as Collateral Agent.
10.4 Subsidiary Guaranty dated as of July 1, 1999 by Reid Plastics Group LLC, Plastic Containers LLC,
Continental Plastic Containers LLC and Continental Caribbean Containers, Inc.
10.6 Trademark License Agreement dated as of July 1, 1999 between Continental Can Company, Inc.,
Consolidated Container Holdings LLC and Consolidated Container Company LLC.
10.7 Management Agreement dated as of April 29, 1999 among Consolidated Container Holdings LLC,
Consolidated Container Company LLC and Vestar Capital Partners.
10.8 Transition Services Agreement dated as of July 2, 1999 by and among Suiza Foods Corporation,
Consolidated Container Holdings LLC and Consolidated Container Company LLC.
10.9(a) Consolidated Container Holdings LLC 1999 Unit Option Plan.
10.9(b) Form of Option Agreement relating to the Consolidated Container Holdings LLC 1999 Unit Option Plan.
10.9(c) Special Unit Acquisition, Ownership and Redemption Agreement relating to the Consolidated Container
Holdings LLC 1999 Unit Option Plan.
10.10(a) Consolidated Container Holdings LLC Replacement Units Option Plan for Options Issued Pursuant to the
Franklin Plastics, Inc. 1998 Stock Option Plan.
10.10(b) Form of Original Consolidated Container Holdings LLC Replacement Units Option Agreement for Option
Issued Pursuant to the Franklin Plastics, Inc. 1998 Stock Option Plan.
10.10(c) Form of Modified Consolidated Container Holdings LLC Replacement Units Option Agreement for Options
Issued Pursuant to the Franklin Plastics, Inc. 1998 Stock Option Plan.
10.11 Long-Term Incentive Plan.
10.12 Employment Agreement dated as of July 5, 1999 between Consolidated Container Company LLC and Peter
Bernon.
10.13 Employment Agreement dated as of July 2, 1999 between Consolidated Container Company LLC and William
Estes.
10.14 Employment Agreement dated as of July 5, 1999 between Consolidated Container Company LLC and Ronald
E. Justice.
10.15 Employment Agreement dated as of July 5, 1999 between Consolidated Container Company LLC and Henry
Carter.
12 Statement regarding the Computation of the Ratios of Earnings to Fixed Charges.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------------------------------
<S> <C>
21 List of Subsidiaries of the Registrants.
23.1 Consent of Deloitte & Touche LLP. (Omaha, Nebraska).
23.2 Consent of Deloitte, Touche LLP (Dallas, Texas).
23.3 Consent of Ernst & Young LLP.
23.4 Consent of PricewaterhouseCoopers LLP.
23.5 Consent of KPMG Peat Marwick LLP.
23.6 Consent of Simpson Thacher & Bartlett (included in Exhibit 5 hereto).
24 Powers of Attorney.
25 Statement of Eligibility of The Bank of New York under the Trust Indenture Act of 1939, as amended,
on Form T-1.
27 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Letter to Securities Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.3 Form of Letter to Clients.
99.4 Form of Notice of Guaranteed Delivery.
</TABLE>
ITEM 22. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or controlling
person of the registrants 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 registrants 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 Securities
Act of 1933 and will be governed by the final adjudication of such issue.
(b) The undersigned registrants hereby undertake:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement.
(i) to include any prospectus required by Section 10(A)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events after the
effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
II-5
<PAGE>
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to this information in the
registration statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request; and
(5) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of, and included in, the registration statement
when it became effective.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant named
below has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, on September 30, 1999.
<TABLE>
<S> <C> <C>
CONSOLIDATED CONTAINER COMPANY LLC
BY: /S/ TIMOTHY W. BRASHER
-----------------------------------------
Timothy W. Brasher
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY
</TABLE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons, members of the Management
Committee ("Managers") and officers of Consolidated Container Holdings LLC, duly
authorized to act for, Consolidated Container Company LLC, in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
<C> <S> <C>
/s/ RONALD V. DAVIS Chairman of the Management September 30, 1999
- ------------------------------ Committee
Ronald V. Davis
/s/ PETER M. BERNON Vice Chairman of the September 30, 1999
- ------------------------------ Management Committee
Peter M. Bernon
/s/ B. JOSEPH ROKUS Vice Chairman of the September 30, 1999
- ------------------------------ Management Committee
B. Joseph Rokus
/s/ WILLIAM L. ESTES President, Chief Executive September 30, 1999
- ------------------------------ Officer and Manager
William L. Estes (principal executive
officer)
/s/ TIMOTHY W. BRASHER Senior Vice President, September 30, 1999
- ------------------------------ Chief Financial Officer
Timothy W. Brasher and Manager (principal
financial officer and
principal accounting
officer)
/s/ WILLIAM G. BELL Manager September 30, 1999
- ------------------------------
William G. Bell
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
<C> <S> <C>
/s/ JAMES P. KELLEY Manager September 30, 1999
- ------------------------------
James P. Kelley
/s/ LEONARD LIEBERMAN Manager September 30, 1999
- ------------------------------
Leonard Lieberman
/s/ JOHN R. WOODARD Manager September 30, 1999
- ------------------------------
John R. Woodard
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant named
below has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, on September 30, 1999.
<TABLE>
<S> <C> <C>
CONSOLIDATED CONTAINER CAPITAL, INC.
By: /s/ TIMOTHY W. BRASHER
-----------------------------------------
Timothy W. Brasher
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY
</TABLE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ RONALD V. DAVIS Chairman of the Board of September 30, 1999
- ------------------------------ Directors
Ronald V. Davis
/s/ PETER M. BERNON Vice Chairman of the Board September 30, 1999
- ------------------------------ of Directors
Peter M. Bernon
/s/ B. JOSEPH ROKUS Vice Chairman of the Board September 30, 1999
- ------------------------------ of Directors
B. Joseph Rokus
/s/ WILLIAM L. ESTES President, Chief Executive September 30, 1999
- ------------------------------ Officer and Director
William L. Estes (principal executive
officer)
/s/ TIMOTHY W. BRASHER Senior Vice President, September 30, 1999
- ------------------------------ Chief Financial Officer
Timothy W. Brasher and Director (principal
financial officer and
principal accounting
officer)
/s/ WILLIAM G. BELL Director September 30, 1999
- ------------------------------
William G. Bell
/s/ JAMES P. KELLEY Director September 30, 1999
- ------------------------------
James P. Kelley
/s/ LEONARD LIEBERMAN Director September 30, 1999
- ------------------------------
Leonard Lieberman
/s/ JOHN R. WOODARD Director September 30, 1999
- ------------------------------
John R. Woodard
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant named
below has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, on September 30, 1999.
<TABLE>
<S> <C> <C>
REID PLASTICS GROUP LLC
By: /s/ TIMOTHY W. BRASHER
-----------------------------------------
Timothy W. Brasher
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY
</TABLE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons, members of the Management
Committee ("Managers") and officers of Consolidated Container Holdings LLC, duly
authorized to act for, and the executive officers of, Reid Plastics Group LLC,
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ RONALD V. DAVIS Chairman of the September 30, 1999
- ------------------------------ Management Committee
Ronald V. Davis
/s/ PETER M. BERNON Vice Chairman of the September 30, 1999
- ------------------------------ Management Committee
Peter M. Bernon
/s/ B. JOSEPH ROKUS Vice Chairman of the September 30, 1999
- ------------------------------ Management Committee
B. Joseph Rokus
/s/ WILLIAM L. ESTES President, Chief Executive September 30, 1999
- ------------------------------ Officer and Manager
William L. Estes (principal executive
officer)
/s/ TIMOTHY W. BRASHER Senior Vice President, September 30, 1999
- ------------------------------ Chief Financial Officer
Timothy W. Brasher and Manager (principal
financial officer and
principal accounting
officer)
/s/ WILLIAM G. BELL Manager September 30, 1999
- ------------------------------
William G. Bell
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JAMES P. KELLEY Manager September 30, 1999
- ------------------------------
James P. Kelley
/s/ LEONARD LIEBERMAN Manager September 30, 1999
- ------------------------------
Leonard Lieberman
/s/ JOHN R. WOODARD Manager September 30, 1999
- ------------------------------
John R. Woodard
</TABLE>
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant named
below has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, on September 30, 1999.
<TABLE>
<S> <C> <C>
PLASTIC CONTAINERS LLC
By: /s/ TIMOTHY W. BRASHER
-----------------------------------------
Timothy W. Brasher
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY
</TABLE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following members of the Management Committee
("Managers") and officers of Consolidated Containers Holdings LLC, duly
authorized to act for, Plastic Containers LLC, in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ RONALD V. DAVIS Chairman of the Management September 30, 1999
- ------------------------------ Committee
Ronald V. Davis
/s/ PETER M. BERNON Vice Chairman of the September 30, 1999
- ------------------------------ Management Committee
Peter M. Bernon
/s/ B. JOSEPH ROKUS Vice Chairman of the September 30, 1999
- ------------------------------ Management Committee
B. Joseph Rokus
/s/ WILLIAM L. ESTES President, Chief Executive September 30, 1999
- ------------------------------ Officer and Manager
William L. Estes (principal executive
officer)
/s/ TIMOTHY W. BRASHER Senior Vice President, September 30, 1999
- ------------------------------ Chief Financial Officer
Timothy W. Brasher and Manager (principal
financial officer and
principal accounting
officer)
/s/ WILLIAM G. BELL Manager September 30, 1999
- ------------------------------
William G. Bell
</TABLE>
II-12
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JAMES P. KELLEY Manager September 30, 1999
- ------------------------------
James P. Kelley
/s/ LEONARD LIEBERMAN Manager September 30, 1999
- ------------------------------
Leonard Lieberman
/s/ JOHN R. WOODARD Manager September 30, 1999
- ------------------------------
John R. Woodard
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant named
below has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, on September 30, 1999.
<TABLE>
<S> <C> <C>
CONTINENTAL PLASTIC CONTAINERS LLC
By: /s/ TIMOTHY W. BRASHER
-----------------------------------------
Timothy W. Brasher
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY
</TABLE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following members of the Management Committee
("Managers") and officers of Consolidated Container Holdings LLC, duly
authorized to act for, Continental Plastic Containers LLC, in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
<C> <S> <C>
/s/ RONALD V. DAVIS Chairman of the Management September 30, 1999
- ------------------------------ Committee
Ronald V. Davis
/s/ PETER M. BERNON Vice Chairman of the September 30, 1999
- ------------------------------ Management Committee
Peter M. Bernon
/s/ B. JOSEPH ROKUS Vice Chairman of the September 30, 1999
- ------------------------------ Management Committee
B. Joseph Rokus
/s/ WILLIAM L. ESTES President, Chief Executive September 30, 1999
- ------------------------------ Officer and Manager
William L. Estes (principal executive
officer)
/s/ TIMOTHY W. BRASHER Senior Vice President, September 30, 1999
- ------------------------------ Chief Financial Officer and
Timothy W. Brasher Manager (principal
financial officer and
principal accounting
officer)
/s/ WILLIAM G. BELL Manager September 30, 1999
- ------------------------------
William G. Bell
</TABLE>
II-14
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
<C> <S> <C>
/s/ JAMES P. KELLEY Manager September 30, 1999
- ------------------------------
James P. Kelley
/s/ LEONARD LIEBERMAN Manager September 30, 1999
- ------------------------------
Leonard Lieberman
/s/ JOHN R. WOODARD Manager September 30, 1999
- ------------------------------
John R. Woodard
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant named
below has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, on September 30, 1999.
<TABLE>
<S> <C> <C>
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By: /s/ TIMOTHY W. BRASHER
-----------------------------------------
Timothy W. Brasher
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY
</TABLE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ RONALD V. DAVIS Chairman of the Board of September 30, 1999
- ------------------------------ Directors
Ronald V. Davis
/s/ PETER M. BERNON Vice Chairman of the Board September 30, 1999
- ------------------------------ of Directors
Peter M. Bernon
/s/ B. JOSEPH ROKUS Vice Chairman of the Board September 30, 1999
- ------------------------------ of Directors
B. Joseph Rokus
/s/ WILLIAM L. ESTES President, Chief Executive September 30, 1999
- ------------------------------ Officer and Director
William L. Estes (principal executive
officer)
/s/ TIMOTHY W. BRASHER Senior Vice President, September 30, 1999
- ------------------------------ Chief Financial Officer
Timothy W. Brasher and Director (principal
financial officer and
principal accounting
officer)
/s/ WILLIAM G. BELL Director September 30, 1999
- ------------------------------
William G. Bell
/s/ JAMES P. KELLEY Director September 30, 1999
- ------------------------------
James P. Kelley
/s/ LEONARD LIEBERMAN Director September 30, 1999
- ------------------------------
Leonard Lieberman
/s/ JOHN R. WOODARD Director September 30, 1999
- ------------------------------
John R. Woodard
</TABLE>
II-16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
1 Purchase Agreement dated June 24, 1999, as amended by the amendment dated July 1 thereto, among
Consolidated Container Company LLC, Consolidated Container Capital, Inc., the Subsidiary
Guarantors listed therein and Donaldson, Lufkin & Jenrette Securities Corporation, Bear, Stearns &
Co., Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc.
3.1(a) Certificate of Formation of Consolidated Container Company LLC.
3.1(b) Limited Liability Company Agreement of Consolidated Container Company LLC.
3.2(a) Certificate of Incorporation of Consolidated Container Capital, Inc.
3.2(b) By-laws of Consolidated Container Capital, Inc.
3.3(a) Certificate of Formation of Reid Plastics Group LLC.
3.3(b) Limited Liability Company Agreement of Reid Plastics Group LLC.
3.4(a) Certificate of Formation of Plastic Containers LLC.
3.4(b) Limited Liability Company Agreement of Plastic Containers LLC.
3.5(a) Certificate of Formation of Continental Plastic Containers LLC.
3.5(b) Limited Liability Company Agreement of Continental Plastic Containers LLC.
3.6(a) Certificate of Incorporation of Continental Caribbean Containers, Inc.
3.6(b) By-laws of Continental Caribbean Containers, Inc.
3.7(a) Certificate of Formation of Consolidated Container Holdings LLC.
3.7(b) Amended and Restated Limited Liability Company Agreement of Consolidated Container Holdings LLC.
4.1 Indenture dated as of July 1, 1999 among Consolidated Container Company LLC and Consolidated
Container Capital, Inc., as Issuers, the Subsidiary Guarantors listed therein and The Bank of New
York, as Trustee.
4.2 Form of 10 1/8% Senior Subordinated Note due 2009 and annexed Guarantees.
4.3 Registration Rights Agreement dated as of July 1, 1999 among Consolidated Container Company LLC,
Consolidated Container Capital Inc., the Subsidiary Guarantors listed therein and Donaldson,
Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co., Inc., Deutsche Bank Securities Inc.
and J.P. Morgan Securities Inc.
5 Opinion of Simpson Thacher & Bartlett as to the legality of the 10 1/8% Senior Subordinated Notes
due 2009.
10.1 Credit Agreement dated as of July 1, 1999 among Consolidated Container Holdings LLC, Consolidated
Container Company LLC, various Banks, Bankers Trust Company, as Administrative Agent, Morgan
Guaranty Trust Company of New York, as Documentation Agent and Donaldson, Lufkin & Jenrette
Securities Corporation, as Syndication Agent.
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
10.2 Pledge Agreement dated as of July 1, 1999 by Consolidated Container Holdings LLC, Consolidated
Container Company LLC, the Subsidiary Guarantors and each other Subsidiary of Consolidated
Container Company LLC that is required to execute a counterpart thereof and Bankers Trust Company
as Collateral Agent.
10.3 Security Agreement dated as of July 1, 1999 among Consolidated Container Holdings LLC,
Consolidated Container Company LLC, Various Subsidiaries and Bankers Trust Company as Collateral
Agent.
10.4 Subsidiary Guaranty dated as of July 1, 1999 by Reid Plastics Group LLC, Plastic Containers LLC,
Continental Plastic Containers LLC and Continental Caribbean Containers, Inc.
10.6 Trademark License Agreement dated as of July 1, 1999 between Continental Can Company, Inc.,
Consolidated Container Holdings LLC and Consolidated Container Company LLC.
10.7 Management Agreement dated as of April 29, 1999 among Consolidated Container Holdings LLC,
Consolidated Container Company LLC and Vestar Capital Partners.
10.8 Transition Services Agreement dated as of July 2, 1999 by and among Suiza Foods Corporation,
Consolidated Container Holdings LLC and Consolidated Container Company LLC.
10.9(a) Consolidated Container Holdings LLC 1999 Unit Option Plan.
10.9(b) Form of Option Agreement relating to the Consolidated Container Holdings LLC 1999 Unit Option
Plan.
10.9(c) Special Unit Acquisition, Ownership and Redemption Agreement relating to the Consolidated
Container Holdings LLC 1999 Unit Option Plan.
10.10(a) Consolidated Container Holdings LLC Replacement Units Option Plan for Options Issued Pursuant to
the Franklin Plastics, Inc. 1998 Stock Option Plan.
10.10(b) Form of Original Consolidated Container Holdings LLC Replacement Units Option Agreement for Option
Issued Pursuant to the Franklin Plastics, Inc. 1998 Stock Option Plan.
10.10(c) Form of Modified Consolidated Container Holdings LLC Replacement Units Option Agreement for
Options Issued Pursuant to the Franklin Plastics, Inc. 1998 Stock Option Plan.
10.11 Long-term Incentive Plan.
10.12 Employment Agreement dated as of July 5, 1999 between Consolidated Container Company LLC and Peter
Bernon.
10.13 Employment Agreement dated as of July 2, 1999 between Consolidated Container Company LLC and
William Estes.
10.14 Employment Agreement dated as of July 5, 1999 between Consolidated Container Company LLC and
Ronald E. Justice.
10.15 Employment Agreement dated as of July 5, 1999 between Consolidated Container Company LLC and Henry
Carter.
12 Statement regarding the Computation of the Ratios of Earnings to Fixed Charges.
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
21 List of Subsidiaries of the Registrants.
23.1 Consent of Deloitte & Touche LLP (Omaha, Nebraska).
23.2 Consent of Deloitte & Touche LLP (Dallas, Texas).
23.3 Consent of Ernst & Young LLP.
23.4 Consent of PricewaterhouseCoopers LLP.
23.5 Consent of KPMG Peat Marwick LLP.
23.6 Consent of Simpson Thacher & Bartlett (included in Exhibit 5 hereto).
24 Powers of Attorney.
25 Statement of Eligibility of The Bank of New York under the Trust Indenture Act of 1939, as
amended, on Form T-1.
27 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Letter to Securities Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.3 Form of Letter to Clients.
99.4 Form of Notice of Guaranteed Delivery.
</TABLE>
iii
<PAGE>
EXHIBIT 1
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
AND
THE SUBSIDIARY GUARANTORS LISTED HEREIN
$185,000,000 of
10 1/8% Senior Subordinated Notes due 2009
Purchase Agreement
June 24, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
BEAR, STEARNS & CO. INC.
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
and the Subsidiary Guarantors listed herein
$185,000,000
10 1/8% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
June 24, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
BEAR, STEARNS & CO. INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Consolidated Container Company LLC, a Delaware limited liability
company (the "Company"), and Consolidated Container Capital, Inc., a Delaware
corporation, ("Consolidated Container Capital" and, together with the Company,
the "Issuers"), propose to issue and sell to Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), Deutsche Bank Securities Inc. ("DBS"), J.P.
Morgan Securities Inc. ("J.P. Morgan") and Bear, Stearns & Co. Inc. ("Bear,
Stearns" and, together with DLJ, DBS and J.P. Morgan, the "Initial Purchasers")
an aggregate of $185,000,000 in principal amount of their 10 1/8% Senior
Subordinated Notes due 2009 (the "Senior Subordinated Notes"), subject to the
terms and conditions set forth herein. The Senior Subordinated Notes are to be
issued pursuant to the provisions of an indenture (the "Indenture"), to be dated
as of the Closing Date (as defined below), among the Issuers, the Subsidiary
Guarantors (as defined below) and The Bank of New York, as trustee (the
"Trustee"). The Senior Subordinated Notes and the New Senior Subordinated Notes
(as defined below) issuable in exchange therefor are collectively referred to
herein as the "Notes." The Notes will be guaranteed (the "Subsidiary
Guarantees") by each of the entities listed on Schedule A hereto (each, a
"Subsidiary Guarantor" and collectively the "Subsidiary Guarantors"). Upon
consummation of the Contributions and Mergers (as defined below), each
Subsidiary Guarantor shall join this Agreement by execution of the joinder
attached hereto as Exhibit A.
Proceeds from the offering of the Notes will be used in connection
with the contributions and mergers (the "Contributions and Mergers") pursuant to
the terms of a Contribution and Merger Agreement, dated as of April 29, 1999 and
as amended and/or restated to date (the "Contribution and Merger Agreement"),
among Suiza Foods Corporation ("Suiza Foods"), Franklin
<PAGE>
Plastics, Inc. ("Franklin Plastics"), the Suiza Companies identified therein,
Vestar Packaging LLC, Reid Plastics Holdings, Inc. ("Reid Plastics"), the Reid
Companies identified therein, Reid Plastics Group LLC, Consolidated Container
Holdings LLC, the owner of all of the member units of the Company ("Holdings"),
and the Company. As part of the Contributions and Mergers, certain of the Suiza
Companies (as defined in the Contribution and Merger Agreement) and each of the
Reid Companies (as defined in the Contribution and Merger Agreement, other than
those incorporated outside of the United States) will be merged with and into
the Company. Also pursuant to the Contribution and Merger Agreement, certain of
the Suiza Companies or their operations will be contributed to the Company. Upon
completion of the Contributions and Mergers, Vestar Packaging LLC and Reid
Plastics will collectively own 51% of the member units of Holdings, and Suiza
Foods, through Franklin Plastics, which is 88% owned by Suiza Foods on a primary
basis, will own 49% of the member units of Holdings. The Contribution and Merger
Agreement, the agreements set forth on Schedule B hereto, and all closing
documents relating to the closing of the Contributions and Mergers are herein
referred to as the "Contribution and Merger Documents."
1. Offering Memorandum. The Senior Subordinated Notes will be
offered and sold to the Initial Purchasers pursuant to one or more exemptions
from the registration requirements under the Securities Act of 1933, as amended
(the "Securities Act"). The Issuers and the Subsidiary Guarantors have prepared
a preliminary offering memorandum, dated June 9, 1999 (the "Preliminary Offering
Memorandum"), and a final offering memorandum, dated June 24, 1999 (the
"Offering Memorandum"), relating to the Senior Subordinated Notes and the
Subsidiary Guarantees.
Upon original issuance thereof, and until such time as the same is
no longer required pursuant to the Indenture, the Senior Subordinated Notes (and
all securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR (7) OR
REGULATION D UNDER THE SECURITIES ACT (AN "IAI"), (2) AGREES THAT
IT WILL NOT RESELL OR
3
<PAGE>
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE CONSOLIDATED
CONTAINER COMPANY LLC, CONSOLIDATED CONTAINER CAPITAL, INC. OR
ANY OF OUR RESPECTIVE SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO
CONSOLIDATED CONTAINER COMPANY LLC AND CONSOLIDATED CONTAINER
CAPITAL, INC. THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS) OR (G) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR
AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND."
2. Agreements to Sell and Purchase. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Issuers agree to issue
and sell to the Initial Purchasers, and the Initial Purchasers agree, severally
and not jointly, to purchase from the Issuers, the principal amounts of Senior
Subordinated Notes set forth opposite the name of such Initial Purchaser on
Schedule C hereto at a purchase price equal to 97 1/4% of the principal amount
thereof (the "Purchase Price").
3. Terms of Offering. The Initial Purchasers have advised the
Issuers that the Initial Purchasers will make offers (the "Exempt Resales") of
the Senior Subordinated Notes purchased
4
<PAGE>
hereunder on the terms set forth in the Offering Memorandum, as amended or
supplemented, solely to (i) persons whom the Initial Purchasers reasonably
believe to be "qualified institutional buyers" as defined in Rule 144A under the
Securities Act ("QIBs") and (ii) to persons permitted to purchase the Senior
Subordinated Notes in offshore transactions in reliance upon Regulation S under
the Securities Act (each, a "Regulation S Purchaser") (such persons specified in
clauses (i) and (ii) being referred to herein as the "Eligible Purchasers"). The
Initial Purchasers will offer the Senior Subordinated Notes to Eligible
Purchasers initially at a price equal to 100% of the principal amount thereof.
Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Senior
Subordinated Notes will have the registration rights set forth in the
registration rights agreement (the "Registration Rights Agreement"), to be dated
the Closing Date, in substantially the form of Exhibit B hereto, for so long as
such Senior Subordinated Notes constitute "Transfer Restricted Securities" (as
defined in the Registration Rights Agreement). Pursuant to the Registration
Rights Agreement, the Issuers and the Subsidiary Guarantors will agree to file
with the Securities and Exchange Commission (the "Commission") under the
circumstances set forth therein, (i) a registration statement under the
Securities Act (the "Exchange Offer Registration Statement") relating to the
Issuers' 10 1/8% new Senior Subordinated Notes due 2009 (the "New Senior
Subordinated Notes"), to be offered in exchange for the Senior Subordinated
Notes (such offer to exchange being referred to as the "Exchange Offer") and the
Subsidiary Guarantees thereof and (ii) a shelf registration statement pursuant
to Rule 415 under the Securities Act (the "Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, the "Registration
Statements") relating to the resale by certain holders of the Senior
Subordinated Notes and to use their best efforts to cause such Registration
Statements to be declared and remain effective and available for use by such
holders for the periods specified in the Registration Rights Agreement and to
consummate the Exchange Offer. This Agreement, the Indenture, the Notes, the
Subsidiary Guarantees, the Senior Credit Facility (as described in the Offering
Memorandum) and the Registration Rights Agreement are hereinafter sometimes
referred to collectively as the "Operative Documents."
4. Delivery and Payment.
(a) Delivery of, and payment of the Purchase Price for, the
Senior Subordinated Notes shall be made at the offices of Latham & Watkins, 885
Third Avenue, New York, New York 10022, or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 9:00 a.m. New
York City time, on July 1, 1999 or at such other time on the same date or such
other date as shall be agreed upon by the Initial Purchasers and the Issuers in
writing. The time and date of such delivery and the payment for the Senior
Subordinated Notes are herein called the "Closing Date."
(b) One or more of the Senior Subordinated Notes in definitive
global form, registered in the name of Cede & Co., as nominee of The Depository
Trust Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Senior Subordinated Notes (collectively, the
"Global Note"), shall be delivered by the Issuers to the Initial
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Purchasers (or as the Initial Purchasers direct) in each case with any transfer
taxes thereon duly paid by the Issuers against payment by the Initial Purchasers
of the Purchase Price thereof by wire transfer in same day funds to the order of
the Company. The Global Note shall be made available to the Initial Purchasers
for inspection not later than 9:30 a.m., New York City time, on the business day
immediately preceding the Closing Date.
5. Agreements of the Issuers and the Subsidiary Guarantors. Each of
the Issuers (or following the Contributions and Mergers, each of the Issuers and
the Subsidiary Guarantors), hereby agrees with the Initial Purchasers as
follows:
(a) To advise the Initial Purchasers promptly (and, if
requested by the Initial Purchasers, confirm such advice in writing) of (i) the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Senior Subordinated Notes
for offering or sale in any jurisdiction designated by the Initial Purchasers
pursuant to Section 5(e) hereof, or the initiation of any proceeding by any
state securities commission or any other federal or state regulatory authority
for such purpose and (ii) the happening of any event during the period referred
to in Section 5(c) below that makes any statement of a material fact made in the
Preliminary Offering Memorandum or the Offering Memorandum untrue or that
requires any additions to or changes in the Preliminary Offering Memorandum or
the Offering Memorandum in order to make the statements therein not misleading.
The Issuers (or following the Contributions and Mergers, the Issuers and the
Subsidiary Guarantors) shall use their best efforts to prevent the issuance of
any stop order or order suspending the qualification or exemption of any Senior
Subordinated Notes under any state securities or Blue Sky laws and, if at any
time any state securities commission or other federal or state regulatory
authority shall issue an order suspending the qualification or exemption of any
Senior Subordinated Notes under any state securities or Blue Sky laws, the
Issuers (or following the Contributions and Mergers, the Issuers and the
Subsidiary Guarantors) shall use their best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Issuers as many copies of the
Offering Memorandum, and any amendments or supplements thereto, as the Initial
Purchasers may reasonably request for the time period specified in Section 5(c).
Subject to the Initial Purchasers' compliance with its representations and
warranties and agreements set forth in Section 7 hereof, the Issuers consent to
the use of the Preliminary Offering Memorandum and the Offering Memorandum, and
any amendments and supplements thereto required pursuant hereto, by the Initial
Purchasers in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers, not to make any
amendment or supplement to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object after being so advised and to prepare
promptly upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering Memorandum which may be
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<PAGE>
necessary or advisable in the reasonable determination of both the Initial
Purchasers and the Issuers in connection with such Exempt Resales.
(d) If, during the period referred to in Section 5(c) above,
any event shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein, in
the light of the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser, not misleading, or if, in the reasonable opinion of counsel
to the Initial Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Senior Subordinated Notes
pursuant to Exempt Resales as contemplated hereby, to cooperate with the Initial
Purchasers and counsel to the Initial Purchasers in connection with the
registration or qualification of the Senior Subordinated Notes for offer and
sale to the Initial Purchasers and pursuant to Exempt Resales under the
securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may
reasonably request and to continue such registration or qualification in effect
so long as required for Exempt Resales and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification; provided, however, that neither the Issuers nor
any Subsidiary Guarantor shall be required in connection therewith to qualify as
a foreign corporation in any jurisdiction in which it is not now so qualified or
to take any action that would subject it to general consent to service of
process or taxation other than as to matters and transactions relating to the
Preliminary Offering Memorandum, the Offering Memorandum or Exempt Resales, in
any jurisdiction in which it is not now so subject.
(f) During a period of five years from the date of the
Offering Memorandum and so long as the Notes are outstanding, to furnish to the
Initial Purchasers as soon as available copies of all reports or other
communications furnished by the Issuers or filed with the Commission or any
national securities exchange on which any class of securities of the Issuers is
listed and such other publicly available information furnished by the Company to
the Trustee or to the holders of the Notes pursuant to the Indenture or the TIA
(as defined).
(g) So long as any of the Senior Subordinated Notes remain
outstanding and during any period in which the Issuers and the Subsidiary
Guarantors are not subject to Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), to make available to any holder of
Senior Subordinated Notes in connection with any sale thereof and any
prospective purchaser of such Senior Subordinated Notes from such holder, the
information ) ("Rule 144A Information") required by Rule 144A(d)(4) under the
Securities Act.
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(h) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of the Issuers
(or following the Contributions and Mergers, the Issuers and the Subsidiary
Guarantors) under this Agreement, including: (i) the fees, disbursements and
expenses of counsel to the Issuers (or following the Contributions and Mergers,
the Issuers and the Subsidiary Guarantors) and accountants of the Issuers and
the Subsidiary Guarantors in connection with the sale and delivery of the Senior
Subordinated Notes to the Initial Purchasers and pursuant to Exempt Resales, and
all other fees and expenses in connection with the preparation, printing, filing
and distribution of the Preliminary Offering Memorandum, the Offering Memorandum
and all amendments and supplements to any of the foregoing (including financial
statements), including the mailing and delivering of copies thereof to the
Initial Purchasers and persons designated by it in the quantities specified
herein, (ii) all costs and expenses related to the transfer and delivery of the
Senior Subordinated Notes to the Initial Purchasers and pursuant to Exempt
Resales, including any transfer or other taxes payable thereon, (iii) all costs
of printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Senior Subordinated Notes, (iv) all expenses in connection with
the registration or qualification of the Senior Subordinated Notes and the
Subsidiary Guarantees for offer and sale under the securities or Blue Sky laws
of the several states and all costs of printing or producing any preliminary and
supplemental Blue Sky memoranda in connection therewith (including the filing
fees and fees and disbursements of counsel for the Initial Purchasers in
connection with such registration or qualification and memoranda relating
thereto), (v) the cost of printing certificates representing the Senior
Subordinated Notes and the Subsidiary Guarantees, (vi) all expenses and listing
fees in connection with the application for quotation of the Senior Subordinated
Notes in the National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System - PORTAL ("PORTAL"), (vii) the fees and expenses of the Trustee
and the Trustee's counsel in connection with the Indenture, the Notes and the
Subsidiary Guarantees, (viii) the costs and charges of any transfer agent,
registrar and/or depositary (including DTC), (ix) any fees charged by rating
agencies for the rating of the Notes, (x) all costs and expenses of the Exchange
Offer and any Registration Statement, as set forth in the Registration Rights
Agreement, and (xi) and all other costs and expenses incident to the performance
of the obligations of the Issuers (or following the Contributions and Mergers,
the Issuers and the Subsidiary Guarantors) hereunder for which provision is not
otherwise made in this Section.
(i) To use its best efforts to effect the inclusion of the
Senior Subordinated Notes in PORTAL and, if the Notes are not listed on any
national securities exchange, to maintain the listing of the Senior Subordinated
Notes on PORTAL for so long as the Senior Subordinated Notes are outstanding.
(j) To obtain the approval of DTC for "book-entry" transfer of
the Notes, and to comply with all of its agreements set forth in the
representation letters of the Issuers and the Subsidiary Guarantors to DTC
relating to the approval of the Notes by DTC for "book-entry" transfer.
8
<PAGE>
(k) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Issuers or
any Subsidiary Guarantor or any warrants, rights or options to purchase or
otherwise acquire debt securities of the Issuers or any Subsidiary Guarantor
substantially similar to the Notes and the Subsidiary Guarantees (other than (i)
the Notes and the Subsidiary Guarantees, (ii) commercial paper issued in the
ordinary course of business and (iii) borrowings under the existing credit
facilities of Reid Plastics, Inc., Franklin Plastics, Inc. or Plastic
Containers, Inc.) without the prior written consent of the Initial Purchasers.
(l) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Securities
Act) that would be integrated with the sale of the Senior Subordinated Notes to
the Initial Purchasers or pursuant to Exempt Resales in a manner that would
require the registration of any such sale of the Senior Subordinated Notes under
the Securities Act.
(m)To comply with all of its agreements set forth in the
Registration Rights Agreement.
(n) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Notes and the related Subsidiary Guarantees.
(o) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Senior Subordinated Notes and the Subsidiary Guarantees.
6. Representations, Warranties and Agreements of the Issuers. As of
the date hereof, the Issuers represent and warrant to, and agree with, the
Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum do not, and any supplement or amendment to them will not, as of their
respective dates, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties contained
in this paragraph (a) shall not apply to statements in or omissions from the
Preliminary Offering Memorandum or the Offering Memorandum (or any supplement or
amendment thereto) based upon information relating to the Initial Purchasers
furnished to the Issuers in writing by the Initial Purchasers expressly for use
therein. No stop order preventing the use of the Preliminary Offering Memorandum
or the Offering Memorandum, or any amendment or supplement thereto, or any order
asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the Securities Act, has been issued.
(b) Each of the Company and each of its subsidiaries is and,
after giving effect to the Contributions and Mergers in accordance with the
terms of the Contribution and Merger
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Documents, will be a corporation or limited liability company, duly incorporated
or formed, as the case may be, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, as the case may be,
and has the corporate power (in the case of a corporation) or power (in the case
of a limited liability company) and authority to carry on its business as
described in the Preliminary Offering Memorandum and the Offering Memorandum and
to own, lease and operate its properties, and, after giving effect to the
Contributions and Mergers in accordance with the terms of the Contribution and
Merger Documents, will be duly qualified and in good standing as a foreign
corporation or limited liability company, as the case may be, and authorized to
do business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole (a "Material Adverse Effect").
(c) All limited liability company interests of the Company
are owned by Holdings, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each a "Lien") (other than
those in favor of the lenders under the Senior Credit Facility). All shares
of capital stock of Consolidated Container Capital, Inc. are owned by the
Company, free and clear of any Liens (other than those in favor of the
lenders under the Senior Credit Facility). All outstanding limited liability
company interests of the Company have been duly authorized, validly issued
and are not subject to any preemptive or similar rights. All outstanding
shares of capital stock of Consolidated Container Capital, Inc. have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights.
(d) The entities listed on Schedule D hereto are, or upon
consummation of the Contributions and Mergers, will be the only subsidiaries,
direct or indirect, of the Company. All of the outstanding shares of capital
stock of each of the Company's subsidiaries that are corporations have been or,
after giving effect to the Contributions and Mergers in accordance with the
terms of the Contribution and Merger Documents, will be duly authorized and
validly issued, fully paid and non-assessable, and owned by the Company,
directly or indirectly through one or more subsidiaries, free and clear of any
Liens (other than Liens in favor of the lenders under the Senior Credit Facility
and other than Reid Mexico, S.A. de C.V., which is 51% owned by the Company).
All of the outstanding limited liability company interests of each of the
Company's subsidiaries that are limited liability companies have been and, after
giving effect to the Contributions and Mergers in accordance with the terms of
the Contribution and Merger Documents, will be duly authorized and validly
issued and are owned by the Company, directly or indirectly through one or more
subsidiaries, free and clear of any Liens (other than those in favor of the
lenders under the Senior Credit Facility).
(e) This Agreement has been duly authorized, executed and
delivered by each of the Issuers.
(f) On the Closing Date, the Indenture will have been duly
authorized by each of the Issuers and each of the Subsidiary Guarantors and will
have been validly executed and delivered by each of the Issuers and each of the
Subsidiary Guarantors. When the Indenture has been
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duly executed and delivered by each of the Issuers, each of the Subsidiary
Guarantors and the Trustee, the Indenture will be a valid and binding agreement
of each of the Issuers, each Subsidiary Guarantor, enforceable against the
Issuers and each Subsidiary Guarantor in accordance with its terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally, (ii) general equitable principles
(whether considered in a proceeding in equity or at law) and (iii) an implied
covenant of good faith and fair dealing. On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture Act
of 1939, as amended (the "TIA" or "Trust Indenture Act"), and the rules and
regulations of the Commission applicable to an indenture which is qualified
thereunder.
(g) On the Closing Date, the Senior Subordinated Notes will
have been duly authorized, validly executed and delivered by each of the
Issuers. When the Senior Subordinated Notes have been issued, executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the terms of this
Agreement, the Senior Subordinated Notes will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Issuers, enforceable
in accordance with their terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law) and (iii) an implied covenant of good faith and fair
dealing. On the Closing Date, the Senior Subordinated Notes will conform as to
legal matters to the description thereof in the Offering Memorandum.
(h) On the Closing Date, the New Senior Subordinated Notes
will have been duly authorized by each of the Issuers. When the New Senior
Subordinated Notes are issued, executed and authenticated in accordance with the
terms of the Exchange Offer and the Indenture, the New Senior Subordinated Notes
will be entitled to the benefits of the Indenture and will be the valid and
binding obligations of each of the Issuers, enforceable against each of the
Issuers in accordance with their terms, except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law) and (iii) an implied covenant of good faith and fair
dealing.
(i) On the Closing Date, the Subsidiary Guarantee to be
endorsed on or annexed to the Senior Subordinated Notes by each Subsidiary
Guarantor will have been duly authorized, executed and delivered by each such
Subsidiary Guarantor. When the Senior Subordinated Notes have been issued,
executed and authenticated in accordance with the Indenture and delivered to and
paid for by the Initial Purchasers in accordance with the terms of this
Agreement, the Subsidiary Guarantee of each Subsidiary Guarantor endorsed
thereon or annexed thereto will be entitled to the benefits of the Indenture and
will be the valid and binding obligation of such Subsidiary Guarantor,
enforceable against such Subsidiary Guarantor in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights
11
<PAGE>
generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law) and (iii) an implied covenant of good faith and fair
dealing. On the Closing Date, the Subsidiary Guarantees to be endorsed on or
annexed to the Senior Subordinated Notes will conform as to legal matters to the
description thereof in the Offering Memorandum.
(j) On the Closing Date, the Subsidiary Guarantee to be
endorsed on or annexed to the New Senior Subordinated Notes by each Subsidiary
Guarantor will have been duly authorized by such Subsidiary Guarantor and, when
issued, will have been duly executed and delivered by each such Subsidiary
Guarantor. When the New Senior Subordinated Notes have been issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Subsidiary Guarantee of each Subsidiary Guarantor endorsed
thereon or annexed thereto will be entitled to the benefits of the Indenture and
will be the valid and binding obligation of such Subsidiary Guarantor,
enforceable against such Subsidiary Guarantor in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity or at law)
and (iii) an implied covenant of good faith and fair dealing. When the New
Senior Subordinated Notes are issued, authenticated and delivered, the
Subsidiary Guarantees to be endorsed or annexed to on the New Senior
Subordinated Notes will conform as to legal matters to the description thereof
in the Offering Memorandum.
(k) The Registration Rights Agreement has been duly authorized
by the each of Issuers and, on the Closing Date, will have been duly authorized
by each of the Subsidiary Guarantors and will have been duly executed and
delivered by each of the Issuers and each of the Subsidiary Guarantors. When the
Registration Rights Agreement has been duly executed and delivered, the
Registration Rights Agreement will be a valid and binding agreement of each of
the Issuers and each of the Subsidiary Guarantors, enforceable against each of
the Issuers and each of the Subsidiary Guarantors in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity or at law),
(iii) an implied covenant of good faith and fair dealing and (iv) any rights of
indemnity or contribution thereunder may be limited by federal or state
securities laws or public policy considerations. On the Closing Date, the
Registration Rights Agreement will conform as to legal matters to the
description thereof in the Offering Memorandum.
(l) The Contribution and Merger Agreement has been duly
authorized, executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity or at law),
(iii) an implied covenant of good faith and fair dealing and (iv) any rights of
indemnity or contribution thereunder may be limited by federal or state
securities laws or public policy considerations. On the Closing Date, the
Contribution and
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Merger Agreement will conform as to legal matters to the description thereof in
the Offering Memorandum.
(m) By or on the Closing Date, the Senior Credit Facility will
have been duly authorized, executed and delivered by each of Holdings and the
Company. When the Senior Credit Facility has been duly executed and delivered,
the Senior Credit Facility will be a valid and binding agreement each of the
Issuers and each of the Subsidiary Guarantors, enforceable against each of the
Issuers and each of the Subsidiary Guarantors in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity or at law),
(iii) an implied covenant of good faith and fair dealing and (iv) the effects of
the possible judicial application of foreign laws or foreign governmental or
judicial action affecting creditors' rights. On the Closing Date, the Senior
Credit Facility will conform as to legal matters to the description thereof in
the Offering Memorandum.
(n) Neither the Company nor any of its subsidiaries is in
violation of or, after giving effect to the Contributions and Mergers in
accordance with the terms of the Contribution and Merger Documents, will be (i)
in violation of its respective charter, by-laws or operating agreement, as the
case may be, or (ii) in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective properties are bound, except in the case of clause (ii) for
such violations that would not have a Material Adverse Effect.
(o) The execution, delivery and performance of this Agreement
and the other Operative Documents by each of the Issuers (or following the
Contributions and Mergers, each of the Issuers and each of the Subsidiary
Guarantors), compliance by each of the Issuers and each of the Subsidiary
Guarantors with all provisions hereof and thereof, the consummation of the
Contributions and Mergers and the consummation of the other transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except as may be required under (1) securities or
Blue Sky laws of the various states with respect to the purchase and
distribution of the Senior Subordinated Notes by the Initial Purchasers, (2) the
Securities Act and the Trust Indenture Act with respect to the Exchange Offer
required by the Registration Rights Agreement, (3) any filings or recordings
pursuant to the Senior Credit Facility and its related security documents to
perfect the security interests in the collateral thereunder and (4) (A) the New
Jersey Industrial Site Recovery Act and (B) certain post-closing filings
relating to the Connecticut Transfer Act, with respect to the consummation of
the Contribution and Merger Agreement), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter,
by-laws or operating agreement, as the case may be, of the Company or any of its
subsidiaries or any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of its subsidiaries is a party or
by which
13
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the Company or any of its subsidiaries or their respective properties are bound,
except for such violations that would not have a Material Adverse Effect, (iii)
violate any applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over the
Company, any of its subsidiaries or their respective properties, except for such
violations that would not have a Material Adverse Effect, (iv) result in the
imposition or creation of (or the obligation to create or impose) a Lien under,
any agreement or instrument to which the Company or any of its subsidiaries are
a party or by which the Company or any of its subsidiaries or their respective
properties are bound (other than those in favor of the lenders under the Senior
Credit Facility), or (v) result in the termination, suspension or revocation of
any Authorization (as defined below) of the Company or any of its subsidiaries
or result in any other impairment of the rights of the holder of any such
Authorization, except as would not have a Material Adverse Effect.
(p) Except as disclosed in the Offering Memorandum, there are
and, after giving effect to the Contributions and Mergers in accordance with the
terms of the Contribution and Merger Documents, there will be no legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of their respective properties are
subject, which might result, singly or in the aggregate, in a Material Adverse
Effect.
(q) Except as disclosed in the Offering Memorandum, neither
the Company nor any of its subsidiaries has and, after giving effect to the
Contributions and Mergers in accordance with the terms of the Contribution and
Merger Documents, will have violated (i) any foreign, federal, state or local
law or regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or (iii) any
provisions of the Foreign Corrupt Practices Act or the rules and regulations
promulgated thereunder, except with respect to each of clauses (i), (ii) and
(iii) of this clause (q) for such violations which, singly or in the aggregate,
would not have a Material Adverse Effect.
(r) Except as disclosed in the Offering Memorandum, there are
and, after giving effect to the Contributions and Mergers in accordance with the
terms of the Contribution and Merger Documents, there will be no costs or
liabilities associated with Environmental Laws (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any Authorization, any
related constraints on operating activities and any potential liabilities to
third parties) which would, singly or in the aggregate, have a Material Adverse
Effect.
(s) Each of the Company and its subsidiaries has and, after
giving effect to the Contributions and Mergers in accordance with the terms of
the Contribution and Merger Documents, will have such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
"Authorization") of, and has and, after giving effect to the Contributions and
Mergers in accordance with the terms of the Contribution and Merger Documents,
will have made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including without limitation, under any applicable
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Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is and, after giving effect to the Contributions and Mergers in
accordance with the terms of the Contribution and Merger Documents, will be
valid and in full force and effect, and each of the Company and its subsidiaries
is and, after giving effect to the Contributions and Mergers in accordance with
the terms of the Contribution and Merger Documents, will be in compliance with
all the terms and conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect thereto; and
no event has occurred (including, without limitation, the receipt of any notice
from any authority or governing body) which allows or, after notice or lapse of
time or both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would result
in any other impairment of the rights of the holder of any such Authorization;
and such Authorizations contain and, after giving effect to the Contributions
and Mergers in accordance with the terms of the Contribution and Merger
Documents, will contain, no restrictions that are burdensome to the Company or
any of its subsidiaries; except where such failure to be valid and in full force
and effect or to be in compliance, the occurrence of any such event or the
presence of any such restriction would not, singly or in the aggregate, have a
Material Adverse Effect.
(t) Each of the Company and its subsidiaries has and,
immediately after the Contributions and Mergers in accordance with the terms of
the Contribution and Merger Documents, will have, good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by it that is material to the business of the Company and its
subsidiaries, in each case free and clear of all Liens and defects, except Liens
described in the Offering Memorandum, Liens in favor of the lenders under the
Senior Credit Facility or Liens that do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by the Company or any of its subsidiaries. Any real property and
buildings held under lease by the Company or any of its subsidiaries are and,
immediately after the Contributions and Mergers in accordance with the terms of
the Contribution and Merger Documents, will be held by the Company or such
subsidiary under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company or such subsidiary.
(u) Except as disclosed in the Offering Memorandum, each of
the Company and its subsidiaries owns or possesses, and immediately after the
Contributions and Mergers in accordance with the terms of the Contribution and
Merger Documents, will own or possess, or can acquire on reasonable terms, all
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names ("intellectual property") currently employed by it in connection
with the business now operated, or immediately after the Contributions and
Mergers in accordance with the terms of the Contribution and Merger Documents,
will be operated by the Company and its subsidiaries, except where the failure
to own or possess or otherwise be able to acquire such intellectual property
would not, singly or in the
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aggregate, have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has received within the last three years any written notice of
infringement of asserted rights of others with respect to any of such
intellectual property that, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect.
(v) Each of the Company and its subsidiaries will, after
giving effect to the Contributions and Mergers in accordance with the terms of
the Contribution and Merger Documents, carry insurance (including
self-insurance, if any) in such amounts and covering such risks as in its
reasonable determination is adequate for the conduct of its business and the
value of its properties.
(w) The accountants that have certified the financial
statements and supporting schedules included in the Preliminary Offering
Memorandum and the Offering Memorandum are independent public accountants with
respect to the Issuers and the Subsidiary Guarantors, as required by Rule 101 of
the AICPA's Code of Professional Conduct and its interpretations and rulings.
(x) The historical financial statements, together with related
notes forming part of the Offering Memorandum (and any amendment or supplement
thereto), present fairly the consolidated financial position, results of
operations and changes in financial position of the Company and its subsidiaries
on the basis stated in the Offering Memorandum at the respective dates or for
the respective periods to which they apply; such statements and related notes
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial information set forth in the Offering
Memorandum (and any amendment or supplement thereto) are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(y) The pro forma financial statements included in the
Preliminary Offering Memorandum and the Offering Memorandum have been prepared
on a basis consistent with the historical financial statements of the Company
and its subsidiaries and give effect to assumptions used in the preparation
thereof on a reasonable basis and in good faith and present fairly the
historical and proposed transactions contemplated by the Preliminary Offering
Memorandum and the Offering Memorandum; and such pro forma financial statements
comply as to form in all material respects with the requirements applicable to
pro forma financial statements included in registration statements on Form S-1
under the Securities Act. The other pro forma financial and statistical
information and data included in the Offering Memorandum are, in all material
respects, accurately presented and prepared on a basis consistent with the pro
forma financial statements.
(z) The Issuers are not and, after giving effect to (i) the
Contributions and Mergers in accordance with the terms of the Contribution and
Merger Documents and (ii) the offering and sale of the Senior Subordinated Notes
and the application of the net proceeds thereof as described in the Offering
Memorandum, will not be, an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended.
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(aa) There are and, after giving effect to the Contributions
and Mergers in accordance with the terms of the Contribution and Merger
Documents, there will be no contracts, agreements or understandings between
either Issuer or any Subsidiary Guarantor and any person granting such person
the right to require such Issuer or such Subsidiary Guarantor to file a
registration statement under the Securities Act with respect to any securities
of such Issuer or such Subsidiary Guarantor or to require such Issuer or such
Subsidiary Guarantor to include such securities with the Notes and Subsidiary
Guarantees registered pursuant to any Registration Statement.
(bb) None of the transactions contemplated by this Agreement,
including the use of proceeds by the Company, will violate, Regulation T (12
C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R.
Part 224) of the Board of Governors of the Federal Reserve System.
(cc) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Securities Act (i) has imposed (or has informed any Issuer or any Subsidiary
Guarantor that it is considering imposing) any condition (financial or
otherwise) on any Issuer's or any Subsidiary Guarantor's retaining any rating
assigned to any Issuer or any Subsidiary Guarantor, any securities of any Issuer
or any Subsidiary Guarantor or (ii) has indicated to any Issuer or any
Subsidiary Guarantor that it is considering (a) the downgrading, suspension, or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of any Issuer, any Subsidiary Guarantor or any
securities of any Issuer or any Subsidiary Guarantor.
(dd) Since the respective dates as of which information is
given in the Offering Memorandum, other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there has not occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management, or
operations of the Company and its subsidiaries, taken as a whole, (ii) there has
not been any material adverse change or any development involving a prospective
material adverse change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries has incurred any material liability or obligation, direct or
contingent.
(ee) The Company has delivered to the Initial Purchasers true
and correct conformed copies of the Contribution and Merger Agreement, including
all schedules and exhibits thereto, and there have been no amendments,
alterations, modifications or waivers thereto or in the exhibits or schedules
thereto, except as have been delivered to the Initial Purchasers.
(ff) There is no strike or material labor dispute, slowdown or
work stoppage involving the employees of the Company or any of its subsidiaries
which is pending or, to the best knowledge of the Issuers, threatened.
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(gg) The Company maintains and, after giving effect to the
Contributions and Mergers in accordance with the terms of the Contribution and
Merger Documents, will maintain, a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(hh) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been and, after
giving effect to the Contributions and Mergers in accordance with the terms of
the Contribution and Merger Documents, will have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been and, after giving effect to the
Contributions and Mergers in accordance with the terms of the Contribution and
Merger Documents, will have been, paid, other than those being contested in good
faith and for which adequate reserves have been provided.
(ii) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Securities Act.
(jj) When the Senior Subordinated Notes and the Subsidiary
Guarantees are issued and delivered pursuant to this Agreement, neither the
Senior Subordinated Notes nor the Subsidiary Guarantees will be of the same
class (within the meaning of Rule 144A under the Securities Act) as any security
of the Issuers or the Subsidiary Guarantors that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated inter-dealer quotation system.
(kk) No form of general solicitation or general advertising
(as defined in Regulation D under the Securities Act) was used by the Issuers,
the Subsidiary Guarantors or any of their respective representatives (other than
the Initial Purchasers, as to whom the Issuers make no representation) in
connection with the offer and sale of the Senior Subordinated Notes contemplated
hereby, including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising. No securities of the same
class as the Senior Subordinated Notes have been issued and sold by the Issuers
within the six-month period immediately prior to the date hereof.
(ll) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the TIA.
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(mm) None of the Issuers, the Subsidiary Guarantors nor any of
their respective affiliates or any person acting on its or their behalf (other
than the Initial Purchasers, as to whom the Issuers make no representation) has
engaged or will engage in any directed selling efforts within the meaning of
Regulation S under the Securities Act ("Regulation S") with respect to the
Senior Subordinated Notes or the Subsidiary Guarantees.
(nn) Neither the Company nor anyone acting at its direction
has offered or sold or, solely in connection with Exempt Resales pursuant to
this Agreement, will offer or sell the Senior Subordinated Notes in transactions
other than offshore transactions in reliance on Regulation S under the
Securities Act, if any.
(oo) The sale of the Senior Subordinated Notes pursuant to
Regulation S is not part of a plan or scheme by the Issuers, the Subsidiary
Guarantors or any of their respective affiliates or any person acting on its or
their behalf (other than the Initial Purchaser, as to whom the Issuers make no
representation) to evade the registration provisions of the Act.
(pp) The Issuers, the Subsidiary Guarantors and their
respective affiliates and all persons acting on their behalf (other than the
Initial Purchasers, as to whom the Issuers makes no representation) have
complied with and, after giving effect to the Contributions and Mergers in
accordance with the terms of the Contribution and Merger Documents, will comply
with the offering restrictions requirements of Regulation S in connection with
the offering of the Senior Subordinated Notes outside the United States and, in
connection therewith, the Offering Memorandum will contain the disclosure
required by Rule 902(g).
(qq) The Senior Subordinated Notes sold in reliance on
Regulation S will be represented upon issuance by a temporary global security
that may not be exchanged for definitive securities until the expiration of the
40 day distribution compliance period referred to in Rule 903(c)(3) of the
Securities Act and only upon certification of beneficial ownership of such
Senior Subordinated Notes by non-U.S. persons or U.S. persons who purchased such
Senior Subordinated Notes in transactions that were exempt from the registration
requirements of the Securities Act.
(rr) No registration under the Securities Act of the Senior
Subordinated Notes or the Subsidiary Guarantees is required for the sale of the
Senior Subordinated Notes and the Subsidiary Guarantees to the Initial
Purchasers as contemplated hereby or for the Exempt Resales, assuming the
accuracy of the Initial Purchasers' representations and warranties and
agreements set forth in Section 7 hereof.
(ss) Each certificate signed by any officer of either Issuer
or any Subsidiary Guarantor and delivered to the Initial Purchasers or counsel
for the Initial Purchasers shall be deemed to be a representation and warranty
by such Issuer or such Subsidiary Guarantor to the Initial Purchasers as to the
matters covered thereby.
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<PAGE>
The Issuers acknowledge that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 9 hereof, counsel to the Issuers and the Subsidiary Guarantors and
counsel to the Initial Purchasers, will rely upon the accuracy and truth of the
foregoing representations and hereby consents to such reliance.
7. Initial Purchasers' Representations and Warranties. Each of the
Initial Purchasers, severally and not jointly, represents and warrants to the
Issuers (or following the Contributions and Mergers, the Issuers and the
Subsidiary Guarantors), and agrees that:
(a) Such Initial Purchaser is either a QIB or an institutional
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) (an "Accredited Institution"), in either case, with such
knowledge and experience in financial and business matters as is necessary in
order to evaluate the merits and risks of an investment in the Senior
Subordinated Notes.
(b) Such Initial Purchaser (A) is not acquiring the Senior
Subordinated Notes with a view to any distribution thereof or with any intention
of offering or selling any of the Senior Subordinated Notes in a transaction
that would violate the Securities Act or the securities laws of any state of the
United States or any other applicable jurisdiction and (B) will be reoffering
and reselling the Senior Subordinated Notes only to (x) QIBs in reliance on the
exemption from the registration requirements of the Securities Act provided by
Rule 144A and (y) in offshore transactions in reliance upon Regulation S under
the Securities Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) has been or will be used by such Initial Purchaser or any of
its representatives in connection with the offer and sale of the Senior
Subordinated Notes pursuant hereto, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with
Exempt Resales, such Initial Purchaser will solicit offers to buy the Senior
Subordinated Notes only from, and will offer to sell the Senior Subordinated
Notes only to, Eligible Purchasers. Each Initial Purchaser further agrees that
it will offer to sell the Senior Subordinated Notes only to, and will solicit
offers to buy the Senior Subordinated Notes only from (A) Eligible Purchasers
that the Initial Purchaser reasonably believes are QIBs and (B) Regulation S
Purchasers, in each case, that agree that (x) the Senior Subordinated Notes
purchased by them may be resold, pledged or otherwise transferred within the
time period referred to under Rule 144(k) (taking into account the provisions of
Rule 144(d) under the Securities Act, if applicable) under the Securities Act,
as in effect on the date of the transfer of such Senior Subordinated Notes, only
(I) to the Company or any of its subsidiaries, (II) to a person whom the seller
reasonably believes is a QIB purchasing for its own account or for the account
of a QIB in a transaction meeting the requirements of Rule 144A under the
Securities
20
<PAGE>
Act, (III) in an offshore transaction (as defined in Rule 902 under the
Securities Act) meeting the requirements of Rule 904 of the Securities Act, (IV)
in a transaction meeting the requirements of Rule 144 under the Securities Act,
(V) to an Accredited Institution that, prior to such transfer, furnishes the
Trustee a signed letter containing certain representations and agreements
relating to the registration of transfer of such Senior Subordinated Note (the
form of which is substantially the same as set forth as an exhibit to the
Indenture) and, if such transfer is in respect of an aggregate principal amount
of Senior Subordinated Notes less than $250,000, an opinion of counsel
acceptable to the Company that such transfer is in compliance with the
Securities Act, (VI) in accordance with another exemption from the registration
requirements of the Securities Act (and based upon an opinion of counsel
acceptable to the Company) or (VII) pursuant to an effective registration
statement and, in each case, in accordance with the applicable securities laws
of any state of the United States or any other applicable jurisdiction and (y)
they will deliver to each person to whom such Senior Subordinated Notes or an
interest therein is transferred a notice substantially to the effect of the
foregoing.
(e) Neither such Initial Purchaser nor any of its affiliates
or any person acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Regulation S with respect to the
Senior Subordinated Notes or the Subsidiary Guarantees.
(f) The Senior Subordinated Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S have been and will
be offered and sold only in offshore transactions.
(g) The sale of the Senior Subordinated Notes offered and sold
by such Initial Purchaser pursuant hereto in reliance on Regulation S is not
part of a plan or scheme to evade the registration provisions of the Securities
Act.
(h) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Senior Subordinated Notes in the United
States or to, or for the benefit or account of, a U.S. Person (other than a
distributor), in each case, as defined in Rule 902 under the Securities Act (i)
as part of its distribution at any time and (ii) otherwise until 40 days after
the later of the commencement of the offering of the Senior Subordinated Notes
pursuant hereto and the Closing Date, other than in accordance with Regulation S
of the Securities Act or another exemption from the registration requirements of
the Securities Act. Such Initial Purchaser agrees that, during such 40-day
distribution compliance period, it will not cause any advertisement with respect
to the Senior Subordinated Notes (including any "tombstone" advertisement) to be
published in any newspaper or periodical or posted in any public place and will
not issue any circular relating to the Senior Subordinated Notes, except such
advertisements as permitted by and include the statements required by Regulation
S.
(i) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Senior Subordinated Notes by it to any distributor,
dealer or person receiving a selling concession, fee or other remuneration
during the 40-day distribution compliance period referred to in Rule
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903(c)(3) under the Securities Act, it will send to such distributor, dealer or
person receiving a selling concession, fee or other remuneration a confirmation
or notice to substantially the following effect:
"The 10 1/8% Senior Subordinated Notes due 2009 (the "Senior
Subordinated Notes") covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities Act"),
and may not be offered and sold within the United States or to, or
for the account or benefit of, U.S. persons (i) as part of your
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering of the Senior Subordinated
Notes and the date of closing related thereto, except in either case
in accordance with Regulation S under the Securities Act (or Rule
144A under the Securities Act or to an institutional "accredited
investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) in transactions that are exempt from the
registration requirements of the Securities Act), and in connection
with any subsequent sale by you of the Senior Subordinated Notes
covered hereby in reliance on Regulation S during the period
referred to above to any distributor, dealer or person receiving a
selling concession, fee or other remuneration, you must deliver a
notice to substantially the foregoing effect. Terms used above have
the meanings assigned to them in Regulation S."
(j) Such Initial Purchaser agrees that the Senior Subordinated
Notes offered and sold in reliance on Regulation S will be represented upon
issuance by a global security that may not be exchanged for definitive
securities until the expiration of the 40-day restricted period referred to in
Rule 903(c)(3) of the Securities Act and only upon certification of beneficial
ownership of such Senior Subordinated Notes by non-U.S. persons or U.S. persons
who purchased such Senior Subordinated Notes in transactions that were exempt
from the registration requirements of the Securities Act.
Such Initial Purchaser acknowledges that the Issuers (or following
the Contributions and Mergers, the Issuers and the Subsidiary Guarantors) and,
for purposes of the opinions to be delivered to each Initial Purchaser pursuant
to Section 9 hereof, counsel to the Issuers and the Subsidiary Guarantors and
counsel to the Initial Purchasers, will rely upon the accuracy and truth of the
foregoing representations, and such Initial Purchaser hereby consents to such
reliance.
8. Indemnification.
(a) Each of the Issuers (or following the Contributions and
Mergers, each of the Issuers and each of the Subsidiary Guarantors) agree,
jointly and severally, to indemnify and hold harmless each Initial Purchaser,
its directors, its officers and each person, if any, who controls such
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Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments (including, without limitation, any legal or
other expenses incurred in connection with investigating or defending any
matter, including any action, that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Offering Memorandum (or any
amendment or supplement thereto), any Rule 144A Information provided by either
Issuer or any Subsidiary Guarantor to any holder of Senior Subordinated Notes
pursuant to Section 5(h) or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are (i) caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to the Initial Purchaser furnished in writing to the Issuers by such Initial
Purchaser, provided, however, that the foregoing indemnity agreement with
respect to any Preliminary Offering Memorandum shall not inure to the benefit of
any Initial Purchaser who failed to deliver an Offering Memorandum, as then
amended or supplemented, (so long as the Offering Memorandum and any amendment
or supplement thereto was provided by the Issuers to the several Initial
Purchasers in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the Closing Date) to the person asserting any losses,
claims, damages, liabilities or judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Offering Memorandum, or (ii) caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, if such material misstatement or omission or
alleged material misstatement or omission was cured in the Offering Memorandum.
(b) The Initial Purchasers agree, severally and not jointly,
to indemnify and hold harmless the Issuers (or following the Contributions and
Mergers, the Issuers and the Subsidiary Guarantors), and their respective
directors, managers (or Management Committee members) and officers and each
person, if any, who controls (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) the Issuers (or following the
Contributions and Mergers, the Issuers or any Subsidiary Guarantors), to the
same extent as the foregoing indemnity from the Issuers (or following the
Contributions and Mergers, the Issuers and the Subsidiary Guarantors) to each
Initial Purchaser but only with reference to information relating to an Initial
Purchaser furnished in writing to the Issuers by any Initial Purchaser expressly
for use in the Preliminary Offering Memorandum or the Offering Memorandum.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Initial Purchasers shall not
be required to assume the defense of such action pursuant to this Section 8(c),
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but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of the Initial Purchasers). Any indemnified party shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of the parties indemnified pursuant to Section 8(a),
and by the Issuers, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers and the Subsidiary Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, from the offering of the Senior Subordinated
Notes or (ii) if the allocation provided by clause 8(d)(i) above is not
permitted by
24
<PAGE>
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(d)(i) above but also the relative
fault of the Issuers and the Subsidiary Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by the Issuers and the Subsidiary Guarantors, on the one hand,
and the Initial Purchasers, on the other hand, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Senior
Subordinated Notes (after underwriting discounts and commissions, but before
deducting expenses) received by the Issuers, and the total discounts and
commissions received by the Initial Purchasers bear to the total price to
investors of the Senior Subordinated Notes, in each case as set forth in
Schedule B hereto. The relative fault of the Issuers and the Subsidiary
Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Issuers or the
Subsidiary Guarantors, on the one hand, or the Initial Purchasers, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Issuers (or following the Contributions and Mergers, the Issuers
and the Subsidiary Guarantors) and the Initial Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchasers shall not be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
such Initial Purchasers exceeds the amount of any damages which the Initial
Purchasers have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial Purchasers'
obligation to contribute pursuant to this Section 8(d) are several in proportion
to the respective principal amount of Senior Subordinated Notes purchased by
each of the Initial Purchasers hereunder and not joint.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
25
<PAGE>
9. Conditions of Initial Purchasers' Obligations. The obligations of
the Initial Purchasers to purchase the Senior Subordinated Notes under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Issuers (or
following the Contributions and Mergers, the Issuers and the Subsidiary
Guarantors) contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a possible
change that does not indicate the direction of the possible change in, any
rating of either Issuer or any Subsidiary Guarantor or any securities of either
Issuer or any Subsidiary Guarantor (including, without limitation, the placing
of any of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any "nationally
recognized statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act, (ii) there shall not have occurred
any change, nor shall notice have been given of any potential or intended
change, in the outlook for any rating of either Issuer or any Subsidiary
Guarantor or any securities of the Issuers or any Subsidiary Guarantor by any
such rating organization and (iii) no such rating organization shall have given
notice that it has assigned (or is considering assigning) a lower rating to the
Senior Subordinated Notes than that on which the Senior Subordinated Notes were
marketed.
(c) Since the respective dates as of which information is
given in the Offering Memorandum, other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there shall not have occurred any change or any
development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Company
and its subsidiaries, taken as a whole, (ii) there shall not have been any
change or any development involving a prospective change in the capital stock or
in the long-term debt of the Company or any of its subsidiaries (except with
respect to the consent solicitation and tender offer for the 10% Senior Secured
Notes due 2006 of Plastic Containers LLC) and (iii) neither the Company nor
any of its subsidiaries shall have incurred any liability or obligation, direct
or contingent, the effect of which, in any such case described in clause
9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is material and adverse and,
in your judgment, makes it impracticable to market the Senior Subordinated Notes
on the terms and in the manner contemplated in the Offering Memorandum.
(d) You shall have received on the Closing Date a certificate
dated the Closing Date, signed by the Presidents and the Chief Financial
Officers of the Issuers, confirming the matters set forth in Sections 6(dd),
9(a) and 9(b) and stating that each of the Issuers and the Subsidiary Guarantors
has complied with all the agreements and satisfied all of the conditions herein
contained and required to be complied with or satisfied on or prior to the
Closing Date.
26
<PAGE>
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Simpson Thacher & Bartlett, counsel for the Issuers and the Subsidiary
Guarantors, substantially to the effect as that provided in Exhibit C.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(g) The Initial Purchasers shall have received, at the time
this Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers each of (i) Deloitte & Touche LLP, (ii)
PricewaterhouseCoopers LLP, (iii) KPMG LLP and (iv) Ernst & Young LLP, all of
which are independent public accountants, containing the information and
statements of the type ordinarily included in accountants' "comfort letters" to
the Initial Purchasers with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
(h) The Senior Subordinated Notes shall have been designated
for trading on PORTAL.
(i) The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Issuers, the Subsidiary Guarantors and the Trustee.
(j) The Issuers and the Subsidiary Guarantors shall have
executed the Registration Rights Agreement and the Initial Purchasers shall have
received an original copy thereof, duly executed by the Issuers and the
Subsidiary Guarantors.
(k) The Senior Credit Facility shall have been entered into by
the parties thereto, and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof and of all other documents and
agreements entered into in connection therewith. Each condition to the closing
contemplated by the Senior Credit Facility shall have been satisfied or waived
thereunder. There shall exist at and as of the Closing Date (after giving effect
to the transactions contemplated by this Agreement and the Contribution and
Merger Documents) no conditions that would constitute a material default (or an
event that, with notice or the lapse of time or both, would constitute a
material default) under the Senior Credit Facility. On the Closing Date, the
closing under the Senior Credit Facility shall have been consummated on terms
that conform in all material respects to the description thereof in the Offering
Memorandum.
(l) All Contribution and Merger Documents (other than the
Equity Registration Rights Agreement) shall have been entered into by the
parties thereto, and the Initial Purchasers shall have received counterparts,
conformed as executed, thereof and of all other documents and agreements entered
into in connection therewith. Each condition to the closing of
27
<PAGE>
the Contributions and Mergers contemplated by the Contribution and Merger
Documents shall have been satisfied or waived by the parties thereto. The
Initial Purchasers shall have been informed of all material waivers with respect
to the Contribution and Merger Documents. Prior to, or simultaneously with, the
closing of the Offering, the Contributions and Mergers shall have been
consummated on terms that conform in all material respects to the description
thereof in the Offering Memorandum. The Initial Purchasers shall have received
evidence satisfactory to the Initial Purchasers that the Contributions and
Mergers has been so consummated.
(m) The lenders of the indebtedness to be refinanced by the
Company and its subsidiaries as set forth in the Offering Memorandum under the
caption "Use of Proceeds" shall have delivered evidence satisfactory to the
Initial Purchasers in connection with the Company's repayment and termination of
such indebtedness, and the Company shall have delivered such letters or such
other evidence to the Initial Purchasers.
(n) On the Closing Date, the Subsidiary Guarantors shall have
approved, adopted, ratified and confirmed the execution, delivery and
performance of this Agreement by the Issuers, and the Initial Purchasers shall
have received a counterpart of this Agreement executed by each Subsidiary
Guarantor as parties hereto.
(o) The Issuers (or following the Contributions and Mergers,
the Issuers and Subsidiary Guarantors) shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Issuers or the Subsidiary
Guarantors, as the case may be, at or prior to the Closing Date.
(p) The Initial Purchasers shall have received, addressed to
the Initial Purchasers, a solvency certificate of the Chief Financial Officers
of the Issuers that is identical to the solvency certificate required to be
delivered to the lenders under the Senior Credit Facility.
10. Effectiveness of Agreement and Termination. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by written notice to the Issuers if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the Initial
Purchasers' judgment, makes it impracticable to market the Senior Subordinated
Notes on the terms and in the manner contemplated in the Offering Memorandum,
(ii) the suspension or material limitation of trading in securities or other
instruments on the New York Stock Exchange, the American Stock Exchange, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade or the Nasdaq National Market or limitation on prices for
securities or other instruments on any such exchange or the Nasdaq National
Market, (iii) the suspension of trading of any securities of the Issuers or any
Subsidiary Guarantor on any exchange or in the over-the-counter market, (iv) the
28
<PAGE>
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects, or will materially and
adversely affect, the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date any one or more of the Initial Purchasers
shall fail or refuse to purchase the Senior Subordinated Notes which it or they
have agreed to purchase hereunder on such date and the aggregate principal
amount of the Senior Subordinated Notes which such defaulting Initial Purchaser
or Initial Purchasers, as the case may be, agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of the
Senior Subordinated Notes to be purchased on such date by all Initial
Purchasers, each non-defaulting Initial Purchaser shall be obligated severally,
in the proportion which the principal amount of the Senior Subordinated Notes
set forth opposite its name in Schedule B bears to the aggregate principal
amount of the Senior Subordinated Notes which all the non-defaulting Initial
Purchasers, as the case may be, have agreed to purchase, or in such other
proportion as you may specify, to purchase the Senior Subordinated Notes which
such defaulting Initial Purchaser or Initial Purchasers, as the case may be,
agreed but failed or refused to purchase on such date; provided that in no event
shall the aggregate principal amount of the Senior Subordinated Notes which any
Initial Purchaser has agreed to purchase pursuant to Section 2 hereof be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of the Senior Subordinated Notes without the written
consent of such Initial Purchaser. If on the Closing Date any Initial Purchaser
or Initial Purchasers shall fail or refuse to purchase the Senior Subordinated
Notes and the aggregate principal amount of the Senior Subordinated Notes with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of the Senior Subordinated Notes to be purchased by all Initial
Purchasers and arrangements satisfactory to the Initial Purchasers and the
Issuers for purchase of such the Senior Subordinated Notes are not made within
48 hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Initial Purchaser and the Issuers.
In any such case which does not result in termination of this Agreement, either
you or the Issuers shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any, in
the Offering Memorandum or any other documents or arrangements may be effected.
Any action taken under this paragraph shall not relieve any defaulting Initial
Purchaser from liability in respect of any default of any such Initial Purchaser
under this Agreement.
11. Initial Purchasers' Information. The Issuers and the Initial
Purchasers acknowledge and agree for all purposes under this Agreement that the
statements with respect to the offering of the Notes set forth in the third
paragraph, in the fourth sentence of the seventh paragraph, in the tenth,
eleventh and twelfth paragraph under the caption "Plan of Distribution" and set
forth in the third sentence of the first paragraph under the caption "Lack of
Public Market" in the section
29
<PAGE>
entitled "Risk Factors," in the Offering Memorandum constitute the only
information furnished to the Issuers in writing by the Initial Purchasers
expressly for use in the Offering Memorandum.
12. Miscellaneous.
Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (i) if to the Issuers or any Subsidiary Guarantor, to 2515
McKinney Avenue, Suite 850, Dallas, Texas 75201, Attention: Chief Financial
Officer and to Vestar Capital Partners III, L.P. and Reid Plastics, Inc., each
care of Vestar Capital Partners, Inc., Seventeenth Street Plaza, 1225 17th
Street, Suite 1660, Denver, Colorado 80202; and (ii) if to the Initial
Purchasers, Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, New York, New York 10172, Attention: Syndicate Department, or in any
case to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Issuers (or following
the Contributions and Mergers, the Issuers and the Subsidiary Guarantors) and
the Initial Purchasers set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Senior Subordinated Notes, regardless of (i) any investigation,
or statement as to the results thereof, made by or on behalf of the Initial
Purchasers, the officers, directors or managers (or Management Committee
members) of the Initial Purchasers, any person controlling the Initial
Purchasers, the Issuers (or following the Contributions and Mergers, the Issuers
and any Subsidiary Guarantor), the officers or directors of the Issuers (or
following the Contributions and Mergers, the Issuers or any Subsidiary
Guarantor), or any person controlling the Issuers (or following the
Contributions and Mergers, the Issuers or any Subsidiary Guarantor), (ii)
acceptance of the Senior Subordinated Notes and payment for them hereunder and
(iii) termination of this Agreement.
If for any reason the Senior Subordinated Notes are not delivered by
or on behalf of the Issuers as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Issuers (or following
the Contributions and Mergers, the Issuers and each Subsidiary Guarantor),
jointly and severally, agree to reimburse the Initial Purchasers for all
reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) incurred by them. Notwithstanding any termination of
this Agreement, the Issuers shall be liable for all reasonable expenses which it
has agreed to pay pursuant to Section 5(i) hereof. The Issuers (or following the
Contributions and Mergers, the Issuers and each Subsidiary Guarantor) also
agree, jointly and severally, to reimburse the Initial Purchasers and its
officers, directors and each person, if any, who controls such Initial
Purchasers within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act for any and all reasonable fees and expenses (including
without limitation the reasonable fees and expenses of counsel) incurred by them
in connection with enforcing their rights under this Agreement (including
without limitation its rights under Section 8).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Issuers (or following
the Contributions and Mergers, the
30
<PAGE>
Issuers and the Subsidiary Guarantors), the Initial Purchasers, the Initial
Purchasers' directors and officers, any controlling persons referred to herein,
the directors or managers (or Management Committee members) of the Issuers (or
following the Contributions and Mergers, the Issuers and the Subsidiary
Guarantors) and their respective successors and assigns, all as and to the
extent provided in this Agreement, and no other person shall acquire or have any
right under or by virtue of this Agreement. The term "successors and assigns"
shall not include a purchaser of any of the Senior Subordinated Notes from the
Initial Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
31
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Issuers and the Initial Purchasers.
Very truly yours,
CONSOLIDATED CONTAINER COMPANY LLC
By: CONSOLIDATED CONTAINER HOLDINGS LLC
as its sole member and manager
By: /s/ Steven M. Silver
----------------------------------
Name: Steven M. Silver
Title: Vice President
CONSOLIDATED CONTAINER CAPITAL, INC.
By: /s/ Steven M. Silver
----------------------------------
Name: Steven M. Silver
Title: Vice President
(Purchase Agreement)
<PAGE>
The foregoing Purchase Agreement is hereby confirmed and accepted as of the date
first above written by Donaldson, Lufkin & Jenrette Securities Corporation on
behalf of the Initial Purchasers.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Howard S. Rimerman
----------------------------------
Name: Howard S. Rimerman
Title: Vice President
(Purchase Agreement)
<PAGE>
SCHEDULE A
Subsidiary Guarantors
Reid Plastics Group LLC
Plastic Containers LLC
Continental Plastic Containers LLC
Continental Caribbean Containers, Inc.
<PAGE>
SCHEDULE B
Contribution and Merger Documents
1. Limited Liability Company Agreement of Consolidated Container Holdings LLC
2. Consolidated Container Holdings LLC 1999 Unit Option Plan
3. Trademark License Agreement between Continental Can Company, Inc. and
Consolidated Container Holdings LLC and Consolidated Container Company LLC
4. Bill of Sale, Assignment and Assumption Agreement, dated April 29, 1999,
between Franklin Plastics, Inc. and the Purchaser
5. Assumption Agreement, dated April 29, 1999, among Reid Plastics Holdings,
Inc., Consolidated Container Holdings LLC and Consolidated Container
Company LLC
6. Bernon Side Letter between Suiza Foods Corporation and Peter M. Bernon,
dated April 29, 1999
7. Non-Competition Side Letter Agreement, dated April 29, 1999, between
Vestar Packaging LLC, Reid Plastics Holdings, Inc. and Suiza Foods
Corporation
8. Tender Offer Side Letter among Vestar Packaging LLC, Reid Plastics
Holdings, Inc., Franklin Plastics, Inc. and Suiza Foods Corporation
9. Supply Agreement between Suiza Foods Corporation and Consolidated
Container Holdings LLC; Supply Agreement-Side Letter Agreement #1; Supply
Agreement - Side Letter Agreement #2
10. Management Agreement, dated April 29, 1999, among Consolidated Container
Holdings LLC, Consolidated Container Company LLC and Vestar Capital
Partners
<PAGE>
SCHEDULE C
Principal Amount of
Initial Purchaser Senior Subordinated Notes
- ----------------- -------------------------
Donaldson, Lufkin & Jenrette
Securities Corporation $111,000,000.00
Deutsche Bank Securities Inc. 24,666,666.67
J.P. Morgan Securities Inc. 24,666,666.67
Bear, Stearns & Co. Inc. 24,666,666.67
---------------
Total $185,000,000.00
===============
<PAGE>
SCHEDULE D
Subsidiaries
Reid Plastics Group LLC
Plastic Containers LLC
Consolidated Container Capital, Inc.
Continental Plastic Containers LLC
Continental Caribbean Containers, Inc.
Reid Canada, Inc.
Reid Mexico, S.A. de C.V.
<PAGE>
EXHIBIT A
Joinder of
the Subsidiary Guarantors
With respect to the Purchase Agreement, dated as of June 24, 1999,
as amended (the "Purchase Agreement") among Consolidated Container Company LLC,
Consolidated Container Capital, Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities Inc., J.P. Morgan & Co. and Bear, Stearns
& Co. Inc., as Initial Purchasers, the undersigned hereby agrees to be bound by
such Purchase Agreement, and assume all of the rights and obligations of the
Subsidiary Guarantors thereunder, as of the effective time of the Contributions
and Mergers on July 2, 1999. Capitalized terms used but not defined in this
Joinder shall have the meanings given to such terms in the Purchase Agreement.
Very truly yours,
REID PLASTICS GROUP LLC
By: CONSOLIDATED CONTAINER COMPANY LLC,
as its Sole Member and Manager
By: CONSOLIDATED CONTAINER HOLDINGS LLC,
as its Sole Member and Manager
By: _______________________________
Name:
Title:
PLASTIC CONTAINERS LLC
By: CONSOLIDATED CONTAINER COMPANY LLC,
as its Sole Member and Manager
By: CONSOLIDATED CONTAINER HOLDINGS LLC,
as its Sole Member and Manager
By: _______________________________
Name:
Title:
J-1
<PAGE>
CONTINENTAL PLASTIC CONTAINERS LLC
By: PLASTIC CONTAINERS LLC,
as its Sole Member and Manager
By: CONSOLIDATED CONTAINER COMPANY LLC,
as its Sole Member and Manager
By: CONSOLIDATED CONTAINER HOLDINGS LLC,
as its Sole Member and Manager
By: _______________________________
Name:
Title:
CONTINENTAL CARIBBEAN CONTAINERS INC.
By:______________________________________
Name:
Title:
J-2
<PAGE>
JOINDER OF
THE SUBSIDIARY GUARANTORS
With respect to the Purchase Agreement, dated as of June 24, 1999,
among Consolidated Container Company LLC, Consolidated Container Capital, Inc.
and Donaldson, Lufkin & Jenrette Securities Corporation, BT Alex. Brown, J.P.
Morgan & Co. and Bear, Stearns & Co. Inc., as Initial Purchasers (the "Purchase
Agreement"), the undersigned hereby agrees to be bound by such Purchase
Agreement, and assume all of the rights and obligations of the Subsidiary
Guarantors thereunder, as of the effective time of the Contributions and Mergers
on July 1, 1999. Capitalized terms used but not defined in this Joinder shall
have the meanings given to such terms in the Purchase Agreement.
Very truly yours,
REID PLASTICS GROUP LLC
By: CONSOLIDATED CONTAINER COMPANY LLC,
as its Sole Member and Manager
By: CONSOLIDATED CONTAINER HOLDINGS LLC,
as its Sole Member and Manager
By: /s/ Steven M. Silver
----------------------------------
Name: Steven M. Silver
Title: Vice President
PLASTIC CONTAINERS LLC
By: CONSOLIDATED CONTAINER COMPANY LLC,
as its Sole Member and Manager
By: CONSOLIDATED CONTAINER HOLDINGS LLC,
as its Sole Member and Manager
By: /s/ Steven M. Silver
----------------------------------
Name: Steven M. Silver
Title: Vice President
<PAGE>
CONTINENTAL PLASTIC CONTAINERS LLC
By: PLASTIC CONTAINERS LLC,
as its Sole Member and Manager
By: CONSOLIDATED CONTAINER COMPANY LLC,
as its Sole Member and Manager
By: CONSOLIDATED CONTAINER HOLDINGS LLC,
as its Sole Member and Manager
By: /s/ Steven M. Silver
----------------------------------
Name: Steven M. Silver
Title: Vice President
CONTINENTAL CARIBBEAN CONTAINERS INC.
By: /s/ Steven M. Silver
----------------------------------
Name: Steven M. Silver
Title: Vice President
<PAGE>
Amendment No. 1 to the Purchase Agreement
Pursuant to Section 4(a) of the Purchase Agreement, dated June 24,
1999 (the "Purchase Agreement"), by and among Consolidated Container Company LLC
and Consolidated Container Capital, Inc. (together, the "Issuers"), the
Subsidiary Guarantors named therein and Donaldson, Lufkin & Jenrette Securities
Corporation, Bear, Stearns & Co., Inc., Deutsche Bank Securities Inc. and J.P.
Morgan Securities Inc. (collectively, the "Initial Purchasers"), the undersigned
hereby agree as of July 1, 1999 that the delivery and payment for the Senior
Subordinated Notes, as defined in the Purchase Agreement, shall be made at 9:00
a.m. New York City time, on July 2, 1999, at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017. All other terms,
conditions and provisions of the Purchase Agreement shall remain in full force
and effect.
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Issuers and the Initial Purchasers.
Very truly yours,
CONSOLIDATED CONTAINER COMPANY LLC
By: CONSOLIDATED CONTAINER HOLDINGS LLC
as its sole member and manager
By: /s/ Steven M. Silver
----------------------------------
Name: Steven M. Silver
Title: Vice President
CONSOLIDATED CONTAINER CAPITAL, INC.
By: /s/ Steven M. Silver
----------------------------------
Name: Steven M. Silver
Title: Vice President
<PAGE>
The foregoing Amendment No. 1 to the Purchase Agreement is hereby confirmed and
accepted as of the date first above written by Donaldson, Lufkin & Jenrette
Securities Corporation on behalf of the Initial Purchasers.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Howard S. Rimerman
-------------------------------------
Name: Howard S. Rimerman
Title: Vice President
<PAGE>
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JULY 1, 1999
BY AND AMONG
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
AND
THE SUBSIDIARY GUARANTORS NAMED HEREIN
AND
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
<PAGE>
2
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of July 1, 1999, by and among Consolidated Container Company LLC, a
Delaware limited liability company (the "COMPANY"), Consolidated Container
Capital, Inc., a Delaware corporation ("CAPITAL" and, together with the Company,
the "ISSUERS"), the subsidiary guarantors set forth on the signature pages
hereto (the "SUBSIDIARY GUARANTORS") and Donaldson, Lufkin & Jenrette Securities
Corporation, Bear, Stearns & Co. Inc., Deutsche Bank Securities Inc., J.P.
Morgan Securities Inc. (each an "INITIAL PURCHASER" and, collectively, the
"INITIAL PURCHASERS"), each of whom has agreed to purchase the Issuers' 10 1/8%
Senior Subordinated Notes due 2009 (the "SENIOR SUBORDINATED NOTES") pursuant to
the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated June 24,
1999 and amended as of July 1, 1999 (the "PURCHASE AGREEMENT"), by and among the
Issuers, the Subsidiary Guarantors and the Initial Purchasers. In order to
induce the Initial Purchasers to purchase the Senior Subordinated Notes, the
Issuers have agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 2 of the Purchase
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them the Indenture, dated as of July 1, 1999, among the
Issuers, the Subsidiary Guarantors and The Bank of New York, as Trustee,
relating to the Senior Subordinated Notes and the New Senior Subordinated Notes
(the "INDENTURE").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Senior Subordinated Notes to be issued in the Exchange
Offer, (b) the maintenance of such Exchange Offer Registration Statement
continuously effective and the keeping of the Exchange Offer open for a
period not less than the
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period required pursuant to Section 3(b) hereof and (c) the delivery by the
Issuers to the Registrar under the Indenture of New Senior Subordinated Notes
in the same aggregate principal amount as the aggregate principal amount of
Senior Subordinated Notes tendered by Holders thereof pursuant to the
Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Issuers of a principal
amount of New Senior Subordinated Notes (which shall be registered pursuant to
the Exchange Offer Registration Statement) equal to the outstanding principal
amount of Senior Subordinated Notes that are tendered by such Holders in
connection with such exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers propose
to sell the Senior Subordinated Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act and in certain
offshore transactions as defined under and pursuant to Regulation S under the
Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
NEW SENIOR SUBORDINATED NOTES: The Issuers' new 10 1/8% Senior
Subordinated Notes due 2009 to be issued pursuant to the Indenture: (i) in the
Exchange Offer or (ii) as contemplated by Section 4 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Issuers and
the Subsidiary Guarantors relating to (a) an offering of New Senior
Subordinated Notes pursuant to an Exchange Offer or (b) the registration for
resale of Transfer Restricted Securities pursuant to the Shelf Registration
Statement, in each case, (i) that is filed pursuant to the provisions of this
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Agreement and (ii) including the Prospectus included therein, all amendments
and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
SUSPENSION PERIOD: As defined in Section 4(a) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each (A) Senior Subordinated Note, until
the earliest to occur of (i) the date on which such Senior Subordinated Note is
exchanged in the Exchange Offer for a New Senior Subordinated Note which is
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (ii) the date on which such
Senior Subordinated Note has been disposed of in accordance with a Shelf
Registration Statement (and the purchasers thereof have been issued New Senior
Subordinated Notes), or (iii) the date on which such Senior Subordinated Note is
distributed to the public pursuant to Rule 144 under the Act and each (B) New
Senior Subordinated Note held by a Broker Dealer until the date on which such
New Senior Subordinated Note is disposed of by a Broker-Dealer pursuant to the
"Plan of Distribution" or similarly titled caption contemplated by the
Prospectus contained in the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law or Commission policy (after the procedures set forth in Section
6(a)(i) below have been complied with), the Issuers and the Subsidiary
Guarantors shall (i) cause the Exchange Offer Registration Statement to be
filed with the Commission as soon as practicable after the Closing Date, but
in no event later than 90 days after the Closing Date (such 90th day being
the "FILING DEADLINE"), (ii) use their best efforts to cause such Exchange
Offer Registration Statement to become effective at the earliest possible
time, but in no event later than 180 days after the Closing Date (such 180th
day being the "EFFECTIVENESS DEADLINE"), (iii) in connection with the
foregoing,
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(A) file all pre-effective amendments to such Exchange Offer Registration
Statement as may be necessary in order to cause it to become effective, (B)
file, if applicable, a post-effective amendment to such Exchange Offer
Registration Statement pursuant to Rule 430A under the Act and (C) cause all
necessary filings, if any, in connection with the registration and
qualification of the New Senior Subordinated Notes to be made under the Blue
Sky laws of such jurisdictions as are necessary to permit Consummation of the
Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting (i) registration
of the New Senior Subordinated Notes to be offered in exchange for the Senior
Subordinated Notes that are Transfer Restricted Securities and (ii) resales
of New Senior Subordinated Notes by Broker-Dealers that tendered into the
Exchange Offer Senior Subordinated Notes that such Broker-Dealer acquired for
its own account as a result of market making activities or other trading
activities (other than Senior Subordinated Notes acquired directly from the
Issuers or any of their respective Affiliates) as contemplated by Section
3(c) below.
(b) The Issuers and the Subsidiary Guarantors shall use their respective
best efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of 30 Business
Days, or longer, if required under applicable federal and state securities laws
to Consummate the Exchange Offer. The Issuers and the Subsidiary Guarantors
shall cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the New Senior Subordinated Notes
shall be included in the Exchange Offer Registration Statement. The Issuers and
the Subsidiary Guarantors shall use their respective best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 30 business days thereafter (such 30th day being the "CONSUMMATION
DEADLINE").
(c) The Issuers shall include a "Plan of Distribution" (or similarly
titled caption) section in the Prospectus contained in the Exchange Offer
Registration Statement and indicate therein that any Broker-Dealer who holds
Transfer Restricted Securities that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities (other than Senior Subordinated Notes acquired directly from the
Issuers or any Affiliate of the Issuers), may exchange such Transfer Restricted
Securities pursuant to the Exchange Offer. Such "Plan of Distribution" (or
similarly titled caption) section shall also contain all other information with
respect to such exchanges by such Broker-Dealers that the Commission may require
in order to permit such exchanges pursuant thereto, but such "Plan of
Distribution" or similarly titled caption shall not name any such Broker-Dealer
or disclose the amount of Transfer Restricted Securities held by any such
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy, rules or regulations after the date of this Agreement. See the
Shearman & Sterling no-action letter (available July 2, 1993).
Because such Broker-Dealer may be deemed to be an "underwriter" within
the meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any New Senior
Subordinated Notes received by such Broker-Dealer in the Exchange Offer, the
Issuers and the Subsidiary Guarantors shall permit the use of
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the Prospectus contained in the Exchange Offer Registration Statement by such
Broker-Dealer to satisfy such prospectus delivery requirement. To the extent
necessary to ensure that the Prospectus contained in the Exchange Offer
Registration Statement is available for sales of New Senior Subordinated
Notes by Broker-Dealers, the Issuers and the Subsidiary Guarantors agree to
use their respective best efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented, amended and current as
required by and subject to the provisions of Section 6(a) and (c) hereof and
in conformity with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period beginning when such New Senior Subordinated Securities are
first issued in the Exchange Offer and ending upon the earlier of the
expiration of the 180th day after the Exchange Offer has been completed or
such time as such Broker-Dealers no longer own any New Subordinated Notes.
The Issuers and the Subsidiary Guarantors shall provide sufficient copies of
the latest version of such Prospectus to such Broker-Dealers, promptly upon
request, and in no event later than one day after such request, at any time
during such period.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Exchange Offer is not permitted by
applicable law (after the Issuers and the Subsidiary Guarantors have complied
with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of
Transfer Restricted Securities shall notify the Issuers within 20 Business Days
following the Consummation Deadline that (A) such Holder was prohibited by law
or Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the New Senior Subordinated Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and the Prospectus contained
in the Exchange Offer Registration Statement is not appropriate or available for
such resales by such Holder or (C) such Holder is a Broker-Dealer and holds
Senior Subordinated Notes acquired directly from the Issuers or any of their
respective Affiliates, then the Issuers and the Subsidiary Guarantors shall:
(x) use their best efforts to cause to be filed, on or prior to 90 days
after the earlier of (i) the date on which the Issuers determine that the
Exchange Offer Registration Statement cannot be filed as a result of clause
(a)(i) above and (ii) the date on which the Issuers receive the notice specified
in clause (a)(ii) above, (such earlier date, the "FILING DEADLINE"), a shelf
registration statement pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement (the "SHELF REGISTRATION
STATEMENT")), relating to all Transfer Restricted Securities, and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 180 days after the
Filing Deadline for the Shelf Registration Statement (such 180th day the
"EFFECTIVENESS DEADLINE").
If, after the Issuers have filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Issuers
are required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law
(i.e., clause (a)(i) above), then the filing of the Exchange Offer
Registration Statement shall be deemed to satisfy the requirements of clause
(x) above; PROVIDED that, in such
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event, the Issuers shall remain obligated to meet the Effectiveness Deadline
set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Issuers and
the Subsidiary Guarantors shall use their respective best efforts to keep any
Shelf Registration Statement required by this Section 4(a) continuously
effective, supplemented, amended and current (except during a Suspension Period)
as required by and subject to the provisions of Sections 6(b) and (c) hereof and
in conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section 6(c)(i)) following
the Closing Date, or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto. Notwithstanding the foregoing, the Issuers and the
Subsidiary Guarantors shall not be required to amend or supplement a
Registration Statement, any related Prospectus or any document incorporated
therein by reference, in the event that, and for a period not to exceed an
aggregate of 60 days in any calendar year (a "SUSPENSION PERIOD") if, (i) an
event occurs and is continuing as a result of which the Shelf Registration would
in the Issuers' good faith judgment, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (ii) (a) the Issuers determine in good faith judgment that the
disclosure of such event at such time would have a material adverse effect on
the business, operations or prospects of the Issuers or (b) the disclosure
otherwise related to a pending material business transaction that has not yet
been publicly disclosed.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Issuers in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Issuers by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation
Deadline or (iv) any Registration Statement required by this Agreement is
filed and declared
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effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose (other than as a result of a Suspension Period) without
being succeeded immediately by a post-effective amendment to such
Registration Statement that cures such failure and that is itself declared
effective immediately (each such event referred to in clauses (i) through
(iv), a "REGISTRATION DEFAULT"), then the Issuers and the Subsidiary
Guarantors hereby jointly and severally agree to pay to each Holder of
Transfer Restricted Securities affected thereby liquidated damages in an
amount equal to $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof
that the Registration Default continues for the first 90-day period
immediately following the occurrence of such Registration Default. The amount
of the liquidated damages shall increase by an additional $.05 per week per
$1,000 in principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period until all Registration Defaults have been
cured, up to a maximum amount of liquidated damages of $.50 per week per
$1,000 in principal amount of Transfer Restricted Securities; PROVIDED that
the Issuers and the Subsidiary Guarantors shall in no event be required to
pay liquidated damages for more than one Registration Default at any given
time. Notwithstanding anything to the contrary set forth herein, (1) upon
filing of the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement), in the case of (i) above, (2) upon the
effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4)
upon the filing of a post-effective amendment to the Registration Statement
or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement) to again be declared effective or made usable in the case of (iv)
above, the liquidated damages payable with respect to the Transfer Restricted
Securities as a result of such clause (i), (ii), (iii) or (iv), as
applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Issuers and the Subsidiary Guarantors to pay liquidated damages with respect to
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Issuers and the Subsidiary Guarantors shall (x) comply
with all applicable provisions of Section 6(c) below, (y) use their
respective best efforts to effect such exchange and to permit (subject to any
Prospectus delivery requirements) the resale of New Senior Subordinated Notes
by Broker-Dealers that tendered in the Exchange Offer Senior Subordinated
Notes that such Broker-Dealer acquired for its own account as a result of its
market making activities or other trading activities (other than Senior
Subordinated Notes acquired directly from the Issuers or any of their
respective Affiliates) being sold in accordance with the intended method or
methods of distribution thereof, and (z) comply with all of the following
provisions:
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(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Issuers raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Issuers and the Subsidiary Guarantors hereby
agree to seek a no-action letter or other favorable decision from the
Commission allowing the Issuers and the Subsidiary Guarantors to
Consummate an Exchange Offer for such Transfer Restricted Securities. The
Issuers and the Subsidiary Guarantors hereby agree to pursue the issuance
of such a decision to the Commission staff level. In connection with the
foregoing, the Issuers and the Subsidiary Guarantors hereby agree to take
all such other actions as may be requested by the Commission or otherwise
required in connection with the issuance of such decision, including
without limitation (A) participating in telephonic conferences with the
Commission, (B) delivering to the Commission staff an analysis prepared by
counsel to the Issuers setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be permitted
and (C) diligently pursuing a resolution (which need not be favorable) by
the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker Dealer) shall furnish, upon the request of the
Issuers, prior to the Consummation of the Exchange Offer, a written
representation to the Issuers and the Subsidiary Guarantors (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an Affiliate of
the Issuers, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate in,
a distribution of the New Senior Subordinated Notes to be issued in the
Exchange Offer and (C) it is acquiring the New Senior Subordinated Notes
in its ordinary course of business. As a condition to its participation in
the Exchange Offer each Holder using the Exchange Offer to participate in
a distribution of the New Senior Subordinated Notes shall acknowledge and
agree that, if the resales are of New Senior Subordinated Notes obtained
by such Holder in exchange for Senior Subordinated Notes acquired directly
from the Issuers or an Affiliate thereof, it (1) could not, under
Commission policy as in effect on the date of this Agreement, rely
on the position of the Commission enunciated in MORGAN STANLEY AND CO.,
INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION
(available May 13, 1988), as interpreted in the Commission's letter to
SHEARMAN & STERLING dated July 2, 1993, and similar no-action letters
(including, if applicable, any no-action letter obtained pursuant to
clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers and the Subsidiary Guarantors shall provide a
supplemental letter to the Commission (A) stating that the
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Issuers and the Subsidiary Guarantors are registering the Exchange Offer
in reliance on the position of the Commission enunciated in EXXON CAPITAL
HOLDINGS CORPORATION (available May 13, 1988), MORGAN STANLEY AND CO.,
INC. (available June 5, 1991) as interpreted in the Commission's letter to
SHEARMAN & STERLING dated July 2, 1993, and, if applicable, any no-action
letter obtained pursuant to clause (i) above, (B) including a
representation that neither Issuer nor any Subsidiary Guarantor has
entered into any arrangement or understanding with any Person to
distribute the New Senior Subordinated Notes to be received in the
Exchange Offer and that, to the best of the Issuers' and each Subsidiary
Guarantors' information and belief, each Holder participating in the
Exchange Offer is acquiring the New Senior Subordinated Notes in its
ordinary course of business and has no arrangement or understanding with
any Person to participate in the distribution of the New Senior
Subordinated Notes received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth in
any no-action letter obtained pursuant to clause (i) above, if applicable.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Issuers and the Subsidiary Guarantors shall:
(i) comply with all the provisions of Section 6(c) below and use
their respective best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof (as indicated in
the information furnished to the Issuer pursuant to Section 4(b) hereof),
and pursuant thereto the Issuers and the Subsidiary Guarantors will
prepare and file with the Commission a Shelf Registration Statement
relating to the registration on any appropriate form under the Act, which
form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof
within the time periods and otherwise in accordance with the provisions
hereof;
(ii) issue, upon the request of any Holder or purchaser of Senior
Subordinated Notes covered by any Shelf Registration Statement
contemplated by this Agreement, New Senior Subordinated Notes having an
aggregate principal amount equal to the aggregate principal amount of
Senior Subordinated Notes sold pursuant to the Shelf Registration
Statement and surrendered to the Issuer for cancellation pursuant to
the Indenture; the Issuer shall register New Senior Subordinated Notes
on the Shelf Registration Statement for this purpose and issue the New
Senior Subordinated Notes to the purchaser(s) of securities subject to
the Shelf Registration Statement in the names as such purchaser(s)
shall designate pursuant to the Indenture;
(iii) make the Issuers' and the Subsidiary Guarantors'
representatives available for discussion of any document that is to be
incorporated by reference into a Shelf Registration Statement or
Prospectus and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such selling
Holders may reasonably request;
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(iv) make available, at reasonable times, for inspection by
representatives of the selling Holders of a majority of the aggregate
principal amount of Notes outstanding and any attorney or accountant
retained by such representatives on behalf of the selling Holders that
enters into a customary confidentiality agreement with the Issuers, all
financial and other records, pertinent corporate documents of the Issuers
and the Subsidiary Guarantors and cause the Issuers' and the Subsidiary
Guarantors' officers, directors and employees to supply all information
reasonably requested by representatives of any such Holder, attorney or
accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness;
(v) if requested by any selling Holders in connection with such
sale, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" (or similarly titled caption) of the Transfer Restricted
Securities; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Issuers are
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(vi) deliver to each Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Issuers and
the Subsidiary Guarantors hereby consent to the use (in accordance with
law) of the Prospectus and any amendment or supplement thereto by each
selling Holder in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto; and
(vii) upon the request of the representative of the selling Holders
of a majority of the aggregate principal amount of the outstanding Notes,
enter into such agreements (including underwriting agreements) and make
such representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of
the Transfer Restricted Securities pursuant to any applicable Registration
Statement contemplated by this Agreement as may be reasonably requested by
such representative in connection with any sale or resale pursuant to any
applicable Registration Statement. In such connection, the Issuers and the
Subsidiary Guarantors shall:
(A) upon request of the representative of the selling Holders
of a majority of the aggregate principal amount of the outstanding
Notes, furnish (or in the case of paragraphs (2) and (3), use its
best efforts to cause to be furnished) to each such Holder, upon the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated such date, signed by the
Presidents and the Chief Financial Officers of the Issuers,
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confirming, as of the date thereof, the matters set forth in
Sections 6(dd), 9(a) and 9(b) of the Purchase Agreement and
such other similar matters as such Holders may reasonably
request;
(2) an opinion, dated the date of effectiveness of the
Shelf Registration Statement, of counsel for the Issuers and
the Subsidiary Guarantors covering matters similar to those
set forth Exhibit C of the Purchase Agreement and such other
matter as such Holder may reasonably request and are customary
and appropriate for transactions of this kind, and in any
event including a statement to the effect that such counsel
(a) has not independently verified the accuracy, completeness
or fairness of the statements made or included in the
Registration Statement or the Prospectus and take no
responsibility therefor, except as and to the extent set forth
in the paragraph regarding the "Description of Notes"
contained elsewhere in the opinion, and (b) in the course of
the preparation by the Issuers and the Subsidiary Guarantors
of the Registration Statement and the Prospectus, has
participated in conferences with certain officers and
employees of the Issuers and the Subsidiary Guarantors, with
representatives of auditors and with counsel to the Issuers
and the Subsidiary Guarantors, and based upon such counsel's
examination of the Registration Statement and the Prospectus,
such counsel's investigation made in connection with
preparation of the Registration Statement and the Prospectus,
and such counsel's participation in the conferences referred
to above, (i) such counsel is of the opinion that the
Registration Statement, as of its effective date, and the
Prospectus, as of the closing date, complied as to form in all
material respects with the requirements of the Act, the Trust
Indenture Act and the applicable rules and regulations of the
Commission thereunder, except that in each case such counsel
may state that it expresses no opinion with respect to the
financial statements or other financial data contained or
incorporated by reference in the Registration Statement and
the Prospectus, and (ii) it has no reason to believe that the
Registration Statement, as of its effective date, contained
any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary
in
<PAGE>
13
order to make the statements therein not misleading, or that
the Prospectus contains any untrue statement of a material
fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that in
each case such counsel may state that it expresses no belief
with respect to the financial statements or other financial
data contained or incorporated by reference in the
Registration Statement or the Prospectus; and
(3) a customary comfort letter, dated the date of
effectiveness of the Shelf Registration Statement, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 9(g) of the Purchase
Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by such representative to evidence compliance
with the matters covered in clause (A) above and with any customary
conditions contained in the any agreement entered into by the
Issuers and the Subsidiary Guarantors pursuant to this clause (vii).
(c) GENERAL PROVISIONS. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Issuers and the
Subsidiary Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective (except, in the case of a Shelf
Registration Statement, during a Suspension Period) and provide all
requisite financial statements for the period specified in Section 3
or 4 of this Agreement, as applicable. Upon the occurrence of any
event (A) that makes any statement of a material fact made in any
such Registration Statement or the Prospectus contained therein
untrue, or that requires the making of any additions to or changes
in the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or (B) that
would cause any such Registration Statement or the Prospectus contained
therein not to be effective and usuable for its intended purpose for
resale of Transfer Restricted Securities during the period required by
this Agreement, the Issuers and the Subsidiary Guarantors shall file
promptly an appropriate amendment to such Registration Statement curing
such defect, and, if Commission review is required, use their respective
best efforts to cause such amendment to be declared effective as soon as
practicable;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep such
<PAGE>
14
Registration Statement effective for the applicable period set forth
in Section 3 or 4 hereof, as the case may be; cause the Prospectus
to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462, as applicable, under the
Act in a timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set
forth in such Registration Statement or supplement to the Prospectus;
(iii) advise each Holder promptly and, if requested by such Holder,
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect
to any applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act
or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or sale
in any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening of
any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Registration
Statement in order to make the statements therein not misleading, or that
requires the making of any additions to or changes in the Prospectus in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Issuers and the Subsidiary
Guarantors shall use their respective best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) except, in the case of a Shelf Registration Statement, during a
Suspension Period and subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(v) furnish to each selling Holder in connection with such exchange
or sale, if any, before filing with the Commission, copies of any
Registration Statement or any
<PAGE>
15
Prospectus included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents incorporated
by reference after the initial filing of such Registration Statement),
which documents will be subject to the review of such selling Holders in
connection with such sale, if any, for a period of at least five Business
Days, and the Issuer will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by
reference) to which the representative of a majority of such selling
Holders shall reasonably object on behalf of the selling Holders within
five Business Days after the receipt thereof. If such representative made
an objection as set forth in the immediately preceding sentence, a
selling Holder shall be deemed to have reasonably objected to such filing
if such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains an untrue statement of a
material fact or omits to state any material fact necessary to make the
statements therein, in the case of any Prospectus, in the light of the
circumstances under which they were made, not misleading or fails to
comply with the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each selling Holder in connection with
such exchange or sale, if any;
(vii) furnish to each Initial Purchaser and each Holder who requests
in connection with such exchange or sale, without charge, at least one
copy of the Registration Statement, as first filed with the Commission,
and of each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
(viii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may reasonably request and do any and
all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; PROVIDED, HOWEVER, that neither Issuer
nor any Subsidiary Guarantor shall be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(ix) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations and
such names as the selling
<PAGE>
16
Holders may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
(x) use their respective best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (ix) above;
(xi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering
such Transfer Restricted Securities and provide the Trustee under the
Indenture with printed certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with The Depository Trust
Company;
(xii) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xiii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee
and the Holders to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the
TIA; and execute and use their best efforts to cause the Trustee to
execute, all documents that may be required to effect such changes and all
other forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner; and
(xiv) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Issuers of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Issuers that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT
DATE"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy
<PAGE>
17
any Prospectuses, other than permanent file copies, then in such Holder's
possession which have been replaced by the Issuers with more recently dated
Prospectuses or (ii) deliver to the Issuers (at the Issuers' expense) all
copies, other than permanent file copies, then in such Holder's possession of
the Prospectus covering such Transfer Restricted Securities that was current
at the time of receipt of the Suspension Notice. The time period regarding
the effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the date of delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' and the Subsidiary Guarantors'
performance of or compliance with this Agreement will be borne by the Issuers,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the New Senior Subordinated Notes to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Issuers, the Subsidiary Guarantors
and the Holders of Transfer Restricted Securities; (v) all application and
filing fees in connection with listing the New Senior Subordinated Notes on an
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Issuers and the Subsidiary Guarantors (including the expenses of any special
audit and comfort letters required by or incident to such performance).
The Issuers will, in any event, bear their and the Subsidiary Guarantors'
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expenses
of any annual audit and the fees and expenses of any Person, including special
experts, retained by the Issuers or the Subsidiary Guarantors.
(b) In connection with any Shelf Registration Statement required by this
Agreement, the Issuers and the Subsidiary Guarantors will reimburse the Initial
Purchasers and the Holders of Transfer Restricted Securities who are selling or
reselling Senior Subordinated Notes or New Senior Subordinated Notes pursuant to
the "Plan of Distribution" or similarly titled caption contained in the Shelf
Registration Statement for the reasonable fees and disbursements of not more
than one counsel, who shall be Latham & Watkins, unless another firm shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Shelf Registration Statement is
being prepared.
SECTION 8. INDEMNIFICATION
(a) Each of the Issuers and each of the Subsidiary Guarantors agree,
jointly and severally, to indemnify and hold harmless each Holder, its
directors, its officers and each person, if any, who controls such Holder
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act),
from and against any and all losses, claims, damages, liabilities and
<PAGE>
18
judgments (including without limitation, any legal or other expenses incurred
in connection with investigating or defending any matter, including any
action that could give rise to any such losses, claims, damages, liabilities
or judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, preliminary prospectus
or Prospectus (or any amendment or supplement thereto) provided by either
Issuer or any Subsidiary Guarantor to any Holder or any prospective purchaser
of New Senior Subordinated Notes or registered Senior Subordinated Notes, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any of the Holders
furnished in writing to the Issuers by any of the Holders.
(b) Each Holder of Transfer Restricted agrees, severally and not jointly,
to indemnify and hold harmless the Issuers and the Subsidiary Guarantors, and
their respective directors, managers (or Management Committee members) and
officers and each person, if any, who controls (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) the Issuers, or any Subsidiary
Guarantors to the same extent as the foregoing indemnity from the Issuers and
the Subsidiary Guarantors set forth in section (a) above, but only with
reference to information relating to such Holder furnished in writing to the
Issuers by such Holder expressly for use in any Registration Statement. In no
event shall any Holder, its directors, officers or any Person who controls such
Holder be liable or responsible for any amount in excess of the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Registration Statement.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of
<PAGE>
19
the indemnified party). In any such case, the indemnifying party shall not,
in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of
the Holders, in the case of the parties indemnified pursuant to Section 8(a),
and by the Issuers, in the case of parties indemnified pursuant to Section
8(b). The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written
consent if the settlement is entered into more than twenty business days
after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party
shall have failed to comply with such reimbursement request. No indemnifying
party shall, without the prior written consent of the indemnified party,
effect any settlement or compromise of, or consent to the entry of judgment
with respect to, any pending or threatened action in respect of which the
indemnified party is or could have been a party and indemnity or contribution
may be or could have been sought hereunder by the indemnified party, unless
such settlement, compromise or judgment (i) includes an unconditional release
of the indemnified party from all liability on claims that are or could have
been the subject matter of such action and (ii) does not include a statement
as to or an admission of fault, culpability or a failure to act, by or on
behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Issuers and
the Subsidiary Guarantors, on the one hand, and the Holders, on the other hand,
from their sale of Transfer Restricted Securities or (ii) if the allocation
provided by clause 8(d)(i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Issuers and the
Subsidiary Guarantors, on the one hand, and of the Holder, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Issuers and the Subsidiary
Guarantors, on the one hand, and of the Holder, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such Issuer or such
Subsidiary Guarantor, on the one hand, or by the Holder, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and judgments
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 8(a), any legal or other fees or
expenses
<PAGE>
20
reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Issuers, the Subsidiary Guarantors and each Holder agree that it
would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation (even if the Holders were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any matter, including any action that could have
given rise to such losses, claims, damages, liabilities or judgments.
Notwithstanding the provisions of this Section 8, no Holder, its directors,
its officers or any Person, if any, who controls such Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount
by which the total received by such Holder with respect to the sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds
(i) the amount paid by such Holder for such Transfer Restricted Securities
and (ii) the amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant
to this Section 8(c) are several in proportion to the respective principal
amount of Transfer Restricted Securities held by each Holder hereunder and
not joint.
The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 9. RULE 144A AND RULE 144
Each Issuer and each Subsidiary Guarantor agrees with each Holder, for
so long as any Transfer Restricted Securities remain outstanding and during
any period in which such Issuer or such Guarantor (i) is not subject to
Section 13 or 15(d) of the Exchange Act, to make available, upon request of
any Holder, to such Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser
of such Transfer Restricted Securities designated by such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the Act
in order to permit resales of such Transfer Restricted Securities pursuant to
Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act,
to make all filings required thereby in a timely manner in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) REMEDIES. The Issuers and the Subsidiary Guarantors acknowledge and
agree that any failure by the Issuers and/or the Subsidiary Guarantors to comply
with their respective
<PAGE>
21
obligations under Sections 3 and 4 hereof may result in material irreparable
injury to the Initial Purchasers or the Holders for which there is no
adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the
Initial Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Issuers' and the Subsidiary Guarantors' obligations
under Sections 3 and 4 hereof. The Issuers and the Subsidiary Guarantors
further agree to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Neither Issuer nor any Subsidiary
Guarantor will, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise violate with the
provisions hereof. Neither Issuer nor any Subsidiary Guarantor has previously
entered into any agreement granting any registration rights with respect to
its securities to any Person. The rights granted to the Holders hereunder do
not in any way violate with and are not inconsistent with the rights granted
to the holders of the Issuers' and the Subsidiary Guarantors' securities
under any agreement in effect on the date hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section
5 hereof and this Section 10(c)(i), the Issuers have obtained the written
consent of Holders of all outstanding Transfer Restricted Securities and (ii)
in the case of all other provisions hereof, the Issuers have obtained the
written consent of Holders of a majority of the outstanding principal amount
of Transfer Restricted Securities (excluding Transfer Restricted Securities
held by the Issuers or their respective Affiliates). Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose Transfer Restricted
Securities are being tendered pursuant to the Exchange Offer, and that does
not affect directly or indirectly the rights of other Holders whose Transfer
Restricted Securities are not being tendered pursuant to such Exchange Offer,
may be given by the Holders of a majority of the outstanding principal amount
of Transfer Restricted Securities subject to such Exchange Offer.
(d) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuers and the
Subsidiary Guarantors, on the one hand, and the Initial Purchasers, on the
other hand, and shall have the right to enforce such agreements directly to
the extent they may deem such enforcement necessary or advisable to protect
their rights or the rights of Holders hereunder.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier,
or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Issuers or the Subsidiary Guarantors:
<PAGE>
22
2515 McKinney Avenue, Suite 850
Dallas, Texas 75201
Attention: Chief Financial Officer
with a copy to
Vestar Capital Partners III, L.P.
and Reid Plastics Holdings, Inc.
c/o Vestar Capital Partners, Inc.,
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
23
(j) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
<PAGE>
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CONSOLIDATED CONTAINER COMPANY LLC
By: Consolidated Container Holdings LLC,
as its Sole Member and Manager
By: /s/ Steven M. Silver
--------------------------------
Name: Steven M. Silver
Title: Vice President
CONSOLIDATED CONTAINER CAPITAL, INC.
By: /s/ Steven M. Silver
--------------------------------------
Name: Steven M. Silver
Title: Vice President
<PAGE>
25
REID PLASTICS GROUP LLC
By: Consolidated Container Company LLC, as its Sole
Member and Manager
By: Consolidated Container Holdings LLC, as its Sole
Member and Manager
By: /s/ Steven M. Silver
---------------------------------------------
Name: Steven M. Silver
Title: Vice President
PLASTIC CONTAINERS LLC
By: Consolidated Container Company LLC, as its Sole
Member and Manager
By: Consolidated Container Holdings LLC, as its Sole
Member and Manager
By: /s/ Steven M. Silver
---------------------------------------------
Name: Steven M. Silver
Title: Vice President
CONTINENTAL PLASTIC CONTAINERS LLC
By: Plastic Containers LLC, as its Sole Member and
Manager
By: Consolidated Container Company LLC, as its Sole
Member and Manager
By: Consolidated Container Holdings LLC, as its Sole
Member and Manager
By: /s/ Steven M. Silver
---------------------------------------------
Name: Steven M. Silver
Title: Vice President
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By: /s/ Steven M. Silver
----------------------------------------------------
Name: Steven M. Silver
Title: Vice President
<PAGE>
26
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
BEAR, STEARNS & CO. INC.
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By: /s/ Howard S. Rimerman
----------------------------
Name: Howard S. Rimerman
Title: Vice President
<PAGE>
EXHIBIT 3.1(a)
CERTIFICATE OF FORMATION
OF
CONSOLIDATED CONTAINER COMPANY LLC
The undersigned, an authorized natural person, for the purpose of forming
a limited liability company, under the provisions and subject to the
requirements of the State of Delaware (particularly Chapter 18, Title 6 of the
Delaware Code and the acts amendatory thereof and supplemental thereto, and
known, identified, and referred to as the "Delaware Limited Liability Company
Act"), hereby certifies that:
FIRST: The name of the limited liability company (hereinafter called the
"Limited Liability Company") is Consolidated Container Company LLC.
SECOND: The address of the registered office and the name and the address
of the registered agent of the Limited Liability Company required to be
maintained by Section 18-104 of the Delaware Limited Liability Company Act are
Corporation Service Company, 1013 Centre Road, Wilmington, New Castle County,
Delaware 19805-1297.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation this 20th day of April, 1999.
By: /s/ Kevin R. Shook
------------------------------------
Name: Kevin R. Shook
Title: Authorized Person
<PAGE>
EXHIBIT 3.1(b)
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONSOLIDATED CONTAINER COMPANY LLC
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONSOLIDATED CONTAINER COMPANY LLC
TABLE OF CONTENTS
Page
----
ARTICLE I ORGANIZATIONAL MATTERS ......................................1
1.1 Formation .........................................................1
1.2 Name ..............................................................1
1.3 Registered Office and Principal Office of Company .................1
1.4 Term ..............................................................1
1.5 Assumed Name Certificate ..........................................1
1.6 Limits of Company .................................................2
ARTICLE II DEFINITIONS .................................................2
ARTICLE III PURPOSE, MEMBER AND MEMBERSHIP INTEREST .....................4
3.1 Purposes and Scope ................................................4
3.2 Sole Member .......................................................4
3.3 Restrictions on the Disposition of a Membership Interest ..........4
ARTICLE IV CAPITAL CONTRIBUTIONS .......................................4
4.1 Initial Capital Contributions .....................................4
4.2 Additional Contributions ..........................................5
4.3 Maintenance of Capital Account ....................................5
4.4 Limited Liability of Sole Member ..................................5
ARTICLE V ALLOCATIONS AND DISTRIBUTIONS ...............................5
5.1 Allocation of Profits and Losses ..................................5
5.2 Interim Distributions .............................................5
5.3 Distributions on Termination ......................................5
5.4 Limitation on Distributions .......................................5
5.5 Distributions in Kind .............................................5
ARTICLE VI MANAGEMENT OF THE COMPANY ...................................6
6.1 Management by Manager .............................................6
6.2 Appointment of Manager and Tenure .................................6
6.3 Removal ...........................................................6
6.4 Duties of Manager .................................................6
6.5 Officers ..........................................................6
6.6 Indemnification ...................................................7
i
<PAGE>
Page
----
ARTICLE VII ACCOUNTING AND TAX MATTERS ..................................7
7.1 Books and Records .................................................7
ARTICLE VIII DISSOLUTION AND LIQUIDATION .................................7
8.1 Dissolution .......................................................7
8.2 Effect of Dissolution .............................................7
8.3 Winding Up Procedures .............................................8
8.4 Distribution of Assets Upon Dissolution ...........................8
8.5 Distributions in Kind .............................................8
8.6 Articles of Dissolution ...........................................8
ARTICLE IX GENERAL PROVISIONS ..........................................8
9.1 Captions and Headings .............................................8
9.2 Amendment of Articles .............................................8
9.3 Amendment of this Agreement .......................................9
9.4 Number and Gender .................................................9
9.5 Binding Effect ....................................................9
9.6 Severability ......................................................9
9.7 Counterparts ......................................................9
9.8 Governing Law .....................................................9
Exhibit A
ii
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONSOLIDATED CONTAINER COMPANY LLC
This LIMITED LIABILITY COMPANY AGREEMENT of Consolidated Container Company
LLC (the "Agreement") is made as of the 29th day of April, 1999, by Consolidated
Container Holdings LLC, a Delaware limited liability company (the "Sole
Member").
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Formation. The Company was formed as a limited liability company
in accordance with the Delaware Act on April 20, 1999. The Sole Member hereby
agrees to continue the Company as a Delaware limited liability company under and
pursuant to the Delaware Act and agrees that except as expressly provided and
permitted herein to the contrary, the rights and obligations of the Sole Member
and the administration and termination of the Company shall be governed by the
Delaware Act.
1.2 Name. The name of the Company shall be, and the business of the
Company shall be conducted under the name of, Consolidated Container Company
LLC. The Company's business may be conducted under any other name or names
approved by the Manager.
1.3 Registered Office and Principal Office of Company. The Company
shall maintain a registered office and a designated and duly qualified agent for
service of process on the Company in the State of Delaware. The Company may
maintain offices at such locations as the Manager deems advisable.
1.4 Term. The existence of the Company commenced on the Commencement
Date, and the Company shall continue in existence until the dissolution of the
Company pursuant to the express provisions of Article VIII hereof.
1.5 Assumed Name Certificate. The Sole Member shall execute and file
any assumed or fictitious name certificate or certificates or any similar
documents required by law to be filed in connection with the formation and
operation of the Company.
1.6 Limits of Company. The Sole Member intends that the Company
shall be treated as a limited liability company in accordance with the Delaware
Act for all purposes under state law; this Agreement shall not be construed to
provide otherwise.
<PAGE>
ARTICLE II
DEFINITIONS
The following definitions shall for all purposes, unless otherwise
clearly indicated to the contrary, apply to the terms used in this Agreement.
"Accounting Year" means the accounting year of the Company for
accounting and tax purposes, which will be the calendar year.
"Additional Contribution" means any Capital Contribution in excess
of that Sole Member's Initial Contribution, made to the Company pursuant to
Section 4.2 hereof.
"Agreed Contribution" means the sum of the Sole Member's Initial
Contribution and any Additional Contributions that Sole Member has made or is
obligated to make to the Company.
"Agreement" means this Limited Liability Company Agreement, as it
may be further amended, supplemented or restated from time to time in accordance
with the terms of this Agreement.
"Capital Account" means the capital account maintained for the Sole
Member pursuant to Section 4.3.
"Capital Contribution" means any Initial Contribution or Additional
Contribution to the capital of the Company in cash or property when and as such
contribution is actually made to the Company by the Sole Member.
"Certificate" means the Certificate of Formation of the Company
filed with the Secretary of State of Delaware, as it may be amended or restated
from time to time.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. All references herein to the Code shall include any
corresponding provision or provisions of succeeding law.
"Commencement Date" means the date that the Certificate was filed
with the Secretary of State of Delaware.
"Company" means Consolidated Container Company LLC, a Delaware
limited liability company, established by the filing of the Certificate with the
Secretary of State of Delaware.
"Delaware Act" means the Delaware Revised Limited Liability Company
Act, 6 Del. C. ss. 18-101, et seq., as amended from time to time.
"Dissolution Event" has the meaning set forth in Section 8.1.
"Distributable Cash" means the amount by which the aggregate amount
of all cash and cash equivalents from time to time held by the Company on hand
or in bank accounts or
2
<PAGE>
other temporary investments pending distribution, exceeds the aggregate of all
amounts to be paid or set aside by the Company for: (i) when due, all principal
and interest payments on indebtedness of the Company and all other sums payable
to lenders; (ii) all cash expenditures to be incurred in the normal operations
of the business of the Company; and (iii) such cash reserves as the Sole Member
may mutually deem reasonably necessary for the proper operation of the business
of the Company.
"Fair Market Value" means the price in cash, or its equivalent, that
an asset would bring considering its highest and most profitable use, if then
offered for sale in the open market, in competition with other similar assets at
or near the same location, with a reasonable time allowed to find a purchaser.
"Initial Contribution" means the initial Capital Contribution to the
Company made by the Sole Member as set forth in Exhibit "A" hereto.
"Losses" mean the losses and deductions of the Company determined in
accordance with accounting principles consistently applied from year to year
under the Method of Accounting of the Company.
"Manager" has the meaning set forth in Section 6.2.
"Membership Interest" means the interest of the Sole Member in the
Company, including, without limitation, such Member's right: (a)_to a
distributive share of the Profits, Losses, and other items of income, gain,
loss, deduction, and credit of the Company; (b)_to a distributive share of the
assets of the Company; and (c) to participate in the management and operation of
the Company as provided in this Agreement.
"Method of Accounting" means the accrued basis method of accounting
unless another method of accounting is agreed upon by the Sole Member or is
required to be used by the Code.
"Officers" has the meaning set forth in Section 6.5.
"Percentage Interest" means the percentage interest of the Sole
Member in certain allocations of Profits, Losses, and other items of income,
gain, loss, or deduction and certain distributions of cash and property.
"Person" means any individual or entity, public or private.
"Profits" means the income and gains of the Company determined in
accordance with accounting principles consistently applied from year to year
under the Company's Method of Accounting.
"Sole Member" means Consolidated Container Holdings LLC, a Delaware
limited liability company.
"Treasury Regulations" means the Treasury Regulations promulgated
under the Code, as amended and in effect (including corresponding provisions of
any succeeding regulations).
3
<PAGE>
ARTICLE III
PURPOSE, MEMBER AND MEMBERSHIP INTEREST
3.1 Purposes and Scope. The Company is organized to transact any and
all lawful business for which limited liability companies may be organized under
the Delaware Act.
3.2 Sole Member. The Sole Member of the Company is Consolidated
Container Holdings LLC, a Delaware limited liability company, which has, subject
to the provisions of Section 4.1 hereof, the entire Membership Interest and the
entire initial Capital Account balance of the Company as shown on Exhibit "A" of
this Agreement.
3.3 Restrictions on the Disposition of a Membership Interest. Except
as expressly set forth herein, the Sole Member will have the right to sell,
transfer, encumber or assign all or any portion of its Membership Interest in
the Company.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contributions. Concurrently with the adoption of
this Agreement, the Sole Member will contribute to the capital of the Company
the Initial Contribution and will receive the Membership Interest set forth on
Exhibit "A" of this Agreement.
4.2 Additional Contributions. The Sole Member may, in its sole and
absolute discretion, make Additional Contributions in such amounts as it deems
appropriate.
4.3 Maintenance of Capital Account. A Capital Account will be
established and maintained for the Sole Member.
4.4 Limited Liability of Sole Member. The Sole Member will not be
liable for the debts, obligations, or liabilities of the Company beyond such
Sole Member's Agreed Contribution to the Company. The Sole Member will not be
required to make any Capital Contribution or loan to the Company beyond the
amount of such Sole Member's Agreed Contribution.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocation of Profits and Losses. All Profits and Losses of the
Company for each fiscal quarter and each Accounting Year (or portion thereof)
will be allocated entirely to the Sole Member as provided in this Agreement. Any
credit available for federal income tax purposes will be allocated entirely to
the Sole Member in the same manner.
5.2 Interim Distributions. Interim distributions of Distributable
Cash will be made not less often than each fiscal quarter, or at such other
times as the Manager may approve, and will be made by the Company to the Sole
Member in accordance with this Article V.
4
<PAGE>
5.3 Distributions on Termination. Upon the dissolution and
winding-up of the Company, its assets will be distributed in the manner
prescribed in Article VIII of this Agreement.
5.4 Limitation on Distributions. Any other provision of this
Agreement to the contrary notwithstanding, no interim distribution or
distribution on termination to the Sole Member will be declared and paid unless,
(a) after the distribution is made, the Fair Market Value of all of the assets
of the Company is in excess of all liabilities of the Company, other than
liabilities to the Sole Member on account of its Capital Contributions; and (b)
such distribution is in conformity with any outstanding loan agreements of the
Company.
5.5 Distributions in Kind. The Sole Member is entitled to demand and
receive a distribution from the Company in the form of cash or any other
property.
ARTICLE VI
MANAGEMENT OF THE COMPANY
6.1 Management by Manager.
(a) The Manager of the Company shall have full and complete
discretion to manage and control the business and affairs of the Company
in accordance with the terms and provisions of this Agreement.
(b) Any action required by the Delaware Act to be taken at any
management meeting, or any action that may be taken at any management
meeting, may be taken without a meeting, without prior notice, and without
a vote, if a written consent, setting forth the action so taken, is signed
by the Sole Member or the Manager.
6.2 Appointment of Manager and Tenure. The Manager of the Company
(the "Manager") will be a Person designated from time to time by the Sole
Member. As of the date hereof, the Manager of the Company will be the Sole
Member. The Manager will hold the office of Manager for such term and shall have
the authority to exercise such powers and perform such duties as will be
determined from time to time by the Sole Member. The salary or other
compensation, if any, of the Manager of the Company will be fixed from time to
time by the Sole Member.
6.3 Removal. The Manager may be removed as such at any time by the
Sole Member, either with or without cause, in the discretion of the Sole Member.
Designation of the Manager shall not of itself create contract rights.
6.4 Duties of Manager. The Manager shall have general and active
management of the day-to-day business and affairs of the Company and shall be
authorized and directed to implement all orders, resolutions and business plans
adopted by the Sole Member that do not violate applicable laws.
6.5 Officers. The Manager may designate such officers of the Company
as it deems necessary or appropriate from time to time, including a President,
one or more Vice Presidents and a Secretary, and such other officers as the
Manager shall deem desirable (the
5
<PAGE>
"Officers"). The Manager hereby delegates to each Officer the nonexclusive power
and authority to act as an agent of the Company and, in such capacity, to bind
the Company in the ordinary course of the Company's business and to execute any
and all documents to be signed by the Company.
As of the date hereof, the Officers shall be as follows:
Name Title
---- -----
William Estes President
Michelle P. Goolsby Vice President and Secretary
Tracy L. Noll Vice President and Assistant
Secretary
Angie Miro Assistant Secretary
6.6 Indemnification. The Company will indemnify its Sole Member,
Manager, and Officers to the same extent a corporation may indemnify its
directors, officers and others under applicable law.
ARTICLE VII
ACCOUNTING AND TAX MATTERS
7.1 Books and Records. The Company will maintain such books and
records of the operations and expenditures of the Company as the Manager and
Officers shall determine.
ARTICLE VIII
DISSOLUTION AND LIQUIDATION
8.1 Dissolution. The Company will be dissolved upon the earliest to
occur of the following events: (each such event is referred to as a "Dissolution
Event"):
(a) an election to dissolve the Company is approved in writing by
the Sole Member; or
(b) any other event occurs that, under the Delaware Act, would
cause the Company's dissolution.
8.2 Effect of Dissolution. Upon the dissolution of the Company, the
Company will cease to carry on its business, except insofar as may be necessary
for the winding up of its business, and the assets of the Company will be
determined and valued effective as of the day on which the event occurs that
results in such dissolution, but the Company will not terminate until there has
been a winding-up of the Company's business and affairs and the assets of the
Company have been liquidated and distributed as provided in this Agreement.
6
<PAGE>
8.3 Winding Up Procedures. Upon the dissolution of the Company, the
Company will (a) proceed to collect its assets; (b) convey and dispose of such
of its properties as are not to be distributed in kind to the Sole Member; (c)
pay, satisfy, and discharge its liabilities, or make adequate provision for
payment and discharge of such liabilities; and (d) do all other acts required to
liquidate its business and affairs.
8.4 Distribution of Assets Upon Dissolution. In settling the
accounts of the Company after its dissolution, the assets of the Company will be
applied and distributed in the following order of priority:
(a) First, to the extent permitted by law, and in accordance with
the priorities, if any, established by applicable law, to creditors in
satisfaction of liabilities of the Company, including liabilities of the
Company to its Sole Member as a creditor (other than for distributions and
Capital Contributions), whether by payment or establishment of reserves;
(b) Second, to its Sole Member.
8.5 Distributions in Kind. If any assets of the Company are
distributed in kind, such assets will be distributed in accordance the
provisions of Section 8.4 above to the Sole Member.
8.6 Articles of Dissolution. When all liabilities and obligations of
the Company have been paid or discharged, or adequate provision has been made
for such liabilities, or in case its property and assets are not sufficient to
satisfy and discharge all of the liabilities and obligations of the Company,
then when all the property and assets of the Company have been applied to the
extent available to the bona fide liabilities and obligations of the Company,
and all of the remaining property and assets of the Company have been
distributed to its Sole Member, the Company shall cause the Certificate to be
cancelled and will take such other actions as are necessary or appropriate to
reflect the dissolution and termination of the Company.
ARTICLE IX
GENERAL PROVISIONS
9.1 Captions and Headings. The captions and heading used in this
Agreement are for convenience of reference only and will not be taken into
account in constructing the meaning or intent of this Agreement.
9.2 Amendment of Articles. The Certificate may be amended,
supplemented or restated by written consent of the Sole Member. Upon executing
the necessary consent with respect to, such amendment, supplement, or
restatement of the Certificate, the Sole Member will cause a Certificate of
Amendment to be prepared, executed, and filed in accordance with the Delaware
Act.
9.3 Amendment of this Agreement. This Agreement may be amended,
supplemented, or restated by the written consent of the Sole Member.
7
<PAGE>
9.4 Number and Gender. Where the context so indicates, the singular
will include the plural, and the use of any gender will include all other
genders.
9.5 Binding Effect. Except as otherwise expressly provided herein,
this Agreement will be binding upon and will inure to the benefit of the Sole
Member and its heirs, legal representatives, executors, administrators,
distributees, successors, and assigns.
9.6 Severability. If any one or more of the provisions contained in
this Agreement for any reason are held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability will not affect
any other provisions of this Agreement and this Agreement will be construed as
if such invalid, illegal, or unenforceable provisions had never been contained
in this Agreement.
9.7 Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed to be an original and will be binding upon the Sole
Member who executed same, but all of such counterparts will constitute the same
Agreement and may be sufficiently evidenced by one counterpart.
9.8 Governing Law. This Agreement and the construction
interpretation will be governed exclusively by the Delaware Act and other
applicable laws of the State of Delaware.
IN WITNESS WHEREOF, the Sole Member has executed this Limited
Liability Company Agreement as of the date first set forth above.
SOLE MEMBER:
CONSOLIDATED CONTAINER HOLDINGS
LLC
By: FRANKLIN PLASTICS, INC.,
Its Manager
By: /s/ Michelle P. Goolsby
-----------------------------------
Name: Michelle P. Goolsby
Title: Vice President and Secretary
8
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONSOLIDATED CONTAINER HOLDINGS LLC
EXHIBIT "A"
Initial Capital Contributions and Membership Interest.
Fair Market Value of
Name of Sole Member Initial Capital Contribution Membership Interest
------------------- ---------------------------- -------------------
Consolidated Container $100.00 100%
Holdings LLC
<PAGE>
EXHIBIT 3.2(a)
CERTIFICATE OF INCORPORATION
OF
CONSOLIDATED CONTAINER CAPITAL, INC.
The undersigned, in order to form a corporation for the purpose
hereinafter stated, under and pursuant to the provisions of the Delaware General
Corporation Law, HEREBY CERTIFIES that:
1. The name of the Corporation is "Consolidated Container Capital, Inc."
2. The registered agent of the Corporation is The Corporation Trust
Company, and its registered office is 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
3. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
4. The total number of shares of stock which the Corporation is authorized
to issue is one hundred (100) shares of common stock, par value $.01 each, all
of which are of one class and are designated as Common Stock.
5. The name and address of the incorporator is: Kevin R. Shook, 1717 Main
Street, Suite 2800, Dallas, Texas 75201.
6. The Corporation is to have perpetual existence.
7. The Board of Directors of the Corporation, acting by majority vote, may
alter, amend or repeal the By-laws of the Corporation.
8. Except as otherwise provided by the Delaware General Corporation Law as
the same exists or may hereafter be amended, no Director of the Corporation
shall be personally liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director. Any amendment, repeal or
modification of this Article EIGHT by the stockholders of the Corporation shall
not adversely affect any right of protection of a director of the Corporation
existing at the time of such repeal or modification.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Incorporation on June 18, 1999.
By: /s/ Kevin R. Shook
------------------------------------
Name: Kevin R. Shook
Title: Sole Incorporator
<PAGE>
EXHIBIT 3.2(b)
CONSOLIDATED CONTAINER CAPITAL, INC.
BY-LAWS
Adopted on June __ , 1999
**********************
ARTICLE I
MEETING OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall be not less than
one nor more than fifteen. The
<PAGE>
2
first Board of Directors shall consist of nine Directors. Thereafter, within the
limits specified above, the number of Directors shall be determined by the Board
of Directors or by the stockholders. The Directors shall be elected by the
stockholders at their annual meeting. Vacancies and newly created directorships
resulting from any increase in the number of Directors may be filled by a
majority of the Directors then in office, although less than a quorum, or by the
sole remaining Director or by the stockholders. A Director may be removed with
or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting. Special
meetings of the Board of Directors may be held at any time upon the call of the
President and shall be called by the President or Secretary if directed by the
Board of Directors. Telegraphic, facsimile or written notice of each special
meeting of the Board of Directors shall be sent to each Director not less than
two hours before such meeting. A meeting of the Board of Directors may be held
without notice immediately after the annual meeting of the stockholders. Notice
need not be given of regular meetings of the Board of Directors.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees of Directors. The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate one or more
committees, including without limitation an Executive Committee, to have and
exercise such power and authority as the Board of Directors shall specify. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he/she or they constitute a quorum, may unanimously appoint another
Director to act at the meeting in place of any such absent or disqualified
member.
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, one or
more Vice Presidents, a Secretary, a Treasurer, and such other additional
officers with such titles as the Board of Directors shall determine, all of whom
shall be chosen by and shall serve at the pleasure of the Board of Directors.
Such officers shall have the usual powers and shall perform all the usual duties
incident to their respective offices. All officers shall be subject to the
supervision and direction of the Board of Directors. The authority, duties or
responsibilities of any officer of the Corporation may be suspended by the
President with or without cause. Any officer elected or
<PAGE>
3
appointed by the Board of Directors may be removed by the Board of Directors
with or without cause.
ARTICLE IV
INDEMNIFICATION
Section 1. Indemnity Undertaking. To the fullest extent permitted by
law (including, without limitation, Section 145 of the General Corporation Law
of the State of Delaware (as amended from time to time, the "General Corporation
Law")), the Corporation shall indemnify any person who is or was made, or
threatened to be made, a party to any threatened, pending or completed action,
suit or proceeding (a "Proceeding"), whether civil, criminal, administrative or
investigative, including, without limitation, an action by or in the right of
the Corporation to procure a judgment in its favor, by reason of the fact that
such person, or a person of whom such person is the legal representative, is or
was a Director or officer of the Corporation, or is or was serving in any
capacity at the request of the Corporation for any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise (an
"Other Entity"), against judgments, fines, penalties, excise taxes, amounts paid
in settlement and costs, charges and expenses (including attorneys' fees and
disbursements). Persons who are not Directors or officers of the Corporation may
be similarly indemnified in respect of service to the Corporation or to an Other
Entity at the request of the Corporation to the extent the Board of Directors at
any time specifies that such persons are entitled to the benefits of this
Article IV.
Section 2. Advancement of Expenses. The Corporation shall, from time
to time, reimburse or advance to any Director or officer or other person
entitled to indemnification hereunder the funds necessary for payment of
expenses, including attorneys' fees and disbursements, incurred in connection
with any Proceeding, in advance of the final disposition of such Proceeding;
provided, however, that, if required by the General Corporation Law, such
expenses incurred by or on behalf of any such Director, officer or other person
may be paid in advance of the final disposition of a Proceeding only upon
receipt by the Corporation of an undertaking, by or on behalf of such Director,
officer or other person indemnified hereunder, to repay any such amount so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right of appeal that such Director, officer or other
person is not entitled to be indemnified for such expenses.
Section 3. Rights Not Exclusive. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article IV shall not be deemed exclusive of any other rights which a person
seeking indemnification or reimbursement or advancement of expenses may have or
to which such person hereafter may be entitled under any statute, the
Certificate of Incorporation, these ByLaws, any agreement, any vote of
stockholders or disinterested Directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
Section 4. Continuation of Benefits. The rights to indemnification
and reimbursement or advancement of expenses provided by, or granted pursuant
to, this Article IV
<PAGE>
4
shall continue as to a person who has ceased to be a Director or officer (or
other person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of any such person.
Section 5. Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a Director, officer, employee or agent of an
Other Entity, against any liability asserted against such person and incurred by
such person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power to indemnify such
person against such liability under the provisions of this Article IV or the
Certificate of Incorporation or under Section 145 of the General Corporation Law
or any other provision of law.
Section 6. Binding Effect. The provisions of this Article IV shall
be a contract between the Corporation, on the one hand, and each Director and
officer who serves in such capacity at any time while this Article IV is in
effect and/or any other person indemnified hereunder, on the other hand,
pursuant to which the Corporation and each such Director, officer or other
person intend to be legally bound. No repeal or modification of this Article IV
shall affect any rights or obligations with respect to any state of facts then
or theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
Section 7. Procedural Rights. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article IV shall be enforceable by any person entitled to such
indemnification or reimbursement or advancement of expenses in any court of
competent jurisdiction. The burden of proving that such indemnification or
reimbursement or advancement of expenses is not appropriate shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel and its stockholders) to have made a
determination prior to the commencement of such action that such indemnification
or reimbursement or advancement of expenses is proper in the circumstances nor
an actual determination by the Corporation (including its Board of Directors,
its independent legal counsel and its stockholders) that such person is not
entitled to such indemnification or reimbursement or advancement of expenses
shall constitute a defense to the action or create a presumption that such
person is not so entitled. Such a person shall also be indemnified for any
expenses incurred in connection with successfully establishing his or her right
to such indemnification or reimbursement or advancement of expenses, in whole or
in part, in any such proceeding.
Section 8. Service Deemed at Corporation's Request. Any Director or
officer of the Corporation serving in any capacity (a) another corporation of
which a majority of the shares entitled to vote in the election of its directors
is held, directly or indirectly, by the Corporation or (b) any employee benefit
plan of the Corporation or any corporation referred to in clause (a) shall be
deemed, in each case, to be doing so at the request of the Corporation.
Section 9. Election of Applicable Law. Any person entitled to be
indemnified or to receive reimbursement or advancement of expenses as a matter
of right pursuant to this Article
<PAGE>
5
IV may elect to have the right to indemnification or reimbursement or
advancement of expenses interpreted on the basis of the applicable law in effect
at the time of the occurrence of the event or events giving rise to the
applicable Proceeding, to the extent permitted by law, or on the basis of the
applicable law in effect at the time such indemnification or reimbursement or
advancement of expenses is sought. Such election shall be made, by a notice in
writing to the Corporation, at the time indemnification or reimbursement or
advancement of expenses is sought; provided, however, that if no such notice is
given, the right to indemnification or reimbursement or advancement of expenses
shall be determined by the law in effect at the time indemnification or
reimbursement or advancement of expenses is sought.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears on the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by facsimile or telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
the calendar year or, otherwise, shall be fixed by the Board of Directors.
<PAGE>
EXHIBIT 3.3(a)
CERTIFICATE OF FORMATION
OF
REID PLASTICS GROUP LLC
The undersigned, an authorized natural person, for the purpose of forming
a limited liability company, under the provisions and subject to the
requirements of the State of Delaware (particularly Chapter 18, Title 6 of the
Delaware Code and the acts amendatory thereof and supplemental thereto, and
known, identified, and referred to as the "Delaware Limited Liability Company
Act"), hereby certifies that:
FIRST: The name of the limited liability company (hereinafter called the
"Limited Liability Company") is Reid Plastics Group LLC.
SECOND: The address of the registered office and the name and the address
of the registered agent of the Limited Liability Company required to be
maintained by Section 18-104 of the Delaware Limited Liability Company Act are
Corporation Service Company, 1013 Centre Road, Wilmington, New Castle County,
Delaware 19805-1297.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation this 29th day of April, 1999.
By: /s/ Kevin R. Shook
----------------------------------
Name: Kevin R. Shook
Title: Authorized Person
<PAGE>
EXHIBIT 3.3(b)
LIMITED LIABILITY COMPANY AGREEMENT
OF
REID PLASTICS GROUP LLC
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
REID PLASTICS GROUP LLC
TABLE OF CONTENTS
Page
----
ARTICLE I ORGANIZATIONAL MATTERS........................................1
1.1 Formation........................................................1
1.2 Name.............................................................1
1.3 Registered Office and Principal Office of Company................1
1.4 Term.............................................................1
1.5 Assumed Name Certificate.........................................1
1.6 Limits of Company................................................1
ARTICLE II DEFINITIONS...................................................2
ARTICLE III PURPOSE, MEMBER AND MEMBERSHIP INTEREST.......................4
3.1 Purposes and Scope...............................................4
3.2 Sole Member......................................................4
3.3 Restrictions on the Disposition of a Membership Interest.........4
ARTICLE IV CAPITAL CONTRIBUTIONS.........................................4
4.1 Initial Capital Contributions....................................4
4.2 Additional Contributions.........................................4
4.3 Maintenance of Capital Account...................................4
4.4 Limited Liability of Sole Member.................................4
ARTICLE V ALLOCATIONS AND DISTRIBUTIONS.................................5
5.1 Allocation of Profits and Losses.................................5
5.2 Interim Distributions............................................5
5.3 Distributions on Termination.....................................5
5.4 Limitation on Distributions......................................5
5.5 Distributions in Kind............................................5
-i-
<PAGE>
ARTICLE VI MANAGEMENT OF THE COMPANY.....................................5
6.1 Management by Manager............................................5
6.2 Appointment of Manager and Tenure................................6
6.3 Removal..........................................................6
6.4 Duties of Manager................................................6
6.5 Officers.........................................................6
6.6 Indemnification..................................................6
ARTICLE VII ACCOUNTING AND TAX MATTERS....................................7
7.1 Books and Records................................................7
ARTICLE VIII DISSOLUTION AND LIQUIDATION...................................7
8.1 Dissolution......................................................7
8.2 Effect of Dissolution............................................7
8.3 Winding Up Procedures............................................7
8.4 Distribution of Assets Upon Dissolution..........................7
8.5 Distributions in Kind............................................8
8.6 Articles of Dissolution..........................................8
ARTICLE IX GENERAL PROVISIONS............................................8
9.1 Captions and Headings............................................8
9.2 Amendment of Articles............................................8
9.3 Amendment of this Agreement......................................8
9.4 Number and Gender................................................8
9.5 Binding Effect...................................................8
9.6 Severability.....................................................8
9.7 Counterparts.....................................................9
9.8 Governing Law....................................................9
Exhibit A
-ii-
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
REID PLASTICS GROUP LLC
This LIMITED LIABILITY COMPANY AGREEMENT of Reid Plastics Group LLC (the
"Agreement") is made as of the 29th day of April, 1999, by Consolidated
Container Company LLC, a Delaware limited liability company (the "Sole Member").
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Formation. The Company was formed as a limited liability company in
accordance with the Delaware Act on April 29, 1999. The Sole Member hereby
agrees to continue the Company as a Delaware limited liability company under and
pursuant to the Delaware Act and agrees that except as expressly provided and
permitted herein to the contrary, the rights and obligations of the Sole Member
and the administration and termination of the Company shall be governed by the
Delaware Act.
1.2 Name. The name of the Company shall be, and the business of the
Company shall be conducted under the name of, Reid Plastics Group LLC. The
Company's business may be conducted under any other name or names approved by
the Manager.
1.3 Registered Office and Principal Office of Company. The Company shall
maintain a registered office and a designated and duly qualified agent for
service of process on the Company in the State of Delaware. The Company may
maintain offices at such locations as the Manager deems advisable.
1.4 Term. The existence of the Company commenced on the Commencement Date,
and the Company shall continue in existence until the dissolution of the Company
pursuant to the express provisions of Article VIII hereof.
1.5 Assumed Name Certificate. The Sole Member shall execute and file any
assumed or fictitious name certificate or certificates or any similar documents
required by law to be filed in connection with the formation and operation of
the Company.
1.6 Limits of Company. The Sole Member intends that the Company shall be
treated as a limited liability company in accordance with the Delaware Act for
all purposes under state law; this Agreement shall not be construed to provide
otherwise.
<PAGE>
ARTICLE II
DEFINITIONS
The following definitions shall for all purposes, unless otherwise clearly
indicated to the contrary, apply to the terms used in this Agreement.
"Accounting Year" means the accounting year of the Company for accounting
and tax purposes, which will be the calendar year.
"Additional Contribution" means any Capital Contribution in excess of that
Sole Member's Initial Contribution, made to the Company pursuant to Section 4.2
hereof.
"Agreed Contribution" means the sum of the Sole Member's Initial
Contribution and any Additional Contributions that Sole Member has made or is
obligated to make to the Company.
"Agreement" means this Limited Liability Company Agreement, as it may be
further amended, supplemented or restated from time to time in accordance with
the terms of this Agreement.
"Capital Account" means the capital account maintained for the Sole Member
pursuant to Section 4.3.
"Capital Contribution" means any Initial Contribution or Additional
Contribution to the capital of the Company in cash or property when and as such
contribution is actually made to the Company by the Sole Member.
"Certificate" means the Certificate of Formation of the Company filed with
the Secretary of State of Delaware, as it may be amended or restated from time
to time.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. All references herein to the Code shall include any
corresponding provision or provisions of succeeding law.
"Commencement Date" means the date that the Certificate was filed with the
Secretary of State of Delaware.
"Company" means Reid Plastics Group LLC, a Delaware limited liability
company, established by the filing of the Certificate with the Secretary of
State of Delaware.
"Delaware Act" means the Delaware Revised Limited Liability Company Act, 6
Del. C. ss. 18-101, et seq., as amended from time to time.
2
<PAGE>
"Dissolution Event" has the meaning set forth in Section 8.1.
"Distributable Cash" means the amount by which the aggregate amount of all
cash and cash equivalents from time to time held by the Company on hand or in
bank accounts or other temporary investments pending distribution, exceeds the
aggregate of all amounts to be paid or set aside by the Company for: (I) when
due, all principal and interest payments on indebtedness of the Company and all
other sums payable to lenders; (ii) all cash expenditures to be incurred in the
normal operations of the business of the Company; and (iii) such cash reserves
as the Sole Member may mutually deem reasonably necessary for the proper
operation of the business of the Company.
"Fair Market Value" means the price in cash, or its equivalent, that an
asset would bring considering its highest and most profitable use, if then
offered for sale in the open market, in competition with other similar assets at
or near the same location, with a reasonable time allowed to find a purchaser.
"Initial Contribution" means the initial Capital Contribution to the
Company made by the Sole Member as set forth in Exhibit "A" hereto.
"Losses" mean the losses and deductions of the Company determined in
accordance with accounting principles consistently applied from year to year
under the Method of Accounting of the Company.
"Manager" has the meaning set forth in Section 6.2.
"Membership Interest" means the interest of the Sole Member in the
Company, including, without limitation, such Member's right: (a) to a
distributive share of the Profits, Losses, and other items of income, gain,
loss, deduction, and credit of the Company; (b) to a distributive share of the
assets of the Company; and (c) to participate in the management and operation of
the Company as provided in this Agreement.
"Method of Accounting" means the accrued basis method of accounting unless
another method of accounting is agreed upon by the Sole Member or is required to
be used by the Code.
"Officers" has the meaning set forth in Section 6.5.
"Percentage Interest" means the percentage interest of the Sole Member in
certain allocations of Profits, Losses, and other items of income, gain, loss,
or deduction and certain distributions of cash and property.
"Person" means any individual or entity, public or private.
3
<PAGE>
"Profits" means the income and gains of the Company determined in
accordance with accounting principles consistently applied from year to year
under the Company's Method of Accounting.
"Sole Member" means Consolidated Container Company LLC, a Delaware limited
liability company.
"Treasury Regulations" means the Treasury Regulations promulgated under
the Code, as amended and in effect (including corresponding provisions of any
succeeding regulations).
ARTICLE III
PURPOSE, MEMBER AND MEMBERSHIP INTEREST
3.1 Purposes and Scope. The Company is organized to transact any and all
lawful business for which limited liability companies may be organized under the
Delaware Act.
3.2 Sole Member. The Sole Member of the Company is Consolidated Container
Company LLC, a Delaware limited liability company, which has, subject to the
provisions of Section 4.1 hereof, the entire Membership Interest and the entire
initial Capital Account balance of the Company as shown on Exhibit "A" of this
Agreement.
3.3 Restrictions on the Disposition of a Membership Interest. Except as
expressly set forth herein, the Sole Member will have the right to sell,
transfer, encumber or assign all or any portion of its Membership Interest in
the Company.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contributions. Concurrently with the adoption of this
Agreement, the Sole Member will contribute to the capital of the Company the
Initial Contribution and will receive the Membership Interest set forth on
Exhibit "A" of this Agreement.
4.2 Additional Contributions. The Sole Member may, in its sole and
absolute discretion, make Additional Contributions in such amounts as it deems
appropriate.
4.3 Maintenance of Capital Account. A Capital Account will be established
and maintained for the Sole Member.
4.4 Limited Liability of Sole Member. The Sole Member will not be liable
for the debts, obligations, or liabilities of the Company beyond such Sole
Member's Agreed Contribution to the Company. The Sole Member will not be
required to make any Capital
4
<PAGE>
Contribution or loan to the Company beyond the amount of such Sole Member's
Agreed Contribution.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocation of Profits and Losses. All Profits and Losses of the
Company for each fiscal quarter and each Accounting Year (or portion thereof)
will be allocated entirely to the Sole Member as provided in this Agreement. Any
credit available for federal income tax purposes will be allocated entirely to
the Sole Member in the same manner.
5.2 Interim Distributions. Interim distributions of Distributable Cash
will be made not less often than each fiscal quarter, or at such other times as
the Manager may approve, and will be made by the Company to the Sole Member in
accordance with this Article V.
5.3 Distributions on Termination. Upon the dissolution and winding-up of
the Company, its assets will be distributed in the manner prescribed in Article
VIII of this Agreement.
5.4 Limitation on Distributions. Any other provision of this Agreement to
the contrary notwithstanding, no interim distribution or distribution on
termination to the Sole Member will be declared and paid unless, (a) after the
distribution is made, the Fair Market Value of all of the assets of the Company
is in excess of all liabilities of the Company, other than liabilities to the
Sole Member on account of its Capital Contributions; and (b) such distribution
is in conformity with any outstanding loan agreements of the Company.
5.5 Distributions in Kind. The Sole Member is entitled to demand and
receive a distribution from the Company in the form of cash or any other
property.
ARTICLE VI
MANAGEMENT OF THE COMPANY
6.1 Management by Manager.
(a) The Manager of the Company shall have full and complete
discretion to manage and control the business and affairs of the Company
in accordance with the terms and provisions of this Agreement.
(b) Any action required by the Delaware Act to be taken at any
management meeting, or any action that may be taken at any management
meeting, may be taken
5
<PAGE>
without a meeting, without prior notice, and without a vote, if a written
consent, setting forth the action so taken, is signed by the Sole Member
or the Manager.
6.2 Appointment of Manager and Tenure. The Manager of the Company (the
"Manager") will be a Person designated from time to time by the Sole Member. As
of the date hereof, the Manager of the Company will be the Sole Member. The
Manager will hold the office of Manager for such term and shall have the
authority to exercise such powers and perform such duties as will be determined
from time to time by the Sole Member. The salary or other compensation, if any,
of the Manager of the Company will be fixed from time to time by the Sole
Member.
6.3 Removal. The Manager may be removed as such at any time by the Sole
Member, either with or without cause, in the discretion of the Sole Member.
Designation of the Manager shall not of itself create contract rights.
6.4 Duties of Manager. The Manager shall have general and active
management of the day-to-day business and affairs of the Company and shall be
authorized and directed to implement all orders, resolutions and business plans
adopted by the Sole Member that do not violate applicable laws.
6.5 Officers. The Manager may designate such officers of the Company as it
deems necessary or appropriate from time to time, including a President, one or
more Vice Presidents and a Secretary, and such other officers as the Manager
shall deem desirable (the "Officers"). The Manager hereby delegates to each
Officer the nonexclusive power and authority to act as an agent of the Company
and, in such capacity, to bind the Company in the ordinary course of the
Company's business and to execute any and all documents to be signed by the
Company.
As of the date hereof, the Officers shall be as follows:
Name Title
---- -----
William Est President
Michelle P. Goolsby Vice President and Secretary
Tracy L. Noll Vice President and Assistant
Secretary
Angie Miro Assistant Secretary
6.6 Indemnification. The Company will indemnify its Sole Member, Manager,
and Officers to the same extent a corporation may indemnify its directors,
officers and others under applicable law.
6
<PAGE>
ARTICLE VII
ACCOUNTING AND TAX MATTERS
7.1 Books and Records. The Company will maintain such books and records of
the operations and expenditures of the Company as the Manager and Officers shall
determine.
ARTICLE VIII
DISSOLUTION AND LIQUIDATION
8.1 Dissolution. The Company will be dissolved upon the earliest to occur
of the following events: (each such event is referred to as a "Dissolution
Event"):
(a) an election to dissolve the Company is approved in writing by
the Sole Member; or
(b) any other event occurs that, under the Delaware Act, would cause
the Company's dissolution.
8.2 Effect of Dissolution. Upon the dissolution of the Company, the
Company will cease to carry on its business, except insofar as may be necessary
for the winding up of its business, and the assets of the Company will be
determined and valued effective as of the day on which the event occurs that
results in such dissolution, but the Company will not terminate until there has
been a winding up of the Company's business and affairs and the assets of the
Company have been liquidated and distributed as provided in this Agreement.
8.3 Winding Up Procedures. Upon the dissolution of the Company, the
Company will (a) proceed to collect its assets; (b) convey and dispose of such
of its properties as are not to be distributed in kind to the Sole Member; (c)
pay, satisfy, and discharge its liabilities, or make adequate provision for
payment and discharge of such liabilities; and (d) do all other acts required to
liquidate its business and affairs.
8.4 Distribution of Assets Upon Dissolution. In settling the accounts of
the Company after its dissolution, the assets of the Company will be applied and
distributed in the following order of priority:
(a) First, to the extent permitted by law, and in accordance with
the priorities, if any, established by applicable law, to creditors in
satisfaction of liabilities of the Company, including liabilities of the
Company to its Sole Member as a creditor (other than for distributions and
Capital Contributions), whether by payment or establishment of reserves;
7
<PAGE>
(b) Second, to its Sole Member.
8.5 Distributions in Kind. If any assets of the Company are distributed in
kind, such assets will be distributed in accordance the provisions of Section
8.4 above to the Sole Member.
8.6 Articles of Dissolution. When all liabilities and obligations of the
Company have been paid or discharged, or adequate provision has been made for
such liabilities, or in case its property and assets are not sufficient to
satisfy and discharge all of the liabilities and obligations of the Company,
then when all the property and assets of the Company have been applied to the
extent available to the bona fide liabilities and obligations of the Company,
and all of the remaining property and assets of the Company have been
distributed to its Sole Member, the Company shall cause the Certificate to be
cancelled and will take such other actions as are necessary or appropriate to
reflect the dissolution and termination of the Company.
ARTICLE IX
GENERAL PROVISIONS
9.1 Captions and Headings. The captions and heading used in this Agreement
are for convenience of reference only and will not be taken into account in
constructing the meaning or intent of this Agreement.
9.2 Amendment of Articles. The Certificate may be amended, supplemented or
restated by written consent of the Sole Member. Upon executing the necessary
consent with respect to, such amendment, supplement, or restatement of the
Certificate, the Sole Member will cause a Certificate of Amendment to be
prepared, executed, and filed in accordance with the Delaware Act.
9.3 Amendment of this Agreement. This Agreement may be amended,
supplemented, or restated by the written consent of the Sole Member.
9.4 Number and Gender. Where the context so indicates, the singular will
include the plural, and the use of any gender will include all other genders.
9.5 Binding Effect. Except as otherwise expressly provided herein, this
Agreement will be binding upon and will inure to the benefit of the Sole Member
and its heirs, legal representatives, executors, administrators, distributees,
successors, and assigns.
9.6 Severability. If any one or more of the provisions contained in this
Agreement for any reason are held to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality, or unenforceability will not affect
any other provisions of this Agreement and this Agreement will be construed as
if such invalid, illegal, or unenforceable provisions had never been contained
in this Agreement.
8
<PAGE>
9.7 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed to be an original and will be binding upon the Sole Member
who executed same, but all of such counterparts will constitute the same
Agreement and may be sufficiently evidenced by one counterpart.
9.8 Governing Law. This Agreement and the construction interpretation will
be governed exclusively by the Delaware Act and other applicable laws of the
State of Delaware.
9
<PAGE>
IN WITNESS WHEREOF, the Sole Member has executed this Limited Liability
Company Agreement as of the date first set forth above.
SOLE MEMBER:
CONSOLIDATED CONTAINER COMPANY LLC
By: Consolidated Container Holdings LLC,
Its Manager
By: FRANKLIN PLASTICS, INC.,
Its Manager
By: /s/ Michelle P. Goolsby
-----------------------------------
Name: Michelle P. Goolsby
Title: Vice President and Secretary
10
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
REID PLASTICS GROUP LLC
EXHIBIT "A"
Initial Capital Contributions and Membership Interest.
Fair Market Value of
Name of Sole Member Initial Capital Contribution Membership Interest
- ------------------- ---------------------------- -------------------
Consolidated Container
Company LLC $100.00 100%
1
<PAGE>
EXHIBIT 3.4(a)
CERTIFICATE OF FORMATION
OF
PLASTIC CONTAINERS LLC
The undersigned, an authorized natural person, for the purpose of forming
a limited liability company, under the provisions and subject to the
requirements of the State of Delaware (particularly Chapter 18, Title 6 of the
Delaware Code and the acts amendatory thereof and supplemental thereto, and
known, identified, and referred to as the "Delaware Limited Liability Company
Act"), hereby certifies that:
FIRST: The name of the limited liability company (hereinafter called the
"Limited Liability Company") is Plastic Containers LLC.
SECOND: The address of the registered office and the name and the address
of the registered agent of the Limited Liability Company required to be
maintained by Section 18-104 of the Delaware Limited Liability Company Act are
Corporation Service Company, 1013 Centre Road, Wilmington, New Castle County,
Delaware 19805-1297.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation this 18th day of June, 1999.
By: /s/ Kevin R. Shook
------------------------------------
Name: Kevin R. Shook
Title: Organizer
<PAGE>
EXHIBIT 3.4(b)
LIMITED LIABILITY COMPANY AGREEMENT
OF
PLASTIC CONTAINERS LLC
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONTINENTAL PLASTIC CONTAINERS LLC
TABLE OF CONTENTS
Page
----
ARTICLE I .....................................................................1
1.1 Formation .........................................................1
1.2 Name ..............................................................1
1.3 Registered Office and Principal Office of the Company .............1
1.4 Term ..............................................................1
1.5 Assumed Name Certificate ..........................................1
1.6 Limits of Company .................................................1
ARTICLE II ....................................................................2
ARTICLE III ...................................................................4
3.1 Purposes and Scope ................................................4
3.2 Sole Member .......................................................4
3.3 Restrictions on the Disposition of a Membership Interest ..........4
ARTICLE IV ....................................................................4
4.1 Initial Capital Contributions .....................................4
4.2 Additional Contributions ..........................................4
4.3 Maintenance of Capital Account ....................................4
4.4 Limited Liability of Sole Member ..................................4
ARTICLE V .....................................................................5
5.1 Allocation of Profits and Losses ..................................5
5.2 Interim Distributions .............................................5
5.3 Distributions on Termination ......................................5
5.4 Limitation on Distributions .......................................5
5.5 Distributions in Kind .............................................5
ARTICLE VI ....................................................................5
6.1 Management by Manager .............................................5
6.2 Appointment of Manager and Tenure .................................5
6.3 Removal ...........................................................6
6.4 Duties of Manager .................................................6
6.5 Officers ..........................................................6
i
<PAGE>
6.6 Indemnification ...................................................6
ARTICLE VII ...................................................................7
7.1 Books and Records .................................................7
ARTICLE VIII ..................................................................7
8.1 Dissolution .......................................................7
8.2 Effect of Dissolution .............................................7
8.3 Winding Up Procedures .............................................7
8.4 Distribution of Assets Upon Dissolution ...........................7
8.5 Distributions in Kind .............................................8
8.6 Articles of Dissolution ...........................................8
ARTICLE IX ....................................................................8
9.1 Captions and Headings .............................................8
9.2 Amendment of Articles .............................................8
9.3 Amendment of this Agreement .......................................8
9.4 Number and Gender .................................................8
9.5 Binding Effect ....................................................8
9.6 Severability ......................................................8
9.7 Counterparts ......................................................9
9.8 Governing Law .....................................................9
Exhibit A
ii
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
PLASTIC CONTAINERS LLC
This LIMITED LIABILITY COMPANY AGREEMENT of Plastic Containers LLC (the
"Agreement") is made as of the 24th day of June, 1999, by Franklin Plastics,
Inc., a Delaware corporation (the "Sole Member").
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Formation. The Company was formed as a limited liability company in
accordance with the Delaware Act on June 18, 1999. The Sole Member hereby agrees
to continue the Company as a Delaware limited liability company under and
pursuant to the Delaware Act and agrees that except as expressly provided and
permitted herein to the contrary, the rights and obligations of the Sole Member
and the administration and termination of the Company shall be governed by the
Delaware Act.
1.2 Name. The name of the Company shall be, and the business of the
Company shall be conducted under the name of, Plastic Containers LLC. The
Company's business may be conducted under any other name or names approved by
the Manager.
1.3 Registered Office and Principal Office of the Company. The Company
shall maintain a registered office and a designated and duly qualified agent for
service of process on the Company in the State of Delaware. The Company may
maintain offices at such locations as the Manager deems advisable.
1.4 Term. The existence of the Company commenced on the Commencement Date,
and the Company shall continue in existence until the dissolution of the Company
pursuant to the express provisions of Article VIII hereof.
1.5 Assumed Name Certificate. The Sole Member shall execute and file any
assumed or fictitious name certificate or certificates or any similar documents
required by law to be filed in connection with the formation and operation of
the Company.
1.6 Limits of Company. The Sole Member intends that the Company shall be
treated as a limited liability company in accordance with the Delaware Act for
all purposes under state law; this Agreement shall not be construed to provide
otherwise.
<PAGE>
2
ARTICLE II
DEFINITIONS
The following definitions shall for all purposes, unless otherwise clearly
indicated to the contrary, apply to the terms used in this Agreement.
"Accounting Year" means the accounting year of the Company for accounting
and tax purposes, which will be the calendar year.
"Additional Contribution" means any Capital Contribution in excess of that
Sole Member's Initial Contribution, made to the Company pursuant to Section 4.2
hereof.
"Agreed Contribution" means the sum of the Sole Member's Initial
Contribution and any Additional Contributions that Sole Member has made or is
obligated to make to the Company.
"Agreement" means this Limited Liability Company Agreement, as it may be
further amended, supplemented or restated from time to time in accordance with
the terms of this Agreement.
"Capital Account" means the capital account maintained for the Sole Member
pursuant to Section 4.3.
"Capital Contribution" means any Initial Contribution or Additional
Contribution to the capital of the Company in cash or property when and as such
contribution is actually made to the Company by the Sole Member.
"Certificate" means the Certificate of Formation of the Company filed with
the Secretary of State of Delaware, as it may be amended or restated from time
to time.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. All references herein to the Code shall include any
corresponding provision or provisions of succeeding law.
"Commencement Date" means the date that the Certificate was filed with the
Secretary of State of Delaware.
"Company" means Plastic Containers LLC, a Delaware limited liability
company, established by the filing of the Certificate with the Secretary of
State of Delaware.
"Delaware Act" means the Delaware Revised Limited Liability Company Act 6
Del. C. ss. 18-101, et seq., as amended from time to time.
"Dissolution Event" has the meaning set forth in Section 8.1.
<PAGE>
3
"Distributable Cash" means the amount by which the aggregate amount of all
cash and cash equivalents from time to time held by the Company on hand or in
bank accounts or other temporary investments pending distribution, exceeds the
aggregate of all amounts to be paid or set aside by the Company for: (i) when
due, all principal and interest payments on indebtedness of the Company and all
other sums payable to lenders; (ii) all cash expenditures to be incurred in the
normal operations of the business of the Company; and (iii) such cash reserves
as the Sole Member may mutually deem reasonably necessary for the proper
operation of the business of the Company.
"Fair Market Value" means the price in cash, or its equivalent, that an
asset would bring considering its highest and most profitable use, if then
offered for sale in the open market, in competition with other similar assets at
or near the same location, with a reasonable time allowed to find a purchaser.
"Initial Contribution" means the initial Capital Contribution to the
Company made by the Sole Member as set forth in Exhibit "A" hereto.
"Losses" means the losses and deductions of the Company determined in
accordance with accounting principles consistently applied from year to year
under the Method of Accounting of the Company.
"Manager" has the meaning set forth in Section 6.2.
"Membership Interest" means the interest of the Sole Member in the
Company, including, without limitation, such Member's right: (a) to a
distributive share of the Profits, Losses, and other items of income, gain,
loss, deduction, and credit of the Company; (b) to a distributive share of the
assets of the Company; and (c) to participate in the management and operation of
the Company as provided in this Agreement.
"Method of Accounting" means the accrued basis method of accounting unless
another method of accounting is agreed upon by the Sole Member or is required to
be used by the Code.
"Officers" has the meaning set forth in Section 6.5.
"Percentage Interest" means the percentage interest of the Sole Member in
certain allocations of Profits, Losses, and other items of income, gain, loss,
or deduction and certain distributions of cash and property.
"Person" means any individual or entity, public or private.
"Profits" means the income and gains of the Company determined in
accordance with accounting principles consistently applied from year to year
under the Company's Method of Accounting.
<PAGE>
4
"Sole Member" means Franklin Plastics, Inc., a Delaware corporation.
"Treasury Regulations" means the Treasury Regulations promulgated under
the Code, as amended and in effect (including corresponding provisions of any
succeeding regulations).
ARTICLE III
PURPOSE, MEMBER AND MEMBERSHIP INTEREST
3.1 Purposes and Scope. The Company is organized to transact any and all
lawful business for which limited liability companies may be organized under the
Delaware Act.
3.2 Sole Member. The Sole Member of the Company is Franklin Plastics,
Inc., a Delaware corporation, which has, subject to the provisions of Section
4.1 hereof, the entire Membership Interest and the entire initial Capital
Account balance of the Company as shown on Exhibit "A" of this Agreement.
3.3 Restrictions on the Disposition of a Membership Interest. Except as
expressly set forth herein, the Sole Member will have the right to sell,
transfer, encumber or assign all or any portion of its Membership Interest in
the Company.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contributions. Concurrently with the adoption of this
Agreement, the Sole Member will contribute to the capital of the Company the
Initial Contribution and will receive the Membership Interest set forth on
Exhibit "A" of this Agreement.
4.2 Additional Contributions. The Sole Member may, in its sole and
absolute discretion, make Additional Contributions in such amounts as it deems
appropriate.
4.3 Maintenance of Capital Account. A Capital Account will be established
and maintained for the Sole Member.
4.4 Limited Liability of Sole Member. The Sole Member will not be liable
for the debts, obligations, or liabilities of the Company beyond such Sole
Member's Agreed Contribution to the Company. The Sole Member will not be
required to make any Capital Contribution or loan to the Company beyond the
amount of such Sole Member's Agreed Contribution.
<PAGE>
5
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocation of Profits and Losses. All Profits and Losses of the
Company for each fiscal quarter and each Accounting Year (or portion thereof)
will be allocated entirely to the Sole Member as provided in this Agreement. Any
credit available for federal income tax purposes will be allocated entirely to
the Sole Member in the same manner.
5.2 Interim Distributions. Interim distributions of Distributable Cash
will be made not less often than each fiscal quarter, or at such other times as
the Manager may approve, and will be made by the Company to the Sole Member in
accordance with this Article V.
5.3 Distributions on Termination. Upon the dissolution and winding-up of
the Company, its assets will be distributed in the manner prescribed in Article
VIII of this Agreement.
5.4 Limitation on Distributions. Any other provision of this Agreement to
the contrary notwithstanding, no interim distribution or distribution on
termination to the Sole Member will be declared and paid unless, (a) after the
distribution is made, the Fair Market Value of all of the assets of the Company
is in excess of all liabilities of the Company, other than liabilities to the
Sole Member on account of its Capital Contributions; and (b) such distribution
is in conformity with any outstanding loan agreements of the Company.
5.5 Distributions in Kind. The Sole Member is entitled to demand and
receive a distribution from the Company in the form of cash or any other
property.
ARTICLE VI
MANAGEMENT OF THE COMPANY
6.1 Management by Manager.
(a) The Manager of the Company shall have full and complete
discretion to manage and control the business and affairs of the Company
in accordance with the terms and provisions of this Agreement
(b) Any action required by the Delaware Act to be taken at any
management meeting, or any action that may be taken at any management
meeting, may be taken without a meeting, without prior notice, and without
a vote, if a written consent, setting forth the action so taken, is signed
by the Sole Member or the Manager.
6.2 Appointment of Manager and Tenure. The Manager of the Company (the
"Manager") will be a Person designated from time to time by the Sole Member. As
of the date
<PAGE>
6
hereof, the Manager of the Company will be the Sole Member. The Manager will
hold the office of Manager for such term and shall have the authority to
exercise such powers and perform such duties as will be determined from time to
time by the Sole Member. The salary or other compensation, if any, of the
Manager of the Company will be fixed from time to time by the Sole Member.
6.3 Removal. The Manager may be removed as such at any time by the Sole
Member, either with or without cause, in the discretion of the Sole Member.
Designation of the Manager shall not of itself create contract rights.
6.4 Duties of Manager. The Manager shall have general and active
management of the day-to-day business and affairs of the Company and shall be
authorized and directed to implement all orders, resolutions and business plans
adopted by the Sole Member that do not violate applicable laws.
6.5 Officers. The Manager may designate such officers of the Company as it
deems necessary or appropriate from time to time, including a President, one or
more Vice Presidents and a Secretary, and such other officers as the Manager
shall deem desirable (the "Officers"). The Manager hereby delegates to each
Officer the nonexclusive power and authority to act as an agent of the Company
and, in such capacity, to bind the Company in the ordinary course of the
Company's business and to execute any and all documents to be signed by the
Company.
As of the date hereof, the Officers shall be as follows:
Name Title
---- -----
William Estes President
Michelle P. Goolsby Vice President and Secretary
Tracy L. Noll Vice President and Assistant
Secretary
Angie Miro Assistant Secretary
6.6 Indemnification. The Company will indemnify its Sole Member, Manager,
and Officers to the same extent a corporation may indemnify its directors,
officers and others under applicable law.
<PAGE>
7
ARTICLE VII
ACCOUNTING AND TAX MATTERS
7.1 Books and Records. The Company will maintain such books and records of
the operations and expenditures of the Company as the Manager and Officers shall
determine.
ARTICLE VIII
DISSOLUTION AND LIQUIDATION
8.1 Dissolution. The Company will be dissolved upon the earliest to occur
of the following events (each such event is referred to as a "Dissolution
Event"):
(a) an election to dissolve the Company is approved in writing by the
Sole Member; or
(b) any other event occurs that, under the Delaware Act, would cause the
Company's dissolution.
8.2 Effect of Dissolution. Upon the dissolution of the Company, the
Company will cease to carry on its business, except insofar as may be necessary
for the winding up of its business, and the assets of the Company will be
determined and valued effective as of the day on which the event occurs that
results in such dissolution, but the Company will not terminate until there has
been a winding-up of the Company's business and affairs and the assets of the
Company have been liquidated and distributed as provided in this Agreement.
8.3 Winding Up Procedures. Upon the dissolution of the Company, the
Company will (a) proceed to collect its assets; (b) convey and dispose of such
of its properties as are not to be distributed in kind to the Sole Member; (c)
pay, satisfy, and discharge its liabilities, or make adequate provision for
payment and discharge of such liabilities; and (d) do all other acts required to
liquidate its business and affairs.
8.4 Distribution of Assets Upon Dissolution. In settling the accounts of
the Company after its dissolution, the assets of the Company will be applied and
distributed in the following order of priority:
(a) First, to the extent permitted by law, and in accordance with
the priorities, if any, established by applicable law, to creditors in
satisfaction of liabilities of the Company, including liabilities of the
Company to its Sole Member as a creditor (other than for distributions and
Capital Contributions), whether by payment or establishment of reserves;
<PAGE>
8
(b) Second, to its Sole Member.
8.5 Distributions in Kind. If any assets of the Company are distributed in
kind, such assets will be distributed in accordance with the provisions of
Section 8.4 above to the Sole Member.
8.6 Articles of Dissolution. When all liabilities and obligations of the
Company have been paid or discharged, or adequate provision has been made for
such liabilities, or in case its property and assets are not sufficient to
satisfy and discharge all of the liabilities and obligations of the Company,
then when all the property and assets of the Company have been applied to the
extent available to the bona fide liabilities and obligations of the Company,
and all of the remaining property and assets of the Company have been
distributed to its Sole Member, the Company shall cause the Certificate to be
cancelled and will take such other actions as are necessary or appropriate to
reflect the dissolution and termination of the Company.
ARTICLE IX
GENERAL PROVISIONS
9.1 Captions and Headings. The captions and headings used in this
Agreement are for convenience of reference only and will not be taken into
account in constructing the meaning or intent of this Agreement.
9.2 Amendment of Articles. The Certificate may be amended, supplemented or
restated by written consent of the Sole Member. Upon executing the necessary
consent with respect to, such amendment, supplement, or restatement of the
Certificate, the Sole Member will cause a Certificate of Amendment to be
prepared, executed, and filed in accordance with the Delaware Act.
9.3 Amendment of this Agreement. This Agreement may be amended,
supplemented, or restated by the written consent of the Sole Member.
9.4 Number and Gender. Where the context so indicates, the singular will
include the plural, and the use of any gender will include all other genders.
9.5 Binding Effect. Except as otherwise expressly provided herein, this
Agreement will be binding upon and will inure to the benefit of the Sole Member
and its heirs, legal representatives, executors, administrators, distributees,
successors, and assigns.
9.6 Severability. If any one or more of the provisions contained in this
Agreement for any reason are held to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality, or unenforceability will not affect
any other provisions of this Agreement and this
<PAGE>
9
Agreement will be construed as if such invalid, illegal, or unenforceable
provisions had never been contained in this Agreement.
9.7 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed to be an original and will be binding upon the Sole Member
who executed same, but all of such counterparts will constitute the same
Agreement and may be sufficiently evidenced by one counterpart.
9.8 Governing Law. This Agreement and the construction interpretation will
be governed exclusively by the Delaware Act and other applicable laws of the
State of Delaware.
<PAGE>
10
IN WITNESS WHEREOF, the Sole Member has executed this Limited Liability
Company Agreement as of the date first set forth above.
SOLE MEMBER:
FRANKLIN PLASTICS, INC.
By: /s/ Michelle P. Goolsby
------------------------------------
Name: Michelle P. Goolsby
Title: Vice President and Secretary
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
PLASTIC CONTAINERS LLC
- --------------------------------------------------------------------------------
EXHIBIT "A"
Initial Capital Contributions and Membership Interest
Fair Market Value of
Name of Sole Member Initial Capital Contribution Membership Interest
------------------- ---------------------------- -------------------
Franklin Plastics, Inc. $100.00 100%
a Delaware corporation
1
<PAGE>
EXHIBIT 3.5(a)
CERTIFICATE OF FORMATION
OF
CONTINENTAL PLASTIC CONTAINERS LLC
The undersigned, an authorized natural person, for the purpose of forming
a limited liability company, under the provisions and subject to the
requirements of the State of Delaware (particularly Chapter 18, Title 6 of the
Delaware Code and the acts amendatory thereof and supplemental thereto, and
known, identified, and referred to as the "Delaware Limited Liability Company
Act"), hereby certifies that:
FIRST: The name of the limited liability company (hereinafter called the
"Limited Liability Company") is Continental Plastic Containers LLC.
SECOND: The address of the registered office and the name and the address
of the registered agent of the Limited Liability Company required to be
maintained by Section 18-104 of the Delaware Limited Liability Company Act are
Corporation Service Company, 1013 Centre Road, Wilmington, New Castle County,
Delaware 19805-1297.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation this 18th day of June, 1999.
By: /s/ Kevin R. Shook
------------------------------------
Name: Kevin R. Shook
Title: Organizer
<PAGE>
EXHIBIT 3.5(b)
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONTINENTAL PLASTIC CONTAINERS LLC
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONTINENTAL PLASTIC CONTAINERS LLC
TABLE OF CONTENTS
Page
----
ARTICLE I....................................................................1
1.1 Formation........................................................1
1.2 Name.............................................................1
1.3 Registered Office and Principal Office of the Company............1
1.4 Term.............................................................1
1.5 Assumed Name Certificate.........................................1
1.6 Limits of Company................................................1
ARTICLE II...................................................................2
ARTICLE III..................................................................4
3.1 Purposes and Scope...............................................4
3.2 Sole Member......................................................4
3.3 Restrictions on the Disposition of a Membership Interest.........4
ARTICLE IV...................................................................4
4.1 Initial Capital Contributions....................................4
4.2 Additional Contributions.........................................4
4.3 Maintenance of Capital Account...................................4
4.4 Limited Liability of Sole Member.................................4
ARTICLE V....................................................................5
5.1 Allocation of Profits and Losses.................................5
5.2 Interim Distributions............................................5
5.3 Distributions on Termination.....................................5
5.4 Limitation on Distributions......................................5
5.5 Distributions in Kind............................................5
ARTICLE VI...................................................................5
6.1 Management by Manager............................................5
6.2 Appointment of Manager and Tenure................................5
6.3 Removal..........................................................6
6.4 Duties of Manager................................................6
i
<PAGE>
6.5 Officers.........................................................6
6.6 Indemnification..................................................6
ARTICLE VII..................................................................7
7.1 Books and Records................................................7
ARTICLE VIII.................................................................7
8.1 Dissolution......................................................7
8.2 Effect of Dissolution............................................7
8.3 Winding Up Procedures............................................7
8.4 Distribution of Assets Upon Dissolution..........................7
8.5 Distributions in Kind............................................8
8.6 Articles of Dissolution..........................................8
ARTICLE IX...................................................................8
9.1 Captions and Headings............................................8
9.2 Amendment of Articles............................................8
9.3 Amendment of this Agreement......................................8
9.4 Number and Gender................................................8
9.5 Binding Effect...................................................8
9.6 Severability.....................................................8
9.7 Counterparts.....................................................9
9.8 Governing Law....................................................9
Exhibit A
ii
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONTINENTAL PLASTIC CONTAINERS LLC
This LIMITED LIABILITY COMPANY AGREEMENT of Continental Plastic Containers
LLC (the "Agreement") is made as of the 24th day of June, 1999, by Plastic
Containers, Inc., a Delaware corporation (the "Sole Member").
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Formation. The Company was formed as a limited liability company in
accordance with the Delaware Act on June 18, 1999. The Sole Member hereby agrees
to continue the Company as a Delaware limited liability company under and
pursuant to the Delaware Act and agrees that except as expressly provided and
permitted herein to the contrary, the rights and obligations of the Sole Member
and the administration and termination of the Company shall be governed by the
Delaware Act.
1.2 Name. The name of the Company shall be, and the business of the
Company shall be conducted under the name of, Continental Plastic Containers
LLC. The Company's business may be conducted under any other name or names
approved by the Manager.
1.3 Registered Office and Principal Office of the Company. The Company
shall maintain a registered office and a designated and duly qualified agent for
service of process on the Company in the State of Delaware. The Company may
maintain offices at such locations as the Manager deems advisable.
1.4 Term. The existence of the Company commenced on the Commencement Date,
and the Company shall continue in existence until the dissolution of the Company
pursuant to the express provisions of Article VIII hereof.
1.5 Assumed Name Certificate. The Sole Member shall execute and file any
assumed or fictitious name certificate or certificates or any similar documents
required by law to be filed in connection with the formation and operation of
the Company.
1.6 Limits of Company. The Sole Member intends that the Company shall be
treated as a limited liability company in accordance with the Delaware Act for
all purposes under state law; this Agreement shall not be construed to provide
otherwise.
<PAGE>
2
ARTICLE II
DEFINITIONS
The following definitions shall for all purposes, unless otherwise clearly
indicated to the contrary, apply to the terms used in this Agreement.
"Accounting Year" means the accounting year of the Company for accounting
and tax purposes, which will be the calendar year.
"Additional Contribution" means any Capital Contribution in excess of that
Sole Member's Initial Contribution, made to the Company pursuant to Section 4.2
hereof.
"Agreed Contribution" means the sum of the Sole Member's Initial
Contribution and any Additional Contributions that Sole Member has made or is
obligated to make to the Company.
"Agreement" means this Limited Liability Company Agreement, as it may be
further amended, supplemented or restated from time to time in accordance with
the terms of this Agreement.
"Capital Account" means the capital account maintained for the Sole Member
pursuant to Section 4.3.
"Capital Contribution" means any Initial Contribution or Additional
Contribution to the capital of the Company in cash or property when and as such
contribution is actually made to the Company by the Sole Member.
"Certificate" means the Certificate of Formation of the Company filed with
the Secretary of State of Delaware, as it may be amended or restated from time
to time.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. All references herein to the Code shall include any
corresponding provision or provisions of succeeding law.
"Commencement Date" means the date that the Certificate was filed with the
Secretary of State of Delaware.
"Company" means Continental Plastic Containers LLC, a Delaware limited
liability company, established by the filing of the Certificate with the
Secretary of State of Delaware.
"Delaware Act" means the Delaware Revised Limited Liability Company Act 6
Del. C. ss. 18-101, et seq., as amended from time to time.
"Dissolution Event" has the meaning set forth in Section 8.1.
<PAGE>
3
"Distributable Cash" means the amount by which the aggregate amount of all
cash and cash equivalents from time to time held by the Company on hand or in
bank accounts or other temporary investments pending distribution, exceeds the
aggregate of all amounts to be paid or set aside by the Company for: (i) when
due, all principal and interest payments on indebtedness of the Company and all
other sums payable to lenders; (ii) all cash expenditures to be incurred in the
normal operations of the business of the Company; and (iii) such cash reserves
as the Sole Member may mutually deem reasonably necessary for the proper
operation of the business of the Company.
"Fair Market Value" means the price in cash, or its equivalent, that an
asset would bring considering its highest and most profitable use, if then
offered for sale in the open market, in competition with other similar assets at
or near the same location, with a reasonable time allowed to find a purchaser.
"Initial Contribution" means the initial Capital Contribution to the
Company made by the Sole Member as set forth in Exhibit "A" hereto.
"Losses" means the losses and deductions of the Company determined in
accordance with accounting principles consistently applied from year to year
under the Method of Accounting of the Company.
"Manager" has the meaning set forth in Section 6.2.
"Membership Interest" means the interest of the Sole Member in the
Company, including, without limitation, such Member's right: (a) to a
distributive share of the Profits, Losses, and other items of income, gain,
loss, deduction, and credit of the Company; (b) to a distributive share of the
assets of the Company; and (c) to participate in the management and operation of
the Company as provided in this Agreement.
"Method of Accounting" means the accrued basis method of accounting unless
another method of accounting is agreed upon by the Sole Member or is required to
be used by the Code.
"Officers" has the meaning set forth in Section 6.5.
"Percentage Interest" means the percentage interest of the Sole Member in
certain allocations of Profits, Losses, and other items of income, gain, loss,
or deduction and certain distributions of cash and property.
"Person" means any individual or entity, public or private.
"Profits" means the income and gains of the Company determined in
accordance with accounting principles consistently applied from year to year
under the Company's Method of Accounting.
<PAGE>
4
"Sole Member" means Franklin Plastics, Inc., a Delaware corporation.
"Treasury Regulations" means the Treasury Regulations promulgated under
the Code, as amended and in effect (including corresponding provisions of any
succeeding regulations).
ARTICLE III
PURPOSE, MEMBER AND MEMBERSHIP INTEREST
3.1 Purposes and Scope. The Company is organized to transact any and all
lawful business for which limited liability companies may be organized under the
Delaware Act.
3.2 Sole Member. The Sole Member of the Company is Franklin Plastics,
Inc., a Delaware corporation, which has, subject to the provisions of Section
4.1 hereof, the entire Membership Interest and the entire initial Capital
Account balance of the Company as shown on Exhibit "A" of this Agreement.
3.3 Restrictions on the Disposition of a Membership Interest. Except as
expressly set forth herein, the Sole Member will have the right to sell,
transfer, encumber or assign all or any portion of its Membership Interest in
the Company.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contributions. Concurrently with the adoption of this
Agreement, the Sole Member will contribute to the capital of the Company the
Initial Contribution and will receive the Membership Interest set forth on
Exhibit "A" of this Agreement.
4.2 Additional Contributions. The Sole Member may, in its sole and
absolute discretion, make Additional Contributions in such amounts as it deems
appropriate.
4.3 Maintenance of Capital Account. A Capital Account will be established
and maintained for the Sole Member.
4.4 Limited Liability of Sole Member. The Sole Member will not be liable
for the debts, obligations, or liabilities of the Company beyond such Sole
Member's Agreed Contribution to the Company. The Sole Member will not be
required to make any Capital Contribution or loan to the Company beyond the
amount of such Sole Member's Agreed Contribution.
<PAGE>
5
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocation of Profits and Losses. All Profits and Losses of the
Company for each fiscal quarter and each Accounting Year (or portion thereof)
will be allocated entirely to the Sole Member as provided in this Agreement. Any
credit available for federal income tax purposes will be allocated entirely to
the Sole Member in the same manner.
5.2 Interim Distributions. Interim distributions of Distributable Cash
will be made not less often than each fiscal quarter, or at such other times as
the Manager may approve, and will be made by the Company to the Sole Member in
accordance with this Article V.
5.3 Distributions on Termination. Upon the dissolution and winding-up of
the Company, its assets will be distributed in the manner prescribed in Article
VIII of this Agreement.
5.4 Limitation on Distributions. Any other provision of this Agreement to
the contrary notwithstanding, no interim distribution or distribution on
termination to the Sole Member will be declared and paid unless, (a) after the
distribution is made, the Fair Market Value of all of the assets of the Company
is in excess of all liabilities of the Company, other than liabilities to the
Sole Member on account of its Capital Contributions; and (b) such distribution
is in conformity with any outstanding loan agreements of the Company.
5.5 Distributions in Kind. The Sole Member is entitled to demand and
receive a distribution from the Company in the form of cash or any other
property.
ARTICLE VI
MANAGEMENT OF THE COMPANY
6.1 Management by Manager.
(a) The Manager of the Company shall have full and complete
discretion to manage and control the business and affairs of the Company
in accordance with the terms and provisions of this Agreement
(b) Any action required by the Delaware Act to be taken at any
management meeting, or any action that may be taken at any management
meeting, may be taken without a meeting, without prior notice, and without
a vote, if a written consent, setting forth the action so taken, is signed
by the Sole Member or the Manager.
6.2 Appointment of Manager and Tenure. The Manager of the Company (the
"Manager") will be a Person designated from time to time by the Sole Member. As
of the date
<PAGE>
6
hereof, the Manager of the Company will be the Sole Member. The Manager will
hold the office of Manager for such term and shall have the authority to
exercise such powers and perform such duties as will be determined from time to
time by the Sole Member. The salary or other compensation, if any, of the
Manager of the Company will be fixed from time to time by the Sole Member.
6.3 Removal. The Manager may be removed as such at any time by the Sole
Member, either with or without cause, in the discretion of the Sole Member.
Designation of the Manager shall not of itself create contract rights.
6.4 Duties of Manager. The Manager shall have general and active
management of the day-to-day business and affairs of the Company and shall be
authorized and directed to implement all orders, resolutions and business plans
adopted by the Sole Member that do not violate applicable laws.
6.5 Officers. The Manager may designate such officers of the Company as it
deems necessary or appropriate from time to time, including a President, one or
more Vice Presidents and a Secretary, and such other officers as the Manager
shall deem desirable (the "Officers"). The Manager hereby delegates to each
Officer the nonexclusive power and authority to act as an agent of the Company
and, in such capacity, to bind the Company in the ordinary course of the
Company's business and to execute any and all documents to be signed by the
Company.
As of the date hereof, the Officers shall be as follows:
Name Title
---- -----
William Estes President
Michelle P. Goolsby Vice President and Secretary
Tracy L. Noll Vice President and Assistant Secretary
Angie Miro Assistant Secretary
6.6 Indemnification. The Company will indemnify its Sole Member, Manager,
and Officers to the same extent a corporation may indemnify its directors,
officers and others under applicable law.
<PAGE>
7
ARTICLE VII
ACCOUNTING AND TAX MATTERS
7.1 Books and Records. The Company will maintain such books and records
of the operations and expenditures of the Company as the Manager and Officers
shall determine.
ARTICLE VIII
DISSOLUTION AND LIQUIDATION
8.1 Dissolution. The Company will be dissolved upon the earliest to
occur of the following events (each such event is referred to as a "Dissolution
Event"):
(a) an election to dissolve the Company is approved in writing by the
Sole Member; or
(b) any other event occurs that, under the Delaware Act, would cause the
Company's dissolution.
8.2 Effect of Dissolution. Upon the dissolution of the Company, the
Company will cease to carry on its business, except insofar as may be necessary
for the winding up of its business, and the assets of the Company will be
determined and valued effective as of the day on which the event occurs that
results in such dissolution, but the Company will not terminate until there has
been a winding-up of the Company's business and affairs and the assets of the
Company have been liquidated and distributed as provided in this Agreement.
8.3 Winding Up Procedures. Upon the dissolution of the Company, the
Company will (a) proceed to collect its assets; (b) convey and dispose of such
of its properties as are not to be distributed in kind to the Sole Member; (c)
pay, satisfy, and discharge its liabilities, or make adequate provision for
payment and discharge of such liabilities; and (d) do all other acts required to
liquidate its business and affairs.
8.4 Distribution of Assets Upon Dissolution. In settling the accounts of
the Company after its dissolution, the assets of the Company will be applied and
distributed in the following order of priority:
(a) First, to the extent permitted by law, and in accordance with
the priorities, if any, established by applicable law, to creditors in
satisfaction of liabilities of the Company, including liabilities of the
Company to its Sole Member as a creditor (other than for distributions and
Capital Contributions), whether by payment or establishment of reserves;
<PAGE>
8
(b) Second, to its Sole Member.
8.5 DISTRIBUTIONS IN KIND. If any assets of the Company are distributed
in kind, such assets will be distributed in accordance with the provisions of
SECTION 8.4 above to the Sole Member.
8.6 ARTICLES OF DISSOLUTION. When all liabilities and obligations of the
Company have been paid or discharged, or adequate provision has been made for
such liabilities, or in case its property and assets are not sufficient to
satisfy and discharge all of the liabilities and obligations of the Company,
then when all the property and assets of the Company have been applied to the
extent available to the bona fide liabilities and obligations of the Company,
and all of the remaining property and assets of the Company have been
distributed to its Sole Member, the Company shall cause the Certificate to be
cancelled and will take such other actions as are necessary or appropriate to
reflect the dissolution and termination of the Company.
ARTICLE IX
GENERAL PROVISIONS
9.1 CAPTIONS AND HEADINGS. The captions and headings used in this
Agreement are for convenience of reference only and will not be taken into
account in constructing the meaning or intent of this Agreement.
9.2 AMENDMENT OF ARTICLES. The Certificate may be amended, supplemented or
restated by written consent of the Sole Member. Upon executing the necessary
consent with respect to, such amendment, supplement, or restatement of the
Certificate, the Sole Member will cause a Certificate of Amendment to be
prepared, executed, and filed in accordance with the Delaware Act.
9.3 AMENDMENT OF THIS AGREEMENT. This Agreement may be amended,
supplemented, or restated by the written consent of the Sole Member.
9.4 NUMBER AND GENDER. Where the context so indicates, the singular will
include the plural, and the use of any gender will include all other genders.
9.5 BINDING EFFECT. Except as otherwise expressly provided herein, this
Agreement will be binding upon and will inure to the benefit of the Sole Member
and its heirs, legal representatives, executors, administrators, distributees,
successors, and assigns.
9.6 SEVERABILITY. If any one or more of the provisions contained in this
Agreement for any reason are held to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality, or unenforceability will not affect
any other provisions of this Agreement and this
<PAGE>
9
Agreement will be construed as if such invalid, illegal, or unenforceable
provisions had never been contained in this Agreement.
9.7 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which will be deemed to be an original and will be binding upon the Sole Member
who executed same, but all of such counterparts will constitute the same
Agreement and may be sufficiently evidenced by one counterpart.
9.8 Governing Law This Agreement and the construction interpretation will
be governed exclusively by the Delaware Act and other applicable laws of the
State of Delaware.
<PAGE>
10
IN WITNESS WHEREOF, the Sole Member has executed this Limited Liability
Company Agreement as of the date first set forth above.
SOLE MEMBER:
PLASTIC CONTAINERS, INC.
By: /s/ Michelle P. Goolsby
----------------------------------
Name: Michelle P. Goolsby
Title: Vice President and Secretary
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONTINENTAL PLASTIC CONTAINERS LLC
- --------------------------------------------------------------------------------
EXHIBIT "A"
Initial Capital Contributions and Membership Interest
Fair Market Value of
Name of Sole Member Initial Capital Contribution Membership Interest
------------------- ---------------------------- -------------------
Plastic Containers, Inc. $100.00 100%
a Delaware corporation
1
<PAGE>
EXHIBIT 3.6(a)
CERTIFICATE OF INCORPORATION
OF
CONTINENTAL CARIBBEAN CONTAINERS, INC.
* * * * *
1. The name of the corporation is
CONTINENTAL CARIBBEAN CONTAINERS, INC.
2. The address of its registered office in the State of Delaware is
No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall
have authority to issue is one thousand Common shares (1,000) and the par value
of each of such shares is One Dollar ($1.00) amounting in the aggregate to One
Thousand Dollars ($1,000.00).
5. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
B.A. Pennington 100 West Tenth Street
Wilmington, Delaware 19801
W.J. Reif 100 West Tenth Street
Wilmington, Delaware 19801
<PAGE>
R.F. Andrews 100 West Tenth Street
Wilmington, Delaware 19801
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the corporation.
To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. The by-laws may provide that in the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors, or in the by-laws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all
-2-
<PAGE>
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or by-laws, expressly so provide, no such committee shall
have the power or authority to declare a dividend or to authorize the issuance
of stock.
When and as authorized by the stockholders in accordance with
statute, to sell, lease or exchange all or substantially all of the property and
assets of the corporation, including its good will and its corporate franchises,
upon such terms and conditions and for such consideration, which may consist in
whole or in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the corporation.
8. Meetings of stockholders may be held within or without the State
of Delaware, as the by-laws may provide. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation. Elections of directors
need not be by written ballot unless the by-laws of the corporation shall so
provide.
9. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this
-3-
<PAGE>
reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate, hereby
declaring and certifying that this is our act and deed and the facts herein
stated are true, and accordingly have hereunto set our hands this 17th day of
October, 1974.
By: /s/ B.A. Pennington
---------------------------------
Name: B.A. Pennington
Title: Incorporator
By: /s/ W.J. Reif
---------------------------------
Name: W.J. Reif
Title: Incorporator
By: /s/ R.F. Andrews
---------------------------------
Name: R.F. Andrews
Title: Incorporator
-4-
<PAGE>
EXHIBIT 3.6(b)
AMENDED AND RESTATED BY-LAWS
OF
CONTINENTAL CARIBBEAN CONTAINERS, INC.
a Delaware corporation
(the "Company")
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF
CONTINENTAL CARIBBEAN CONTAINERS, INC.
a Delaware corporation
(the "Company")
TABLE OF CONTENTS
Page
Article I. Shareholders......................................................1
Section 1.1 Annual Meeting............................................1
Section 1.2 Special Meetings..........................................1
Section 1.3 Notice of Meetings........................................1
Section 1.4 Quorum....................................................1
Section 1.5 Voting....................................................2
Section 1.6 Presiding Officer and Secretary...........................2
Section 1.7 Proxies...................................................2
Section 1.8 List of Shareholders......................................2
Article II. Directors........................................................3
Section 2.1 Number of Directors.......................................3
Section 2.2 Election and Term of Directors............................3
Section 2.3 Vacancies and Newly Created Directorships.................3
Section 2.4 Resignation...............................................3
Section 2.5 Meetings..................................................3
Section 2.6 Quorum and Voting.........................................4
Section 2.7 Written Consents and Meetings by Telephone................4
Section 2.8 Compensation..............................................4
Section 2.9 The "Whole Board".........................................4
Article III. Committees of the Board.........................................4
Section 3.1 Appointment and Powers....................................4
Article IV. Officers, Agents and Employees...................................5
Section 4.1 Appointment and Qualification.............................5
Section 4.2 Removal of Officers, Agents or Employees..................5
Section 4.3 Compensation and Bond.....................................5
Section 4.4 Chairman of the Board.....................................5
Section 4.5 President.................................................6
Section 4.6 Vice Presidents...........................................6
Section 4.7 Treasurer.................................................6
Section 4.8 Secretary.................................................6
Section 4.9 Assistant Treasurer.......................................7
Section 4.10 Assistant Secretaries....................................7
i
<PAGE>
Section 4.11 Delegation of Duties......................................7
Article V. Capital Stock.....................................................7
Section 5.1 Certificates..............................................7
Section 5.2 Transfers of Stock........................................7
Section 5.3 Lost, Stolen or Destroyed Certificates....................8
Section 5.4 Shareholder Record Date...................................8
Article VI. Seal.............................................................8
Section 6.1 Seal......................................................8
Article VII. Waiver of Notice................................................9
Section 7.1 Waiver of Notice..........................................9
Article VIII. Indemnification................................................9
Section 8.1 Indemnification...........................................9
Section 8.2 Determination............................................10
Section 8.3 Business Combination.....................................10
Section 8.4 Advances of Expenses.....................................10
Section 8.5 Employee Benefit Plans...................................10
Article IX. Amendments......................................................11
Section 9.1 Amendments...............................................11
ii
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF
CONTINENTAL CARIBBEAN CONTAINERS, INC.
a Delaware corporation
(the "Company")
(as adopted by the Board of Directors on November 21, 1991)
Article I. Shareholders
Section 1.1 Annual Meeting. The annual meeting of shareholders of
the Company, for the election of directors and for the transaction of any other
business which may properly be transacted at the annual meeting, shall be held
at such hour on such day and at such place within or without the State of
Delaware as may be fixed by the Board of Directors.
Section 1.2 Special Meetings. A special meeting of the shareholders
of the Company entitled to vote on any business to be considered at any such
meeting may be called by the Chairman of the Board or the President or the
Secretary when directed to do so by resolution of the Board of Directors or at
the written request of directors representing a majority of the Whole Board or
at the written request of any shareholder. Any such request shall state the
purpose or purposes of the proposed meeting and the time and place of the
proposed meeting.
Section 1.3 Notice of Meetings. (a) Whenever shareholders are
required or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called.
(b) Unless otherwise provided by law, and except as to any
shareholder duly waiving notice, the written notice of any meeting shall be
given personally or by Federal Express or other reliable commercial courier or
by facsimile transmission to such facsimile telephone number as any shareholder
shall designate in writing to the Company's Secretary, not less than 15 nor more
than 60 days before the date of the meeting to each shareholder entitled to vote
at such meeting. If couriered, notice shall be deemed given when deposited with
the commercial courier, postage prepaid, directed to the shareholder at such
shareholder's address as it appears on the stock records of the Company.
(c) When a meeting is adjourned to another time or place, notice
must be given of the adjourned meeting in the manner described above. At the
adjourned meeting the company may transact any business which might have been
transacted at the original meeting.
Section 1.4 Quorum. Except as otherwise provided by law in respect
of the vote of holders of stock that shall be required for a specified action,
at any meeting of shareholders the
<PAGE>
2
holders of stock representing one third of the voting power of the Company
entitled to vote thereat, either present or represented by proxy, shall
constitute a quorum for the transaction of any business, but the shareholders
present, although less than a quorum, may adjourn the meeting to another time or
place.
Section 1.5 Voting. (a) Whenever directors are to be elected at a
meeting, they shall be elected by a majority of the votes cast at the meeting by
the holders of stock entitled to vote thereat. Whenever any corporate action,
other than the election of directors, is to be taken by vote of shareholders at
a meeting, it shall, except as otherwise required by law or by the certificate
of incorporation or by these By-Laws, be authorized by a majority of the votes
cast at the meeting by the holders of stock entitled to vote thereat.
(b) Except as otherwise provided by law or by the certificate of
incorporation, each holder of record of stock of the Company entitled to vote on
any matter shall be entitled to one vote for each share of capital stock
standing in the name of such holder on the stock ledger of the Company on the
record date for the determination of the shareholders entitled to vote on such
matter.
Section 1.6 Presiding Officer and Secretary. At every meeting of
shareholders the Chairman of the Board, or, in the chairman of the Board's
absence, the President, or, in the President's absence, a Vice President, or if
none be present, the appointee of the meeting, shall preside. The Secretary, or
in the Secretary's absence an Assistant Secretary, or if none be present, the
appointee of the presiding officer of the meeting, shall act as secretary of the
meeting.
Section 1.7 Proxies. Each shareholder entitled to vote at a meeting
of shareholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for such
shareholder by proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period. Every proxy
shall be signed by the shareholder or by such shareholder's duly authorized
attorney. A proxy that does not bear a date shall be deemed to be dated the date
it was first delivered to one or more of the persons named to act under such
proxy.
Section 1.8 List of Shareholders. (a) The officer who has charge of
the stock ledger of the Company shall prepare and make, at least ten days before
every meeting of shareholders, a complete list of the shareholders entitled to
vote at the meeting, arranged in alphabetical order and showing the address of
each shareholder and the number of shares registered in such shareholder's name.
Such list shall be open to the examination of any shareholder entitled to vote
at the meeting, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
shareholder entitled to vote at the meeting who is present.
<PAGE>
3
(b) The stock ledger shall be the only evidence as to who are the
shareholders entitled to examine the stock ledger, the list required by this
Section 1.8 or the books of the Company, or to vote in person or by proxy at any
meeting of shareholders.
Article II. Directors
Section 2.1 Number of Directors. The Board of Directors shall
consist of such number of persons, not less than two, as shall be determined
from time to time by the affirmative vote at a meeting of the holders of stock
representing a majority of the voting power of the Company or by resolution of
the Board of Directors, adopted by a majority of the Whole Board; provided that
the number of directors shall not be reduced so as to shorten the term of any
director at the time in office; and provided, further, that the number of
directors shall initially be six until otherwise determined by the affirmative
vote at a meeting of the holders of stock representing a majority of the voting
power of the Company or by resolution of the Board of Directors, adopted by a
majority of the Whole Board.
Section 2.2 Election and Term of Directors. Directors shall be
elected annually at the annual meeting of shareholders. Each director shall hold
office until such director's successor is elected and qualified or until such
director's earlier resignation or removal. If the annual election of directors
is not held on the date designated therefor, the directors shall cause such
election to be held as soon thereafter as convenient. The shareholders at any
meeting called for the purpose, by vote of a majority of the outstanding stock
entitled to vote, may remove from office any director, either with or without
cause, and elect such director's successor.
Section 2.3 Vacancies and Newly Created Directorships. Vacancies and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by election at a meeting of shareholders. Vacancies
and such newly created directorships may also be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director.
Section 2.4 Resignation. Any director may resign from office at any
time either by oral tender of resignation at any meeting of the Board or by oral
tender to the Chairman of the Board or the President or by giving written notice
to the Secretary of the Company. Any such resignation shall take effect at the
time it specifies or, if the time be not specified, upon receipt, and the
acceptance of such resignation, unless required by its terms, shall not be
necessary to make such resignation effective.
Section 2.5 Meetings. Meetings of the Board, regular or special, may
be held at any place within or without the State of Delaware. An annual meeting
of the Board for the appointment of officers and the transaction of any other
business shall be held immediately following the annual meeting of shareholders
at the same place at which such meeting shall have been held, and no notice
thereof need be given. If the meeting is not so held, the annual meeting of the
Board shall take place as soon thereafter as is practicable, either at the next
regular meeting of the Board or at a special meeting. The Board may fix times
and places for regular meetings of
<PAGE>
4
the Board and no notice of such meetings need be given. A special meeting of the
Board shall be held whenever called by the Chairman of the Board or by any
director at such time and place as shall be specified in the notice or waiver
thereof. Notice of each special meeting shall be given by the Secretary or by a
person calling the meeting to each director by couriering the same, by Federal
Express or other reliable commercial courier, not later than the second day
before the meeting, or personally or by telegraphing, sending by telephone
facsimile (to such facsimile telephone number as any director shall designate in
writing to the Company's Secretary) or telephoning the same not later than the
date before the meeting.
Section 2.6 Quorum and Voting. One third of the Whole Board of
Directors shall constitute a quorum for the transaction of business (except as
otherwise provided in Section 2.3 hereof and hereinafter in this Section 2.6),
but in no event shall a quorum consist of less than two directors. If there be
less than a quorum at any meeting of the Board, a majority of the directors
present may adjourn the meeting from time to time, and notice thereof shall be
given in the manner provided above. Except as otherwise provided by law or by
these By-Laws, the act of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
Section 2.7 Written Consents and Meetings by Telephone. Any action
required or permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting if all members of the Board
or of such committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the minutes of proceedings of the Board or
committee. Members of the Board of Directors or any committee designated by the
Board may (and shall have the right, by written notice to the Secretary, to
elect to) participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this sentence shall constitute presence in person at such
meeting.
Section 2.8 Compensation. Directors may receive compensation for
services to the Company in their capacities as directors or otherwise in such
manner and in such amounts as may be fixed from time to time by the Board.
Section 2.9 The "Whole Board". As used in these By-Laws the term
"the Whole Board" or "the Whole Board of Directors" means the total number of
directors which the Company would have if there were no vacancies.
Article III. Committees of the Board
Section 3.1 Appointment and Powers. The Board of Directors may from
time to time, by resolution passed by a majority of the Whole Board, designate
an executive committee or such other committee or committees as it may
determine, each committee to consist of one or more directors of the Company.
Any such committees, to the extent provided in the resolution, shall have and
may exercise any of the powers and authority of the Board of Directors in the
<PAGE>
5
management of the business and affairs of the Company, and may authorize the
seal of the Company to be affixed to all papers which may require it, all
subject to the exceptions set forth in the General Corporation Law of the State
of Delaware. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee may adopt rules governing the
method of calling and time and place of holding its meetings. Unless otherwise
provided by the Board of Directors, a majority of any such committee shall
constitute a quorum for the transaction of business, and the act of a majority
of the members of such committee present at a meeting at which a quorum is
present shall be the act of such committee. Each such committee shall keep a
record of its acts and proceedings and shall report thereon to the Board of
Directors whenever requested so to do. Any or all members of any such committees
may be removed, with or without cause, by resolution of the Board of Directors,
adopted by a majority of the Whole Board.
Article IV. Officers, Agents and Employees
Section 4.1 Appointment and Qualification. The officers of the
Company shall be a Chairman of the Board, a President, a Treasurer and a
Secretary, and may include one or more Vice Presidents, one or more Assistant
Treasurers and one or more Assistant Secretaries, all of whom shall be appointed
by the Board of Directors. The Chairman of the Board shall be chosen from among
the directors. Any number of offices may be held by the same person. Each
officer shall hold office until such officer's successor is elected and
qualified or until such officer's earlier resignation or removal. The Board may
appoint, and may delegate power to appoint, such other officers, agents and
employees as it may deem necessary or proper, who shall hold office for such
period, have such authority and perform such duties as may from time to time be
prescribed by the Board.
Section 4.2 Removal of Officers, Agents or Employees. Any officer,
agent or employee of the Company may be removed by the Board of Directors with
or without cause at any time, and the Board may delegate such power of removal
as to officers, agents and employees not appointed by the Board of Directors.
Such removal shall be without prejudice to such person's contract rights, if
any, but the appointment of any person as an officer, agent or employee of the
Company shall not of itself create contract rights.
Section 4.3 Compensation and Bond. The compensation of the officers
of the Company shall be fixed by the Board of Directors. The Company may secure
the fidelity of any or all of its officers, agents or employees by bond or
otherwise.
Section 4.4 Chairman of the Board. The Chairman of the Board shall
be the chief executive officer of the Company. The Chairman of the Board shall
preside at all meetings of the shareholders and of the Board at which the
Chairman of the Board is present. Subject to the control of the Board, the
Chairman of the Board shall have general charge of the business and affairs of
the Company and shall keep the Board fully advised. The Chairman of the Board
shall employ and discharge employees and agents of the Company, except such as
shall be appointed
<PAGE>
6
by the Board, and the Chairman of the Board may delegate these powers to the
President or other officers. The Chairman of the Board shall have such powers
and perform such duties as generally pertain to the office of the Chairman of
the Board as well as such further powers and duties as may be prescribed by the
Board. Any officer designated by resolution of the Board may vote the shares of
other securities of any other domestic or foreign Company of any type or kind
which may at any time be owned by the Company, may execute any shareholder or
other consent in respect thereof and may in such officer's discretion delegate
such powers by executing proxies, or otherwise, on behalf of the Company. The
board, by resolution from time to time, may confer like powers upon any other
person or persons.
Section 4.5 President. The President shall be the principal
operating officer of the Company. The President shall have such powers and
perform such duties as the Board of Directors may from time to time prescribe.
In the absence or the inability to act by the Chairman of the Board, unless the
Board shall otherwise provide, the President shall perform all the duties and
may exercise any of the powers of the chairman of the board, subject to the
control of the Board of Directors.
Section 4.6 Vice Presidents. Each Vice President shall have such
powers and perform such duties as the board of Directors or the Chairman of the
Board may from time to time prescribe (and to the extent that the Chairman of
the Board shall do so he shall promptly notify the board of the details). In the
absence or inability to act of the President, unless the Board of Directors
shall otherwise provide, or unless there shall be in office an Executive Vice
President (who shall have been determined by the Board of Directors to be senior
to all other Vice Presidents), the Vice President who has served in that
capacity for the longest time and who shall be present and able to act, shall
perform all the duties and may exercise any of the powers of the President. The
performance of any duty by the Vice President shall, in respect of any other
person dealing with the Company, be conclusive evidence of such Vice President's
power to act.
Section 4.7 Treasurer. The Treasurer shall have charge of all funds
and securities of the Company, shall endorse the same for deposit or collection
when necessary and deposit the same to the credit of the Company in such banks
or depositories as the Board of Directors may authorize. The Treasurer may
endorse all commercial documents requiring endorsements for or on behalf of the
Company and may sign all receipts and vouchers for payments made to the Company.
The Treasurer shall have all such further powers and duties as generally are
incident to the position of Treasurer or as may be assigned to the Treasurer by
the Chairman of the Board or the Board of Directors.
Section 4.8 Secretary. The Secretary shall record all proceedings of
meetings of the shareholders and directors in a book kept for that purpose and
shall file in such book all written consents of directors to any action taken
without a meeting. The Secretary shall attend to the giving and serving of all
notices of the Company. The Secretary shall have custody of the seal of the
Company and shall attest the same by signature whenever required. The Secretary
shall have charge of the stock ledger and such other books and papers as the
Board of Directors may direct, but may delegate responsibility for maintaining
the stock ledger to any transfer agent appointed by the Board. The Secretary
shall have all such further powers and duties as generally
<PAGE>
7
are incident to the position of Secretary or as may be assigned to the Secretary
by the Board of Directors.
Section 4.9 Assistant Treasurer. In the absence or inability to act
of the Treasurer, any Assistant Treasurer may perform all the duties and
exercise all the powers of the Treasurer. The performance of any such duty
shall, in respect of any other person dealing with the Company, be conclusive
evidence of such Assistant Treasurer's power to act. An Assistant Treasurer
shall also perform such other duties as the Treasurer or the Board of Directors
may assign to such person.
Section 4.10 Assistant Secretaries. In the absence or inability to
act of the Secretary, any Assistant Secretary may perform all the duties and
exercise all the powers of the Secretary. The performance of any such duty
shall, in respect of any other person dealing with the Company, be conclusive
evidence of such Assistant Secretary's power to act. An Assistant Secretary
shall also perform such other duties as the Secretary or the Board of Directors
may assign to such person.
Section 4.11 Delegation of Duties. In case of the absence of any
office of the Company, or for any other reason that the Board may deem
sufficient, the Board may confer for the time being the powers or duties, or any
of them, of such officer upon any other officer or upon any director.
Article V. Capital Stock
Section 5.1 Certificates. Certificates for stock of the Company
shall be in such forms and shall be approved by the Board of Directors and shall
be signed in the name of the Company by the Chairman of the Board, the President
or a Vice President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary. Such certificates may be sealed with the
seal of the Company or a facsimile thereof, and shall contain such information
as is required by law to be stated thereon. Any of or all of the signatures on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Company with the same
effect as if such person were such officer, transfer agent or registrar at the
date of issue.
Section 5.2 Transfers of Stock. Transfers of stock shall be made
only upon the books of the Company by the holder, in person or by a duly
authorized attorney, and on the surrender of the certificate or certificates for
such stock properly endorsed. The Board of Directors shall have the power to
make all such rules and regulations, not inconsistent with the certificate of
incorporation and these By-Laws, as the Board may deem appropriate concerning
the issue, transfer and registration of certificates for stock of the Company.
The Board may appoint one or more transfer agents or registrars of transfers, or
both, and may require all stock certificates to bear the signature of either or
both, which signature or signatures may be in facsimile form if the Board by
resolution authorizes such procedure.
<PAGE>
8
Section 5.3 Lost, Stolen or Destroyed Certificates. The Company may
issue a new stock certificate in the place of any certificate theretofore issued
by it, alleged to have been lost, stolen or destroyed, and the Company may
require the owner of the lost, stolen or destroyed certificate or such owner's
legal representative to give the Company a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of any such new
certificate. The Board may require such owner to satisfy other reasonable
requirements.
Section 5.4 Shareholder Record Date. (a) In order that the Company
may determine the shareholders entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or entitled to express consent to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than 60 nor less than 15 days
before the date of such meeting, nor more than 60 days prior to any other
action. Only such shareholders as shall be shareholders of record on the date so
fixed shall be entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to express consent or dissent to corporate action in
writing without a meeting, or to receive payment of such dividend or other
distribution, or to exercise such rights in respect of any such change,
conversion or exchange of stock, or to participate in such action, as the case
may be, notwithstanding any transfer of any stock on the books of the Company
after any record date so fixed.
(b) If no record date is fixed by the Board of Directors, (i) the
record date for determining shareholders entitled to notice of or to vote at a
meeting of shareholders shall be at the close of business on the day next
preceding the date on which notice is given, (ii) the record date for
determining shareholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is expressed, and
(iii) the record date for determining shareholders for any other purpose shall
be at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto.
(c) A determination of shareholders of record entitled to notice of
or to vote at a meeting of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Article VI. Seal
Section 6.1 Seal. The seal of the Company shall consist of a
flat-faced circular die with the name of the Company in a circle and the word
"Delaware" and the year of its incorporation in the center. Such seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
<PAGE>
9
Article VII. Waiver of Notice
Section 7.1 Waiver of Notice. Whenever notice is required to be
given by statute, or under any provision of the certificate of incorporation or
these By-Laws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. In the case of a shareholder, such waiver of notice may be
signed by such shareholder's attorney or a proxy duly appointed in writing.
Attendance of a shareholder at a meeting of shareholders, or attendance of a
director at a meeting of the Board of Directors or any committee thereof, shall
constitute a waiver of notice of such meeting, except when such shareholder or
director, as the case may be, attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
shareholders, directors or members of a committee of directors need be specified
in any written waiver of notice.
Article VIII. Indemnification
Section 8.1 Indemnification. Except in the case of willful
misconduct by any such person, the Company shall indemnify each director,
officer, employee and agent (provided, that, in the case of agents, the Company
shall indemnify only those agents to whom the Board of Directors shall
determine, before or after their engagement, shall be afforded the protection of
these indemnification provisions) of the Company who is a natural person, such
person's heirs, executors and administrators (whether or not natural persons)
and all other natural persons whom the Company is authorized to indemnify under
the provisions of the General Corporation Law of the State of Delaware to whom
the Board of Directors shall determine shall be afforded the protection of these
indemnification provisions (including but not limited to a person who is or was
serving at the request of the Company as a director, officer, partner, trustee,
employee or agent (or in a like capacity) of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise), to the fullest
extent permitted by law, (i) against all expenses (including but not limited to
attorneys' and other experts' fees and disbursements), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any actual or threatened action, suit or other proceeding,
whether civil, criminal, administrative, investigative or an arbitration, or in
connection with any appeal therein, or otherwise, and (ii) against all expenses
(including but not limited to attorneys' and other experts' fees and
disbursements) actually and reasonably incurred by such person in connection
with the defense or settlement of any action, suit or other proceeding by or in
the right of the Company, or in connection with any appeal therein, or
otherwise; and no provision of these By-Laws is intended to be construed as
limiting, prohibiting, denying or abrogating any of the general or specific
powers or rights conferred under the General Corporation Law of the State of
Delaware upon the Company to furnish, or upon any court to award, such
indemnification, or such other indemnification as may otherwise be authorized
pursuant to the General Corporation Law of the State of Delaware or any other
law now or hereafter in effect, including but not limited to indemnification of
any employees or agents of the Company or of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise. The term
<PAGE>
10
"proceeding" shall be understood to include any inquiry or investigation that
could lead to a proceeding. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which a person seeking indemnification
may be entitled and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of such
person's heirs, executors and administrators.
Section 8.2 Determination. If and to the extent such indemnification
shall require a determination whether or not the relevant person met the
applicable standard of conduct set forth in the General Corporation Law of the
State of Delaware, such determination shall be made expeditiously at the cost of
the Company after a request for the same from the person seeking
indemnification. If indemnification is to be given or an advance of expenses is
to be made upon a determination by independent legal counsel, such independent
counsel to be selected at the Company's request by the then acting President of
the Association of the Bar of the City of New York. In rendering such opinion,
such counsel shall be entitled to rely upon statements of fact furnished to them
by persons reasonably believed by them to be credible, and such counsel shall
have no liability or responsibility for the accuracy of the facts so relied
upon, nor shall such counsel have any liability for the exercise of their own
judgment as to matters of fact or law forming a part of the process of providing
such opinion. The fees and disbursements of counsel engaged to render such
opinion shall be paid by the Company whether or not such counsel ultimately are
able to render the opinion that is the subject of their engagement.
Section 8.3 Business Combination. Unless the Board of Directors
shall determine otherwise with reference to a particular merger or consolidation
or other business combination, for purposes of this Article VIII references to
"the Company" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a merger or consolidation or other business combination which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, partner, trustee, employee, agent (or in a like capacity) of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, shall stand in the same position under the provisions of this
Article VIII with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued.
Section 8.4 Advances of Expenses. If a person who may be entitled to
indemnification hereunder shall request that such person's expenses actually and
reasonably incurred in connection with any action, suit, proceeding, arbitration
or investigation or appeal therein be paid by the Company in advance of the
final disposition thereof, such request shall not be unreasonably refused, and a
response to such request shall not be unreasonably delayed, by the Company.
Section 8.5 Employee Benefit Plans. References herein to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a corporate agent which
<PAGE>
11
imposes duties on, or involves services by, the corporate agent with respect to
an employee benefit plan, its participants, or beneficiaries.
Article IX. Amendments
Section 9.1 Amendments. These By-Laws or any of them may be altered,
amended or repealed, and new By-Laws may be adopted, at any annual meeting of
the shareholders, or at any special meeting of the shareholders called for that
purpose, by a vote of a majority of the voting power of all outstanding shares
of the Company.
<PAGE>
EXHIBIT 3.7(a)
CERTIFICATE OF FORMATION
OF
CONSOLIDATED CONTAINER HOLDINGS LLC
The undersigned, an authorized natural person, for the purpose of
forming a limited liability company, under the provisions and subject to the
requirements of the State of Delaware (particularly Chapter 18, Title 6 of the
Delaware Code and the acts amendatory thereof and supplemental thereto, and
known, identified, and referred to as the "Delaware Limited Liability Company
Act"), hereby certifies that:
FIRST: The name of the limited liability company (hereinafter called
the "Limited Liability Company") is Consolidated Container Holdings LLC.
SECOND: The address of the registered office and the name and the
address of the registered agent of the Limited Liability Company required to be
maintained by Section 18-104 of the Delaware Limited Liability Company Act are
Corporation Service Company, 1013 Centre Road, Wilmington, New Castle County,
Delaware 19805-1297.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation this 20th day of April, 1999.
By: /s/ Kevin R. Shook
------------------------------
Name: Kevin R. Shook
Title: Authorized Person
<PAGE>
EXHIBIT 3.7(b)
================================================================================
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONSOLIDATED CONTAINER HOLDINGS LLC
================================================================================
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONSOLIDATED CONTAINER HOLDINGS LLC
TABLE OF CONTENTS
Page
----
ARTICLE I ORGANIZATIONAL MATTERS......................................-1-
1.1 Formation......................................................-1-
1.2 Name...........................................................-1-
1.3 Registered Office and Principal Office of Company; Addresses of
Members........................................................-1-
1.4 Term...........................................................-2-
1.5 Assumed Name Certificate.......................................-2-
1.6 Ownership......................................................-2-
1.7 No Individual Authority........................................-2-
1.8 Title to Company Property......................................-2-
1.9 Limits of Company..............................................-2-
ARTICLE II DEFINITIONS.................................................-2-
ARTICLE III PURPOSE....................................................-10-
3.1 Purposes and Scope............................................-10-
ARTICLE IV CAPITAL CONTRIBUTIONS......................................-10-
4.1 Initial Capital Contributions.................................-10-
4.2 Non-Contemplated Contributions................................-10-
4.3 Capital Accounts..............................................-11-
4.4 Interest......................................................-15-
4.5 No Withdrawal.................................................-15-
4.6 Limitation on Capital Contributions and Loans.................-15-
ARTICLE V ALLOCATIONS................................................-15-
5.1 Allocation of Profits and Losses..............................-15-
5.2 Special Allocations...........................................-16-
5.3 Curative Allocations..........................................-18-
5.4 Tax Allocations: Code Section 704(c)..........................-18-
5.5 Allocations Upon Option Exercise..............................-19-
-i-
<PAGE>
Page
----
5.6 Other Allocation Rules........................................-19-
ARTICLE VI DISTRIBUTIONS..............................................-20-
6.1 Distributions of Available Cash...............................-20-
6.2 Amounts Withheld..............................................-20-
6.3 Excess Distributions..........................................-21-
6.4 Tax Distributions.............................................-21-
ARTICLE VII MANAGEMENT OF THE COMPANY..................................-23-
7.1 Management Committee..........................................-23-
7.2 Major Decisions...............................................-25-
7.3 Approval of Major Decisions...................................-26-
7.4 Officers......................................................-27-
7.5 Certificate of Formation......................................-27-
7.6 Compensation and Reimbursement of Member Expenses.............-27-
7.7 Outside Activities; Noncompetition............................-28-
7.8 Transactions with Affiliates..................................-30-
7.9 Indemnification of Members....................................-31-
7.10 Liability of the Members......................................-33-
7.11 Preemptive Rights.............................................-33-
7.12 Certain Anti-dilutive Rights..................................-34-
7.13 Exercise of Certain Options...................................-36-
ARTICLE VIII RIGHTS AND OBLIGATIONS OF MEMBERS..........................-37-
8.1 Limitation of Liability.......................................-37-
8.2 Return of Capital.............................................-37-
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS.....................-37-
9.1 Records and Accounting........................................-37-
9.2 Fiscal Year...................................................-37-
9.3 Reports.......................................................-37-
9.4 Documents.....................................................-38-
9.5 Certain Administrative Expenses of RPH........................-38-
ARTICLE X TAX MATTERS................................................-38-
10.1 Tax Matters Partner...........................................-38-
10.2 Annual Tax Returns............................................-38-
10.3 Notice and Limitations on Authority...........................-39-
10.4 Tax Elections.................................................-40-
-ii-
<PAGE>
Page
----
10.5 Actions in Event of Audit.....................................-40-
10.6 Organizational Expenses.......................................-40-
10.7 Taxation as a Partnership.....................................-40-
ARTICLE XI TRANSFERS OF UNITS; NEW MEMBERS............................-41-
11.1 Transfer Restrictions.........................................-41-
11.2 Transfer to Affiliates and Pledgees...........................-41-
11.3 [Reserved]....................................................-41-
11.4 Registration..................................................-41-
11.5 Right of First Offer; Tag-Along Rights........................-42-
11.6 Drag-Along Rights.............................................-45-
11.7 Put Rights....................................................-46-
11.8 Prohibited Transfers..........................................-48-
11.9 Rights of Assignee............................................-48-
11.10 Admission as a New Member.....................................-49-
11.11 Distributions and Allocations in Respect of Transferred Units.-49-
11.12 Conversion to Corporate Form..................................-50-
ARTICLE XII PREFERRED UNITS............................................-51-
12.1 Issuance of Preferred Units...................................-51-
12.2 Terms of Preferred Units......................................-51-
ARTICLE XIII DISSOLUTION AND LIQUIDATION................................-53-
13.1 Dissolution...................................................-53-
13.2 Continuation of the Company...................................-53-
13.3 Liquidation...................................................-54-
13.4 Reserves......................................................-55-
13.5 Distribution in Kind..........................................-55-
13.6 Disposition of Documents and Records..........................-56-
13.7 Negative Capital Accounts.....................................-56-
13.8 Filing of Certificate of Cancellation.........................-56-
13.9 Return of Capital.............................................-56-
13.10 Waiver of Partition...........................................-56-
ARTICLE XIV AMENDMENT OF AGREEMENT.....................................-56-
14.1 Amendment Procedures..........................................-56-
-iii-
<PAGE>
Page
----
ARTICLE XV GENERAL PROVISIONS.........................................-57-
15.1 Addresses and Notices.........................................-57-
15.2 Titles and Captions...........................................-58-
15.3 Pronouns and Plurals..........................................-58-
15.4 Further Action................................................-58-
15.5 Binding Effect................................................-58-
15.6 Integration...................................................-58-
15.7 No Third Party Beneficiary....................................-59-
15.8 Waiver........................................................-59-
15.9 Counterparts..................................................-59-
15.10 Applicable Law................................................-59-
15.11 Invalidity of Provisions......................................-59-
15.12 Confidentiality...............................................-59-
-iv-
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
CONSOLIDATED CONTAINER HOLDINGS LLC
This LIMITED LIABILITY COMPANY AGREEMENT of CONSOLIDATED CONTAINER
HOLDINGS LLC (the "Agreement") is entered into as of July 1, 1999, by and among
Franklin Plastics, Inc., a Delaware corporation ("Franklin"), Reid Plastics
Holdings, Inc. ("RPH"), and Vestar Packaging LLC, a Delaware limited liability
company ("Vestar"), together with any Person who becomes a Member as provided
herein.
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Formation. The Company was formed as a limited liability company by
the filing of the Certificate in accordance with the Delaware Act on April 20,
1999. The Members hereby enter into this Agreement in order to set forth the
rights and obligations of the Members and certain matters related thereto.
Except as expressly provided and permitted herein to the contrary, the rights
and obligations of the Members and the administration and termination of the
Company shall be governed by the Delaware Act.
1.2 Name. The name of the Company shall be, and the business of the
Company shall be conducted under the name of, "Consolidated Container Holdings
LLC." The Company's business may be conducted under any other name or names
approved by the Management Committee.
1.3 Registered Office and Principal Office of Company; Addresses of
Members.
(a) The registered office of the Company in the State of Delaware
shall be 1209 Orange Street, Wilmington, Delaware 19805, and the
registered agent for service of process on the Company at such registered
office shall be Corporation Service Company, 1013 Centre Road, Wilmington,
DE 19805. The principal place of business of the Company shall be at 2515
McKinney, Suite 850, Dallas, Texas 75201, or such other location as
determined by the Management Committee. The Company may maintain offices
at such other locations as the Management Committee deems advisable.
(b) The addresses of the Members as of the Closing Date are set
forth in Section 15.1. The address of a Member may be changed in
accordance with the requirements set forth in Section 15.1.
<PAGE>
1.4 Term. The existence of the Company commenced on the Commencement Date,
and the Company shall continue in existence until the dissolution of the Company
pursuant to the express provisions of Article XIII hereof (other than a
dissolution that is followed by the reconstitution of the Company pursuant to
Section 13.2).
1.5 Assumed Name Certificate. The Members shall execute and file any
assumed or fictitious name certificate or certificates or any similar documents
required by law to be filed in connection with the formation and operation of
the Company.
1.6 Ownership. The interest of each Member in the Company shall be
personal property for all purposes. All property and interests in property, real
or personal, owned by the Company shall be deemed owned by the Company as an
entity, and no Member, individually, shall have any ownership of such property
or interest except by having an ownership interest in the Company as a Member.
Each of the Members irrevocably waives, during the term of the Company and
during any period of its liquidation following any dissolution, any right that
it may have to maintain any action for partition with respect to any of the
assets of the Company.
1.7 No Individual Authority. No Member shall have any authority to act
for, or to undertake or assume, any obligation, debt, duty or responsibility on
behalf of any other Member or the Company except as otherwise expressly provided
in this Agreement.
1.8 Title to Company Property. It is the desire and intention of the
Members that legal title to all property of the Company shall be held and
conveyed in the name of the Company.
1.9 Limits of Company. The relationship between the parties hereto shall
be limited to the carrying on of the business of the Company in accordance with
the terms of this Agreement. Such relationship shall be construed and deemed to
be a limited liability company for the sole and limited purpose of carrying on
such business. Except as otherwise provided for or contemplated in this
Agreement, nothing herein shall be construed to create a partnership between the
Members or to authorize any Member to act as general agent for any other Member.
ARTICLE II
DEFINITIONS
The following definitions shall for all purposes, unless otherwise clearly
indicated to the contrary, apply to the terms used in this Agreement.
"Adjusted Capital Account" means, with respect to any Member, a special
account maintained for such Member, the balance of which shall equal such
Member's Capital Account balance, increased by the amount (if any) of such
Member's share of the Company Minimum Gain and Member Minimum Gain of the
Company.
2
<PAGE>
"Adjusted Capital Account Deficit" means, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such Member is
obligated to restore pursuant to any provision of this Agreement or is
deemed to be obligated to restore pursuant to Regulations Section
1.704-1(b)(2)(iv)(c), the penultimate sentence of Regulations Section
1.704-2(g)(1), or the penultimate sentence of Regulations Section
1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"Affiliate" means, with respect to a particular Person, any other Person
directly or indirectly Controlling, Controlled by, or under common Control with
such Person.
"Agreement" means this Limited Liability Company Agreement of Consolidated
Container Holdings LLC, as it may be further amended, supplemented or restated
from time to time in accordance with the terms of this Agreement.
"As-Converted Units" shall mean, with respect to any Member that shall own
Preferred Units at the time the Suiza Member, in the case of any Reid Member, or
the Reid Members, in the case of the Suiza Member, propose to effect a sale of
its Units in accordance with the terms hereof, a number of Units equal to the
aggregate Liquidation Preference of the number of Preferred Units owned by such
Member divided by the price per Unit proposed to be paid for each Unit proposed
to be sold by such Suiza Member or Reid Member, as the case may be.
"Available Cash" of the Company as of any date means all cash funds of the
Company on hand as of such date after: (a) payment of all expenditures of any
kind, including operating expenses and capital expenditures, that are due and
payable as of such date or that are expected to become due and payable in the
next 30 days; and (b) provision for adequate reserves (working capital and
capital), with the amount of such reserves to be determined by the Management
Committee (acting reasonably and in good faith).
"Blocked Affiliate Transfer" has the meaning set forth in Section 11.2.
"Book Depreciation" has the meaning set forth in Section 4.3(b)(v).
"Book Value" has the meaning set forth in Section 4.3(c).
3
<PAGE>
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the Government of the United States shall
not be regarded as a Business Day.
"Capital Account" means the capital account maintained for a Member
pursuant to Section 4.3 with respect to Units held by such Member.
"Capital Contribution" means, with respect to any Member, the amount of
money and the initial Book Value of any property (other than money) contributed
to the Company with respect to the interest in the Company held by such Member,
reduced by the amount of any liabilities of the Member assumed by the Company or
which are secured by any property contributed by such Member to the Company.
"Certificate" means the Certificate of Formation of the Company filed with
the Secretary of State of Delaware, as it may be amended or restated from time
to time.
"Change in Control" means the first to occur of the following events: (i)
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of Suiza Foods,
RPH or Vestar, as the case may be, to any person, or "group" of related persons,
as defined in Rule 13d-5 under the Securities Exchange Act of 1934 (a "Group");
(ii) a majority of the board of directors of Suiza Foods, RPH or Vestar, as the
case may be, shall consist of persons who are not Continuing Directors; or (iii)
the acquisition by any person or Group of the power, directly or indirectly, to
vote or direct the voting of securities having more than 50% of the ordinary
voting power for the election of directors of Suiza Foods, RPH or Vestar, as the
case may be, or to designate a majority of the directors of Suiza Foods, RPH or
Vestar, as the case may be, or (iv) a merger of Suiza Foods, RPH or Vestar, as
the case may be, with another entity in which the previous shareholders or
members of the merging entity do not continue to own at least a majority of the
voting equity securities of the surviving entity.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. All references herein to the Code shall include any
corresponding provision or provisions of succeeding law.
"Commencement Date" means the date that the Certificate of Formation was
filed with the Secretary of State of Delaware.
"Company" means Consolidated Container Holdings LLC, a Delaware limited
liability company established by filing of the Certificate with the Secretary of
State of Delaware.
"Company Estimated Net Taxable Income" has the meaning set forth in
Section 6.4(a).
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"Company Minimum Gain" has the meaning set forth in Regulations Section
1.704-2(d).
"Company Option" has the meaning set forth in Section 5.5(b).
"Competing Business" has the meaning set forth in Section 7.7(b).
"Continuing Director" means, as of the date of determination, any person
who (i) was a member of the board of directors or management committee of Suiza
Foods, RPH or Vestar, as the case may be, on the date of this Agreement, or (ii)
was nominated for election or elected to the board of directors or management
committee of Suiza Foods, RPH or Vestar, as the case may be, with the
affirmative vote of a majority of the Continuing Directors who were members of
such board of directors at the time of such nomination or election.
"Contributions" means the contribution by Franklin of the member interests
of PCI to Consolidated Container Company LLC and the contribution by Vestar of
$60,800,000 to the Company, both pursuant to the Merger Agreement.
"Control" (and derivations thereof) means, with respect to a particular
Person, (a) the ownership, directly or indirectly, of more than 50% of the
equity or voting interests in such Person or (b) the right to elect or appoint,
together with others who are required to act in concert with such Person, more
than 50% of the directors or members of another governing body that directs the
management and policies of such Person.
"Delaware Act" means the Delaware Revised Limited Liability Company Act, 6
Del. C. ss. 18-101, et seq., as amended from time to time.
"Dissolution Event" has the meaning set forth in Section 13.1(b).
"Event of Bankruptcy" means, with respect to any Member or the Company,
any of the following acts or events:
(a) making an assignment for the benefit of creditors;
(b) filing a voluntary petition in bankruptcy;
(c) becoming the subject of an order for relief or being declared
insolvent or bankrupt in any federal or state bankruptcy or insolvency
proceeding;
(d) filing a petition or answer seeking a reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under any statute, law, or regulation;
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(e) filing an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in a
proceeding of the type described in parts (a) through (d) of the
definition;
(f) seeking, consenting to, or acquiescing in the appointment of a
trustee, receiver, or liquidator of all or any substantial part of its
properties; or
(g) the expiration of 90 days after the date of the commencement of
a proceeding against such Person seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief
under any statute, law, or regulation if the proceeding has not been
previously dismissed or the expiration of 60 days after the date of the
appointment, without such Person's consent or acquiescence, of a trustee
or receiver for the liquidation of such Person or of all or any
substantial part of such Person's properties, if the appointment has not
been previously vacated or stayed, or the expiration of 60 days after the
date of expiration of a stay, if the appointment has not been previously
vacated.
"Fair Market Value" has the meaning set forth in Section 11.7(c).
"Financial Statements" means the audited financial statements called for
in Section 9.3.
"Fiscal Year" means the 12-month period ending December 31 of each year;
provided that the initial Fiscal Year shall be the period beginning on the
Commencement Date and ending December 31, 1999, and the last Fiscal Year shall
be the period beginning on January 1 of the calendar year in which the final
liquidation and termination of the Company is completed and ending on the date
such final liquidation and termination is completed (to the extent any
computation or other provision hereof provides for an action to be taken on a
Fiscal Year basis, an appropriate proration or other adjustment shall be made in
respect of the initial and final Fiscal Years to reflect that such periods are
less than full calendar year periods).
"Franklin Managers" means the Managers designated by Franklin pursuant to
Section 7.1.
"Franklin Replacement Options" has the meaning set forth in Section 7.13.
"Indemnitee" has the meaning set forth in Section 7.9.
"Independent Accountants" means any of the five largest nationally
recognized accounting firms in the United States, as selected by the Management
Committee. Deloitte & Touche LLP shall be the initial Independent Accountant.
"Initial Liquidation Preference" has the meaning set forth in Section
12.2.
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"Initial Public Offering" means any underwritten public offering of
securities of RPH (which is intended to be the corporate successor to the
Company in the event of an Initial Public Offering, by merger of the Company
and, subject to Section 11.12 hereof, Franklin into RPH), or its successor, the
gross proceeds of which exceed $50,000,000.
"Liquidation Preference" has the meaning set forth in Section 12.2.
"Liquidator" has the meaning set forth in Section 13.3.
"Losses" has the meaning set forth in Section 4.3(b).
"Major Decision" has the meaning set forth in Section 7.2.
"Management Committee" means a committee appointed by Franklin, RPH and
Vestar in accordance with Section 7.1 hereof.
"Manager" has the meaning set forth in Section 7.1.
"Member" means Franklin, RPH, Vestar and any other Person who is admitted
as a member in the Company on and after the Closing Date and whose admission has
been reflected on the books and records of the Company.
"Member Minimum Gain" shall mean partner nonrecourse debt minimum gain as
determined under the rules of Regulations Section 1.704-2(i).
"Member Nonrecourse Deduction" has the meaning set forth in Regulations
Section 1.704-2(i)(1) and (2).
"Merger Agreement" means the Contribution and Merger Agreement dated as of
April 29, 1999, among Suiza Foods, Franklin, the Suiza Companies identified
therein, RPH, Reid Plastics, Inc., a Delaware corporation, the Reid Companies
identified therein, Vestar, and the Company.
"Mergers" means the Mergers, as defined in the Merger Agreement, pursuant
to which the Suiza Companies and the Reid Companies will be merged into the
Company.
"Net Income" of a Person means the net income of such Person, determined
in accordance with generally accepted accounting principles.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
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"PCI" means Plastic Containers, Inc., a Delaware corporation and
wholly-owned subsidiary of Continental Can Company, Inc. or, after certain
corporate restructuring transactions, Plastic Containers LLC, a Delaware limited
liability company and wholly-owned subsidiary of Franklin.
"Percentage Interest" means the percentage interest of a Member in certain
allocations of Profits, Losses, and other items of income, gain, loss, or
deduction and certain distributions of cash and property, which with respect to
each Member shall be equal to the number of Units owned by such Member as a
percentage of the total number of Units owned by all Members at any given time.
"Person" means an individual, corporation, partnership, limited liability
company, trust, estate, unincorporated organization, association, or other
entity.
"Plastics Operations" means any manufacture, distribution or sale of
plastic packaging products and the conduct of any operations ancillary thereto,
including but not limited to any operations conducted by any Reid Company or any
Suiza Company immediately prior to Closing.
"Preferred Capital Account" means the capital account maintained for a
Member pursuant to Section 4.3 with respect to Preferred Units held by such
Member.
"Preferred Capital Account Deficit" means, with respect to any Member, the
amount by which the aggregate Liquidation Preference of the Preferred Units held
by such Member exceeds such Member's Preferred Capital Account.
"Preferred Units" means the preferred interest of a Member of the Company
issued in accordance with Article XII.
"Principal Companies" has the meaning set forth in Section 7.7(b).
"Pro Rata Share" has the meaning set forth in Section 7.11(a).
"Profits" has the meaning set forth in Section 4.3(b).
"Redemption Price" has the meaning set forth in Section 12.2.
"Registration Rights Agreement" has the meaning set forth in Section
11.12(b).
"Regulations" means the Treasury Regulations promulgated under the Code,
as amended and in effect (including corresponding provisions of any succeeding
regulations).
"Regulatory Allocations" has the meaning set forth in Section 5.3.
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"Reid Companies" has the meaning given to it in the Merger Agreement.
"Reid Members" means RPH, Vestar, and any Affiliate of either of them that
becomes a Member, or for purposes of Article XI, an RPH stockholder.
"RPH" means Reid Plastics Holdings, Inc., a Delaware corporation.
"RPH Managers" means the Manager designated by RPH pursuant to Section
7.1.
"Suiza Companies" has the meaning given to it in the Merger Agreement.
"Suiza Foods" means Suiza Foods Corporation, a Delaware corporation.
"Suiza Member" means Franklin and any Affiliate of Franklin that becomes a
Member; provided, however, that for purposes of Section 7.7, neither Peter M.
Bernon or Alan J. Bernon shall ever be included within the definition of "Suiza
Member".
"Tax Matters Partner" has the meaning set forth in Section 10.1.
"Units" means the interest of a Member in the Company, including, without
limitation, such Member's right: (a) to a distributive share of the Profits,
Losses, and other items of income, gain, loss, deduction, and credit of the
Company; (b) to a distributive share of the assets of the Company; and (c) to
participate in the management and operation of the Company as provided in this
Agreement. The initial number of Units of each Member is set forth below:
================================================================================
Member Initial Number of Units
- --------------------------------------------------------------------------------
Franklin 4,900,000
- --------------------------------------------------------------------------------
RPH 3,050,000
- --------------------------------------------------------------------------------
Vestar 2,050,000
- --------------------------------------------------------------------------------
TOTAL 10,000,000
================================================================================
"VCP Affiliates" has the meaning set forth in Section 7.7(d).
"Vestar" means Vestar Packaging LLC, a Delaware limited liability company.
"Unpaid Distribution Amount" shall mean, for each Preferred Unit, the
amount of distributions accrued during the most recently completed calendar
quarter which distributions have neither been paid nor been taken into account
through an increase in Liquidation Preference on such Preferred Units.
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"Unusual Items" of income or loss mean any extraordinary items of income
or loss, any nonoperating gains or losses resulting from the sale of assets, any
merger or acquisition expenses and any restructuring charges, all as reflected
in or determined from the Financial Statements.
ARTICLE III
PURPOSE
3.1 Purposes and Scope. Subject to the provisions of this Agreement, the
purposes of the Company are to:
(a) acquire (directly or through subsidiaries) the operations of the
Reid Companies and the Suiza Companies through the Mergers and the
Contributions;
(b) own, operate, manage, maintain, improve, develop, purchase, sell
or exchange, and otherwise acquire or dispose of, Plastics Operations;
provided, however, that the Company may also invest or expend up to $25
million in the aggregate to own, operate, manage, maintain, improve,
develop, purchase, and otherwise acquire or dispose of non-plastic
packaging operations;
(c) borrow money in furtherance of any or all of the objectives of
the Company business, and to secure the same by mortgage, pledge, or other
liens; and
(d) do any and all other acts or things that may be incidental or
necessary to carry on the business of the Company as herein contemplated.
The Company shall not engage in any other business or activity not
intended to implement the foregoing without the prior written consent of
the Management Committee.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contributions. The initial Capital Contributions of
Franklin and Reid are being effected on the Closing Date through the Mergers.
The initial Capital Contributions of PCI and Vestar are being effected on the
Closing Date through the Contributions. The Members hereby agree that they will
take all reasonable steps to determine each Member's Capital Account as of the
Closing Date within 30 days after the Closing Date.
4.2 Non-Contemplated Contributions.
(a) If the Management Committee approves (in accordance with the
Major Decision provisions of Section 7.3) any additional Capital
Contributions beyond those required by Section 4.1, the Company shall
deliver a written notice to all of the Members
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(a "Contribution Notice") requesting such additional Capital
Contributions. Each Contribution Notice shall specify the following
information:
(i) the aggregate amount of Capital Contributions requested in
the Contribution Notice;
(ii) the amount of additional cash funds each Member is
required to contribute to the Company (which Capital Contributions
shall be made by the Members in proportion to their Percentage
Interests);
(iii) the date on which such additional Capital Contributions
are due, which date shall be approved in advance by the Management
Committee; and
(iv) wiring or other instructions for the bank account into
which the required Capital Contribution is to be deposited.
(b) Any Capital Contributions made pursuant to Section 4.2(a) shall
be spent by the Company in accordance with the general directions of the
Management Committee, as approved in connection with the approval of such
Capital Contributions.
(c) Except as provided in Section 4.1 hereof and in the foregoing
provisions of this Section 4.2, no Member shall be required to make any
Capital Contribution.
(d) Upon the exercise of a Franklin Replacement Option, for all
purposes, including Capital Accounts and Percentage Interests, a number of
Units shall be considered transferred from Franklin to RPH and Vestar such
that RPH's and Vestar's respective Percentage Interests immediately after
the exercise of the Franklin Replacement Option shall be equal to their
respective Percentage Interests immediately prior to such exercise.
4.3 Capital Accounts.
(a) Maintenance Rules. The Company shall maintain for each Member a
separate Capital Account and, if applicable, a Preferred Capital Account
in accordance with this Section 4.3, which shall control the division of
assets upon liquidation of the Company as provided in Section 13.3. The
Capital Account and Preferred Capital Account shall be maintained in
accordance with the following provisions:
(i) Such Capital Account shall be increased by the cash amount
or Book Value of any property contributed by such Member to the
Company pursuant to this Agreement, such Member's share of Profits
allocable to Units and any items in the nature of income or gain
which are specially allocated to such Member pursuant to Section 5.2
and Section 5.3 hereof with respect to Units held
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by such Member, and the amount of any Company liabilities assumed by
such Member or which are secured by any property distributed to such
Member.
(ii) Such Capital Account shall be decreased by the cash
amount or Book Value of any property distributed to such Member
pursuant to this Agreement, such Member's allocable share of Losses
and any items in the nature of deductions or losses which are
specially allocated to such Member pursuant to Section 5.2 and
Section 5.3 hereof, and the amount of any liabilities of the Member
assumed by the Company or which are secured by any property
contributed by such Member to the Company.
(iii) Such Preferred Capital Account shall be established upon
issuance of Preferred Units to such Member in an amount equal to the
Initial Liquidation Preference of the Preferred Units so issued.
(iv) Such Preferred Capital Account shall be increased by such
Member's share of Profits allocable to Preferred Units and any items
in the nature of income or gain which are specially allocated to
such Member pursuant to Section 5.2 and Section 5.3 hereof with
respect to Preferred Units held by such Member.
(v) In the event all or a portion of an interest in the
Company is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account
and/or Preferred Capital Account of the transferor to the extent it
relates to the transferred interest; provided, however, that if the
transfer causes a termination of the Company under Section
708(b)(1)(B) of the Code, then the Company shall be deemed to have
contributed its assets to a new limited liability company in
exchange for interests in the new limited liability company,
followed by a distribution of the interests in the new limited
liability company to the Company and liquidation of the Company.
Such deemed liquidation and reconstitution shall not cause the
Company to be dissolved or reconstituted for purposes other than
maintenance of the Capital Accounts and federal income tax, unless
otherwise provided in Article XII.
(vi) Notwithstanding anything in this Section 4.3 to the
contrary, upon the exercise of a Franklin Option or a Partnership
Option the initial Capital Account of the exercising Member shall be
equal to the exercise price of such option.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts and Preferred Capital Accounts generally are
intended to comply with Section 1.704-1(b) of the Regulations and shall be
interpreted and applied in a manner consistent with such Regulations. If the
Management Committee reasonably determines that it is prudent
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to modify the manner in which the Capital Accounts or Preferred Capital
Accounts, or any increases or decreases to the Capital Accounts or Preferred
Capital Accounts, are computed in order to comply with such Regulations, the
Management Committee may authorize such modifications, provided that it does
not have any effect on the amounts distributable to any Person pursuant to
Section 13.3 hereof upon the dissolution of the Company.
(b) Definition of Profits and Losses. "Profits" and "Losses" mean,
for each Fiscal Year or other period, an amount equal to the Company's
taxable income or loss for such year or period, determined in accordance
with Code Section 703(a) (for this purpose, all items of income, gain,
loss or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(i) Income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Profits and
Losses pursuant to this Section 4.3(b) shall be added to such
taxable income or loss;
(ii) Any expenditures of the Company described in Code Section
705(a)(2)(B), or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits and Losses
pursuant to this Section 4.3(b) shall be subtracted from such
taxable income or loss;
(iii) In the event the Book Value of any Company asset is
adjusted pursuant to Section 4.3(c)(ii) or Section 4.3(c)(iii), the
amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing
Profits and Losses;
(iv) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Book Value of the
property disposed of, notwithstanding that the adjusted tax basis of
such property differs from its Book Value;
(v) In lieu of the deduction for depreciation, cost recovery
or amortization taken into account in computing such taxable income
or loss, there shall be taken into account "Book Depreciation" as
defined in this Section 4.3(b)(v). "Book Depreciation" for any asset
means for any Fiscal Year or other period an amount that bears the
same ratio to the Book Value of that asset at the beginning of such
Fiscal Year or other period as the federal income tax depreciation,
amortization or other cost recovery deduction allowable for that
asset for such year or other period bears to the adjusted tax basis
of that asset at the beginning of such year or other period. If the
federal income tax depreciation,
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amortization, or other cost recovery deduction allowable for any
asset for such year or other period is zero, then Book Depreciation
for that asset shall be determined with reference to such beginning
Book Value using any reasonable method selected by the Management
Committee; and
(vi) Notwithstanding any other provision of this Section
4.3(b), any items that are specially allocated pursuant to Section
5.2 or Section 5.3 shall not be taken into account in computing
Profits and Losses.
(c) Definition of Book Value. "Book Value" means for any asset the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Book Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such
asset, as determined by the Management Committee.
(ii) The Book Values of all Company assets shall be adjusted
to equal their respective gross fair market values, as determined by
the Management Committee, as of the following times: (A) the
acquisition of an additional interest in the Company by any new or
existing Member in exchange for more than a de minimis capital
contribution if the Management Committee reasonably determines that
such adjustment is necessary or appropriate to reflect the relative
economic interests of the Members in the Company; (B) the
distribution by the Company to a Member of more than a de minimis
amount of Company property as consideration for an interest in the
Company if the Management Committee reasonably determines that such
adjustment is necessary or appropriate to reflect the relative
economic interests of the Members in the Company; and (C) the
liquidation of the Company within the meaning of Regulation Section
1.704-1(b)(2)(ii)(g);
(iii) The Book Value of any Company asset distributed to any
Member shall be the gross fair market value of such asset on the
date of distribution, as determined by the Management Committee.
(iv) The Book Values of Company assets shall be increased (or
decreased) to reflect any adjustment to the adjusted basis of such
assets pursuant to Code Section 734(b) or Code Section 743(b), but
only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m) and Section 5.2(d) hereof; provided, however,
that Book Values shall not be adjusted pursuant to this Section
4.3(c)(iv) to the extent the Management Committee determines that an
adjustment pursuant to Section 4.3(c)(ii) is necessary or
appropriate in connection
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with a transaction that would otherwise result in an adjustment
pursuant to this Section 4.3(c)(iv).
(v) If the Book Value of an asset has been determined or
adjusted pursuant to Section 4.3(c)(i), Section 4.3(c)(ii), or
Section 4.3(c)(iv) hereof, such Book Value shall thereafter be
adjusted by the Book Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.
4.4 Interest. Except as otherwise provided in this Agreement, no interest
shall be paid by the Company on Capital Contributions or on balances in Capital
Accounts or Preferred Capital Accounts.
4.5 No Withdrawal. No Member shall be entitled to withdraw any part of its
Capital Contribution or its Capital Account or Preferred Capital Account or to
receive any distribution from the Company, except as provided in Articles IV,
VI, and XII.
4.6 Limitation on Capital Contributions and Loans. Except as specifically
provided in this Agreement, no Member may contribute capital, loan, or advance
money to the Company.
ARTICLE V
ALLOCATIONS
5.1 Allocation of Profits and Losses.
(a) Allocation of Profit Generally. After giving effect to the
allocations set forth in Section 5.2 and Section 5.3, and after giving
effect to all distributions of cash or property (other than cash or
property to be distributed pursuant to Article XIII), Profits for any
Fiscal Year shall be allocated to the Members in the following manner:
(i) First, to each Member with Preferred Units in proportion
to their Preferred Capital Account Deficit until the Preferred
Capital Account balances of each such Member equal the aggregate
Liquidation Preference of the Preferred Units held by such Member;
(ii) Second, to each Member with a negative balance in its
Adjusted Capital Account, pro rata in accordance with such negative
Adjusted Capital Account balances, until such negative Adjusted
Capital Account balances have been eliminated; and
(iii) Third, to the Members in proportion to their Percentage
Interests.
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(b) Allocation of Losses.
(i) After giving effect to the provisions of Section 5.2 and
Section 5.3, and subject to the limitation set forth in Section
5.1(b)(ii), Losses for any Fiscal Year shall be allocated to the
Members in the following manner:
(A) First, to the Members until each of their Adjusted
Capital Account balances is reduced to zero dollars ($0), in
proportion to their Adjusted Capital Account balances; and
(B) Next, to the Members in proportion to their
Percentage Interests.
(ii) Notwithstanding anything to the contrary in Section
5.1(b)(i):
(A) The Losses allocated pursuant to Section 5.1(b)(i)
hereof to any Member for any Fiscal Year shall not exceed the
maximum amount of Losses that may be allocated to such Member
without causing such Member to have an Adjusted Capital
Account Deficit at the end of such Fiscal Year.
(B) If some but not all of the Members would have an
Adjusted Capital Account Deficit as a consequence of an
allocation of Losses pursuant to Section 5.1(b)(i) hereof, the
limitations set forth in this Section 5.1(b)(ii) shall be
applied by allocating Losses pursuant to this Section
5.1(b)(ii) only to those Members who would not have an
Adjusted Capital Account Deficit as a consequence of receiving
such an allocation of Losses (with the allocation of such
Losses among such Members to be determined by the Management
Committee, based on the allocation that is most likely to
effectuate the distribution priorities set forth in Section
6.1 hereof).
(C) If no Member may receive an additional allocation of
Losses pursuant to Section 5.1(b)(ii)(B) above, such
additional Losses not allocated pursuant to Section
5.1(b)(ii)(B) shall be allocated solely to the Members in
proportion to their Percentage Interests.
5.2 Special Allocations.
(a) Minimum Gain Chargeback--Company Nonrecourse Liabilities. If
there is a net decrease in Company Minimum Gain during any Company Fiscal
Year, certain items of income and gain shall be allocated (on a gross
basis) to the Members in the amounts and manner described in Regulations
Section 1.704-2(f) and (j)(2)(i) and (ii),
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subject to the exemptions set forth in Regulations Section 1.704-2(f)(2),
(3), (4), and (5). This Section 5.2(a) is intended to comply with the
minimum gain chargeback requirement (set forth in Regulations Section
1.704-2(f)) relating to Company nonrecourse liabilities (as defined in
Regulations Section 1.704-2(b)(3)) and shall be so interpreted.
(b) Minimum Gain Chargeback--Member Nonrecourse Debt. If there is a
net decrease in Member Minimum Gain during any Company Fiscal Year,
certain items of income and gain shall be allocated (on a gross basis) as
quickly as possible to those Members who had a share of the Member Minimum
Gain (determined pursuant to Regulations Section 1.704-2(i)(5)) in the
amounts and manner described in Regulations Section 1.704-2(i)(4),
(j)(2)(ii), and (j)(2)(iii). This Section 5.2(b) is intended to comply
with the minimum gain chargeback requirement (set forth in Regulations
Section 1.704-2(i)(4)) relating to partner nonrecourse debt (as defined in
Regulations Section 1.704-2(b)(4)) and shall be so interpreted.
(c) Qualified Income Offset. If, after applying Section 5.2(a) and
Section 5.2(b), any Member has an Adjusted Capital Account Deficit, items
of Company income and gain shall be specially allocated (on a gross basis)
to each such Member in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital Account
Deficit of such Member as quickly as possible.
(d) Optional Basis Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Sections 734(b)
or 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and such gain or
loss shall be specially allocated to the Members in a manner consistent
with the manner in which their Capital Accounts are required to be
adjusted pursuant to such Section of the Regulations.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
Year shall be specially allocated among the Members in proportion to their
Percentage Interests.
(f) Member Nonrecourse Deductions. Member nonrecourse deductions
shall be allocated pursuant to Regulations Section 1.704-2(b)(4) and
(i)(1) to the Member who bears the economic risk of loss with respect to
the deductions.
(g) Special Allocation: Economic Sharing Arrangement.
Notwithstanding anything to the contrary in this Article V, the Members
acknowledge and agree that the manner in which distributions are to be
made pursuant to Section 6.1 correctly reflects the Members' economic
sharing arrangement in the Company. To the extent that
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allocations of Profits, Losses, and other items of income, gain, loss, and
deduction set forth in this Article V (other than this Section 5.2(g))
could produce an economic sharing arrangement among the Members different
than that described in Section 6.1, then the Company shall specially
allocate items of gross income, gain, loss, and deduction among the
Members in any manner that may be required to cause the allocations of
Profits, Losses, and other items of income, gain, loss, and deduction
described in Article V to be consistent with the economic sharing
arrangement described in Section 6.1.
5.3 Curative Allocations. The allocations set forth in Section 5.1(b)(ii)
and Section 5.2(a) through Section 5.2(f) hereof (the "Regulatory Allocations")
are intended to comply with certain requirements of the Regulations. It is the
intent of the Members that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with special
allocations of other items of Company income, gain, loss, or deduction pursuant
to this Section 5.3. Therefore, notwithstanding any other provisions of this
Article V (other than the Regulatory Allocations), the Management Committee
shall make such offsetting special allocations of Company income, gain, loss, or
deduction in whatever manner it determines appropriate so that, after such
offsetting allocations are made, each Member's Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Member would have
had if the Regulatory Allocations were not part of the Agreement and all Company
items were allocated pursuant to Section 5.1(a), Section 5.1(b)(i), and Section
5.2(g) hereof. In exercising its discretion under this Section 5.3, the
Management Committee shall take into account future Regulatory Allocations under
Sections 5.2(a) and 5.2(b) that, although not yet made, are likely to offset
other Regulatory Allocations previously made under Sections 5.2(e) and 5.2(f).
5.4 Tax Allocations: Code Section 704(c).
(a) In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax purposes,
be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal
income tax purposes and its initial Book Value (computed in accordance
with Section 4.3(c)(i) hereof).
(b) If the Book Value of any Company asset is adjusted pursuant to
Section 4.3(c)(ii) hereof, subsequent allocations of income, gain, loss,
and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Book Value in the same manner as under Code Section
704(c) and the Regulations thereunder.
(c) Any elections or other decisions relating to such allocation
shall be made by the Management Committee.
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(d) Allocations pursuant to this Section 5.4 are solely for purposes
of federal, state, and local taxes and shall not affect or in any way be
taken into account in computing any Person's Capital Account, Adjusted
Capital Account, or share of Profits, Losses, and other items or
distributions pursuant to any provision of this Agreement.
5.5 Allocations Upon Option Exercise.
(a) Upon the exercise of a Reid Option, any deduction arising solely
as a result of such exercise shall be specially allocated to RPH.
(b) Notwithstanding anything in this Article V to the contrary, upon
the exercise of a Franklin Replacement Option, or any other option to
purchase Units granted by the Company from time to time (a "Company
Option"), or both, allocations shall be made in the following order and
priority:
(i) first, if there has been an exercise of a Company Option,
all Company income shall be allocated in the year of such exercise
and thereafter to the exercising Member until an amount of Company
income has been allocated to such exercising Member such that, after
such allocation, the proportion that the exercising Member's
Adjusted Capital Account balance bears to the total Adjusted Capital
Account balances of all Members is equal to the exercising Member's
Percentage Interest immediately after such exercise,
(ii) second, according to the provisions of this Article V,
except that if there has been an exercise of a Franklin Replacement
Option, all allocations that would have been made to Franklin under
this Article V shall be made to Members who have exercised a
Franklin Replacement Option (the "Franklin Option Members") in the
year of exercise and thereafter until an amount of Company income
has been allocated to the Franklin Option Members such that, after
such allocation, the proportion that each Franklin Option Member's
Adjusted Capital Account balance bears to the total Adjusted Capital
Account balances of all Members is equal to the exercising Member's
Percentage Interest immediately after such exercise, and
(iii) third, according to the provisions of this Article V.
5.6 Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or any other
item allocable to any period, Profits, Losses, and any such other item
shall be determined on a daily, monthly, or other basis, as determined by
the Management Committee using any permissible method under Code Section
706 and the Regulations thereunder.
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(b) For federal income tax purposes, every item of income, gain,
loss and deduction shall be allocated among the Members in accordance with
the allocations under Sections 5.1, 5.2, 5.3, 5.4 and 5.5.
(c) The Members are aware of the income tax consequences of the
allocations made by this Article V and hereby agree to be bound by the
provisions of this Article V in reporting their shares of Company income
and loss for income tax purposes.
(d) The Members agree that the Members' Percentage Interests
represent the Members' respective interests in Company profits for
purposes of allocating excess nonrecourse liabilities (as defined in
Regulations Section 1.752-3(a)(3)) pursuant to Regulations Section
1.752-3(a)(3).
(e) Notwithstanding anything herein to the contrary, if a deduction
arises solely as a result of a cancellation of the Units held as a result
of a prior exercise by the holder of the Franklin Replacement Option by
reason of the exercise of the holders' put rights pursuant to Section 7 of
the applicable Replacement Units Option Agreement, then any such deduction
shall be especially allocated to Franklin.
ARTICLE VI
DISTRIBUTIONS
6.1 Distributions of Available Cash. The Management Committee shall review
the Company's accounts at the end of each calendar quarter to determine whether
distributions are appropriate. Subject to ss. 18-607 of the Delaware Act, the
Management Committee shall authorize such distributions of Available Cash as it
may determine in its sole discretion. All such distributions of cash shall be
made to the Members in the following manner:
(a) First, to each Member with Preferred Units in proportion to the
sum of (i) the amount by which the Liquidation Preference exceeds the
Initial Liquidation Preference and (ii) the aggregate Unpaid Distribution
Amount for all of the Preferred Units owned by each such Member; and
(b) Second, to each Member in proportion to the Percentage
Interests..
Notwithstanding anything to the contrary above, if Available Cash is
derived from a transaction that occurs in connection with the dissolution,
termination and liquidation of the Company, any Available Cash that is derived
from or attributable to such a transaction shall be distributed to the Members
in accordance with Section 13.3 hereof.
6.2 Amounts Withheld. Notwithstanding any other provision of this
Agreement to the contrary, each Member hereby authorizes the Company to withhold
and to pay over, or
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otherwise pay, any withholding or other taxes payable by the Company with
respect to such Member as a result of such Member's participation in the
Company. If and to the extent that the Company shall be required to withhold or
pay any such taxes, such Member shall be deemed for all purposes of this
Agreement to have received a payment from the Company as of the time such
withholding or tax is paid, which payment shall be deemed to be a distribution
with respect to such Member's Units to the extent that the Member (or any
successor to such Member's Units) is entitled to receive a distribution. Any
withholdings authorized by this Section 6.2 shall be made at the maximum
applicable statutory rate under the applicable tax law unless the Company shall
have received an opinion of counsel or other evidence satisfactory to the
Management Committee to the effect that a lower rate is applicable, or that no
withholding is applicable.
6.3 Excess Distributions. To the extent that the aggregate of actual and
deemed distributions to a Member under this Article VI for any period exceeds
the distributions to which such Member is entitled for such period, the amount
of such excess shall be considered an amount upon which the Company shall pay a
preferred return to all other Members, in proportion to the Percentage Interests
of such other Members, until such excess has been repaid to the Company by the
Member receiving such excess distribution, which repayment shall be made out of
distributions to which such Member would otherwise be subsequently entitled if
the Member does not otherwise repay such excess. The preferred return payable
hereunder shall be seven and one-half percent (7.5%) per annum, accruing from
and after the date on which such excess is distributed. Notwithstanding any
other provision in this Agreement to the contrary, if an excess distribution or
advance distribution made to a Member or a shortfall tax distribution as
calculated under Section 6.4(c) remains outstanding when such Member or any
other Member disposes of its interest in the Company, by transfer, liquidation,
conversion into stock of RPH or otherwise, a payment by such Member or an
adjustment to such other Member's Units shall be made to settle the outstanding
amount; provided, that, any adjustment to the Member's Units in the Company will
be made in Preferred Units to insure that Vestar and Reid, collectively, own at
least 51% of the common equity in the Company.
6.4 Tax Distributions.
(a) Notwithstanding anything to the contrary in Section 6.1, the
Managers shall cause the Company from time to time to distribute to (x)
RPH and Franklin (and to an option holder or transferee who becomes a
Member as a result of option exercise or Unit transfer) an amount equal to
the excess of (i) the Company's Estimated Net Taxable Income (defined
below) for the applicable Fiscal Year (or portion thereof) to which such
distribution relates which is allocable to such Member in excess of the
cumulative Company Estimated Net Taxable Income allocated to such Member
from prior Fiscal Years, multiplied by the actual effective federal and
state and local tax rates (including, to the extent applicable,
alternative minimum tax, if any) applicable to the relevant corporation or
individual, as the case may be, in effect during the Fiscal Year to which
such distribution relates, over (ii) the sum of distributions already made
to such Member
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during the relevant Fiscal Year, and (y) Vestar an amount equal to the
excess of (i) the Company's Estimated Net Taxable Income for the
applicable Fiscal Year (or portion thereof) to which such distribution
relates which is allocable to Vestar in excess of the cumulative Company
Estimated Net Taxable Income allocated to such Member from prior Fiscal
Years, multiplied by the maximum marginal federal income and New York
State and New York City individual tax rate (including, to the extent
applicable, alternative minimum tax, if any) in effect during the Fiscal
Year to which such distribution relates, over (ii) the sum of
distributions already made to Vestar during the relevant Fiscal Year
(distributions under (i) or (ii) being referred to herein as "Tax
Distributions"). For these purposes, "Company Estimated Net Taxable
Income" means (Y) the estimate of the aggregate amount of items of taxable
income and gain of the Company for the applicable Fiscal Year (or portion
thereof) to which such distribution relates, minus (Z) the estimate of the
aggregate amount of items of taxable deduction and loss for such Fiscal
Year (or portion thereof) to which such distribution relates. The Managers
shall determine the Company Estimated Net Taxable Income and each Member's
allocable share of Company Estimated Net Taxable Income. For purposes of
calculating RPH's or Franklin's actual effective tax rates, all other
non-Company items of income, deduction, gain, loss and credits available
to such Member shall be taken into account. The Members acknowledge and
agree that the sole purpose of this Section 6.4(a) is to enable the
Company to distribute sufficient cash to each Member to permit each Member
to timely satisfy its estimated income tax obligations, if any, arising
from the Member's allocable share of the Company's taxable income. The
Manager shall make such distributions on or about April 15, June 15,
September 15 and December 15 of each year and/or on any other date that
similarly coincides with the due date of any estimated income tax
obligation of any Member. The provisions of this Section 6.4(a) shall
apply to Company Net Taxable Income allocated to the Members as a result
of a final adjustment by a taxing authority to Company Net Taxable Income;
provided, that, no Tax Distribution shall be made to Franklin as a result
of the disallowance of the current deduction claimed by the Company for
the bond tender premium paid in connection with the redemption of the PCI
Notes; provided, further, that any Tax Distribution made to RPH or Vestar
as a result of such disallowance shall not be deemed an advance
distribution as provided in Section 6.4(b) and thus not subject to the
provisions of Section 6.4(d); provided, further, that amounts that would
otherwise be payable as subsequent Tax Distributions to Franklin shall be
deemed paid in an amount equal to the Tax Distributions made to RPH and
Vestar as a result of such disallowance, but in the event of a final
adjustment by a taxing authority disallowing the deduction of the bond
tender premium claimed by Franklin, any amounts that Franklin would have
received as Tax Distributions but for the deemed payment described above
shall be paid to it and Franklin shall receive a Tax Distribution both in
accordance with Section 6.4(a) as a result of the disallowance of the
current deduction claimed by the Company for the bond tender premium.
Notwithstanding anything to the contrary in this Section 6.4, an option
holder who becomes a Member as a result of exercise is not entitled to a
Tax
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Distribution relating to compensatory income allocated pursuant to Section
5.5 of this Agreement from the Company to such option holder as a result
of such option exercise.
(b) For purposes of this Agreement, amounts distributed to the
Members pursuant to Section 6.4(a) shall be deemed to be advance
distributions of amounts to be distributed pursuant to Section 6.1.
(c) If a Member receives an actual Tax Distribution for the year in
an amount less than the Member's Adjusted Tax Distribution Amount, then
such shortfall tax distribution will be subject to the provisions of
Section 6.4(d). The Member's Adjusted Tax Distribution Amount, for
purposes of this clause is equal to (y) the largest Tax Distribution
Amount of all the Members multiplied by (z) such Member's Percentage
Interest. Tax Distribution Amount for each Member is determined by
dividing the actual Tax Distribution made to a Member by such Member's
Percentage Interest.
(d) In the case of a shortfall tax distribution as computed under
Section 6.4(c), the amount of such shortfall shall be considered an amount
upon which the Company shall pay a preferred return to such Member until
such shortfall has been repaid to the Company by the Member receiving the
largest Tax Distribution Amount, which repayment shall be made out of
distributions to which such Member would otherwise be subsequently
entitled unless the Members agree to settle the outstanding amounts
through payments. The preferred return payable hereunder shall be seven
and one-half percent (7.5%) per annum, accruing from and after the date on
which such shortfall tax distribution is created.
ARTICLE VII
MANAGEMENT OF THE COMPANY
7.1 Management Committee.
(a) The Company shall be managed by a Management Committee
consisting initially of seven individuals (the "Managers"). Two Managers
shall be appointed by RPH, two Managers shall be appointed by Vestar, two
Managers shall be appointed by Franklin, and one Manager shall be the
Chief Executive Officer of the Company (who initially shall be William
Estes). RPH, Vestar and Franklin shall have the right to remove and
replace those Managers appointed by them at any time effective immediately
upon written notice. The initial RPH Managers shall be Ronald V. Davis and
Leonard Lieberman, the initial Vestar Managers shall be James P. Kelley
and John R. Woodard, and the initial Franklin Managers shall be Peter M.
Bernon and ____________________. RPH may designate one of the RPH Managers
as the Chairman of the Management Committee, and such Manager will preside
(when present) at all meetings of the Management Committee. The Management
Committee may be expanded in size from
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time to time to add "independent" Managers or, at the request of the Reid
Parent and Vestar, B. Joseph Rokus. For each independent Manager added, or
if B. Joseph Rokus is added to the Management Committee, RPH and Vestar
shall be entitled to jointly appoint such additional Managers as may be
necessary to ensure that RPH and Vestar, jointly, are able to designate a
majority in number of the Managers.
(b) Subject to the rights expressly granted to the Members or to
particular Members hereunder, the Management Committee shall have general
powers of supervision, direction and control over the business of the
Company. The Management Committee shall have the general powers and duties
typically vested in the board of directors of a corporation and all other
powers and duties over the Company and its business, except as expressly
provided elsewhere in this Agreement.
(c) The presence of Managers entitled to cast at least a majority of
votes shall be necessary to constitute a quorum at any meeting of the
Management Committee. Except as expressly provided with respect to Major
Decisions in Section 7.3, any matter submitted to a vote or consent of the
Management Committee at which a quorum is present may be approved by a
majority of the votes represented at such meeting. No Member or Manager,
acting solely in its capacity as a Member or Manager, shall have the power
and authority to act for and bind the Company with respect to any matter
unless such matter has been approved by the Management Committee as set
forth herein.
(d) Any Manager may participate in a meeting through use of a
conference telephone, video conference or similar communication equipment,
so long as all Managers participating in the meeting can hear one another,
and any Manager participating in such manner will be considered "present"
at such meeting. Accurate minutes of each meeting of the Management
Committee shall be maintained by a Manager or officer designated by the
Management Committee for that purpose.
(e) Meetings of the Management Committee for any purpose may be
called at any time by any Manager. Unless waived as set forth below, at
least two Business Days notice of the time, place and general subject
matter of each meeting of the Management Committee shall be delivered
personally to each of the Managers or personally communicated to them by
another Manager or an officer of the Company, and confirmed in writing by
facsimile, or communicated by FedEx or other comparable overnight courier
service (receipt requested). Notice shall be transmitted to the last known
facsimile number or address of the Manager as shown on the records of the
Company. Such notice as above provided shall be considered due, legal and
personal notice to such Manager. With respect to any meeting not duly
called or noticed in accordance with the foregoing provisions, any
transactions carried out at such meeting will be as valid as if they had
occurred at a meeting duly called and noticed if: (i) all Managers are
present at the meeting; or (ii) those Managers not present at the meeting
sign a waiver of notice of such meeting, whether before or after the
meeting.
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(f) Any action required or permitted to be taken by the Management
Committee may be taken without a meeting and will have the same force and
effect as if taken by a vote of the Managers at a meeting properly called
and noticed, if authorized by a writing signed individually or
collectively by all, but not less than all, of the Managers.
7.2 Major Decisions. The term "Major Decision" means any decision by the
Management Committee with respect to any of the following matters:
(a) issuing any Units or any security, including any indebtedness,
convertible into Units, or any other form of equity in the Company, other
than (i) granting options to management employees of the Company to
purchase up to 810,811 Units in the aggregate, (ii) issuing Units pursuant
to the exercise of such options, (iii) issuing Units pursuant to the
options held by certain employees of Franklin that have been converted
into options to acquire Units pursuant to the Merger Agreement, and (iv)
issuing Units or any security, including any indebtedness, convertible
into Units, or any other form of equity in the Company, in one or more
private offerings (excluding any issuances referred to in (i), (ii) or
(iii) above) where the aggregate purchase price for all such issuances
does not exceed $50 million;
(b) accepting or requiring any Member to make any additional Capital
Contribution to the Company;
(c) incurring indebtedness or entering into guarantees for borrowed
money (excluding trade payables incurred in the ordinary course of
business or refinancing of indebtedness incurred in connection with the
transactions contemplated by the Merger Agreement or borrowing after the
Closing Date under the Tranche C term loan facility or the revolving
credit facility included in the senior bank financing of the Company on
the Closing Date and refinancings thereof) in excess of $80 million;
(d) selling, leasing, pledging or granting a security interest or
encumbrance in all or substantially all of the Company's assets, except in
connection with the incurrence of indebtedness for borrowed money that
does not involve a Major Decision under the preceding paragraph;
(e) acquiring (whether through an asset purchase, merger, equity
purchase or otherwise) any Plastics Operations or other assets (excluding
acquisitions of raw materials and supplies in the ordinary course of
business) having a value, individually or in the aggregate for any series
of related transactions, in excess of $80 million;
(f) selling or otherwise disposing of any Plastics Operations or
other assets (excluding sales or other dispositions of inventory in the
ordinary course of business)
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having a value, individually or in the aggregate for any series of related
transactions, in excess of $80 million;
(g) except as otherwise permitted in Section 7.6(b) or Section 7.8,
entering into or amending any transaction or agreement between the Company
and a Member or an Affiliate of a Member, including any amendment to the
VCP Management Agreement;
(h) making any material election or other decision pursuant to
Section 5.4(c), which relates to Code Section 704(c);
(i) any change in the purpose or scope of the Company pursuant to
Article III;
(j) amending or granting a waiver with respect to this Agreement;
(k) authorizing any consolidation, dissolution, or liquidation of
the Company or any merger in which the Company does not survive, other
than pursuant to an Initial Public Offering;
(l) converting the Company into a corporation, other than pursuant
to an Initial Public Offering;
(m) executing or delivering any assignment for the benefit of
creditors of the Company;
(n) filing any voluntary petition in bankruptcy or receivership with
respect to the Company;
(o) authorizing the payment in cash of distributions on the
Preferred Units under Section 12.2(b);
(p) authorizing the optional redemption of Preferred Units under
Section 12.2(c); or
(q) entering into any agreement with any Person that would afford
such Person priority over any of Suiza, Franklin, RPH or any other person
contemplated to be a party to the Registration Rights Agreement with
regard to the exercise of incidental registration rights pursuant to
Section 2.2(a) and 2.2(b) of the Registration Rights Agreement.
7.3 Approval of Major Decisions. Notwithstanding any contrary provisions
of Section 7.1:
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(a) Any Major Decision must be approved by the affirmative vote of
not less than a majority of the Managers present and entitled to vote at a
meeting of the Management Committee at which a quorum is present. Such
affirmative vote shall include (i) the vote of the Franklin Manager
specifically designated by Suiza from time to time for approval of Major
Decisions, who shall initially be ____________________, and (ii) the vote
of the Vestar Manager specifically designated by Vestar from time to time
for approval of Major Decisions, who shall initially be James P. Kelley.
(b) Section 7.2 and the requirement for the affirmative vote of the
Franklin Manager described in Section 7.3(a)(i) shall not apply from and
after the date of the first to occur of the following events: (i) a Change
in Control of Suiza Foods, (ii) an Initial Public Offering, or (iii)
Franklin holds less than 10% of the Percentage Interests.
(c) Section 7.2 and the requirement for the affirmative vote of the
Vestar Manager described in Section 7.3(a)(ii) shall not apply from and
after the date of the first to occur of the following events: (i) a Change
in Control of RPH, (ii) a Change in Control of Vestar, (iii) an Initial
Public Offering, or (iv) RPH and Vestar, collectively, hold less than 10%
of the Percentage Interests.
7.4 Officers. The officers of the Company shall include a President, a
Secretary and such other officers as the Management Committee in its discretion
may appoint, and such officers will have any powers delegated to them by the
Management Committee (subject to any limitations on the authority of the
Management Committee set forth in this Agreement).
7.5 Certificate of Formation. The President or another officer of the
Company shall cause to be filed at the Company's expense such certificates or
documents (including, without limitation, copies, renewals, amendments or
restatements of the Certificate) as may be determined by such officer to be
reasonable and necessary or appropriate for the formation or qualification and
operation of a limited liability company in the State of Delaware and in any
other state in which the Company may elect to do business.
7.6 Compensation and Reimbursement of Member Expenses.
(a) Except as provided in Section 7.6(b), no Member shall be
compensated for any services rendered to the Company by such Member or its
designees on the Management Committee. Notwithstanding anything to the
contrary in this Agreement, each Member shall be reimbursed for
out-of-pocket expenses that such Member makes for or on behalf of the
Company, to the extent such expenses are authorized by the Management
Committee.
(b) Vestar will perform certain advisory services for the Company
pursuant to the VCP Management Agreement as defined in the Merger
Agreement.
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7.7 Outside Activities; Noncompetition.
(a) Subject to Section 7.7(b), (c) and (d), a Member, any Affiliate
of a Member, and any director, officer, partner, or employee of a Member
or any Affiliate thereof, may have business interests and engage in
business activities in addition to those relating to the Company and may
engage in any businesses and activities for its own account and for the
accounts of others without having or incurring any obligation to offer any
interest in or funds from such properties, businesses or activities to the
Company or any Member, and no other provision of this Agreement shall be
deemed to prohibit the Members or any such other Person from conducting
such other businesses and activities. Neither the Company nor any Member
shall have any rights by virtue of this Agreement or the limited liability
company relationship created hereby in any business ventures of the other
Member or any Affiliate of such Member or any director, officer, partner,
or employee of the other Member or any Affiliate thereof.
(b) Neither Suiza Foods, nor the Suiza Member, nor any Controlled
Affiliates of Suiza Foods or the Suiza Member (collectively, the "Suiza
Affiliates") may, directly or indirectly, operate or acquire any interest
in a business or operation that (1) manufactures or sells (i) plastic
packaging products that are substantially similar to the products then
manufactured or sold by any of the Suiza Companies or the Reid Companies
(prior to the Closing Date) and the Company and its subsidiaries (after
the Closing Date) (collectively, the "Principal Companies") or (ii)
plastic bottles for dairy, water, juice or other beverages and (2) sells
such products in a common geographic market as the substantially similar
products then sold by the Principal Companies or in any Proposed
Geographic Market (collectively, a "Competing Business"); provided that:
(i) nothing in this Section 7.7(b) shall restrict (A) the
continued ownership or operation in the ordinary course of business
of Neva Plastics, Inc. in Puerto Rico, (B) the operations conducted
by Controlled Affiliates of Suiza Foods that manufacture plastic
packaging products solely for their own use, or (C) subject to the
terms and conditions of the Supply Agreement, the acquisition of a
Competing Business which generated 50% or less of the revenues of
the total enterprise being acquired by the Suiza Affiliate for the
twelve months preceding such acquisition; provided that, for
purposes of this subsection (c), within six months of such
acquisition the Suiza Affiliate offers to sell to the Company the
Competing Business and agrees to work in good faith to establish a
mutually acceptable purchase price for the Competing Business, or if
a mutually acceptable purchase price is not agreed upon, the Suiza
Affiliate transfers the Competing Business to an unaffiliated third
party within twelve months of the acquisition; and
(ii) this Section 7.7(b) shall be of no force or effect from
and after the later of the fifth anniversary of the Closing Date and
the date on which the Suiza
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Members and their Controlled Affiliates, in the aggregate, cease to
own 10% or more of the Units.
(c) Neither RPH nor any of its Affiliates (excluding the Company and
its subsidiaries) may, directly or indirectly, engage or participate in
any Plastics Operations in the United States, Mexico and any other country
in which any of the Principal Companies does business; provided that this
Section 7.7(c) shall be of no force or effect from and after the later of
the fifth anniversary of the Closing Date and the date on which Vestar and
RPH and their Controlled Affiliates, in the aggregate, cease to own 10% of
the Units.
(d) Entities Controlled by Vestar Equity Partners, L.P. or Vestar
Capital Partners III, L.P. or any merchant banking fund or other entity
Controlled by Vestar Equity Partners, L.P. or Vestar Capital Partners III,
L.P. or by the Controlling persons of Vestar Equity Partners, L.P. or
Vestar Capital Partners III, L.P. (collectively, the "VCP Affiliates")
shall not, directly or indirectly, (x) acquire a Controlling interest in,
or (y) after the date hereof, make an equity investment valued at the time
of investment at $75 million or more in, any Competing Business; provided
that:
(i) nothing in this Section 7.7(d) shall restrict (A) the
continued ownership or operation in the ordinary course of business
of Russell Stanley Holdings, Inc. and its subsidiaries and their
respective transferees and successors (collectively,
"Russell-Stanley"), or (B) any action taken or transaction effected
by Russell-Stanley or by Russell-Stanley's Affiliates in respect of
Russell-Stanley if immediately following such action or transaction
Russell-Stanley is not Controlled by the VCP Affiliates;
(ii) nothing in this Section 7.7(d) shall restrict any
acquisition of a Competing Business that (A) generated less than $25
million in revenues for the twelve months preceding such
acquisition; provided that in no event shall any VCP Affiliate
acquire any enterprise with respect to which a Competing Business
generated more than 50% of the revenues of the total enterprise
being acquired by the VCP Affiliate for the twelve months preceding
such acquisition, or (B) generated 50% or less of the revenues of
the total enterprise being acquired by the VCP Affiliate for the
twelve months preceding such acquisition; provided that within six
months of such acquisition the VCP Affiliate offers to sell to the
Company the Competing Business and agrees to work in good faith to
establish a mutually acceptable purchase price for the Competing
Business, or if a mutually acceptable purchase price is not agreed
upon, the VCP Affiliate transfers the Competing Business to an
unaffiliated third party within twelve months of the acquisition, or
(C) is in a product category for which the Principal Companies have
less than $25 million in revenues; and
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(iii) this Section 7.7(d) shall be of no force or effect from
and after the later of the fifth anniversary of the Closing Date and
the date on which Vestar and RPH, in the aggregate, cease to own 10%
of the Units.
(e) The Members acknowledge and agree that their respective
obligations under this Section 7.7 are a material inducement and condition
to this Agreement and the obligations of the parties hereunder and that
the restrictions and remedies contained in this Section 7.7 are reasonable
as to time, geographic area and scope of activity and do not impose a
greater restraint than is necessary to protect the goodwill and other
legitimate business interests of the Company. It is the intent of all
parties hereto that the foregoing restrictions against unlawful and unfair
competitive activities be given the fullest effect consistent with
applicable law.
(f) If any of the provisions of this Section 7.7 is found by a court
of competent jurisdiction to contain unreasonable or unnecessary
limitations as to time, geographic area or scope of activity, then such
court is hereby directed to reform such provisions to the minimum extent
necessary to cause the limitations contained therein as to time,
geographical area and scope of activity to be reasonable and enforceable.
(g) The Members acknowledge and agree that (i) the Company would be
irreparably harmed by any violation of their respective obligations under
this Section 7.7 and that, in addition to all other rights or remedies
available at law or in equity, the parties will be entitled to injunctive
and other equitable relief to prevent or enjoin any such violation,
without posting any bond whatsoever and (ii) this Section 7.7 will inure
to the benefit of the Company and its successors (including its successors
by merger) regardless of whether the parties bound hereby continue as
Members of the Company or members or stockholders of any successor to the
Company.
(h) For purposes of this Section 7.7, a "Proposed Geographic Market"
shall mean any geographic market in which the Company and its subsidiaries
intend to sell products substantially similar to products sold by the
Principal Companies, such intent being evidenced by (i) a resolution of
the Management Committee to conduct business or begin operations in such
geographic market or (ii) the approval by the Management Committee of a
budget authorizing capital expenditures specifically for the conduct of
business in such geographic market.
7.8 Transactions with Affiliates. Except as otherwise permitted in Section
7.6(b), and except for any transaction or agreement approved as a Major Decision
pursuant to Section 7.3, the Company may not enter into any transaction or
agreement with any Member or any Affiliate of a Member if the terms of such
transaction or agreement are materially less favorable to the Company than the
terms that could be obtained by the Company through an arms length transaction
or agreement with an unrelated party.
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7.9 Indemnification of Members. The Company shall indemnify and hold
harmless the Members and their Affiliates (other than the Company and its
subsidiaries), and their respective directors, officers, constituent partners,
employees and advisors and other representatives, and the Managers designated by
the Members (individually, an "Indemnitee"), as follows (provided that no such
indemnification shall be available to a Member and its Affiliates in respect of
any claim which is an indemnifiable claim against any of them pursuant to
Section 12.2 or 12.3 of the Merger Agreement):
(a) In any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, to which an Indemnitee was or is a party or is threatened
to be made a party by reason of the fact that such Indemnitee is or was a
Member or an Affiliate of a Member (other than the Company and its
subsidiaries) or a director, officer, employee, or constituent partner of
a Member or an Affiliate of a Member (other than the Company and its
subsidiaries), or a Manager, the Company shall indemnify such Indemnitee
against attorneys' fees, judgments, fines, penalties, settlements, and
reasonable expenses actually incurred by such Indemnitee in connection
with the defense or settlement of such action, suit or proceeding, if such
Indemnitee acted in good faith, and in the case of the exercise of
authority by the Indemnitee under the Delaware Act or this Agreement,
other than service for another enterprise, in a manner reasonably believed
by such Indemnitee to be in the best interests of the Company and, in all
other cases, that the Indemnitee's conduct was at least not opposed to the
Company's best interests, and with respect to any criminal action or
proceeding, the Indemnitee did not have reasonable cause to believe that
his conduct was unlawful. In no event, however, shall indemnification ever
be made in relation to a proceeding in which the Indemnitee has been found
liable for fraud or a criminal act or for gross negligence or willful or
intentional misconduct, in the Indemnitee's performance of its duty to the
Company or in relation to a proceeding which arises out of a material
violation by the Indemnitee of the terms and provisions of this Agreement.
The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere, or its equivalent, shall
not, of itself, create a presumption that an Indemnitee did not act in
good faith and in a manner reasonably believed by such Indemnitee to be in
the best interests of the Company or not opposed to the Company's best
interests.
(b) Promptly after receipt by an Indemnitee of notice of the
commencement of any proceeding against it, such Indemnitee will, if a
claim is to be made against an Indemnitor, give notice to the Indemnitor
of the commencement of such claim, but the failure to notify the
Indemnitor will not relieve the Indemnitor of any liability that it may
have to any Indemnitee, except to the extent that the Indemnitor
demonstrates that the defense of such action is prejudiced by the
Indemnitee's failure to give such notice.
(c) If any proceeding is brought against an Indemnitee and it gives
notice to the Indemnitor of the commencement of such proceeding, the
Indemnitor will, to the
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extent that it wishes (unless (i) the Indemnitor is also a party to such
proceeding and the Indemnitee determines in good faith that joint
representation would be inappropriate, or (ii) the Indemnitor fails to
provide reasonable assurance to the Indemnitee of its financial capacity
to defend such proceeding and provide indemnification with respect to such
proceeding), assume the defense of such proceeding with counsel
satisfactory to the Indemnitee and, after notice from the Indemnitor to
the Indemnitee of its election to assume the defense of such proceeding
and an acknowledgment of its indemnification obligation with respect
thereto, the Indemnitor will not, as long as it diligently conducts such
defense, be liable to the Indemnitee under this section for any fees of
other counsel or any other expenses with respect to the defense of such
proceeding, in each case subsequently incurred by the Indemnitee in
connection with the defense of such proceeding, other than reasonable
costs of investigation. If the Indemnitor assumes the defense of a
proceeding in accordance with the preceding sentence, (i) no compromise or
settlement of such claims may be effected by the Indemnitor without the
Indemnitee's consent (which consent shall not be unreasonably withheld)
unless (A) there is no finding or admission of any violation of legal
requirements or any violation of the rights of any Person and no effect on
any other claims that may be made against the Indemnitee, and (B) the sole
relief provided is monetary damages that are paid in full by the
Indemnitor and (ii) the Indemnitee will have no liability with respect to
any compromise or settlement of such claims effected without its consent
(which consent shall not be unreasonably withheld). If notice is given to
an Indemnitor of the commencement of any proceeding and the Indemnitor
does not, within 20 days after the Indemnitee's notice is given, give
notice to the Indemnitee of its election to assume the defense of such
proceeding, the Indemnitor will be bound by any determination made in such
proceeding or any compromise or settlement reasonably effected by the
Indemnitee.
(d) Notwithstanding the foregoing, if an Indemnitee determines in
good faith that there is a reasonable probability that a proceeding may
adversely affect it or its Affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this
Agreement, the Indemnitee may, by notice to the Indemnitor, assume the
exclusive right to defend, compromise, or settle such proceeding, but the
Indemnitor will not be bound by any determination of a proceeding so
defended or any compromise or settlement effected without its consent
(which may not be unreasonably withheld).
(e) Any indemnification permitted under this Section 7.9 shall be
made only out of the assets of the Company and no Member shall be
obligated to contribute to the capital of or loan funds to, the Company to
enable the Company to provide such indemnification.
(f) The indemnification provided by this Section 7.9 shall be in
addition to any other rights to which each Indemnitee may be entitled
under any agreement or vote of the Members, as a matter of law or
otherwise, as to action in the Indemnitee's capacity
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as a Member, as a director, officer, employee, or constituent partner of a
Member, or as a Manager, and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns, administrators, and personal representatives
of the Indemnitee.
(g) Except as otherwise provided in this Agreement, the Company may
purchase and maintain insurance on behalf of any one or more Indemnitees
if approved by the Management Committee.
(h) In no event may an Indemnitee subject a Member to personal
liability by reason of the indemnification provisions of this Agreement.
(i) The provisions of this Section 7.9 are for the benefit of the
Indemnitees and the heirs, successors, assigns, administrators, and
personal representatives of the Indemnitees and shall not be deemed to
create any rights for the benefit of any other Persons.
7.10 Liability of the Members.
(a) Neither the Members nor their respective owners, directors,
officers, employees, or agents nor their designated Managers shall be
liable to the Company or to the other Members for errors in judgment or
for any acts or omissions that do not constitute gross negligence or
willful or wanton misconduct.
(b) Each Member may exercise any of the powers granted to them by
this Agreement and perform any of the duties imposed upon them hereunder
either directly or by or through agents.
7.11 Preemptive Rights.
(a) Grant of Preemptive Rights. The Company will not issue or sell
any new Units without first complying with this Section 7.11; provided,
however, that the Company may (i) grant options to management employees of
the Company to purchase up to ____ Units in the aggregate, which
represents 7.5% of the total Units on a fully diluted basis, taking into
account, for the purpose of the denominator only, the Units initially
issued and the options rolled over from Franklin, (ii) issue Units
pursuant to the exercise of such options, and (iii) issue Units pursuant
to the options held by certain employees of Franklin that have been
converted into options to acquire Units pursuant to the Merger Agreement,
without first complying with this Section 7.11. The Company hereby grants
to each of Franklin, RPH and Vestar the preemptive right to purchase up to
its Pro Rata Share of any new Units that the Company may, from time to
time, propose to sell or issue, other than in an Initial Public Offering.
For purposes of this Agreement, Pro Rata Share means, with respect to each
of Franklin, RPH and Vestar, the percentage of
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all outstanding fully diluted Units of the Company beneficially owned by
each of Franklin, RPH and Vestar.
(b) Notice. If the Company proposes to issue or sell new Units, the
Company will provide each of Franklin, RPH and Vestar with written notice
of its intention (the "New Units Notice"). The New Unit Notice will
describe the type of new Units to be offered and the price and other terms
upon which the Company proposes to issue or sell the new Units.
(c) Exercise of Preemptive Rights. Each of Franklin, RPH and Vestar
will have 30 days from the date of receipt of the New Units Notice and any
information delivered by or on behalf of the Company to any proposed
purchasers or as it may reasonably request to facilitate their investment
decision, to agree to purchase up to its Pro Rata Share of the new Units
for the price and upon the other terms specified in the New Units Notice.
Each of Franklin, RPH and Vestar will provide written notice to the
Company stating the quantity of such new Units that it agrees to purchase.
The sale of the new Units will occur in accordance with the terms on which
the new Units will otherwise be sold.
(d) Failure to Exercise Preemptive Rights. If any or all of
Franklin, RPH or Vestar fail to exercise fully such preemptive right
within such 30-day period, the Company will have 60 days to sell the new
Units at no less than 95% of the price set forth in the New Units Notice
and otherwise upon substantially the same terms specified in the New Units
Notice. In the event that the Company has not sold such new Units within
such 60-day period, the Company will not thereafter issue or sell any new
Units without again complying with this Section 7.11.
(e) Termination of Preemptive Rights. The preemptive rights existing
pursuant to this Section 7.11 shall terminate if the Company (or its
corporate successor) consummates an Initial Public Offering.
7.12 Certain Anti-dilutive Rights.
(a) If at any time after the date hereof the Company shall issue or
sell any Units or any immediately exercisable warrants, options or rights
to subscribe for or purchase Units or other immediately exercisable
securities exercisable or convertible into Units, and the consideration
per Unit for, and/or the price per Unit at which, such warrants, options
or rights are exercisable for or such securities are convertible into,
such Units is less than the Fair Market Value of the Units immediately
prior to such issuance or sale, then, forthwith upon such issuance or
sale, the number of Suiza Member's Units shall be adjusted so that for
each Unit held by a Suiza Member, such Suiza Member shall be entitled to
receive a number of Units equal to the product of (a) the number of Units
held by such Suiza Member before such adjustment and (b) a fraction the
numerator of
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which shall be the number of Units outstanding immediately prior to such
issuance or sale, plus the number of additional Units offered for sale or
issuable pursuant to such warrants, options or rights and the denominator
of which shall be the number of Units outstanding immediately prior to
such issuance or sale, plus the number of Units which the aggregate
offering price of the Units so offered for sale and/or the exercise price
for the Units issuable pursuant to such warrants, options or rights would
purchase at such Fair Market Value (determined by multiplying such number
of Units offered or issuable by the offering price per Unit of such Units
or the exercise price of such warrants, options or rights and dividing the
product so obtained by such Fair Market Value); provided, however, that
the Company may (i) grant options to management employees of the Company
to purchase up to ___ Units in the aggregate, which represents [7.5%] of
the total Units on a fully diluted basis, taking into account, for the
purpose of the denominator only, the Units initially issued and the
options rolled over from Franklin and RPH, (ii) issue Units pursuant to
the exercise of such options, (iii) issue Units pursuant to the options
held by certain employees of Franklin that have been converted into
options to acquire Units pursuant to the Merger Agreement, (iv) issue
Units to a buyer if the Suiza designated Manager had the opportunity to
veto the sale of the Units under Section 7.2(a) but elected not to do so,
and (v) issue Units in connection with the conversion of the Preferred
Units in accordance with the term of this Agreement, without first
complying with this Section 7.12.
(b) If at any time after the date hereof the Company shall issue or
sell to any person any securities convertible into or exercisable for
Units ("Convertible Securities") (other than securities described in
Section 7.12(a) above), whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per Unit for which
Units are issuable upon such conversion or exchange is less than the Fair
Market Value in effect immediately prior to the time of such issue or
sale, then the number of the Suiza Member's Units shall be adjusted as
provided in Section 7.12(a) above on the basis that (i) the maximum number
of Units necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and
outstanding, (ii) the price per Unit of such Units shall be deemed to be
the average price in any range of prices at which such additional Units
are issuable to such holders upon conversion, and (iii) the Company shall
be deemed to have received all of the consideration payable (including
amounts payable upon conversion) therefor, if any, as of the date of the
actual issuance of such Convertible Securities. No adjustment of the
number of the Suiza Member's Units shall be made under this Section
7.12(b) upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any warrants, options or other subscription or
purchase rights therefor, if any such adjustment shall previously have
been made upon the issuance of such warrants, options or other rights
pursuant to Section 7.12(a) above. No further adjustments of the number of
the Suiza Member's Units shall be made upon the actual issuance of such
Units upon conversion or exchange of such Convertible Securities and, if
any issue or sale of such Convertible Securities is made upon exercise of
any warrant, option or other right to subscribe for or to purchase
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any such Convertible Securities for which adjustments of the number of
Suiza Member's Units have been or are to be made pursuant to other
provisions of this Section 7.12, no further adjustments of the number of
the Suiza Member's Units shall be made by reason of such issue or sale.
For the purposes of this Section 7.12(b), the date as of which the number
of Units shall be computed shall be the earlier of (i) the date on which
the Company shall enter into a firm contract for the issuance of such
Convertible Securities and (ii) the date of actual issuance of such
Convertible Securities. Such adjustments shall be made upon each issuance
of Convertible Securities and shall become effective immediately after
such issuance.
(c) No adjustment in the number of the Suiza Member's Units issuable
hereunder shall be required unless such adjustment would require an
increase or decrease of at least one quarter of one percent (0.25%) in the
number of the Suiza Member's Units; provided, however, that any
adjustments which by reason of this Section 7.12(c) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one-thousandth
of a Unit.
(d) The number of Units outstanding at any given time shall not
include Units directly or indirectly owned or held by or for the account
of the Company or any of its subsidiaries, and the disposition of any such
Units shall be considered an issue or sale of Units for the purposes of
this Section 7.12.
(e) Units issued (i) pursuant to the option plans and allocation of
options referred to in Section 2.3 of the Merger Agreement, (ii) to
members of the Company's management as part of a stock option plan or
other stock-based incentive plan with the approval of a majority of the
holders of Units, or (iii) by the Company as consideration in a merger,
acquisition or other business combination, shall be deemed to be issued at
Fair Market Value for the purposes of this Section 7.12.
(f) No adjustment in the number of the Suiza Member's Units issuable
hereunder shall be required if the Franklin Manager(s) voted in favor of
the issuance or sale of Units by the Company, and the affirmative vote of
such Franklin Manager(s) was required under this Agreement for approval of
such issuance or sale.
(g) The rights existing pursuant to this Section 7.12 shall
terminate if the Company (or its corporate successor) consummates an
Initial Public Offering.
7.13 Exercise of Certain Options. The Company has granted the options to
purchase Units listed on Exhibit 7.13(a) to certain employees of the Company
formerly employed by Franklin in replacement of such persons' options to
purchase Franklin stock (the "Franklin Replacement Options"). Upon each exercise
of any of the Franklin Replacement Options, Franklin shall transfer to the
Company for cancellation, without payment therefor by the
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Company, a number of Units equal to the number of Units issued upon such
exercise of a Franklin Replacement Option. Options granted by RPH to its or its
Affiliates' employees shall remain options to purchase RPH common stock.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF MEMBERS
8.1 Limitation of Liability. The Members shall have no liability under
this Agreement except as provided in Article IV and Article VI of this
Agreement.
8.2 Return of Capital. No Member shall be entitled to the withdrawal or
return of its Capital Contribution, except to the extent, if any, that
distributions made pursuant to this Agreement or upon termination of the Company
may be considered as such by law and then only to the extent provided for in
this Agreement.
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 Records and Accounting. The officers of the Company shall keep or
cause to be kept appropriate books and records with respect to the Company's
business (including without limitation, any books, records, statements, or
information required to be maintained by the Company under the Delaware Act),
which shall at all times be kept at the principal office of the Company or such
other office as the Management Committee may approve for such purposes. Any
books and records maintained by the Company in the regular course of its
business, including books of account and records of Company proceedings, may be
kept on, or be in the form of, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided that the books
and records so kept are convertible into clearly legible written form within a
reasonable period of time. The books of the Company shall be maintained for
financial reporting purposes on the accrual basis of accounting.
9.2 Fiscal Year. The Fiscal Year of the Company shall be the calendar year
for tax and accounting purposes.
9.3 Reports.
(a) The officers of the Company shall deliver to each Member, not
later than 60 days following the end of each Fiscal Year, Financial
Statements, including a balance sheet, an income statement, and an annual
statement of source and application of funds of the Company for such
Fiscal Year prepared in accordance with generally accepted accounting
principles and audited by the Independent Accountants.
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(b) No later than 30 days after the last day of each fiscal quarter
during the term of this Agreement, the officers of the Company shall cause
the Company to prepare, or cause to be prepared and delivered to each
Member, a balance sheet together with a profit and loss statement for such
fiscal quarter together with a cumulative profit and loss statement for
the year-end with comparative statements for the previous year if
applicable.
(c) No later than 30 days after the last day of each calendar month
during the term of this Agreement, the officers of the Company shall cause
the Company to prepare, or cause to be prepared and delivered to each
Member, a balance sheet together with a profit and loss statement for such
calendar month together with a cumulative profit and loss statement for
the year-end with comparative statements for the previous year if
applicable.
9.4 Documents. Each Member shall have the right to inspect, review and
make copies (with such copies at Company expense) of documents relating to the
business of the Company.
9.5 Certain Administrative Expenses of RPH. The Company shall reimburse
RPH for all administrative costs and expenses of RPH, including but not limited
to, costs associated with financial audits and tax filings.
ARTICLE X
TAX MATTERS
10.1 Tax Matters Partner. RPH shall be the "Tax Matters Partner" for
Federal income tax purposes pursuant to Section 6231 of the Code with respect to
each applicable taxable year of the Company. RPH is authorized to do whatever is
necessary to qualify as such.
10.2 Annual Tax Returns.
(a) RPH shall prepare or cause the Independent Accountants to
prepare, at the Company's expense, and shall timely file, or cause the
timely filing of, all tax returns and shall, on behalf of the Company,
timely file, or cause the timely filing of, all other writings required by
any governmental authority having jurisdiction to require such filing. RPH
shall submit the proposed returns to each Member for its review and
approval no later than 15 days prior to the due date of the returns, after
giving effect to any extensions of time unless an extension would
effectively make or make unavailable a material tax election.
(b) If a Member disagrees with the treatment of any partnership item
(within the meaning of Section 6231(a)(3) of the Code and Regulations) on
a tax return of the
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Company, then such Member shall give written notice to RPH. If, after good
faith consultation, an agreement regarding the treatment of such item
cannot be reached within ten (10) days after the receipt of notice, the
Company shall seek written advice from a mutually agreed upon independent
tax counsel or mutually agreed upon Independent Accountants. Such advice
shall recommend the treatment which is consistent with the terms of this
Agreement, the respective interests of the Members, and for which there
exists substantial authority in support thereof. Such recommended
treatment shall be the one reported on the return.
(c) Without the prior approval of the Management Committee, no
Member shall file an amended return of the Company or a request for an
administrative adjustment under Section 6227 of the Code, nor shall any
Member (other than the Tax Matters Member, as provided herein) commence
any administrative or judicial proceeding relating to a return of the
Company. If, after good faith consultation, such approval is not provided,
no Member shall file such return or request, or commence such proceeding
unless a mutually agreed upon independent tax counsel renders an opinion
that there is substantial authority for the proposed treatment of the tax
items with respect to which such return, request, or proceeding relates.
Nothing herein shall be construed to prevent a Member from undertaking any
administrative or judicial proceeding with respect to its own return.
10.3 Notice and Limitations on Authority.
(a) Each Member shall notify the other Members upon receipt of any
notice regarding a material audit or tax examination of the Company and
upon any request for material information by United States federal, state,
local, or other tax authorities.
(b) RPH shall, within ten (10) days after the receipt thereof,
forward to each Member a photocopy of any material correspondence relating
to the Company received from the Internal Revenue Service. RPH shall,
within ten (10) days thereof, advise each Member in writing of the
substance of any material conversation affecting the Company held with any
representative of the Internal Revenue Service.
(c) RPH shall have all the authority granted by the Code and
Regulations to the Tax Matters Partner, including the authority:
(i) to enter into a settlement agreement with the Internal
Revenue Service which purports to bind Members other than the Tax
Matters Partner;
(ii) to file a petition as contemplated in Section 6226(a) or
6228 of the Code;
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(iii) to intervene in any action as contemplated in Section
6226(b)(5) of the Code;
(iv) to file any request contemplated in Section 6227(b) of
the Code; and
(v) to enter into an agreement extending the period of
limitations as contemplated in Section 6229(b)(1)(B) of the Code.
10.4 Tax Elections. RPH shall do all acts, make all elections and take
whatever reasonable steps are required to maximize, in the aggregate, the
federal, state, and local income tax advantages available to the Company and
shall defend all tax audits and litigation with respect thereto at the expense
of the Company. RPH shall maintain the books, records, and tax returns of the
Company in a manner consistent with the acts, elections and steps taken by the
Company. In making any election for each Fiscal Year for tax purposes, RPH shall
make such election, to the extent reasonably possible, in a manner that
maximizes the benefit and minimizes the detriment of each such election to each
Member.
10.5 Actions in Event of Audit. If an audit of the Company's tax returns
occurs, RPH shall, at the expense of the Company, notify the Members thereof,
participate in the audit and contest, and settle or otherwise compromise
assertions of the auditing agent which may be adverse to the Company in
accordance with this Article X. RPH may, if it determines that the retention of
accountants or other professionals would be in the best interests of the
Company, retain such accountants or other professionals to assist in such
audits. The Company shall indemnify and reimburse RPH for all reasonable
expenses, including legal and accounting fees, claims, liabilities, losses and
damages borne by RPH or its Affiliates which were incurred in connection with
any administrative or judicial proceeding with respect to any audit of the
Company's tax returns, except to the extent caused by the gross negligence or
willful misconduct of RPH.
10.6 Organizational Expenses. The Company shall elect to deduct expenses
incurred in organizing the Company ratably over a 60-month period as provided in
Section 709 of the Code.
10.7 Taxation as a Partnership. No election shall be made by the Company
or any Member for the Company to be excluded from the application of any of the
provisions of Subchapter K, Chapter 1 of Subtitle A of the Code or from any
similar provisions of any state tax laws.
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ARTICLE XI
TRANSFERS OF UNITS; NEW MEMBERS
11.1 Transfer Restrictions. After the Closing Date, a Member may not
transfer any of its Units or Preferred Units except as specifically permitted
pursuant to this Article XI. After the fourth anniversary of the Closing Date,
the Reid Members shall be permitted to sell all or less than all of their Units
or Preferred Units, subject to Section 11.5. For purposes of this Article XI,
the term "transfer," when used with respect to any units, includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange, or any
other disposition.
11.2 Transfer to Affiliates and Pledgees. A Member may (A) pledge all or
any portion of its Units or Preferred Units to a financial institution to secure
bona fide indebtedness of such Member or its Affiliates and transfer such Units
or Preferred Units to the pledgee in connection with or following foreclosure of
such pledge, provided that (i) neither such financial institution nor any of its
Affiliates shall be engaged in Plastics Operations, (ii) if the financial
institution forecloses on the Units or Preferred Units, the financial
institution agrees to become a party to, and be bound to the same extent as the
pledgor by the terms of, this Agreement pursuant to the provisions of Section
11.10, and (iii) if the financial institution forecloses on the Units, (x) such
Units shall automatically become non-voting Units, and (y) such financial
institution shall have no right to appoint Managers and no rights under Sections
7.2, 7.3, 7.11, 7.12, 11.5, 11.6 or 11.7; and (B) transfer all or any portion of
its Units or Preferred Units to an Affiliate of such Member upon compliance with
Section 11.4, provided that such Affiliate agrees to become a party to, and be
bound to the same extent as its transferor by the terms of, this Agreement
pursuant to the provisions of Section 11.10, and provided further that such a
transfer to an Affiliate of such Member would not result in a federal income tax
termination of the Company pursuant to Section 708(b)(1)(B) of the Code. If a
proposed transfer to an Affiliate is prohibited under the proviso in the
preceding sentence concerning Section 708(b)(1)(B) (a "Blocked Affiliate
Transfer"), no other transfer to an Affiliate may be made without the prior
written consent of the Member proposing the Blocked Affiliate Transfer until the
Blocked Affiliate Transfer is no longer prohibited by such proviso, at which
time the Blocked Affiliate Transfer may occur. If the Member proposing such
transfer does not effect such transfer within 30 days after the time that such
transfer becomes no longer prohibited, other transfers to Affiliates may be made
(still subject to the provisos above).
11.3 [Reserved]
11.4 Registration. If any Units or Preferred Units are to be assigned,
transferred or sold, either: (a) such Units or Preferred Units shall be
registered under the Securities Act of 1933, as amended, and any applicable
state securities laws; or (b) the transferor shall provide an opinion of
counsel that the proposed assignment, transfer, or sale is exempt from such
registration requirements, which opinion shall not be deemed provided unless and
until it is accepted by the Management Committee, which acceptance shall not be
unreasonably withheld.
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The Company and the Members have no obligation or intention whatsoever either to
register Units or Preferred Units for resale under any federal or state
securities laws or to take any action which would make available to any Person
any exemption from the registration requirements of such laws.
11.5 Right of First Offer; Tag-Along Rights.
(a) If, after the fourth anniversary of the Closing Date and prior
to the Initial Public Offering, the Reid Members desire to sell all or
less than all the Units and/or Preferred Units held by such Members and/or
the stock of RPH owned by Vestar or its Affiliates (or any successive
equity interests in successors of RPH), the Reid Members shall offer such
Units and/or Preferred Units and/or stock to the Suiza Member by giving
written notice (the "Notice") to the Suiza Member to such effect,
enclosing the offer to sell such Units and/or Preferred Units and/or stock
to the Suiza Member, the consideration per Unit and/or Preferred Units
and/or share, and the other material terms of the offer. Upon receipt of
the Notice, the Suiza Member shall have the right and option to purchase
such Units and/or Preferred Units and/or stock offered by the Reid
Members, pro rata according to their respective holdings of Units or in
such other proportions as they may agree upon, for cash at the purchase
price per Unit and/or share specified in the Notice, exercisable for 30
days after receipt of the Notice. Failure of the Suiza Member to respond
to such Notice within such 30-day period shall be deemed to constitute a
notification to the Reid Member of the Suiza Member's decision not to
purchase such Units and/or Preferred Units and/or stock under this Section
11.5(a).
(b) The Suiza Member may exercise the right and option to purchase
all (but not less than all) of such Units and/or Preferred Units and/or
stock offered by the Reid Members by giving written notice of exercise to
the Reid Members within such 30-day period, specifying the date (not later
than three Business Days after the date of such notice) upon which payment
of the purchase price for the Units and/or Preferred Units and/or stock
shall be made and the identity of the Suiza Member who will purchase such
Units and/or Preferred Units and/or stock. The Reid Members shall deliver
to the Suiza Member at the Company's principal office, at least one day
prior to the payment date, wire transfer instructions, and on or before
the payment date specified in such notice, appropriate documentation
transferring such Units and/or Preferred Units and/or stock, against
payment of the purchase price therefor by the Suiza Member in immediately
available funds.
(c) In the event that all of the Units and/or Preferred Units and/or
stock offered by the Reid Members are not purchased by the Suiza Member,
subject to the Suiza Member's rights as set forth in the remainder of this
Section 11.5, during the 90-day period commencing on the expiration of the
rights and options provided for in this Section 11.5, the Reid Members may
sell the unpurchased Units and/or Preferred Units and/or stock offered by
the Reid Members to a third party for a consideration equal
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to or greater than 95% of the consideration specified in the Notice, free
of the restrictions contained in this Section 11.5 (but subject to the
other terms and conditions hereof).
(d) If the Suiza Member elects not to exercise its rights to
purchase Units and/or Preferred Units and/or stock of the Reid Members
under subsections (a), (b) and (c) of this Section 11.5, the Suiza Member
shall have the right (but not the obligation) to participate in the Reid
Members' sale of Units and/or Preferred Units and/or stock by requiring
the Reid Members' proposed transferee to purchase a number of Units from
the Suiza Member as set forth in Section 11.5(e).
(e) (i) If the Suiza Member owns any Preferred Units, the Suiza
Member shall be permitted to require that the proposed transferee
purchase from such Suiza Member exercising its tag-along rights
pursuant to Section 11.5(d) above (the "Tagging Member"), in lieu of
a number of Units (other than Converted Units, as defined below)
proposed to be transferred by the Reid Members, a number of Units
not in excess of the number of As-Converted Units held by the Suiza
Member (and not in excess of the number of Units proposed to be sold
to such transferee by the Reid Members); provided, however, to the
extent that any Converted Units proposed to be sold by the Suiza
Member ("Suiza Converted Units") would displace Converted Units
proposed to be sold by the Reid Members ("Reid Converted Units"),
the number of Suiza Converted Units and Reid Converted Units to be
sold shall be treated as "Units" and determined in accordance with
the formula set forth in Section 11.5(e)(iii). Subject to the
proviso in the immediately preceding sentence, the number of
Converted Units that the Suiza Member elects to sell to the proposed
transferee in accordance with this Section 11.5(e)(i) shall directly
reduce, on a one-for-one basis, the number of Units to be sold by
the Reid Members, pro rata in accordance with the number of Units
proposed to be sold by each Reid Member, to such proposed
transferee. Any Suiza Member exercising its tag-along rights
pursuant to this Section 11.5(e)(i) shall convert such number of its
Preferred Units into the number of As-Converted Units proposed to be
transferred by it (such newly issued Units, together with any Units
issued to a Reid Member pursuant to Section 12.2(f), "Converted
Units") in accordance with the formula set forth in the definition
of "As-Converted Units" immediately prior to the closing of the
purchase of the Units pursuant to Section 11.5(g).
(ii) In lieu of, or in addition to, the tag-along rights
afforded to the Suiza Member pursuant to Section 11.5(e)(i), if the
Suiza Member owns any Preferred Units and the Transferring Member
(as defined below) proposes to transfer Preferred Units, the
proposed transferee shall be required to purchase a number of
Preferred Units from the Suiza Member up to the product (rounded up
to the nearest whole number) of (i) the quotient determined by
dividing (A) the aggregate number of Preferred Units beneficially
owned on a fully diluted basis
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by the Suiza Member and sought by the Suiza Member to be included in
the contemplated transfer by (B) the aggregate number of Preferred
Units beneficially owned (including those beneficially owned by
Vestar or its Affiliate through its ownership of RPH) on a fully
diluted basis by the proposed transferring Members (the
"Transferring Members") and all Tagging Members and sought by the
Transferring Members and all Tagging Members to be included in the
contemplated transfer, in each case as Preferred Units, and (ii) the
total number of Preferred Units proposed to be directly or
indirectly transferred to the transferee in the contemplated
transfer (which includes the proportion of Preferred Units owned by
RPH equal to the proportion of shares of RPH proposed to be
transferred).
(iii) Subject to Section 11.5(e)(i), the proposed transferee
shall be required to purchase a number of Units of the Tagging
Members up to the product (rounded up to the nearest whole number)
of (i) the quotient determined by dividing (A) the aggregate number
of Units (other than Converted Units to be sold in accordance with
Section 11.5(e)(i) but including Converted Units to be sold in
accordance with this Section 11.5(e)(iii) pursuant to Section
11.5(e)(i)) beneficially owned on a fully diluted basis by the
Tagging Member and sought by the Tagging Member to be included in
the contemplated transfer by (B) the aggregate number of Units
(other than as aforesaid) beneficially owned (including those
beneficially owned by Vestar or its Affiliate through its ownership
of RPH) on a fully diluted basis by the proposed Transferring
Members, including any Units displaced pursuant to Section
11.5(e)(i), and all Tagging Members and sought by the Transferring
Members and all Tagging Members to be included in the contemplated
transfer and (ii) the total number of Units (other than Converted
Units to be sold in accordance with Section 11.5(e)(i)) proposed to
be directly or indirectly transferred to the transferee in the
contemplated transfer (which includes the proportion of Units owned
by RPH equal to the proportion of shares of RPH proposed to be
transferred).
(iv) Any transfers made by the Tagging Member pursuant to this
Section 11.5(e) shall be at the same price per Unit or Preferred
Unit (including, in the case of a sale of shares of RPH, the price
per Unit underlying the specified per share price) and upon the same
terms and conditions (including without limitation time of payment
and form of consideration) as to be paid and given to the
Transferring Members; provided that in order to be entitled to
exercise its right to sell Units to the proposed transferee pursuant
to this Section 11.5, the Suiza Member must agree to make to the
transferee the same representations, warranties, covenants,
indemnities and agreements as the Reid Members agree to make in
connection with the proposed transfer of the Units and/or shares of
the Reid Members (except that in the case of representations and
warranties
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pertaining specifically to the Reid Members, the Suiza Member shall
make the comparable representations and warranties pertaining
specifically to itself).
(f) In connection with a proposed sale of their Units and/or
Preferred Units and/or stock of RPH, the Reid Members shall inform the
proposed transferee of the tag-along rights provided for in Section
11.5(e) and obtain the proposed transferee's agreement to purchase Units
and/or Preferred Units or shares in accordance with the terms hereof. The
tag-along rights provided by this Section 11.5 must be exercised by the
Suiza Member within the same 30 day period following receipt of the Notice
as is provided for the right and option to purchase provided in Section
11.5(a), by delivery of a written notice to the Reid Members indicating
the Suiza Member's desire to exercise its tag-along rights and specifying
the number of Units (including Converted Units) and/or Preferred Units it
desires to sell. If the proposed transferee fails to purchase Units and/or
Preferred Units from the Suiza Member after properly exercising its
tag-along rights, then the Reid Members shall not be permitted to make the
proposed transfer, and any such attempted transfer shall be void and of no
effect.
(g) If the Suiza Member exercises its rights to tag-along under this
Section 11.5, the closing of the purchase of the Units and/or Preferred
Units with respect to which such rights have been exercised shall take
place concurrently with the closing of the sale of the Reid Members' Units
and/or Preferred Units and/or shares. No transfer shall occur pursuant to
this Section 11.5 unless the transferee shall agree to become a party to,
and be bound to the same extent as its transferor by the terms of, this
Agreement pursuant to the provisions of Section 11.9.
(h) For purposes of this Section 11.5(e), (f) and (g) and with
respect to the Suiza Member's tag along rights as set forth therein,
"Suiza Member" shall be deemed to include any employee optionee who
exercises options to acquire Units pursuant to Company option plans,
provided that the exercising optionee agrees to become a party to, and be
bound to the same extent as the Suiza Member by the terms of, this
Agreement pursuant to the provisions of Section 11.10.
11.6 Drag-Along Rights.
If the Reid Members propose to sell all of their Units in the
Company and/or stock in RPH (or any successive equity interests in
successors of RPH) and the Suiza Member have not exercised their right to
buy or to sell pursuant to Section 11.5 within the time periods required,
then the Reid Members shall have the right (but not the obligation) to
require the Suiza Member and all other Members to participate in such sale
by requiring the Suiza Member and all other Members to sell their Units to
the proposed purchaser on the same terms as have been offered by such
purchaser to the Reid Members. The election by the Reid Members to require
the Suiza Member and all other Members to participate in such sale shall
be exercisable by the Reid Members within
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thirty days after the date on which the Suiza Member notify the Reid
Members of their election not to purchase the Units (or shares) of the
Reid Members, and in the event that the Reid Members do not elect to do so
within such thirty days, the Reid Members will be deemed conclusively to
have waived such right. Notwithstanding anything to the contrary elsewhere
herein, Sections 7.2 and 7.3 shall not apply to prevent the Reid Members
from exercising their rights under this Section 11.6. For purposes of this
Section 11.6 and with respect to the Reid Members' drag along rights as
set forth herein, "Suiza Members" shall be deemed to include any employee
optionee who exercises options to acquire Units pursuant to Company option
plans.
11.7 Put Rights. (a) At any time on or after the fourth anniversary of the
Closing Date and prior to the Initial Public Offering, the Suiza Member shall
have the right, but not the obligation, to offer to sell to the Reid Members all
(but not less than all) the Units and/or Preferred Units held by the Suiza
Member and/or the stock of Franklin owned by Continental Can Company, Inc. or
its Affiliates (or any successive equity interests in successors of Franklin) at
Fair Market Value, which shall be determined in accordance with the procedures
set forth in Section 11.7(c). If after 30 days after the determination of the
Fair Market Value, the Reid Members decline to purchase such Units and/or
Preferred Units, the Suiza Member shall have the right, but not the obligation,
to offer to sell to the Company all (but not less than all) its Units and/or
Preferred Units or Franklin Stock at Fair Market Value. In the event of such an
offer by written notice to the Company, the Company shall either (i) notify in
writing the Suiza Member within 30 days of its receipt of such written offer of
its intention to purchase the Units and/or Preferred Units or stock and purchase
all such Units and/or Preferred Units or stock for cash within 30 days after its
notice of its intent to purchase the Units and/or Preferred Units or stock or
(ii) notify the Suiza Member, by written notice within 30 days after receipt of
such written offer, that the Company will use its reasonable best efforts to
either (A) cause a sale of business of the Company as expeditiously as
practicable or (B) consummate an Initial Public Offering as expeditiously as
practicable. Sections 7.2 and 7.3 shall not apply to any action taken by the
Company pursuant to or in connection with the preceding sentence. If the Company
is unable to sell the business or consummate an Initial Public Offering within
180 days following the expiration of the 30 day period referred to in this
subsection, however, the Suiza Member shall have the right to sell its Units
and/or Preferred Units or stock without further restriction or impediment,
except that (x) any transferee shall agree to become a party to, and be bound to
the same extent as the Suiza Member by the terms of, this Agreement pursuant to
the provisions of Section 11.10, and (y) the Reid Members shall have the right
to tag along with any such sale on effectively the same terms as set forth for
the Suiza Member in Section 11.5(e), (f) and (g) and the Suiza Member shall have
the right to drag along the Reid Members on effectively the same terms as set
forth for the Reid Members in Section 11.6, provided the Suiza Member agrees to
purchase the Reid Members' RPH stock in addition to Units if the Reid Members so
request in writing; provided, further, however that at such time, if the Suiza
Member so requests in writing, RPH in a writing reasonably satisfactory in form
and substance to the Suiza Member represents and warrants to the Suiza Member
that RPH has no assets other than its Units and Preferred
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Units and has no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent or otherwise), and provides
customary indemnification (with no "basket" or "cap" and payable solely in cash
without any offsets) to the Suiza Member for any breach thereof. Such
representation, warranty and indemnity shall survive until the expiration of the
applicable statute of limitations.
(b) If, after the fourth anniversary of the Closing Date and prior to an
Initial Public Offering, any of the Managers appointed by Franklin vote against
a proposal to effect an Initial Public Offering or a sale of the Company or all
or substantially all of its assets, thereby causing such proposal not to be
approved pursuant to Section 7.3, the Reid Members shall have the right, but not
the obligation, within 30 days after such proposal was not approved, to offer to
sell to the Suiza Member all (but not less than all) their Units and/or
Preferred Units and stock of RPH at Fair Market Value, which shall be determined
in accordance with the procedures set forth in Section 11.7(c). If after 30 days
after the determination of the Fair Market Value, the Suiza Member declines to
purchase such Units and/or Preferred Units and stock, the Reid Members shall
have the right, but not the obligation, to offer to sell to the Company all (but
not less than all) their Units and/or Preferred Units and stock at Fair Market
Value. In the event of such an offer by written notice to the Company, the
Company shall either (i) purchase all such Units and/or Preferred Units and
stock for cash within 30 days after its notice of its intent to purchase the
Units and/or Preferred Units and stock or (ii) notify the Reid Members, by
written notice within 30 days after receipt of such written notice, that the
Company will use its reasonable best efforts to either (A) cause a sale of
business of the Company as expeditiously as practicable or (B) consummate an
Initial Public Offering as expeditiously as practicable. Sections 7.2 and 7.3
shall not apply to any action taken by the Company pursuant to or in connection
with the preceding sentence. For the purpose of this Section 11.7(b), a sale of
all of the Units and Preferred Units owned by Vestar together with a sale of all
of the shares of RPH shall be deemed to be a sale of all of the Units and
Preferred Units owned by the Reid Members. If the Company is unable to sell the
business or consummate an Initial Public Offering within 180 days following the
expiration of the 30 day period referred to in this subsection, however, the
Reid Members shall have the right to sell their Units (as well as their RPH
stock) and Preferred Units without further restriction or impediment, except
that (x) any transferee shall agree to become a party to, and be bound to the
same extent as the Reid Members by the terms of, this Agreement pursuant to the
provisions of Section 11.10, and (y) the Suiza Member shall have the right to
tag along with any such sale on the terms set forth in Section 11.5(e), (f), and
(g), and the Reid Members shall have the right to drag along the Suiza Member on
the terms set forth in Section 11.6, provided the Reid Members agree to purchase
the stock of Franklin owned by Continental Can Company, Inc. or its Affiliates
in addition to Units if the Suiza Member so requests in writing; provided
further, however that at such time, Suiza Foods in a writing reasonably
satisfactory in form and substance to the Reid Members represents and warrants
to the Reid Member that Franklin has no assets other than its Units and
Preferred Units and has no liabilities or obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent or otherwise), and
provides customary indemnification (with no "basket" or "cap" and payable solely
in cash without any offsets) to the Reid Members for any breach thereof. Such
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representation, warranty and indemnity shall survive until the expiration of the
applicable statute of limitations.
(c) "Fair Market Value" of any Units and/or Preferred Units or stock means
as of any date the fair market value thereof, as mutually determined by the
Suiza Members and the Reid Members. If the parties cannot agree on a Fair Market
Value, they will select a mutually acceptable independent appraiser to determine
such value. If the parties cannot mutually agree upon an independent appraiser
within 30 days, each of the Suiza Members and the Reid Members shall have an
additional 15 days to select an independent appraiser and the two independent
appraisers selected by the parties shall then have 15 days to select a third
independent appraiser. The independent appraiser or appraisers selected shall
determine the Fair Market Value of the Units, Preferred Units and stock and
deliver an opinion in writing to the parties within 30 days after its or their
engagement. The determination of the appraiser or appraisers shall be final. The
Company will bear the cost of the appraisal.
11.8 Prohibited Transfers. Any transfer or purported transfer, whether by
operation of law or otherwise, of any Units shall be null and void and of no
legal effect if such transfer is prohibited by this Article XI or by other
provisions of this Agreement.
11.9 Rights of Assignee.
(a) Except as provided in this Article XI, and as required by
operation of law, the Company shall not be obligated for any purpose
whatsoever to recognize the transfer by any Member of any Units and/or
Preferred Units if such transfer violates the terms of this Article XI.
(b) Any transfer of Units and/or Preferred Units must be in writing,
may not contravene any of the provisions of this Agreement or the Delaware
Act, and must be executed by the transferor and delivered to the Company
and recorded on the books of the Company. Any transfer which contravenes
any of the provisions of this Agreement or the Delaware Act shall be of no
force and effect and shall not be recognized by the Company.
(c) A transferee of Units and/or Preferred Units who is not already
a Member or is not admitted as a Member pursuant to Section 11.10 shall
have no right to require any information or account of the Company's
transactions or to inspect the Company books or to vote, but shall only be
entitled to receive the allocations and distributions to which his
transferor would otherwise be entitled under this Agreement.
(d) Any transferee who does not become a Member and desires to make
a further transfer of such Units and/or Preferred Units shall be subject
to all of the provisions of this Article XI to the same extent and in the
same manner as any Member desiring to transfer his Units and/or Preferred
Units.
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(e) A transferee or assignee of Units and/or Preferred Units,
whether or not admitted as a Member hereunder, shall have no rights under
Sections 7.11, 7.12 or 11.7 hereunder.
11.10 Admission as a New Member.
(a) Subject to the other provisions of this Article XI, a permitted
transferee of a Unit and/or Preferred Unit (if such transferee is not
already a Member) or a Person who exercises an employee option to acquire
Units pursuant to a Company option plan shall be admitted as a Member only
after the satisfactory completion of items (i) through (iv) below, and if
applicable, item (v):
(i) The transferee or optionee accepts and agrees to be bound
by the terms and provisions of this Agreement;
(ii) a counterpart of this Agreement and such other documents
or instruments as the Management Committee may reasonably require is
executed by the transferee or optionee to evidence such acceptance
and agreement;
(iii) the transferee or optionee pays or reimburses the
Company for all reasonable legal fees, filing, and publication costs
incurred by the Company in connection with the admission of the
transferee or optionee as a Member;
(iv) the Management Committee approves the admission of such
permitted transferee or optionee, which approval may be withheld in
the reasonable discretion of such Management Committee; provided
that such approval will not be required in connection with a
transfer to or by a pledgee in connection with or following
foreclosure of such pledge; and provided further, that Alan J.
Bernon and Peter M. Bernon shall in any event be permitted
transferees or optionees; and
(v) if the transferee is not an individual, the transferee
provides the Company with evidence satisfactory to counsel for the
Company of the authority of such transferee to become a Member under
the terms and provisions of this Agreement.
(b) The Management Committee or officers of the Company shall make
all official filings and publications as promptly as practicable after the
satisfaction by the transferee or optionee of the conditions contained in
this Article XI to the admission of such transferee or optionee as a
Member.
11.11 Distributions and Allocations in Respect of Transferred Units. If
any Units and/or Preferred Units are sold, assigned, or transferred during any
Fiscal Year without violating
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the provisions of this Article XI, Profits, Losses, and all other items
attributable to the transferred (or adjusted) interest for such period shall be
divided and allocated between the affected Persons by taking into account their
varying interests during the period in accordance with Code Section 706(d),
using any conventions permitted by law and approved by the Management Committee.
All distributions on or before the date of such transfer shall be made to the
transferor. Solely for purposes of making such allocations and distributions in
the case of a transfer, the Company shall recognize such transfer not later than
the end of the calendar month during which it is given notice of such transfer,
provided that if the Company does not receive a notice stating the date such
Units and/or Preferred Units were transferred and such other information as the
Management Committee may reasonably require within 30 days after the end of the
Fiscal Year during which the transfer occurs, then all of such items shall be
allocated, and all distributions shall be made, to the Person who, according to
the books and records of the Company, on the last day of the Fiscal Year during
which the transfer occurs, was the owner of the Units and/or Preferred Units.
Neither the Company nor any Member shall incur any liability for making
allocations and distributions in accordance with the provisions of this Section
11.11, whether or not any Member or the Company has knowledge of any transfer of
ownership of any interest.
11.12 Conversion to Corporate Form.
(a) In the event that the Management Committee shall determine that
the business of the Company should be conducted in the form of a
corporation rather than a limited liability company so that an Initial
Public Offering can occur, the Managers shall have the power to merge the
Company into RPH, and take such other action as they shall deem advisable
in connection therewith. Franklin anticipates that it will simultaneously
merge into RPH in the event of an Initial Public Offering. RPH agrees to
permit the merger of Franklin into RPH at such time if Franklin so
requests in writing at least 60 days prior to the merger of the Company
into RPH and if Suiza Foods (and/or the successor by operation of law to
Suiza Foods or the transferee of substantially all of its assets) in a
writing reasonably satisfactory in form and substance to RPH represents
and warrants to RPH at that time that Franklin has no assets other than
its Units and Preferred Units and has no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent
or otherwise), and provides customary indemnification (with no "basket" or
"cap" and payable solely in cash without any offsets) to RPH for any
breach thereof. Such representation, warranty and indemnity shall survive
until the expiration of the applicable statute of limitations. In
connection with any such merger of the Company and/or Franklin into RPH,
the Members or Franklin Shareholders, as the case may be, shall receive,
in exchange for their Units or shares of Franklin Stock, shares of common
stock of RPH in proportion to their Units and, if Franklin is merged into
RPH, warrants to purchase Franklin stock will be exchanged for RPH stock
equal in value to such warrants.
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(b) Prior to taking such action to merge the Company and/or Franklin
into RPH, the Management Committee shall submit to the Members, and the
Members agree to approve, the proposed forms of an amended certificate of
incorporation, by-laws and any other governing documents for RPH. In
addition, each of the Members agrees to take all action necessary with
respect to its Units in order to approve any merger of the Company and/or
Franklin into RPH in accordance with this Section 11.12. Upon such merger,
RPH shall enter into a Registration Rights Agreement with each of the
Members with respect to the stock of RPH substantially in the form
attached hereto as Exhibit 11.12(b).
ARTICLE XII
PREFERRED UNITS
12.1 Issuance of Preferred Units. The Company shall issue Preferred Units
to those Members, at the times and with an aggregate liquidation preference as
specified in the Merger Agreement. Upon any such issuance (i) the initial
Capital Contributions described in Section 4.1 shall be deemed to be
retroactively and proportionately reduced in an aggregate amount equal to the
aggregate initial liquidation preference of the Preferred Units so issued and
(ii) consequently, the Capital Account of each Member shall be reduced in
proportion to their Percentage Interests in an aggregate amount for all Members
equal to the aggregate initial liquidation preference of the Preferred Units so
issued.
12.2 Terms of Preferred Units.
(a) Liquidation Preference. Each Preferred Unit shall have an
initial liquidation preference equal to $1,000 (the "Initial Liquidation
Preference"). Such liquidation preference shall be increased from time to
time as a result of the accrual of distributions as described in Section
12.2(b) and shall be decreased from time to time by the amount of
distributions made on such Preferred Unit pursuant to Section 6.1 (such
liquidation preference as so increased or decreased from time to time, the
"Liquidation Preference").
(b) Distribution Rights. Each Preferred Unit shall accrue
distribution rights at a rate of 3.125% per calendar quarter on the
average daily Liquidation Preference during such calendar quarter. Subject
to Section 7.2(o), such distribution rights shall be payable in cash
within 15 days of the end of such calendar quarter. If the full amount of
any distribution is not made within such 15 day period, the Liquidation
Preference on such Preferred Unit shall be deemed to be increased by the
amount of such distribution not so made. Such increase shall be deemed to
have occurred on the first day of such 15 day period and shall accrue
distribution rights from that day forward until paid or redeemed, together
with any future distributions thereon, in full.
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(c) Optional Redemption. Subject to Section 7.2(p), the Company, at
its option, may redeem Preferred Units, in whole or in part, at any time
or from time to time, at a redemption price per Preferred Unit equal to
the sum of (A) the aggregate Liquidation Preference of the Preferred Units
to be redeemed, (B) the aggregate Unpaid Distribution Amount with respect
to such Preferred Units and (C) distributions that accrued on such
Preferred Units during that portion of the calendar quarter in which such
redemption occurs (such sum, the "Redemption Price").
(d) Mandatory Redemption. The Company shall redeem, prior to
redeeming or repurchasing any other Units, all Preferred Units at the
Redemption Price upon the occurrence of the following: (i) a sale, lease,
exchange, or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company,
(ii) an Initial Public Offering or (iii) the merger of the Company into
RPH in accordance with Section 11.12.
(e) Redemption Procedures. In the event the Company shall redeem
(either optionally or mandatorily) Preferred Units, notice of such
redemption shall be given by first class mail, postage prepaid, mailed not
less than 10 nor more than 60 days prior to the redemption date, to each
holder of record of the Preferred Units to be redeemed. Each such notice
shall state: (i) the redemption date, (ii) the number of Preferred Units
to be redeemed and, if fewer than all the Preferred Units held by such
holder are to be redeemed, the number of such Preferred Units to be
redeemed from such holder, (iii) the Redemption Price and (iv) that
distributions on the Preferred Units to be redeemed will cease to accrue
on the redemption date. Notice having been mailed as aforesaid, from and
after the redemption date (unless there shall be a default by the Company
in providing money for the payment of the redemption price) distributions
on the Preferred Units so called for redemption shall cease to accrue, and
such Preferred Units shall no longer be deemed to be outstanding, and all
rights of the holders thereof (except the right to receive from the
Company the Redemption Price) shall cease.
(f) Conversion Rights. Any Preferred Units held by any Suiza Member
shall not be convertible into Units except as provided in Section
11.5(e)(i). Any Preferred Units held by any Reid Member may be converted
into Units at any time following the fourth anniversary of the Closing
Date in connection with a proposed sale of Units made in accordance with
Section 11.5. If, after the fourth anniversary of the Closing Date, any
Reid Member proposes to sell Units, such Reid Member shall be permitted to
convert Preferred Units into a number of Units determined by dividing the
aggregate Liquidation Preference of the number of Preferred Units sought
to be converted by the price per Unit proposed to be paid for each Unit
proposed to be sold by such Reid Member; provided, however, that no Reid
Member shall be permitted to exercise such conversion right so as to
receive a greater number of Units than will be transferred by it in such
sale. Any such conversion shall be made immediately prior to the closing
of any such sale.
52
<PAGE>
(g) Voting Rights. The approval of the holders of a majority of all
of the Preferred Units (as measured by liquidation value) at the time
outstanding, given in person or by proxy, either in writing or by a vote
at a meeting called for the purpose at which the holders of Preferred
Units shall vote together as a class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of this
Agreement so as to affect adversely the powers, preferences or other
special rights of the Preferred Units. Except as set forth herein or
required by applicable law, holders of Preferred Units shall have no
voting rights and their consent shall not be required for taking any
corporate action.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
13.1 Dissolution.
(a) Except as set forth in this Agreement, no Member shall have the
right to terminate this Agreement or to dissolve the Company by its
express will or by withdrawal without the consent of the other Members.
(b) The Company shall be dissolved upon the first to occur of any of
the following events: (each such event is referred to as a "Dissolution
Event"):
(i) any Member suffers an Event of Bankruptcy;
(ii) an election to dissolve the Company is unanimously
approved in writing by the Members; or
(iii) any other event occurs that, under the Delaware Act,
would cause the Company's dissolution.
13.2 Continuation of the Company. Upon the occurrence of an event
described in Section 13.1(b)(i) or Section 13.1(b)(iii), the Company shall be
carried on without dissolution if approved by Members holding 50% or more of the
Percentage Interests. In all other cases, upon the occurrence of an event
described in Section 13.1(b), the Company shall be deemed to be dissolved and
reconstituted only if Members holding 100% of the Percentage Interests
(excluding for these purposes any Percentage Interests held by the Member with
respect to which such Dissolution Event occurred) elect to continue the Company
within 90 days of such event. If no election to continue the Company is made
within 90 days of such event, the Company shall conduct only those activities
necessary to wind up its affairs. If an election to continue the Company is made
upon the occurrence of an event described in Section 13.1(b), then:
53
<PAGE>
(a) the Company shall be deemed to be reconstituted and shall
continue until the end of the term for which it is formed unless earlier
dissolved in accordance with this Article XIII; and
(b) all necessary steps shall be taken to amend or restate this
Agreement and the Certificate of Formation, provided that the right of
Members holding 100% of the Percentage Interests (excluding for these
purposes any Percentage Interests held by a Member with respect to which
such Dissolution Event occurred) to continue the Company shall not exist
and may not be exercised unless the Company has received an opinion of
counsel acceptable to the Management Committee that (i) the exercise of
the right would not result in the loss of limited liability of any Member;
and (ii) neither the Company nor the reconstituted Company would be
treated as an association taxable as a corporation for federal income tax
purposes upon the exercise of such right to continue.
13.3 Liquidation.
(a) Upon the dissolution of the Company, unless an election to
continue the Company is made pursuant to Section 13.2, RPH shall serve as
liquidator ("Liquidator") of the Company.
(b) Upon dissolution or resignation of the Liquidator, a successor
and substitute Liquidator (who shall have and succeed to all rights,
powers and duties of the original Liquidator) shall within 30 days
thereafter be approved by the Members holding 70% of the Percentage
Interests. The right to appoint a successor or substitute Liquidator in
the manner provided herein shall be recurring and continuing for so long
as the functions and services of the Liquidator are authorized to continue
under the provisions hereof, and every reference herein to the Liquidator
will be deemed to refer also to any such successor or substitute
Liquidator appointed in the manner herein provided.
(c) Except as expressly provided in this Article XIII, the
Liquidator appointed in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the parties
hereto, all of the powers conferred upon the Management Committee under
the terms of this Agreement to the extent necessary or desirable in the
good faith judgment of the Liquidator to carry out the duties and
functions of the Liquidator hereunder for and during such period of time
as shall be reasonably required in the good faith judgment of the
Liquidator to complete the winding up and liquidation of the Company as
provided for herein.
(d) Except as otherwise provided in this Article XIII (including
Section 13.5 below), the Liquidator shall liquidate the assets of the
Company, and, after making all allocations and distributions otherwise
required by this Agreement, shall apply and distribute the net proceeds of
such liquidation in the following order of priority:
54
<PAGE>
(i) to the creditors of the Company, including Members, in the
order of priority provided by applicable law;
(ii) to the Members with Preferred Units in proportion to the
sum of (A) the aggregate Liquidation Preference of the Preferred
Units held by such Member, (B) the aggregate Unpaid Distribution
Amount with respect to such Preferred Units and (C) dividends that
accrued on such Preferred Units during that portion of the calendar
quarter in which such liquidation occurs; and
(iii) then, the remaining balance of the liquidation proceeds,
if any, to the Members in accordance with their respective positive
Capital Account balances, after taking into account all allocations
of Profit, Loss and other items of income, gain, loss and deduction,
and distributions for all periods, including prior distributions
made pursuant to this Article XIII provided, that, profit or loss of
the Company resulting from the sale or other disposition of all or
substantially all of the Company's Assets or otherwise associated
with the liquidation of the Company shall be allocated in a manner
designed, to the extent possible, to cause the Capital Account
balance of each Member to equal the amount that would be distributed
to such Member if all of the Company's Assets were distributed to
the Members in accordance with the provisions of Section 6.1 of this
Agreement; provided, however, that, notwithstanding anything in this
Article XIII to the contrary, the Liquidator may place in escrow a
reserve of cash or other assets of the Company for contingent
liabilities in an amount determined by the Liquidator to be
appropriate for such purposes.
13.4 Reserves. After all of the assets of the Company have been
distributed, the Company shall terminate. If at any time thereafter any funds in
any cash reserve fund referred to in Section 13.3(d) are released because the
need for such cash reserve fund has ended, such funds shall be distributed to
the Members in the same manner as if such distribution had been made pursuant to
Section 13.3(d).
13.5 Distribution in Kind. Notwithstanding the provisions of Section 13.3
which require the liquidation of the assets of the Company, but subject to the
order of priorities set forth therein and subject also to Section 13.4, if upon
the dissolution of the Company the Management Committee determines that an
immediate sale of part or all of the Company's assets would be impractical or
would cause undue loss to the Members, the Liquidator may, in good faith, defer
for a reasonable time the liquidation of any assets except those necessary to
satisfy liabilities of the Company (other than those to Members). The Liquidator
may distribute to the Members, in lieu of cash, such Company assets as the
Liquidator deems not suitable for liquidation. Any distributions in kind shall
be subject to such conditions relating to the disposition and management thereof
as the Liquidator and the Management Committee deem reasonable and equitable.
The Management Committee shall value any property distributed in
55
<PAGE>
kind based upon such property's fair market value as determined using such
reasonable method of valuation as it may adopt.
13.6 Disposition of Documents and Records. All documents and records of
the Company, including, without limitation, all financial records, vouchers,
canceled checks and bank statements, shall be delivered to RPH upon termination
of the Company. RPH shall retain such documents and records for a period of not
less than six (6) years and shall make such documents and records available
during normal business hours to any other Member for inspection and copying at
the other Member's cost and expense.
13.7 Negative Capital Accounts. If, after the allocations of Profit, Loss,
and other items of income, gain, loss, deduction or credit under Article V and
after distributions of cash under Article VI, any Member shall ever have a
negative balance in such Member's Capital Account, no Member shall have any
obligation to restore such negative balance, or to make any contribution to the
capital of the Company by reason thereof, and such negative balance shall under
no circumstances be considered a liability of the Company or of any Member.
13.8 Filing of Certificate of Cancellation. Upon the completion of the
distribution of Company property as provided in Sections 13.3, 13.4, and 13.5,
the Company shall be terminated, and the Liquidator (or the Members if
necessary) shall cause the Certificate to be canceled and will take such other
actions as may be necessary to terminate the Company.
13.9 Return of Capital. No Member shall be personally liable for the
return of the Capital Contributions of any other Members, or any portion
thereof, it being expressly understood that any such return shall be made solely
from Company assets.
13.10 Waiver of Partition. Each Member hereby waives any rights to
partition of the Company property.
ARTICLE XIV
AMENDMENT OF AGREEMENT
14.1 Amendment Procedures.
(a) Amendments to this Agreement may be proposed by any Member,
which shall give written notice to all Members of the text of such
amendment, together with a statement of the purpose of such amendment.
(b) Proposed amendments to this Agreement shall be adopted, subject
to Section 7.2, if they have been approved in writing by Members holding
80% of the Percentage Interests; provided, however, that no amendment
shall be adopted without the consent of each Member affected if the
amendment adversely affects such Member's
56
<PAGE>
economic interests relating to the Member's Units or if the amendment
adversely affects such Member's rights with respect to management or
control of the Company, except, in each case, for such amendments that
adversely affect all Members' economic interests and rights
proportionately. The President shall, within a reasonable time after the
adoption of any amendment to this Agreement, make official filings or
publications required or desirable to reflect such amendment, including
any required filing for recordation of any parallel amendment to the
Certificate.
ARTICLE XV
GENERAL PROVISIONS
15.1 Addresses and Notices. Any notice provided in or permitted under this
Agreement shall be made in writing and may be given or served by: (a) delivering
the same in person to the party to be notified; (b) depositing the same in the
mail, postage prepaid, registered or certified with return receipt requested,
and addressed to the party to be notified at the address herein specified; (c)
delivering the same on a prepaid basis via a nationally recognized courier
service, such as Federal Express; or (d) sending the same by facsimile
transmission, followed by delivery of a hard copy via a nationally recognized
courier service, such as Federal Express. If notice is deposited in the mail
pursuant to this Section 15.1, it will be deemed received on the third (3rd)
Business Day after it is so deposited. Notice given in any other manner shall be
deemed received only if and when actually received by the party to be notified.
For the purpose of notice, the address of the parties shall be, until changed as
hereinafter provided for, as follows:
If to any RPH or Vestar: with a copy to:
Reid Plastic Holdings, Inc. Simpson Thacher & Bartlett
21700 East Copley Drive, Suite 200 425 Lexington Avenue
Diamond Bar, California 91765 New York, New York 10017
Attention: Chief Financial Officer Attention: Peter J. Gordon
Telecopy: (909) 612-2410 Telecopy: (212) 455-2502
and
Vestar Packaging, LLC
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, CO 80202
Attention: John R. Woodard
Telecopy: (303) 292-6639
- --------------------------------------------------------------------------------
57
<PAGE>
If to Franklin: with a copy to:
Suiza Foods Corporation Hughes & Luce, L.L.P.
2515 McKinney Ave., LB 30, Suite 1200 1717 Main Street, Suite 2800
Dallas, Texas 75201 Dallas, Texas 75201
Attention: President and General Counsel Attention: William A. McCormack
Telecopy: (214) 303-3499 Telecopy: (214) 939-5849
The parties shall have the right from time to time and at any time to change
their respective addresses and each shall have the right to specify as its
address any other address by at least 15 days' prior written notice to the other
parties. Each party shall have the right from time to time to specify additional
parties (not to exceed two additional parties) to whom notice hereunder must be
given by delivering to the other party 15 days' prior written notice thereof,
setting forth the address of such additional parties. Notice required to be
delivered hereunder to any party shall not be deemed to be effective until the
additional parties, if any, designated by such party have been given notice in a
manner deemed effective pursuant to the terms of this Section 15.1.
15.2 Titles and Captions. All article and section titles and captions in
this Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent of
any provisions hereof. Except as specifically provided otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
15.3 Pronouns and Plurals. Whenever the context may require, any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa. The locative adverbs "hereof," "herein," "hereafter,"
etc. refer to this Agreement as a whole.
15.4 Further Action. The parties shall execute all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
15.5 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives, and permitted assigns.
15.6 Integration. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
58
<PAGE>
15.7 No Third Party Beneficiary. This Agreement is made solely and
specifically between and for the benefit of the parties hereto, and their
respective successors and assigns subject to the express provisions hereof
relating to successors and assigns, and no other Person whatsoever shall have
any rights, interest, or claims hereunder or be entitled to any benefits under
or on account of this Agreement as a third party beneficiary or otherwise. It is
expressly understood that the right of the Company or the Members to require any
additional Capital Contributions under the terms of this Agreement shall not be
construed as conferring any rights or benefits to or upon any Person not a party
to this Agreement, or the holder of any obligations secured by a mortgage, deed
of trust, security interest or other lien or encumbrance upon or affecting the
Company or any interest of a Member therein.
15.8 Waiver. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
15.9 Counterparts. This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto or, in the case of a transferee, upon
executing and delivering such documents as required by the Management Committee.
15.10 Applicable Law. This Agreement shall be construed in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of Delaware applicable to contracts entered into and to be performed in the
State of Delaware.
15.11 Invalidity of Provisions. If any provision of this Agreement is
declared or found to be illegal, unenforceable or void, in whole or in part,
then the parties shall be relieved of all obligations arising under such
provision, but only to extent that it is illegal, unenforceable or void, it
being the intent and agreement of the parties that this Agreement shall be
deemed amended by modifying such provision to the extent necessary to make it
legal and enforceable while preserving its intent or, if that is not possible,
by substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
15.12 Confidentiality. Each party to this Agreement agrees to keep
confidential the terms of this Agreement and any materials provided in
connection with this Agreement. Notwithstanding the foregoing, each party to
this Agreement may disclose the terms, and any all materials provided in
connection with this Agreement, (a) to its counsel, accountants, auditors or
other agents whose professional responsibility it is to hold such information
confidential, (b) as may be required by any statute, court order, administrative
order or decree or governmental ruling or regulation of the United States or
other applicable jurisdiction, including Internal Revenue Service auditors, or
as may be requested by the Internal Revenue Service or any other
59
<PAGE>
governmental entity, or (c) to such other Persons as are reasonably deemed
necessary by such party to protect the interests of such party or for the
purposes of enforcing such documents and who agree to hold such information
confidential on the terms hereof.
SIGNATURE PAGES ARE ATTACHED HERETO
60
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the day and year first above written.
MEMBERS:
REID PLASTIC HOLDINGS, INC.,
a Delaware corporation
By: /s/ Ronald V. Davis
--------------------------------------------
Name: Ronald V. Davis
Title: President and Chief Executive Officer
VESTAR PACKAGING LLC, a
Delaware limited liability company
By: /s/ Steven M. Silver
--------------------------------------------
Name: Steven M. Silver
Title: Vice President
FRANKLIN PLASTICS, INC., a Delaware
corporation
By: /s/ Michelle P. Goolsby
--------------------------------------------
Name: Michelle P. Goolsby
Title: Vice President
60
<PAGE>
EXHIBIT 4.1
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
AND
THE GUARANTORS
10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
------------------------------
INDENTURE
Dated as of July 1, 1999
------------------------------
The Bank of New York
Trustee
------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.10
(c) N.A.
311 (a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.05
(b) 12.03
(c) 12.03
313 (a) 7.06
(b)(2) 7.07
(c) 7.06;12.02
(d) 7.06
314 (a) 4.03;12.02
(c)(1) 12.04
(c)(2) 12.04
(c)(3) N.A.
(e) 12.05
(f) N.A.
315 (a) 7.01
(b) 7.05,12.02
(c) 7.01
(d) 7.01
(e) 6.11
316 (a) (last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 2.12
317 (a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318 (a) 12.01
(b) N.A.
(c) 12.01
N.A. means not applicable.
- --------
* This Cross Reference Table is not part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATIONBY REFERENCE..........................1
Section 1.01. Definitions.........................................1
Section 1.02. Other Definitions..................................22
Section 1.03. Incorporation by Reference of Trust Indenture
Act................................................23
Section 1.04. Rules of Construction..............................24
ARTICLE 2 THE NOTES.........................................................24
Section 2.01. Form and Dating....................................24
Section 2.02. Execution and Authentication.......................25
Section 2.03. Registrar and Paying Agent.........................26
Section 2.04. Paying Agent to Hold Money in Trust................26
Section 2.05. Holder Lists.......................................27
Section 2.06. Transfer and Exchange..............................27
Section 2.07. Replacement Notes..................................41
Section 2.08. Outstanding Notes..................................41
Section 2.09. Treasury Notes.....................................41
Section 2.10. Temporary Notes....................................42
Section 2.11. Cancellation.......................................42
Section 2.12. Defaulted Interest.................................42
Section 2.13. CUSIP Numbers......................................42
ARTICLE 3 REDEMPTION AND PREPAYMENT.........................................43
Section 3.01. Notices to Trustee.................................43
Section 3.02. Selection of Notes to Be Redeemed..................43
Section 3.03. Notice of Redemption...............................44
Section 3.04. Effect of Notice of Redemption.....................44
Section 3.05. Deposit of Redemption Price........................45
Section 3.06. Notes Redeemed in Part.............................45
Section 3.07. Optional Redemption................................45
Section 3.08. Mandatory Redemption...............................46
Section 3.09. Offer to Purchase by Application of Excess
Proceeds...........................................46
ARTICLE 4 COVENANTS.........................................................48
Section 4.01. Payments on Notes..................................48
Section 4.02. Maintenance of Office or Agency....................48
Section 4.03. Reports............................................49
Section 4.04. Compliance Certificate.............................49
Section 4.05. Taxes..............................................50
Section 4.06. Stay, Extension and Usury Laws.....................50
Section 4.07. Restricted Payments................................50
Section 4.08. Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries..................54
i
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Section 4.09. Incurrence of Indebtedness and Issuance
of Preferred Stock.................................55
Section 4.10. Asset Sales........................................58
Section 4.11. Transactions with Affiliates.......................60
Section 4.12. Liens..............................................61
Section 4.13. Business Activities................................62
Section 4.14. Corporate Existence................................62
Section 4.15. Offer to Repurchase Upon Change of Control.........62
Section 4.16. No Senior Subordinated Debt........................64
Section 4.17. Limitation on Sale and Leaseback Transactions......64
Section 4.18. Limitation on Issuances and Sales of Equity
Interests in Wholly Owned Restricted Subsidiaries..64
Section 4.19. Limitation on Issuances of Guarantees of
Indebtedness.......................................65
Section 4.20. Designation of Restricted and Unrestricted
Subsidiaries.......................................65
Section 4.21. Restrictions on Activities of Capital..............66
Section 4.22. Payments for Consent...............................66
Section 4.23. Additional Subsidiary Guarantees...................66
ARTICLE 5 SUCCESSORS........................................................66
Section 5.01. Merger, Consolidation or Sale of Assets............66
Section 5.02. Successor Corporation Substituted..................67
ARTICLE 6 DEFAULTS AND REMEDIES.............................................67
Section 6.01. Events of Default..................................68
Section 6.02. Acceleration.......................................69
Section 6.03. Other Remedies.....................................70
Section 6.04. Waiver of Past Defaults............................70
Section 6.05. Control by Majority................................71
Section 6.06. Limitation on Suits................................71
Section 6.07. Rights of Holders of Notes to Receive Payment......71
Section 6.08. Collection Suit by Trustee.........................71
Section 6.09. Trustee May File Proofs of Claim...................72
Section 6.10. Priorities.........................................72
Section 6.11. Undertaking for Costs..............................73
ARTICLE 7 TRUSTEE...........................................................73
Section 7.01. Duties of Trustee..................................73
Section 7.02. Rights of Trustee..................................74
Section 7.03. Individual Rights of Trustee.......................75
Section 7.04. Trustee's Disclaimer...............................75
Section 7.05. Notice of Defaults.................................76
Section 7.06. Reports by Trustee to Holders of the Notes.........76
Section 7.07. Compensation and Indemnity.........................76
Section 7.08. Replacement of Trustee.............................77
Section 7.09. Successor Trustee by Merger, etc...................78
Section 7.10. Eligibility; Disqualification......................78
Section 7.11. Preferential Collection of Claims Against
Issuers............................................78
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ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE..........................78
Section 8.01. Option to Effect Legal Defeasance or
Covenant Defeasance................................79
Section 8.02. Legal Defeasance and Discharge.....................79
Section 8.03. Covenant Defeasance................................79
Section 8.04. Conditions to Legal or Covenant Defeasance.........80
Section 8.05. Deposited Money and Government Securities to
be Held in Trust; Other Miscellaneous
Provisions.........................................81
Section 8.06. Repayment to Issuers...............................82
Section 8.07. Reinstatement......................................82
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER..................................82
Section 9.01. Without Consent of Holders of Notes................82
Section 9.02. With Consent of Holders of Notes...................83
Section 9.03. Compliance with Trust Indenture Act................85
Section 9.04. Revocation and Effect of Consents..................85
Section 9.05. Notation on or Exchange of Notes...................85
Section 9.06. Trustee to Sign Amendments, etc....................86
ARTICLE 10 SUBORDINATION....................................................86
Section 10.01. Agreement to Subordinate...........................86
Section 10.02. Liquidation; Dissolution; Bankruptcy...............86
Section 10.03. Default on Designated Senior Debt..................87
Section 10.04. Acceleration of Notes..............................88
Section 10.05. When Distribution Must Be Paid Over................88
Section 10.06. Notice by Issuers..................................89
Section 10.07. Subrogation........................................89
Section 10.08. Relative Rights....................................89
Section 10.09. Subordination May Not Be Impaired by Issuers.......89
Section 10.10. Distribution or Notice to Representative...........90
Section 10.11. Rights of Trustee and Paying Agent.................90
Section 10.12. Authorization to Effect Subordination..............90
Section 10.13. Amendments.........................................91
ARTICLE 11 SUBSIDIARY GUARANTEES............................................91
Section 11.01. Subsidiary Guarantees..............................91
Section 11.02. Subordination of Subsidiary Guarantee..............92
Section 11.03. Limitation on Subsidiary Guarantor Liability.......92
Section 11.04. Execution and Delivery of Subsidiary
Guarantee..........................................93
Section 11.05. Subsidiary Guarantors May Consolidate, etc.,
on Certain Terms...................................93
Section 11.06. Releases Following Sale of Assets..................94
ARTICLE 12 MISCELLANEOUS....................................................95
Section 12.01. Trust Indenture Act Controls.......................95
Section 12.02. Notices............................................95
Section 12.03. Communication by Holders of Notes with
Other Holders of Notes.............................96
Section 12.04. Certificate and Opinion as to Conditions
Precedent..........................................97
Section 12.05. Statements Required in Certificate or Opinion......97
iii
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Section 12.06. Rules by Trustee and Agents........................97
Section 12.07. No Personal Liability of Managers, Directors,
Officers, Employees, Stockholders and Members......97
Section 12.08. Governing Law......................................98
Section 12.09. No Adverse Interpretation of Other Agreements......98
Section 12.10. Successors.........................................98
Section 12.11. Severability.......................................98
Section 12.12. Counterpart Originals..............................98
Section 12.13. Table of Contents, Headings, etc...................98
EXHIBITS
Exhibit A1 FORM OF NOTE
Exhibit A2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF NOTATION OF SUBSIDIARY GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY
SUBSIDIARY GUARANTORS
Schedule 1 SCHEDULE OF SUBSIDIARY GUARANTORS
iv
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INDENTURE, dated as of July 1, 1999, among Consolidated Container
Company LLC, a Delaware limited liability company (the "Company"), Consolidated
Container Capital, Inc., a Delaware corporation ("Capital," and together with
the Company, the "Issuers"), the Subsidiary Guarantors set forth on Schedule I
hereto and The Bank of New York, a New York banking corporation, as trustee (the
"Trustee").
The Issuers, the Subsidiary Guarantors and the Trustee agree as
follows for the benefit of each other and for the equal and ratable benefit of
the Holders of up to $300.0 million in aggregate principal amount of 10 1/8%
Senior Subordinated Notes due 2009 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions.
"144A Global Note" means a global note substantially in the form of
Exhibit A1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Restricted Subsidiary of, such specified Person and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Additional Notes" means up to $115 million aggregate principal
amount of Notes (other than the Initial Notes) issued under this Indenture in
accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the
Initial Notes.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control",
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" shall have
correlative meanings.
"Agent" means any Registrar, Paying Agent, co-registrar,
authenticating agent or securities custodian.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
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2
"Asset Sale" means (a) the sale, lease, conveyance or other
disposition of any assets or rights, other than sales of inventory in the
ordinary course of business consistent with past practices; provided that the
sale, conveyance or other disposition of all or substantially all of the assets
of the Company and its Subsidiaries taken as a whole will be governed by the
provisions of Section 4.15 hereof and/or the provisions of Section 5.01 hereof
and not by the provisions of Section 4.10 hereof and (b) the issuance or sale of
Equity Interests by any of the Company's Restricted Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales: (i) any single transaction or series of related transactions that
involves assets having a fair market value of less than $2.0 million, (ii) a
transfer of assets between or among the Company and its Restricted Subsidiaries,
(iii) an issuance of Equity Interests by a Restricted Subsidiary to the Company
or to another Restricted Subsidiary, (iv) the sale or lease of equipment,
inventory, accounts receivable or other assets in the ordinary course of
business, (v) the sale or other disposition of cash or Cash Equivalents or
Investment Grade Securities, (vi) a Restricted Payment or Permitted Investment
that is permitted by Section 4.07 hereof, (vii) any exchange of like property
pursuant to Section 1031 of the Code for use in a Permitted Business, (viii) any
sale-leaseback or asset securitization by the Company or any of its Restricted
Subsidiaries with respect to property built or acquired by the Company or such
Restricted Subsidiary after the date of this Indenture, (ix) foreclosures on
assets, (x) any sale of Equity Interests in, or Indebtedness or other securities
of, an Unrestricted Subsidiary and (xi) any sale of accounts receivable, or
participations therein, in connection with any Qualified Receivables
Transaction.
"Assumption Agreement" means the Assumption Agreement among
Holdings, the Company and Reid Plastics Holdings, dated July 2, 1999.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar state law
for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "Beneficially Owns" and "Beneficially Owned" shall have a
corresponding meaning.
"Board of Directors" means, (i) with respect to a corporation, the
board of directors of the corporation, (ii) with respect to a partnership, the
Board of Directors of the general partner of the partnership, (iii) with respect
to any other Person, the board or committee of such Person serving a similar
function and (iv) any duly authorized committee of any of the foregoing.
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3
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
"Capital" means Consolidated Container Capital, Inc., a Delaware
corporation, and any or all successors thereto.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at that time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means, (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) or similarly titled interests and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars (and foreign
currency exchanged into United States dollars within 180 days), (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, provided that the full
faith and credit of the United States is pledged in support thereof, having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case,
with any lender party to the Credit Agreement or with any domestic commercial
bank having capital and surplus in excess of $500.0 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having a
rating no lower than "A-2" from Moody's Investors Service, Inc. ("Moody's") or
"P2" from Standard & Poor's Rating Services ("S&P") and in each case maturing
within twelve months after the date of acquisition, (vi) money market funds at
least 95% of the assets of which constitute Cash Equivalents of the kinds
described in clauses (i) through (v) of this definition, (vii) readily
marketable direct obligations issued by any state of the United States or any
political subdivision thereof having one of the two highest rating categories
obtainable from either Moody's or S&P and (viii) Indebtedness or preferred stock
issued by Persons with a rating of "A" or higher from S&P or "A-2" or higher
from Moody's.
"Cedel" means Cedel Bank, S.A.
"Change of Control" means the occurrence of any of the following:
(i) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the properties or assets of
Holdings and its Restricted Subsidiaries taken as a whole or the Company and its
Restricted Subsidiaries taken as a whole to any "person" (as that term is used
in Section 13(d)(3) of the Exchange Act) other than a Principal or a Related
Party of a Principal, (ii) the adoption of a plan
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4
relating to the liquidation or dissolution of the Issuers, (iii) the Company
becomes aware (by way of a report or any other filing pursuant to Section 13(d)
of the Exchange Act, proxy, vote, written notice or otherwise) of the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than the Principals and their Related Parties, becomes the Beneficial
Owner, directly or indirectly, of more than 50% of the Voting Equity Securities
of one of the Issuers or of Holdings, measured by voting power rather than
number of shares or (iv) the first day on which a majority of the members of the
Management Committee are not Continuing Managers.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Consolidated Container Company LLC, a Delaware
limited liability company, and any and all successors thereto.
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus
(i) an amount equal to any extraordinary loss plus any net loss realized by such
Person or any of its Restricted Subsidiaries in connection with an Asset Sale,
to the extent such losses were deducted in computing such Consolidated Net
Income, plus (ii) provision for taxes based on income or profits or the Tax
Amount of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes or Tax Amount was included in computing
such Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
and whether or not capitalized (including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net of the effect of all payments made or received pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation, amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and
its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, plus (v) any fees, expenses or charges
related to any Equity Offering, Permitted Investment, acquisition or
recapitalization or Indebtedness permitted to be incurred by this Indenture
(whether or not successful) and fees, expenses or charges related to the
transactions contemplated by the Contribution and Merger Agreement (including
fees to Vestar), plus (vi) the amount of non-recurring charges (including any
one-time costs incurred in connection with acquisitions after the date of this
Indenture) deducted in such period in computing Consolidated Net Income, plus
(vii) the amount of any minority interest expense deducted in calculating
Consolidated Net Income, plus (viii) special charges and unusual items during
any period ending on or prior to the second anniversary of the date of this
Indenture not to exceed $15.0 million in the aggregate, plus (ix) the amount of
(a) management, consulting, monitoring and advisory fees paid to Vestar and its
Affiliates during such period not to exceed $1.0 million during any four quarter
period and (b) amounts payable (excluding
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5
any payments of salary) pursuant to the Assumption Agreement, minus (x) non-cash
items increasing such Consolidated Net Income for such period, other than the
accrual of revenue in the ordinary course of business, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
preceding, the provision for taxes based on the income or profits of, and the
depreciation and amortization and other non-cash expenses of, a Restricted
Subsidiary of the Company shall be added to Consolidated Net Income to compute
Consolidated Cash Flow of the Company only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior governmental approval (that
has not been obtained), and without direct or indirect restriction pursuant to
the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any specified
Person for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that: (i) the Net Income (but not loss) of any
Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid in cash to the specified Person or a
Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, unless such restriction with respect to the
payment of dividends or similar distributions has been legally waived, (iii) the
Net Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded, (v)
the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to the specified Person or one of its Restricted
Subsidiaries, (vi) the net after-tax extraordinary gains or losses (less all
fees and expenses related thereto) shall be excluded, (vii) any increase in the
cost of sales or other incremental expenses resulting from purchase accounting
in relation to any acquisition, net of taxes, shall be excluded, (viii) any net
after-tax income (loss) from discontinued operations and any net after-tax gains
or losses on disposal of discontinued operations shall be excluded and (ix) any
net after-tax gains or losses (less all fees and expenses relating thereto)
attributable to asset dispositions other than in the ordinary course of business
(as determined in good faith by the Company) shall be excluded.
"Continuing Managers" means, as of any date of determination, any
member of the Management Committee who (i) was a member of such Management
Committee on the date of this Indenture or (ii) was nominated for election or
elected to such Management Committee with the approval of a majority of the
Continuing Managers who were members of such Committee at the time of such
nomination or election.
"Contribution and Merger Agreement" means the Contribution and
Merger Agreement, dated as of April 29, 1999, among Suiza Foods Corporation,
Franklin Plastics, Inc.,
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6
Plastic Containers Holding, Inc., the companies owned by Suiza identified
therein, Vestar Packaging LLC, Reid Plastics Holdings, Inc., the companies owned
by Reid identified therein, Holdings and the Company.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 12.02 hereof or such other address as to which
the Trustee may give notice to the Issuers.
"Credit Agreement" means that certain Credit Agreement, dated July
2, 1999, by and among Holdings, the Company, Bankers Trust Company, as
administrative agent, Morgan Guaranty Trust Company of New York, as
documentation agent, Donaldson Lufkin & Jenrette Securities Corporation, as
syndication agent, and the other lenders party thereto, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Subsidiaries
of the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
"Credit Facilities" means, one or more debt facilities (including,
without limitation, the Credit Agreement) or commercial paper facilities, in
each case with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables), swingline loans or letters of credit, in
each case, as amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time.
"Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Default" means any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued or transferred to or exchanged for such Holder
in accordance with Section 2.06 hereof, substantially in the form of Exhibit A1
hereto except that such Note shall not bear the Global Note Legend and shall not
have the "Schedule of Exchanges of Interests in the Global Note" attached
thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
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"Designated Noncash Consideration" means the fair market value of
noncash consideration (as determined in good faith by the principal financial
officer of the Company) received by the Company or any of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Noncash Consideration pursuant to an Officers' Certificate, setting
forth the basis of such valuation, less the amount of cash or Cash Equivalents
received in connection with a subsequent sale of such Designated Noncash
Consideration.
"Designated Preferred Stock" means preferred stock of the Company
(other than Disqualified Stock) that is issued for cash (other than to a
Restricted Subsidiary) and is so designated as Designated Preferred Stock,
pursuant to an Officers' Certificate, on the issuance date thereof, the cash
proceeds of which are excluded from the calculation set forth in Section 4.07(c)
hereof.
"Designated Senior Debt" means (i) any Indebtedness outstanding
under the Credit Agreement and (ii) any other Senior Debt permitted under this
Indenture the principal amount of which is $25.0 million or more and that has
been designated by the Company as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature; provided that if such Capital Stock is issued to
any employee or to any plan for the benefit of employees of the Company or any
of its Subsidiaries or by any such plan to such employees, such Capital Stock
shall not constitute Disqualified Stock solely because it may be required to be
repurchased by the Company or such Subsidiary in order to satisfy applicable
statutory or regulatory obligations or as a result of such employee's death or
disability. Notwithstanding the preceding sentence, any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
change of control or an asset sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07 hereof.
"Domestic Subsidiary" means any Restricted Subsidiary that was
formed under the laws of the United States or any state thereof or the District
of Columbia or that guarantees or otherwise provides direct credit support for
any Indebtedness of the Company.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means an offering of the Equity Interests (other
than Disqualified Stock) of the Company or Holdings, other than (i) public
offerings with respect to the Equity Interests registered on Form S-8 and (ii)
any such offering of Equity Interests the proceeds of which have been designated
by the Company as an Excluded Contribution.
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8
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Excluded Contributions" means the net cash proceeds received by the
Company after the date of this Indenture from (i) contributions to its common
equity capital and (ii) the sale (other than to a Subsidiary or to any
management equity plan or stock option plan or any other management or employee
benefit plan or agreement of the Company or any of its Subsidiaries) of Capital
Stock (other than Disqualified Stock) of the Company, in each case designated
within 60 days of the receipt of such net cash proceeds as Excluded
Contributions pursuant to an Officers' Certificate, the cash proceeds of which
are excluded from the calculation set forth in Section 4.07(c) hereof.
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness under the Credit Agreement) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person and its Restricted Subsidiaries for any period, the ratio of the
Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such
period to the Fixed Charges of such Person and its Restricted Subsidiaries for
such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period. In addition, for purposes of
calculating the Fixed Charge Coverage Ratio, (i) Investments, acquisitions,
dispositions, discontinued operations, mergers and consolidations that have been
made by the specified Person or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be given pro
forma effect as if they had occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated on a pro forma basis as determined in good faith by a responsible
financial or accounting officer of
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9
the Company, without giving effect to clause (iii) of the proviso set forth in
the definition of Consolidated Net Income, (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, (iii) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of the
specified Person or any of its Restricted Subsidiaries following the Calculation
Date and (iv) if since the beginning of such period any Person that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period shall have made any
Investment, acquisition, disposition, discontinued operation, merger or
consolidation that would have required adjustment pursuant to this definition,
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition, disposition,
discontinued operation, merger or consolidation had occurred at the beginning of
the applicable four-quarter period.
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued, including, without limitation, amortization of debt issuance costs
incurred in connection with the Transactions, the Notes and the Credit Agreement
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations, plus
(ii) the consolidated interest of such Person and its Restricted Subsidiaries
that was capitalized during such period, plus (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries, whether or not such Guarantee or Lien is called
upon, plus (iv) the product of (a) all cash dividend payments or other
distributions (and non-cash dividend payments in the case of a Person that is a
Restricted Subsidiary) on any series of preferred equity of such Person and its
Restricted Subsidiaries, times (b)(x) if such Person is not a taxable entity for
U.S. federal income tax purposes, one, and (y) if such Person is a taxable
entity for U.S. federal income tax purposes, a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person and its Restricted
Subsidiaries, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
For the purposes of this Indenture, the term "consolidated" with respect to any
Person shall mean such Person consolidated with its Restricted Subsidiaries and
shall not include any Unrestricted Subsidiary.
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"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued, transferred or exchanged, as the case may be,
in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii) hereof, which is required to be placed on all Global Notes issued
under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee other than by endorsement of
negotiable instruments for collection in the ordinary course of business, direct
or indirect, in any manner including, without limitation, letters of credit and
reimbursement agreements in respect thereof, of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any specified Person,
the obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange or commodity prices.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means Consolidated Container Holdings LLC, a Delaware
limited liability company and the parent of the Company.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of (i)
borrowed money, (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or reimbursement agreements in respect thereof,
(iii) banker's acceptances, (iv) representing Capital Lease Obligations, (v) the
balance deferred and unpaid of the purchase price of any property, except any
such balance that constitutes an accrued expense or trade payable or (vi)
representing any Hedging Obligations, if and to the extent any of the preceding
items (other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of the specified Person prepared in accordance
with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of
others secured by a Lien on any asset of the specified Person (whether or not
such Indebtedness is assumed by the specified Person) and, to the extent not
otherwise included, the Guarantee by the specified Person of any indebtedness of
any other Person. The amount of any Indebtedness outstanding as of any date
shall be (i) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount and (ii) the principal amount thereof, in the case
of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
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11
"Initial Notes" means the first $185.0 million aggregate principal
amount of Notes issued under this Indenture on the date hereof.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investment Grade Securities" means (i) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof (other than Cash Equivalents), (ii) debt
securities or debt instruments with a rating of BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such rating by such rating organization,
or, if no rating of S&P or Moody's then exists, the equivalent of such rating by
any other nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances between and among the
Company and its Subsidiaries and (iii) investments in any fund that invests
exclusively in investments of the type described in clauses (i) and (ii), which
fund may also hold immaterial amounts of cash pending investment and/or
distribution.
"Investments" means, with respect to any Person, all direct or
indirect investments by such Person in other Persons (including Affiliates) in
the forms of loans (including Guarantees or other obligations), advances or
capital contributions (excluding accounts receivable, trade credit, advances to
customers, commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP. If the Company or any Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a Subsidiary of the Company, the
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in
Section 4.07 hereof. The acquisition by the Company or any Subsidiary of the
Company of a Person that holds an Investment in a third Person shall be deemed
to be an Investment by the Company or such Subsidiary in such third Person in an
amount equal to the fair market value of the Investment held by the acquired
Person in such third Person in an amount determined as provided in Section 4.07
hereof.
"Issuers" means the Company and Capital.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Issuers and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
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12
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction,
provided that in no event shall an operating lease be deemed to constitute a
Lien.
"Liquidated Damages" means all Liquidated Damages, if any, then
owing pursuant to Section 5 of the Registration Rights Agreement.
"Management Committee" means (i) for so long as the Company is a
limited liability company, the Management Committee of the Company, or the
Management Committee of Holdings if acting on behalf of the Company and (ii)
otherwise the Board of Directors of the Company.
"Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of dividends on preferred interests, excluding, however,
(i) any gain (but not loss), together with any related provision for taxes or
Tax Distributions on such gain (but not loss), realized in connection with (a)
any Asset Sale or (b) the disposition of any securities by such Person or any of
its Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries plus (ii) any extraordinary gain
(but not loss), together with any related provision for taxes or Tax
Distributions on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any Designated Noncash Consideration received in any Asset Sale),
net of the direct costs relating to such Asset Sale and the sale or disposition
of such Designated Noncash Consideration, including, without limitation, legal,
accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof, taxes or Tax Distributions
paid or payable as a result thereof, in each case, after taking into account any
available tax credits or deductions and any tax sharing arrangements, and
amounts required to be applied to the repayment of Indebtedness, other than
Senior Debt under the Credit Agreement, secured by a Lien on the asset or assets
that were the subject of such Asset Sale and any reserve established in
accordance with GAAP for adjustment in respect of any liabilities associated
with such asset or assets and retained by the Company after such sale or other
disposition thereof, including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with such
transaction.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or
otherwise or (c) constitutes the lender, (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted
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13
Subsidiary) would permit upon notice, lapse of time or both any holder of any
other Indebtedness (other than the Notes) of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated maturity
and (iii) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
"Notes" has the meaning assigned to it in the preamble to this
Indenture. The Initial Notes and the Additional Notes shall be treated as a
single class for all purposes under this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Initial Notes by the Issuers.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, any Assistant Secretary or any VicePresident of such
Person.
"Officers' Certificate" means a certificate signed on behalf of the
Issuers by two Officers of the Issuers, one of whom must be the principal
executive officer, the principal financial officer or the principal accounting
officer of the Issuers, that meets the requirements of Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Issuers, any
Subsidiary of either of the Issuers or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).
"Permitted Agreements" means (i) the Supply Agreement, dated July 2,
1999, between Holdings and Suiza Foods Corporation, (ii) the Assumption
Agreement, (iii) the Registration Rights Agreement to be entered into among
Holdings, Reid Plastic Holdings and the holders of member units in Holdings, the
form of which is an exhibit to the Limited Liability Company Agreement of
Holdings, dated July 2, 1999 and (iv) the Trademark License Agreement, dated
July 2, 1999, among the Company, Holdings and Continental Can Company, Inc.
"Permitted Business" means any of the lines of business conducted by
the Company and its Restricted Subsidiaries on the date hereof and any business
similar, ancillary or related thereto or that constitutes a reasonable extension
or expansion thereof, including in connection with the Company's existing and
future technology, trademarks and patents.
<PAGE>
14
"Permitted Investments" means (i) any Investment in the Company or
in a Restricted Subsidiary of the Company, (ii) any Investment in Cash
Equivalents or Investment Grade Securities, (iii) any Investment by the Company
or any Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (a) such Person becomes a Restricted Subsidiary of the Company or (b)
such Person is merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into, the Company
or a Restricted Subsidiary of the Company, (iv) any Investment made as a result
of the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with Section 4.10 hereof, (v) any Investments the
payment for which solely consists of Equity Interests (other than Disqualified
Stock) of the Company, provided that such Equity Interests will not increase the
amount available for Restricted Payments under Section 4.07(c) hereof, (vi)
Hedging Obligations, (vii) other Investments in any Person other than Holdings
or an Affiliate of Holdings that is not also a Restricted Subsidiary of the
Company having an aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause
(vii) that are at the time outstanding not to exceed $15.0 million, (viii)
Investments in Unrestricted Subsidiaries having an aggregate fair market value
not to exceed at any one time outstanding $15.0 million (measured on the date
each such Investment was made and without giving effect to subsequent changes in
value), (ix) any Investment existing on the date of this Indenture, (x) advances
to employees and officers not in excess of $10.0 million in the aggregate
outstanding at any one time, (xi) any Investment acquired by the Company or any
of its Restricted Subsidiaries (a) in exchange for any other Investment or
accounts receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or accounts receivable
or (b) as a result of a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to any secured Investment or other transfer of title
with respect to any secured Investment in default, (xii) any Investment in a
Permitted Business (other than an Investment in an Unrestricted Subsidiary)
having an aggregate fair market value, taken together with all other Investments
made pursuant to this clause (xii) that are at that time outstanding, not to
exceed 10% of the Total Assets at the time of such Investment (measured on the
date each such Investment was made and without giving effect to subsequent
changes in value), (xiii) any transaction to the extent it constitutes an
Investment that is permitted by and made in accordance with provisions (vii) and
(xiii) of the second paragraph of Section 4.11 hereof, (xiv) Investments
consisting of the licensing or contribution of intellectual property pursuant to
joint marketing arrangements with other Persons, (xv) Investments consisting of
purchase and acquisitions of inventory, supplies, materials and equipment or
licenses or leases of intellectual property, in any case, in the ordinary course
of business and (xvi) Investments by the Company or a Restricted Subsidiary in a
Receivables Subsidiary or any Investment by a Receivables Subsidiary in any
other Person, in each case, in connection with a Qualified Receivables
Transaction.
"Permitted Junior Securities" means debt or equity securities of the
Company or any successor corporation issued pursuant to a plan of reorganization
of the Company that are subordinated to the payment of all then outstanding
Senior Debt of the Company at least to the same extent that the Notes are
subordinated to the payment of all Senior Debt of the Company as in effect on
July 2, 1999, so long as (i) the effect of the use of this defined term in the
subordination provisions contained in this Indenture is not to cause the Notes
to be treated as part of (a) the same class of claims as the Senior Debt of the
Company or (b) any class of claims pari passu with, or
<PAGE>
15
senior to, the Senior Debt of the Company for any payment or distribution in any
case or proceeding or similar event relating to the liquidation, insolvency,
bankruptcy, dissolution, winding up or reorganization of the Company and (ii) to
the extent that any Senior Debt of the Company outstanding on the date of
consummation of any such plan of reorganization is not paid in full in cash or
Cash Equivalents (other than Cash Equivalents of the type referred to in clauses
(iii) and (iv) of the definition thereof) on such date, either, (a) the holder
of any such Senior Debt not so paid in full in cash or Cash Equivalents (other
than Cash Equivalents of the type referred to in clauses (iii) and (iv) of the
definition thereof) have consented to the terms of such plan of reorganization
or (b) such holders receive securities which constitute Senior Debt of the
Company (which are guaranteed pursuant to guarantees constituting Senior Debt of
each Subsidiary Guarantor) and which have been determined by the relevant court
to constitute satisfaction in full in money or money's worth of any Senior Debt
of the Company (and any related Senior Debt of the Subsidiary Guarantors) not
paid in full in cash or Cash Equivalents (other than Cash Equivalents of the
type referred to in clauses (iii) and (iv) of the definition thereof).
"Permitted Liens" means (i) Liens of the Company and any Subsidiary
Guarantor securing Senior Debt that was permitted by the terms of this Indenture
to be incurred, (ii) Liens in favor of the Issuers or the Subsidiary Guarantors,
(iii) Liens on property of a Person existing at the time such Person is merged
with or into or consolidated with the Company or any Restricted Subsidiary of
the Company, provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Company or
the Restricted Subsidiary, (iv) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of such
acquisition, (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business, (vi) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (iv) of the second
paragraph of Section 4.09 hereof, covering only the assets acquired with such
Indebtedness, (vii) Liens existing on July 2, 1999, (viii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor, (ix) Liens incurred in the ordinary course of business of
the Company or any Restricted Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding, (x)
judgment Liens not giving rise to an Event of Default so long as such Lien is
adequately bonded and any appropriate legal proceedings that may have been duly
initiated for the review of such judgment shall not have been finally terminated
or the period within which such proceedings may be initiated shall not have
expired, (xi) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods, (xii) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in good faith,
if such reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof, (xiii) Liens incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of Social Security,
including any Lien
<PAGE>
16
securing letters of credit issued in the ordinary course of business consistent
with past practice in connection therewith, (xiv) Liens encumbering deposits
made to secure obligations arising from statutory, regulatory, contractual or
warranty requirements, including rights of offset and set off and (xv) Liens or
assets of a Receivables Subsidiary arising in connection with a Qualified
Receivables Transaction.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness), provided that (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount (or accreted value, if applicable) of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus all accrued interest thereon and the amount of all expenses and premiums
incurred in connection therewith) and with such refinancing, (ii) such Permitted
Refinancing Indebtedness has a Weighted Average Life to Maturity equal to or
greater than the remaining Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded, provided, that this clause (ii) shall not apply to Senior Debt, (iii)
if the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness has a final maturity date equal to or later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded and (iv) such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.
"Principals" means Vestar and its Affiliates, Suiza Foods
Corporation and its Affiliates, Ronald V. Davis, William L. Estes, Ronald E.
Justice, Henry Carter, Timothy W. Brasher and David M. Stulman.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) hereof to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"Purchase Money Note" means a promissory note evidencing a line of
credit, or evidencing other Indebtedness owed to the Company or any Restricted
Subsidiary in connection with a Qualified Receivables Transaction, which note
shall be repaid from cash available to the maker of such note, other than
amounts required to be established as reserves pursuant to agreement, amounts
paid to investors in respect of interest, principal and other amounts owing to
such investors and amounts paid in connection with the purchase of newly
generated receivables.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
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17
"Qualified Receivables Transaction" means any transaction or series
of transactions that may be entered into by the Company or any Restricted
Subsidiary pursuant to which the Company or any Restricted Subsidiary may sell,
convey or otherwise transfer to (i) a Receivables Subsidiary (in the case of a
transfer by the Company or any Restricted Subsidiary) and (ii) any other Person
(in the case of a transfer by a Receivables Subsidiary), or may grant a security
interest in, any accounts receivable (whether now existing or arising in the
future) of the Company or any Restricted subsidiary and any asset related
thereto, including, without limitation, all collateral securing such accounts
receivable, and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets that are
customarily transferred, or in respect of which security interests are
customarily granted, in connection with an asset securitization transaction
involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary
(other than a Subsidiary Guarantor) that engages in no activities other than in
connection with the financing of accounts receivables and that is designated by
the Management Committee (as provided below) as a Receivables Subsidiary (i) no
portion of the Indebtedness or any other Obligations (contingent or otherwise)
of which (a) is guaranteed by the Company or any other Restricted Subsidiary
(excluding guarantees of obligations (other than the principal of, and interest
on, Indebtedness) pursuant to Standard Securitization Undertakings), (b) is
recourse to or obligates the Company or any other Restricted Subsidiary in any
way other than pursuant to standard Securitization Undertakings or (c) subjects
any property or asset of the Company or any other Restricted Subsidiary,
directly or indirectly, contingently or otherwise, to the satisfaction thereof,
other than pursuant to Standard Securitization Undertakings, (ii) with which
neither the Company nor any other Restricted Subsidiary has any material
contract, agreement, arrangement or understanding (except in connection with a
Purchase Money Note or Qualified Receivables Transaction) other than on terms no
less favorable to the Company or such other Restricted Subsidiary than those
that might be obtained at the time from Persons that are not Affiliates of the
Company, other than fees payable in the ordinary course of business in
connection with servicing accounts receivable and (iii) to which neither the
Company nor any other Restricted Subsidiary has any obligation to maintain or
preserve such entity's financial condition or cause such entity to achieve a
certain level of operating results. Any such designation by the Management
Committee shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the resolution of the Board of Directors of the Company giving
effect to such designation and an Officers' Certificate certifying, to the best
of such officer's knowledge and belief after consulting with counsel, that such
designation complied with the foregoing conditions.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of July 1, 1999, by and among the Issuers, the Subsidiary
Guarantors and the Initial Purchasers, as such agreement may be amended,
modified or supplemented from time to time and, with respect to any Additional
Notes, one or more registration rights agreements between the Issuers and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Issuers to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act.
"Regulation S" means Regulation S promulgated under the Securities
Act.
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18
"Regulation S Global Note" means a Regulation S Temporary Global
Note or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note
in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note
in the form of Exhibit A2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" means (i) any controlling stockholder, 80% (or more)
owned Subsidiary, or immediate family member (in the case of an individual) of
any Principal, (ii) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding clause (i) or
(iii) any limited partnership of which a Principal or one of its Affiliates is a
general partner.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the corporate trust department of the Trustee (or any
successor to the Trustee) including any vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
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19
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means (a) all Indebtedness of an Issuer or any
Subsidiary Guarantor outstanding under Credit Facilities and all Hedging
Obligations with respect thereto, whether outstanding on July 2, 1999 or
incurred thereafter, (b) any other Indebtedness of an Issuer or any Subsidiary
Guarantor permitted to be incurred under the terms of this Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the Notes or any
Subsidiary Guarantee and (c) all Obligations with respect to the items listed in
the preceding clauses (a) and (b) (including any interest accruing subsequent to
the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law). Notwithstanding anything to the contrary in the
preceding, Senior Debt will not include (i) any liability for federal, state,
local or other taxes owed or owing by an Issuer, (ii) any Indebtedness of an
Issuer to any of its Subsidiaries or other Affiliates, (iii) any trade payables,
(iv) the portion of any Indebtedness that is incurred in violation of this
Indenture (but only to the extent so incurred) or (v) Non-Recourse Debt.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Standard Securitization Undertakings" means representations,
warrantees, covenants and indemnities entered into by the Company or any
Restricted Subsidiary that are reasonably customary in an accounts receivable
transaction.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such
<PAGE>
20
Person or a Subsidiary of such Person or (b) the only general partners of which
are such Person or one or more Subsidiaries of such Person (or any combination
thereof).
"Subsidiary Guarantors" means the Subsidiary Guarantors set forth on
Schedule I hereto each subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of this Indenture and their respective successors
and assigns.
"Tax Amount" means (i) for so long as Holdings is a pass-through
entity for income tax purposes and the sole asset of Holdings is its membership
interest in the Company (and prior to any distribution of any Tax Amount, the
Company delivers an Officers' Certificate to such effect), the tax amount that
Holdings is required to distribute to its members pursuant to Section 6.4 of its
Limited Liability Company Agreement as in effect on July 2, 1999, (ii) if
Holdings holds other assets in addition to its member interest in the Company,
the tax amount that Holdings is required to distribute to its members pursuant
to Section 6.4 of its Limited Liability Company Agreement less any amounts for
taxes related to assets other than the membership interests in the Company or
(iii) if Holdings is no longer a pass-through entity for income tax purposes,
the combined federal, state and local income taxes that would be paid by the
Company if it were a separate entity and a Delaware corporation filing separate
tax returns with respect to its Taxable Income for such Period; provided,
however, that in determining the Tax Amount, the effect thereon of any net
operating loss carryforwards or other carryforwards or tax attributes, such as
alternative minimum tax carryforwards, that would have arisen if the Company
were a Delaware corporation shall be taken into account. Notwithstanding
anything to the contrary, for purposes of clause (iii), Tax Amount shall not
include taxes resulting from the Company's reorganization as or change in its
status to a corporation.
"Tax Distribution" means a distribution in respect of taxes to the
member or members, as the case may be, of the Company pursuant to clause (vii)
of the second paragraph of Section 4.07 hereof.
"Taxable Income" means, with respect to any Person for any period,
the hypothetical taxable income or loss of such Person for such period for
federal income tax purposes computed on the hypothetical assumption that such
person is a separate entity and a Delaware corporation.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.03 hereof.
"Total Assets" means the total consolidated assets of the Company
and its Restricted Subsidiaries, as shown on the most recent balance sheet of
the Company.
"Trustee" means the party named as such in the recitals hereto until
a successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note
substantially in the form of Exhibit A1 attached hereto that bears the Global
Note Legend and that has the "Schedule of
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21
Exchanges of Interests in the Global Note" attached thereto, and that is
deposited with or on behalf of and registered in the name of the Depositary,
representing a series of Notes that do not bear the Private Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company (other
than Capital or any successor to Capital) that is designated by the Management
Committee as an Unrestricted Subsidiary pursuant to a Board Resolution, but only
to the extent that such Subsidiary (i) has no Indebtedness other than
Non-Recourse Debt, (ii) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company, (iii) is a Person with respect to which neither the Company nor any of
its Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results, (iv) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries and (v) has at least one director on its Board of
Directors that is not a director or executive officer of the Company or any of
its Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries. Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant. The Management Committee may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.09 hereof, calculated on a pro forma basis as if
such designation had occurred at the beginning of the four-quarter reference
period and (ii) no Default or Event of Default would be in existence following
such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under
the Securities Act.
"Vestar" means Vestar Capital Partners, a New York general
partnership.
"Voting Equity Interests" of any Person as of any date means the
Capital Stock of such Person that is at the time, or would be if such Person
were a Delaware corporation, entitled to
<PAGE>
22
vote in the election of the Management Committee, Board of Directors or other
governing body of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
Section 1.02. Other Definitions
Other terms not defined above have the definitions ascribed to them
in the corresponding section below.
Defined in
Term Section
---- -------
"Acceleration Notice" 6.02
"Affiliate Transaction" 4.11
"Alternate Offer" 4.15
"Asset Sale Offer" 3.09
"Authentication Order" 2.02
"Change of Control Offer" 4.15
"Change of Control Payment" 4.15
"Change of Control Payment Date" 4.15
"Covenant Defeasance" 8.03
"DTC" 2.03
"Event of Default" 6.01
"Excess Proceeds" 4.10
"Excluded Guarantee" 4.19
"incur" 4.09
"Legal Defeasance" 8.02
"Offer Amount" 3.09
"Offer Period" 3.09
"Paying Agent" 2.03
"Payment Default" 6.01
"Payment Blockage Notice" 10.03
"Permitted Debt" 4.09
"Purchase Date" 3.09
<PAGE>
23
Defined in
Term Section
---- -------
"Refunding Equity Interests" 4.07
"Registrar" 2.03
"Restricted Payments" 4.07
"Retired Equity Interests" 4.07
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes and the Subsidiary
Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes and the Subsidiary Guarantees means the
Company and the Subsidiary Guarantors, respectively, and any successor
obligor upon the Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular;
(e) provisions apply to successive events and transactions; and
<PAGE>
24
(f) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially as set forth in the form of Exhibit A1 or
Exhibit A2 hereto. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or usage. Each Note shall be dated the date
of its authentication. The Notes shall be in denominations of $1,000 and
integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Issuers, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
(b) Global Notes. Notes issued in global form shall be substantially
in the form of Exhibits A1 or A2 attached hereto, as applicable (including the
Global Note Legend thereon and the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A1 attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
written instructions given by the Holder thereof as required by Section 2.06
hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its New York office, as Custodian for
the Depositary, and registered in the name of the Depositary or the nominee of
the Depositary for the accounts of designated agents holding on behalf of
Euroclear or Cedel Bank, duly executed by the Issuers and authenticated by the
Trustee as hereinafter provided. The Restricted Period shall be terminated upon
the receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel Bank certifying
that they have received certification of non-United States beneficial ownership
of 100% of the aggregate principal amount of the Regulation S Temporary Global
Note (except to the extent of any beneficial owners thereof who acquired an
interest therein during the Restricted Period pursuant to
<PAGE>
25
another exemption from registration under the Securities Act and who will take
delivery of a beneficial ownership interest in a 144A Global Note bearing a
Private Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof),
and (ii) an Officers' Certificate from the Issuers. Following the termination of
the Restricted Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in Regulation S Permanent
Global Notes pursuant to the Applicable Procedures. Simultaneously with the
authentication of Regulation S Permanent Global Notes, the Trustee shall cancel
the Regulation S Temporary Global Note. The aggregate principal amount of the
Regulation S Temporary Global Note and the Regulation S Permanent Global Notes
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
One Officer shall sign the Notes for each of the Issuers by manual
or facsimile signature.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Issuers signed by an
Officer (an "Authentication Order"), authenticate Notes for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Issuers to authenticate the Notes. An authenticating agent may authenticate the
Notes whenever the Trustee may or has been directed to do so by the Issuers.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with Holders or an Affiliate of the Issuers.
Section 2.03. Registrar and Paying Agent.
The Issuers shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of
<PAGE>
26
their transfer and exchange. The Issuers may appoint one or more co-registrars
and one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
The Issuers may change any Paying Agent or Registrar without prior notice to any
Holder. The Issuers shall notify the Trustee in writing of the name and address
of any Agent not a party to this Indenture. If the Issuers fail to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. The Company or any of its Restricted Subsidiaries may act as Paying Agent
or Registrar. The Issuers initially appoint The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Issuers initially appoint the Trustee to act as the Registrar
and Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Issuers shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or Liquidated Damages, if any, or interest on the
Notes, and will notify the Trustee of any default by the Issuers in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Issuers at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a Restricted
Subsidiary) shall have no further liability for the money. If the Company or a
Restricted Subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Issuers, the Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Issuers shall furnish to the Trustee at least seven
Business Days before each Interest Payment Date (as defined in paragraph 1 of
the Notes) and at such other times as the Trustee may request in writing, a list
in such form and as of such date as the Trustee may reasonably require of the
names and addresses of the Holders of Notes and the Issuers shall otherwise
comply with TIA ss. 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Issuers for Definitive Notes if (i) the Issuers deliver to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is
<PAGE>
27
no longer a clearing agency registered under the Exchange Act and, in either
case, a successor Depositary is not appointed by the Issuers within 120 days
after the date of such notice from the Depositary or (ii) the Issuers in their
sole discretion determines that the Global Notes (in whole but not in part)
should be exchanged for Definitive Notes and delivers a written notice to such
effect to the Trustee; provided that in no event shall the Regulation S
Temporary Global Note be exchanged by the Issuers for Definitive Notes prior to
(x) the expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act. Upon the occurrence of either of the preceding events in (i) or
(ii) above, Definitive Notes shall be issued in such names as the Depositary
shall instruct the Trustee. Global Notes also may be exchanged or replaced, in
whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided
in this Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures, as applicable. Beneficial
interests in the Restricted Global Notes shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Notes also shall
require compliance with either subparagraph (i) or (ii) below, as applicable, as
well as one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Temporary Regulation S Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note. No written orders or instructions shall be required to be delivered
to the Registrar to effect the transfers described in this Section
2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from
a Participant or an
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28
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to
the Registrar containing information regarding the Person in whose name
such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903 under the Securities
Act. Upon consummation of an Exchange Offer by the Issuers in accordance
with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii)
shall be deemed to have been satisfied upon receipt by the Registrar of
the instructions contained in the Letter of Transmittal delivered by the
Holder of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1)
a broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as defined
in Rule 144) of the Issuers;
<PAGE>
29
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note,
a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Issuers shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive
Note, then, upon receipt by the Registrar of the following documentation:
<PAGE>
30
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to
a Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to
an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item
(3) thereof, if applicable;
(F) if such beneficial interest is being transferred to
the Issuers or any of their Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Issuers shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
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(ii) Beneficial Interests in Regulation S Temporary Global
Note to Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C)
hereof, a beneficial interest in the Regulation S Temporary Global Note
may not be exchanged for a Definitive Note or transferred to a Person who
takes delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption
from the registration requirements of the Securities Act other than Rule
903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the case of
an exchange, or the transferee, in the case of a transfer, certifies
in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Issuers;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item
(1)(b) thereof; or
(2) if the Holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
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32
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Issuers shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Note to a Person who
takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the form
of Exhibit C hereto, including the certifications in item (2)(b)
thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144 under
the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
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33
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in reliance on
an exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D) above,
a certificate to the effect set forth in Exhibit B hereto, including
the certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Issuers or any of their Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement under
the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the
Issuers;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes
proposes to exchange such Notes for a beneficial interest in
the Unrestricted Global Note, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications
in item (1)(c) thereof; or
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34
(2) if the Holder of such Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the
subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the
Definitive Notes and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Issuers shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of Definitive Notes so
transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and registered
in the name of Persons who take delivery thereof in the form of a
Restricted Definitive Note if the Registrar receives the following:
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35
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the
Issuers;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Notes proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(d)
thereof; or
(2) if the Holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of an Unrestricted
Definitive Note, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in item (4)
thereof;
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36
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of counsel in form reasonably
acceptable to the Issuers to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained hereinand in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Issuers shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Issuers,
and accepted for exchange in the Exchange Offer. Concurrently with the issuance
of such Notes, the Trustee shall cause the aggregate principal amount of the
applicable Restricted Global Notes to be reduced accordingly, and the Issuers
shall execute and the Trustee shall authenticate and deliver to the Persons
designated by the Holders of Definitive Notes so accepted Definitive Notes in
the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in substantially
the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(B) IT HAS
<PAGE>
37
ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR
(7) OR REGULATION D UNDER THE SECURITIES ACT (AN "IAI"), (2) AGREES
THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A)
TO THE CONSOLIDATED CONTAINER COMPANY, CONSOLIDATED CONTAINER
CAPITAL OR ANY OF OUR RESPECTIVE SUBSIDIARIES, (B) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES
LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO CONSOLIDATED
CONTAINER COMPANY AND CONSOLIDATED CONTAINER CAPITAL THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO
THE ISSUERS) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(iii), (c)(iv), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes
issued in exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
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38
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE ISSUERS.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY TO THE ISSUERS OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS
REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE
PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes
<PAGE>
39
represented by such Global Note shall be reduced accordingly and an endorsement
shall be made on such Global Note by the Trustee or by the Depositary at the
direction of the Trustee to reflect such reduction; and if the beneficial
interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note,
such other Global Note shall be increased accordingly and an endorsement shall
be made on such Global Note by the Trustee or by the Depositary at the direction
of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Issuers' order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note
for any registration of transfer or exchange, but the Issuers may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05
hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Issuers, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Issuers shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the mailing of a
notice of Notes for redemption under Section 3.02 hereof and ending at the
close of business on the day of such mailing, (B) to register the transfer
of or to exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part or (C) to
register the transfer of or to exchange a Note between a record date and
the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Issuers may deem and
treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of
and interest on such Notes and for all other purposes, and none of the
Trustee, any Agent or the Issuers shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02 hereof.
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(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
(ix) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Note (including any transfers between or
among Depositary Participants or beneficial owners of interests in any
Global Note) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by the terms of, this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Issuers
and the Trustee receives evidence to their satisfaction of the destruction, loss
or theft of any Note, the Issuers shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. An indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Issuers to protect the
Issuers, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Issuers and the Trustee may
charge the Holder requesting such replacement Note for its expenses in replacing
a Note.
Every replacement Note is an obligation of the Issuers as if issued
in place of such replaced Note and shall be entitled to all of the benefits of
this Indenture equally and proportionately with all other Notes duly issued
hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Issuers or an Affiliate of the
Issuers holds the Note unless such Note has been retired pursuant to Section
2.11 hereof; however, Notes held by the Issuers or a Subsidiary of the Issuers
shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it shall cease to be outstanding and interest on it shall cease to
accrue.
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41
If the Paying Agent (other than the Company, a Restricted Subsidiary
or an Affiliate of any thereof) holds, on a redemption date or maturity date,
money sufficient to pay Notes payable on that date, then on and after that date
such Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent hereunder, Notes
owned by the Issuers, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Issuers, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the
Issuers may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Issuers
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Issuers shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
Section 2.11. Cancellation.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
the Notes in accordance with its customary procedures (subject to the record
retention requirement of the Exchange Act). The Issuers may not issue new Notes
to replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.
Section 2.12. Defaulted Interest.
If the Issuers default in a payment of interest on the Notes, they
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Issuers shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Issuers shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Issuers (or, upon the written
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42
request of the Issuers, the Trustee in the name and at the expense of the
Issuers) shall mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
Section 2.13. CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
In the event that the Issuers shall issue and the Trustee shall
authenticate any Additional Notes pursuant to this Indenture, the Issuers shall
use their best efforts to obtain the same CUSIP number for such Additional Notes
as is printed on the Notes outstanding at such time; provided, however, that if
any series of Additional Notes is determined, pursuant to an Opinion of Counsel,
to be a different class of security than the Notes outstanding at such time for
federal income tax purposes, the Issuers may obtain a CUSIP number for such
series of Additional Notes that is different from the CUSIP number printed on
the Notes then outstanding.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Issuers elect to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
not less than 45 days but not more than 90 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 90 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
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43
The Trustee shall promptly notify the Issuers in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Issuers shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address. The notice shall
identify the Notes (including CUSIP numbers) to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Issuers default in making such redemption
payment, interest on Notes called for redemption shall cease to accrue on and
after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at its expense; provided, however, that the
Issuers shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
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44
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Issuers shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Issuers any
money deposited with the Trustee or the Paying Agent by the Issuers in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Issuers comply with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Issuers to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender and cancellation of a Note that is redeemed in part,
the Issuers shall issue and, upon the Issuers' written request, the Trustee
shall authenticate for the Holder at the expense of the Issuers a new Note equal
in principal amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the
Issuers shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to July 15, 2004. Thereafter, the Issuers may redeem all or part of
the Notes upon not less than 30 nor more than 90 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, thereon, if any, to
the applicable redemption date, if redeemed during the twelve-month period
beginning on July 15 of the years indicated below:
Year Percentage
- ---- ----------
2004 105.0625%
2005 103.3750%
2006 101.6875%
2007 and thereafter 100.0000%
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45
(b) Notwithstanding the provisions of clause (a) of this Section
3.07, at any time prior to July 15, 2002, the Issuers may on any one or more
occasions redeem up to 40% of the aggregate principal amount of Notes issued
under this Indenture at a redemption price of 110.125% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of one or more Equity Offerings of
the Company (or of Holdings to the extent such proceeds are contributed to the
Company); provided that (i) at least 60% of the aggregate principal amount of
Notes issued under this Indenture remains outstanding immediately after the
occurrence of such redemption (excluding Notes held by the Company and its
Subsidiaries) and (ii) the redemption occurs within 90 days of the date of the
closing of such Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Issuers shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Issuers
shall be required to commence an offer to all Holders to purchase Notes (an
"Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Issuers shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Issuers shall
send, by first class mail, a notice to the Trustee and each of the Holders, with
a copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
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46
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Issuers default in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may elect to have Notes purchased in integral multiples of
$1,000 only;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Issuers, a depositary, if appointed by
the Issuers, or a Paying Agent at the address specified in the notice at least
three Business Days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Issuers, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Issuers shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Issuers shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Issuers in accordance
with the terms of this Section 3.09. The Issuers, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
Business Days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Issuers for purchase, and the Issuers shall promptly issue a new
Note, and the Trustee, upon written request from the Issuers shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Issuers to the Holder thereof. The
Issuers shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
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Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
Section 4.01. Payments on Notes.
The Issuers shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Restricted
Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money
deposited by the Issuers in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due. The
Issuers shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Issuers shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to the then applicable interest rate on the Notes to the extent lawful; they
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages, if
any, (without regard to any applicable grace period) at the same rate to the
extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Issuers shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Issuers in respect of the Notes and this Indenture may be
served. The Issuers shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuers shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Issuers may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Issuers of their obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Issuers shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Issuers hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Issuers in accordance with Section
2.03 hereof.
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48
Section 4.03. Reports.
(a) Whether or not required by the SEC, so long as any Notes are
outstanding, the Issuers shall furnish to the Holders of Notes, within the time
periods specified in the SEC's rules and regulations, (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the SEC on Forms 10-Q and 10-K if the Company were required to file such
forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report on the annual financial statements by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports. In
addition, following consummation of the Exchange Offer contemplated by the
Registration Rights Agreement, whether or not required by the SEC, the Issuers
shall file a copy of all such information and reports referred to in clauses (i)
and (ii) above with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, the Issuers and the Subsidiary
Guarantors have agreed that, for so long as any Notes (but not Exchange Notes)
remain outstanding, they shall furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(b) If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and in Management's Discussion and Analysis of Financial Condition and
Results of Operations, of the financial condition and results of operations of
the Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company.
(c) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuers'
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.04. Compliance Certificate.
(a) The Issuers and each Subsidiary Guarantor (to the extent that
such Subsidiary Guarantor is so required under the TIA), shall deliver to the
Trustee, within 90 days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the Issuers and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Issuers have kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Issuers have kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and are not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
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49
of which he or she may have knowledge and what action the Issuers are taking or
propose to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Issuers are taking or propose to take with respect thereto.
(b) The Issuers shall, so long as any of the Notes are outstanding,
deliver to the Trustee,, as soon as possible, and in any event within five days
forthwith upon any Officer becoming aware of any Default or Event of Default, an
Officers' Certificate specifying such Default or Event of Default and what
action the Issuers are taking or propose to take with respect thereto.
Section 4.05. Taxes.
The Issuers shall pay, and shall cause each of their Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Issuers and each of the Subsidiary Guarantors covenants (to the
extent permitted by applicable law) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and each of the Issuers and each of the Subsidiary Guarantors (to the extent
permitted by applicable law) hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including, without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Notes or the
Subsidiary Guarantees, except (a) a mandatory sinking fund payment or a payment
of interest or principal that is paid within one year prior to the Stated
Maturity of such subordinated Indebtedness or (b)
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Indebtedness permitted under clause (vi) of the second paragraph of Section 4.09
hereof or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first paragraph
of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of this Indenture (excluding Restricted
Payments permitted by clauses (ii), (iii), (iv), (vi), (vii), (viii),
(xi), (xiv), (xv) and (xvi) of the next succeeding paragraph) is less than
the sum, without duplication, of (i) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting period) from April 1,
1999 to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net
proceeds, including cash and the fair market value of property other than
cash, received by the Company since the date of this Indenture as a
contribution to its common equity capital or from the issue or sale of
Equity Interests of the Company (other than Disqualified Stock) or from
the issue or sale of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of the Company that have been
converted into or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a Subsidiary
of the Company), plus (iii) to the extent that any Restricted Investment
that was made after the date of this Indenture is sold or otherwise
liquidated or repaid, the aggregate amount received in cash and the fair
market value of property other than cash received with respect to such
Restricted Investment, plus (iv) in case any Unrestricted Subsidiary has
been redesignated a Restricted Subsidiary or has been merged, consolidated
or amalgamated with or into, transfers or conveys assets to, or is
liquidated into, the Company or any of its Restricted Subsidiaries, the
fair market value of such Investment in such Unrestricted Subsidiary at
the time of such redesignation, combination or transfer (or of the assets
transferred or conveyed, as applicable), after deducting any Indebtedness
associated with the Unrestricted Subsidiary so designated or combined or
with the assets so transferred or conveyed.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture, (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness of the Company or any
Restricted Subsidiary or of any Equity Interests (the "Retired Equity
Interests") of the Company
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51
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Restricted Subsidiary of the Company) of, Equity Interests
of the Company (the "Refunding Equity Interests"), provided that the amount of
any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded from
clause (c)(ii) of the preceding paragraph, (iii) the declaration and payment of
dividends on the Retired Equity Interests out of the proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary) of
Refunding Equity Interests, provided that the amount of any such proceeds that
are utilized for any such dividends shall be excluded from clause (c)(ii) of the
preceding paragraph, (iv) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness of the Company or any Restricted
Subsidiary with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness, (v) the payment of any dividend by a Restricted
Subsidiary of the Company to the holders of its Equity Interests on a pro rata
basis, (vi) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary of the
Company or any direct or indirect parent of the Company held by any future,
present or former member of the Company's (or any of its Restricted
Subsidiaries') management or any director, employee or consultant of the Company
or any of its Restricted Subsidiaries pursuant to any management equity
subscription agreement or stock option agreement in effect as of the date of
this Indenture or by any employee upon retirement of such employee, provided
that the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed in any calendar year $5.0 million
(with unused amounts in any calendar year being carried over to succeeding
calendar years subject to a maximum (without giving effect to the following
proviso) of $10.0 million in any calendar year), provided further that such
amount in any calendar year may be increased by any amount not to exceed (y) the
cash proceeds from the sale of Equity Interests of the Company (or of Holdings
that are contributed to the Company) to members of management, directors or
consultants of the Company and its Subsidiaries or Vestar that occurs after the
date of this Indenture (provided that such proceeds have not been included for
the purpose of determining whether a previous Restricted Payment was permitted
pursuant to the preceding paragraph) plus (z) the cash proceeds of key man life
insurance policies received by the Company and its Restricted Subsidiaries after
the date of this Indenture, (vii) so long as the Company is a limited liability
company treated as a partnership or an entity disregarded as separate from its
owner for federal and state income tax purposes (and prior to any distribution
of any Tax Amount, the Company delivers an Officers' Certificate to such
effect), distributions to members of the Company in an amount, with respect to
any period after March 31, 1999 not to exceed the Tax Amount with respect to the
Company for such period, (viii) the making of distributions, loans or advances
to Holdings in order to permit Holdings to pay the ordinary operating expenses
of Holdings (including, without limitation, directors' fees, indemnification
obligations, professional fees and expenses), (ix) the declaration and payment
of dividends or distributions to holders of any class or series of Disqualified
Stock of the Company or any of its Restricted Subsidiaries issued or incurred in
accordance with Section 4.09 hereof, (x) the declaration and payment of
dividends or distributions to holders of any class or series of Designated
Preferred Stock, provided that for the most recently ended four full fiscal
quarters for which internal financial statements are available preceding the
date of declaration of any such dividend or distribution, after giving effect to
such dividend or distribution as a Fixed Charge on a pro forma basis, the
Company and its Restricted Subsidiaries would have had a Fixed Charge Coverage
Ratio of at least 1.75 to 1.0, (xi) the repurchase of (or a dividend or
distribution to fund the repurchase of) Equity Interests of the Company or any
direct or indirect parent of the Company deemed to occur upon exercise of stock
options if such Equity Interests represent a portion of the
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52
exercise price of such options, (xii) so long as no Default (except for any
Default set forth in Section 6.01(c) or (i) hereof) has occurred and is
continuing or would be caused thereby, the payment of dividends on the Company's
common Equity Interests (or the payment to Holdings to fund the payment by
Holdings of dividends on Holdings' common Equity Interests) following the first
public offering of common Equity Interests of the Company or Holdings, as the
case may be, after the date of this Indenture, of up to 6% per annum of the net
proceeds received by the Company or contributed to the Company by Holdings, as
the case may be, in such public offering, (xiii) the repurchase, retirement or
other acquisition for value after the first anniversary of the date of this
Indenture (or dividend or distribution to fund the repurchase, retirement or
other acquisition) of Equity Interests of the Company or any direct or indirect
parent of the Company in existence on the date of this Indenture and that are
not held by the Principals or any of their Related Parties on the date of this
Indenture (including any Equity Interests issued in respect of such Equity
Interests as a result of a stock split, recapitalization, merger, combination,
consolidation or otherwise, but excluding any management equity plan or stock
option plan or similar agreement), provided that (a) the aggregate amounts paid
under this clause (xiii) shall not exceed (A) $15.0 million on or prior to the
second anniversary of the date of this Indenture or (B) $30.0 million at any
time after the second anniversary of the date of this Indenture and (b) after
giving effect thereto, the Company would be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 hereof, (xiv) Investments that are
made with Excluded Contributions, (xv) so long as no Default (except for any
Default set forth Section 6.01(c) or (i) hereof) has occurred and is continuing
or would be caused thereby, other Restricted Payments in an aggregate principal
amount not to exceed $15.0 million and (xvi) Restricted Payments contemplated by
the Contribution and Merger Agreement and any agreement executed in connection
therewith or contemplated thereby.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued to or by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be valued
by this covenant shall be determined by the Management Committee whose
resolution with respect thereto shall be delivered to the Trustee. The
Management Committee determination must be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if the fair market value exceeds $5.0 million. Not later than the date
of making any Restricted Payment, the Issuers shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
4.07 were computed, together with a copy of any fairness opinion or appraisal
required by this Indenture.
Accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
shall not be deemed to be a Restricted Payment for purposes of this Section
4.07; provided, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued.
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53
Section 4.08. Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or any of its Restricted Subsidiaries, or with
respect to any other interest or participation in, or measured by, its profits,
or pay any indebtedness owed to the Company or any of its Restricted
Subsidiaries, (b) make loans or advances to the Company or any of its Restricted
Subsidiaries or (c) transfer any of its properties or assets to the Company or
any of its Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances
or restrictions existing under or by reason of (i) the Credit Facilities as in
effect on July 2, 1999, (ii) contractual encumbrances or restrictions as in
effect on July 2, 1999, including pursuant to Existing Indebtedness, (iii) this
Indenture and the Notes, the Exchange Notes and the Subsidiary Guarantees, (iv)
applicable law or regulation, (v) any agreement or other instrument of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, (vi) customary provisions in leases entered into in the
ordinary course of business, (vii) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions on the
property so acquired of the nature described in clause (c) of the preceding
paragraph, (viii) any agreement for the sale or other disposition of assets,
including, without limitation customary restrictions with respect to a
Restricted Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition, (ix) Permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being
refinanced, (x) Liens securing Indebtedness that limit the right of the debtor
to dispose of the assets subject to such Lien, (xi) provisions with respect to
the disposition or distribution of assets or property in joint venture
agreements, assets sale agreements, stock sale agreements and other similar
agreements entered into in the ordinary course of business, (xii) restrictions
on cash or other deposits or net worth imposed by customers under contracts
entered into in the ordinary course of business, (xiii) other Indebtedness of
any Restricted Subsidiary that is not a Domestic Subsidiary permitted to be
incurred subsequent to the date of this Indenture pursuant to the provisions of
Section 4.09 hereof, (xiv) any encumbrance or restrictions of the type referred
to in clauses (a), (b) and (c) of the preceding paragraph imposed by any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of the contracts, instruments or
obligations referred to in clauses (i) through (xiii) above, provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are (in the good faith judgment of the
Management Committee) no more restrictive, taken as a whole, with respect to
such dividend and other payment restrictions than those contained in such
contracts, instruments or obligations prior to such amendment, modification,
restatement, renewal, increase, supplement, refunding, replacement or
refinancing, (xv) any agreement relating to a sale and leaseback transaction or
Capital Lease Obligation, but only on the property subject to
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54
such transaction or Capital Lease Obligation and only to the extent that such
restrictions or encumbrances are customary with respect to a sale and leaseback
transaction or Capital Lease Obligation, (xvi) any encumbrance or restriction
that will not in the aggregate cause the Issuers not to have the funds necessary
to pay the principal of, premium, if any, or interest on the Notes, Senior Debt
and any pari passu Indebtedness or (xvii) any other agreement, instrument or
document relating to Senior Debt hereafter in effect, provided that the terms
and conditions of such encumbrances or restrictions are not more restrictive
than those encumbrances or restrictions imposed in connection with the Credit
Agreement as in effect on July 2, 1999.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Restricted Subsidiaries that are not Subsidiary Guarantors to issue any shares
of preferred stock; provided, however, that the Issuers and the Subsidiary
Guarantors may incur Indebtedness (including Acquired Debt) or issue
Disqualified Stock, and the Company's Restricted Subsidiaries that are not
Subsidiary Guarantors may incur Indebtedness (including Acquired Debt) or issue
preferred stock, if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock or preferred stock is issued
would have been at least 1.75 to 1.0, determined on a pro forma basis (including
a pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred or the preferred stock or Disqualified Stock had
been issued, as the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this Section 4.09 shall not
prohibit the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company and its Restricted Subsidiaries of
additional Indebtedness and letters of credit under Credit Facilities in
an aggregate principal amount at any one time outstanding under this
clause (i) (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and its Restricted
Subsidiaries thereunder) not to exceed $575.0 million outstanding at any
one time;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iii) the incurrence by the Issuers and the Subsidiary Guarantors of
Indebtedness represented by the Notes and the related Subsidiary
Guarantees to be issued on the date of this Indenture and the Exchange
Notes and the related Subsidiary Guarantees to be issued pursuant to the
Registration Rights Agreement;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase
<PAGE>
55
money obligations, in each case, incurred for the purpose of financing all
or any part of the purchase price or cost of construction or improvement
of property, plant or equipment used in the business of the Company or
such Restricted Subsidiary, in an aggregate principal amount that, when
aggregated with the principal amount of all other Indebtedness then
outstanding and incurred pursuant to this clause (iv) and including all
Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any Indebtedness incurred pursuant to this clause (iv), does not
exceed 15% of the Total Assets at the time of the respective incurrence;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted by
this Indenture to be incurred under the first paragraph hereof or clauses
(ii), (iii), (iv), (v), (x), (xvi) or (xviii) of this paragraph;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries, provided, however, that (a) if the
Issuers or any Subsidiary Guarantor is the obligor on such Indebtedness
and the lender is not a Subsidiary Guarantor, such Indebtedness must be
expressly subordinated to the prior payment in full in cash of all
Obligations with respect to the Notes, in the case of the Issuers, or the
Subsidiary Guarantees, in the case of a Subsidiary Guarantor and (b)(1)
any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than the Company or a
Restricted Subsidiary thereof and (2) any sale or other transfer of any
such Indebtedness to a Person that is not either the Company or a
Restricted Subsidiary thereof, shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not permitted by this
clause (vi);
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred (a) for the purpose
of fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding, (b) for the purpose of fixing or hedging currency exchange
rate risk with respect to any currency exchanges or (c) for the purpose of
fixing or hedging commodity price risk with respect to any commodity
purchases;
(viii) the guarantee by the Issuers or any of the Subsidiary
Guarantors of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be incurred by another provision of this
Section 4.09;
(ix) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in
the form of additional Indebtedness with the same terms, and the payment
of dividends on Disqualified Stock in the form of additional shares of the
same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this
Section 4.09; provided, in each such case, that the amount thereof is
included in Fixed Charges of the Company as accrued;
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56
(x) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (x);
(xi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness constituting reimbursement obligations with
respect to letters of credit issued in the ordinary course of business,
including, without limitation, letters of credit in respect of workers'
compensation claims or self-insurance, or other Indebtedness with respect
to reimbursement type obligations regarding workers' compensation claims
or self-insurance;
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness arising from agreements of the Company or
such Restricted Subsidiary providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred or assumed
in connection with the disposition of any business, assets or Capital
Stock of a Subsidiary, other than guarantees of Indebtedness incurred by
any Person acquiring all or any portion of such business, assets or a
Subsidiary for the purpose of financing such acquisition;
(xiii) the issuance of preferred stock by any of the Company's
Restricted Subsidiaries issued to the Company or another Restricted
Subsidiary; provided that any subsequent issuance or transfer of any
Equity Securities or any other event that results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such shares of preferred stock (except to the Company or
another Restricted Subsidiary) shall be deemed, in each case to be an
issuance of such shares of preferred stock;
(xiv) the incurrence by the Company or any of its Restricted
Subsidiaries of obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or such Restricted
Subsidiary in the ordinary course of business;
(xv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness or Disqualified Stock not otherwise permitted
under this covenant in an aggregate principal amount or liquidation
preference that, when aggregated with the principal amount and liquidation
preference of all other Indebtedness and Disqualified Stock then
outstanding and incurred pursuant to this clause (xv) does not exceed
$50.0 million;
(xvi) the incurrence of Indebtedness or Disqualified Stock of
Persons that are acquired by the Company or any of its Restricted
Subsidiaries or merged into a Restricted Subsidiary in accordance with the
terms of this Indenture; provided that such Indebtedness or Disqualified
Stock is not incurred in contemplation of such acquisition or merger;
provided further that after giving effect to such acquisition, either (a)
the Company would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of this Section 4.09 or (b)
the Fixed Charge Coverage Ratio is greater than immediately prior to such
acquisition;
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(xvii) the incurrence of any Excluded Guarantee by any Restricted
Subsidiary; and
(xviii) the incurrence of any Indebtedness by a Receivables
Subsidiary that is not recourse to the Company or any other Restricted
Subsidiary of the Company (other than Standard Securitization
Undertakings) incurred in connection with a Qualified Receivables
Transaction;
For purposes of determining compliance with this Section 4.09, in
the event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Permitted Debt described in clauses (i) through (xviii)
above, or is entitled to be incurred pursuant to the first paragraph of this
Section 4.09, the Company shall be permitted to classify such item of
Indebtedness on the date of its incurrence, or later reclassify all or a portion
of such item of Indebtedness, in any manner that complies with this Section
4.09. Indebtedness under Credit Facilities outstanding on the date on which
Notes are first issued and authenticated under this Indenture shall be deemed to
have been incurred on such date in reliance on the exception provided by clause
(i) of the definition of Permitted Debt.
Accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
shall not be deemed to be a Restricted Payment for purposes of this Section
4.09; provided, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of, (ii) such fair market value
is determined by the Management Committee and, in the case of Asset Sales in
excess of $10.0 million, evidenced by a resolution of the Management Committee
set forth in an Officers' Certificate delivered to the Trustee and (iii) at
least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes
of this provision, each of the following shall be deemed to be cash: (a) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet), of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any Subsidiary Guarantee) that are assumed by the transferee of any
such assets that releases the Company or such Restricted Subsidiary from further
liability, (b) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received in that conversion) within 180 days of the closing of such
Asset Sale and (c) any Designated Noncash Consideration received by the Company
or any of its Restricted Subsidiaries in such Asset Sale (x) having a fair
market value, taken together with all other Designated Noncash Consideration
received pursuant to this clause that is at that time outstanding, not to exceed
15% of Total Assets at the time of the receipt of such Designated Noncash
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Consideration or (y) if, on a pro forma basis after giving effect to such Asset
Sale and the application of the Net Proceeds therefrom (including the
application of the proceeds pursuant to clause (i) or (ii) of the next
paragraph), the Company can incur $1.00 of Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth the first paragraph of Section 4.09 hereof,
in the case of each clause (c)(x) or (c)(y), with the fair market value being
measured at the time received and without giving effect to subsequent changes in
value.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds at its option (i) to repay Senior
Debt and, if the Senior Debt repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto, (ii) to repay pari
passu Indebtedness provided that the Company will equally and ratably reduce
Obligations under the Notes if the Notes are then redeemable or, if the Notes
may not be then redeemed, the Company will make an offer (in accordance with the
procedures set forth below for an Asset Sale Offer) to all Holders to purchase
the Notes that would otherwise be redeemed at a price equal to 100% of the
principal amount of such Notes, (iii) to make an investment in properties or
assets that replaces the assets that are the subject of such Asset Sale, (iv) to
make capital expenditures or (v) to make an investment in one or more businesses
or to acquire other assets that are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings, invest such Net Proceeds in Cash
Equivalents or Investment Grade Securities or otherwise invest such Net Proceeds
in any manner that is not prohibited by this Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested
as provided in the preceding paragraph will constitute "Excess Proceeds." Within
ten Business Days after the date on which the aggregate amount of Excess
Proceeds exceeds $15.0 million, the Issuers shall make an Asset Sale Offer to
all Holders of Notes and all holders of other Indebtedness that is pari passu
with the Notes containing provisions similar to those set forth in this
Indenture with respect to offers to purchase or redeem with the proceeds of
sales of assets to purchase the maximum principal amount of Notes and such other
pari passu Indebtedness that may be purchased out of the Excess Proceeds. The
offer price in any Asset Sale Offer will be equal to 100% of principal amount
plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase, and will be payable in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by this Indenture. If the aggregate
principal amount of Notes and such other pari passu Indebtedness tendered into
such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes and such other pari passu Indebtedness to be purchased on a pro
rata basis based on the principal amount of Notes and such other pari passu
Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.
The Issuers shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of this Indenture, the Issuers shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the Asset Sale provisions of this Indenture by virtue of such
conflict.
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Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless (i) with respect to
any Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, such Affiliate Transaction is
on terms that are not materially less favorable to the Company or the relevant
Restricted Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Subsidiary with an unrelated Person and (ii)
the Company delivers to the Trustee (a) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, a resolution of the Management
Committee set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with this covenant and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the Management
Committee and (b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $10.0
million, an opinion as to the fairness to the holders of the Notes of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of the prior paragraph:
(i) any employment or consulting agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or such Restricted Subsidiary, (ii)
transactions between or among the Company and/or its Restricted Subsidiaries,
(iii) transactions with a Person that is an Affiliate of the Company solely
because the Company owns an Equity Interest in such Person, (iv) payment of
reasonable directors' fees and the provision of customary indemnities to
directors and officers, (v) sales of Equity Interests (other than Disqualified
Stock) to Affiliates of the Company, (vi) Restricted Payments that are permitted
by Section 4.07 hereof, (vii) the payment (directly or through Holdings) of
annual management, consulting, monitoring and advisory fees and related expenses
to Vestar and its Affiliates, (viii) transactions in which the Company or any of
its Restricted Subsidiaries, as the case may be, delivers to the Trustee a
letter from an accounting, appraisal or investment banking firm of national
standing stating that such transaction is fair to the Company or such Restricted
Subsidiary from a financial point of view or meets the requirements of clause
(i) of the preceding paragraph, (ix) payments or loans to employees or
consultants that are approved in good faith by a majority of the Management
Committee, (x) any agreement (and payments pursuant thereto) as in effect on
July 2, 1999 (including the Permitted Agreements) or any amendment thereto (so
long as such amendment is not disadvantageous to the Holders in any material
respect) or any transaction contemplated thereby, (xi) the existence of, or the
performance by the Company or any Restricted Subsidiary of its obligations under
the terms of, the Contribution and Merger Agreement, or any agreement
contemplated thereunder (including any registration rights agreement or purchase
agreement related thereto) to which it is a party as of July 2, 1999 and any
similar agreements that it may enter into thereafter, provided, however, that
the existence of, or the performance by the Company or any Restricted Subsidiary
of obligations under, any future amendment to any such existing agreement or
under any similar agreement entered into after July 2, 1999 shall only be
permitted by this clause (xi) to the extent that the terms of any such amendment
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or new agreement are not otherwise disadvantageous to the Holders in any
material respect, (xii) the payment of all fees, expenses, bonuses and awards
related to the transactions contemplated by the Contribution and Merger
Agreement, including fees to Vestar, (xiii) transactions with customers,
clients, suppliers, or purchasers or sellers of goods or services, in each case
in the ordinary course of business and otherwise in compliance with the terms of
this Indenture that are fair to the Company and its Restricted Subsidiaries in
the reasonable determination of the majority of the Management Committee or are
on terms at least as favorable as might reasonably have been obtained at such
time from an unaffiliated party and (xiv) payments by the Company or any of its
Restricted Subsidiaries to Vestar and its Affiliates made for any financial
advisory, financing, underwriting or placement services or in respect of other
investment banking activities, including, without limitation, in connection with
acquisitions or divestitures, which payments are approved by the majority of the
Management Committee in good faith.
Section 4.12. Liens.
The Company shall not and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind securing Indebtedness, Attributable Debt
or trade payables (other than Permitted Liens) upon any of their property or
assets, now owned or hereafter acquired, unless all payments due under this
Indenture and the Notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligations are no longer secured
by a Lien.
No Subsidiary Guarantor shall, directly or indirectly, create,
incur, assume or otherwise cause or suffer to exist or become effective any Lien
of any kind securing Indebtedness, Attributable Debt or trade payables (other
than Permitted Liens) that secures any Indebtedness that is pari passu or
subordinated to such Subsidiary Guarantor's Subsidiary Guarantee upon any of its
property or assets, now owned or hereafter acquired, unless all payments due
under its Subsidiary Guarantee are secured on an equal and ratable basis with
the obligations so secured until such time as such obligations are no longer
secured by a Lien.
Section 4.13. Business Activities.
The Company shall not, and shall not permit any Restricted
Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Issuers shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i)
their corporate or limited liability company existence, and the corporate,
limited liability company or other existence of each of their Subsidiaries, in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Issuers or any such Subsidiary and (ii) the
rights (charter and statutory), licenses and franchises of the Issuers and its
Subsidiaries; provided, however, that the Issuers shall not be required to
preserve any such right, license or franchise, or the corporate, limited
liability or other existence of any of their Subsidiaries, if the Management
Committee or Board of
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Directors, as applicable, shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Issuers and their
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Issuers shall
make an offer (a "Change of Control Offer") to each Holder to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of each Holder's
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, thereon, if
any, to the date of purchase, the "Change of Control Payment"). Within 30 days
following any Change of Control, the Issuers shall mail a notice to each Holder
stating: (i) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered will be accepted for payment; (ii) the
purchase price and the purchase date, which shall be no earlier than 30 days and
no later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"); (iii) that any Note not tendered will continue to accrue
interest; (iv) that, unless the Issuers default in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date; (v) that Holders electing to have any Notes purchased pursuant to a Change
of Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their election if the Paying
Agent receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have the Notes purchased; and (vii) that Holders whose Notes are being purchased
only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple thereof. The Issuers
shall comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Notes in
connection with a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the Change of Control provisions of
this Indenture, the Issuers shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue of such conflict.
(b) On the Change of Control Payment Date, the Issuers shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Issuers. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered
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by such Holder, if any; provided, that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof.
(c) Prior to complying with any of the provisions of this Section
4.15, but in any event within 90 days following a Change of Control, the Company
shall either repay all outstanding Senior Debt or obtain the requisite consents,
if any, under all agreements governing outstanding Senior Debt to permit the
repurchase of Notes required by this Section 4.15. The Issuers shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
(d) The Company shall first comply with Section 4.15(c) above before
it shall be required to repurchase Notes pursuant to the provisions described
above. The Company's failure to comply with Section 4.15(c) shall (with notice
and lapse of time) constitute an Event of Default described in Section 6.01(c)
hereof, but shall not constitute an Event of Default described in Section
6.01(b) hereof.
(e) The provisions described above that require the Issuers to make
a Change of Control Offer following a Change of Control shall be applicable
regardless of whether any other provisions of this Indenture are applicable.
Except as described above with respect to a Change of Control, this Indenture
does not contain provisions that permit the Holders of the Notes to require that
the Issuers repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
(f) Notwithstanding anything to the contrary in this Section 4.15,
the Issuers shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.15 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
(g) Notwithstanding the foregoing, the Company shall not be required
to make a Change of Control Offer as provided above if, in connection with or in
contemplation of any Change of Control, it has made an offer to purchase (an
"Alternate Offer") any and all Notes validly tendered at a cash price equal to
or higher than the Change of Control Payment and has purchased all Notes
properly tendered in accordance with the terms of such Alternate Offer.
Section 4.16. No Senior Subordinated Debt.
Notwithstanding the provisions of Section 4.09 hereof, (i) the
Issuers shall not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
any Senior Debt of the Issuers and senior in any respect in right of payment to
the Notes and (ii) no Subsidiary Guarantor shall incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate or
junior in right of payment to the Senior Debt of such Subsidiary Guarantor and
senior in any respect in right of payment to such Subsidiary Guarantor's
Subsidiary Guarantee.
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Section 4.17. Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if (i) the Company or that Restricted Subsidiary, as applicable,
could have incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof,
(ii) the gross cash proceeds of such sale and leaseback transaction are at least
equal to the fair market value (as determined in good faith by the Management
Committee and set forth in an Officers' Certificate delivered to the Trustee) of
the property that is the subject of that sale and leaseback transaction and
(iii) the transfer of assets in that sale and leaseback transaction is permitted
by, and the Company applies the proceeds of such transaction in compliance with,
Section 4.10 hereof.
Section 4.18. Limitation on Issuances and Sales of Equity Interests
in Wholly Owned Restricted Subsidiaries.
The Company (i) shall not, and shall not permit any of its
Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose
of any Equity Interests in any Wholly Owned Restricted Subsidiary of the Company
to any Person (other than the Company or a Wholly Owned Restricted Subsidiary of
the Company), unless the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with Section 4.10 hereof
and (ii) shall not permit any Wholly Owned Restricted Subsidiary of the Company
to issue any of its Equity Interests (other than, if necessary, shares of its
Capital Stock constituting directors' qualifying shares) to any Person other
than to the Company or a Wholly Owned Restricted Subsidiary of the Company.
Section 4.19. Limitation on Issuances of Guarantees of Indebtedness.
The Company shall not permit any of its Restricted Subsidiaries,
directly or indirectly, to Guarantee any other Indebtedness of the Company or
any Restricted Subsidiary unless either (i) such Restricted Subsidiary is a
Subsidiary Guarantor or (ii) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for the
Guarantee of the payment of the Notes by such Subsidiary, which Guarantee shall
be senior to or pari passu with such Restricted Subsidiary's Guarantee of such
other Indebtedness, unless such other Indebtedness is Senior Debt, in which case
the Guarantee of the Notes may be subordinated to the Guarantee of such Senior
Debt to the same extent as the Notes are subordinated to such Senior Debt.
The provisions of this Section 4.19 shall not apply to any guarantee
by any Restricted Subsidiary (i) that (a) existed at the time such Person became
a Restricted Subsidiary of the Company, and (b) was not incurred in connection
with, or in contemplation of, such Person becoming a Restricted Subsidiary of
the Company or (ii) that guarantees the payment of Obligations of the Company or
any Restricted Subsidiary under the Credit Facilities and any refunding,
refinancing or replacement thereof, in whole or in part, provided that such
refunding, refinancing or replacement thereof is not incurred pursuant to a
registered offering of securities under the Securities Act or a private
placement of securities (including under Rule 144A) pursuant to any exemption
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from the registration requirements of the Securities Act (other than securities
issued pursuant to any bank or similar credit facility (including the Credit
Agreement), which private placement provides for registration rights under the
Securities Act (any guarantee excluded by operation of this clause (ii) being an
"Excluded Guarantee").
Notwithstanding the foregoing, any Subsidiary Guarantee of the Notes
shall provide by its terms that it shall be automatically and unconditionally
released and discharged under the circumstances set forth in Article 11. The
form of such Subsidiary Guarantee is attached as Exhibit E hereto.
Section 4.20. Designation of Restricted and Unrestricted
Subsidiaries.
The Management Committee may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if that designation would not cause a Default. If
a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the
aggregate fair market value of all outstanding Investments owned by the Company
and its Restricted Subsidiaries in the Subsidiary so designated shall be deemed
to be an Investment made as of the time of such designation and shall reduce the
amount available for Restricted Payments under the first paragraph or under
clause (xiv) or (xv) of the second paragraph of Section 4.07 hereof or reduce
the amount available for future Investments under one or more clauses of the
definition of Permitted Investments, as the Company shall determine. That
designation shall only be permitted if such Investment would be permitted at
that time and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Management Committee may redesignate any
Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would
not cause a Default.
Section 4.21. Restrictions on Activities of Capital.
Capital shall not hold any material assets, become liable for any
material obligations, other than the Notes, or engage in any significant
business activities; provided that Capital may be a co-obligor with respect to
Indebtedness if the Company is a primary obligor of such Indebtedness and the
net proceeds of such Indebtedness are received by the Company or one or more of
the Company's Restricted Subsidiaries other than Capital.
Section 4.22. Payments for Consent.
Neither the Company nor any of its Restricted Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this Indenture or the
Notes unless such consideration is offered to be paid or is paid to all Holders
of the Notes that consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.
Section 4.23. Additional Subsidiary Guarantees.
If the Company or any of its Restricted Subsidiaries shall acquire
or create another Domestic Subsidiary after the date of this Indenture, then
such newly acquired or created Domestic
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Subsidiary shall execute a Subsidiary Guarantee in the form of a Supplemental
Indenture and deliver an Opinion of Counsel to the Trustee within 10 Business
Days of the date on which it was acquired or created; provided that (i) all
Subsidiaries that have properly been designated as Unrestricted Subsidiaries in
accordance with this Indenture shall not become Subsidiary Guarantors for so
long as they continue to constitute Unrestricted Subsidiaries and (ii) this
Section 4.23 shall not apply to any newly acquired or created Domestic
Subsidiary for so long as such Domestic Subsidiary does not have total assets
exceeding $500,000. The form of such Subsidiary Guarantee is attached as Exhibit
E hereto.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets.
The Company shall not, directly or indirectly, consolidate or merge
with or into another Person (whether or not the Company is the surviving entity)
or sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company and its Restricted Subsidiaries
taken as a whole, in one or more related transactions to, another Person unless
(i) either the Company is the surviving corporation or entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, conveyance, lease or other
disposition shall have been made is a corporation, limited liability company or
partnership organized or existing under the laws of the United States, any state
thereof or the District of Columbia, (ii) the Person formed by or surviving any
such consolidation or merger (if other than the Company or Capital) or the
Person to which such sale, assignment, transfer, conveyance, lease or other
disposition shall have been made assumes all the obligations of the Company
under the Notes, this Indenture and the Registration Rights Agreement pursuant
to agreements reasonably satisfactory to the Trustee, (iii) immediately after
such transaction no Default or Event of Default exists and (iv) the Company or
the Person formed by or surviving any such consolidation or merger (if other
than Capital), or the Person (if other than Capital) to which such sale,
assignment, transfer, conveyance, lease or other disposition shall have been
made shall, on the date of such transaction after giving pro forma effect
thereto and any related financing transactions as if the same had occurred at
the beginning of the applicable four-quarter period, either (a) be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof or
(b) have a Fixed Charge Coverage Ratio that is greater than such ratio for the
Company and its Restricted Subsidiaries immediately prior to such transaction.
The predecessor Company shall not be relieved from its obligations
to pay the principal of, and interest on the Notes except in the case of a sale
(but not lease) of all of the Company's assets that meets the requirements of
this Section 5.01. This Section 5.01 shall not apply to a sale, assignment,
transfer, conveyance or other disposition of assets between or among the Company
and any of its Wholly Owned Restricted Subsidiaries.
Notwithstanding the foregoing, the Company is permitted to
reorganize as a corporation in accordance with the procedures established in
this Indenture (and may merge or
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consolidate with an Affiliate for such purpose), provided that the Company shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such reorganization.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company, in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Issuers default in the payment when due of interest on, or
premium, if any, or Liquidated Damages, if any, with respect to, the Notes
whether or not prohibited by the subordination provisions of this Indenture and
such default continues for a period of 30 days;
(b) the Issuers default in the payment when due of principal of the
Notes, whether or not prohibited by Article 10 when the same becomes due and
payable at maturity, upon redemption (including in connection with an offer to
purchase) or otherwise;
(c) the Company or any of its Subsidiaries fails to comply with any
of the provisions of Section 4.10 or 4.15 hereof;
(d) the Company or any of its Subsidiaries fail to observe or
perform any other covenant, representation, warranty or other agreement in this
Indenture or the Notes for 60 days after notice to the Company by the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes
(including Additional Notes, if any) then outstanding;
(e) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money
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borrowed by the Company or any of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Restricted Subsidiaries),
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, which default (i) is caused by a failure to pay principal at
the final stated maturity of such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (ii) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $20.0 million or more;
(f) the Company or any of its Restricted Subsidiaries fails to pay
judgments, aggregating in excess of $20.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days after such judgments have become
final and nonappealable, and in the event such judgment is covered by insurance,
an enforcement proceeding has been commenced by any creditor upon such judgment
or decree that is not promptly stayed;
(g) the Company or any of its Significant Subsidiaries or any group
of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
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(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; and the order or decree
remains unstayed and in effect for 60 consecutive days; or
(i) except as permitted by this Indenture, any Subsidiary Guarantee
by a Significant Subsidiary is held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Subsidiary Guarantor that is a Significant Subsidiary, or any
Person acting on behalf of any such Subsidiary Guarantor, shall deny or
disaffirm its obligations under such its Subsidiary Guarantee.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company) occurs and
is continuing, the Trustee (upon request of the Holders of at least 25% in
principal amount of the Notes then outstanding) or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that such notice is a "notice of
acceleration" (the "Acceleration Notice"), and the same (a) shall become
immediately due and payable or (b) if there are any amounts outstanding under
the Credit Agreement, shall become immediately due and payable upon the first to
occur of an acceleration under the Credit Agreement or five Business Days after
receipt by the Company and the representative under the Credit Agreement of such
Acceleration Notice but only if such Event of Default is then continuing.
Notwithstanding the foregoing, if an Event of Default specified in clause (g) or
(h) of Section 6.01 hereof occurs with respect to the Company, all outstanding
Notes shall be due and payable immediately without further action or notice.
The Holders of the Notes may not enforce this Indenture or the Notes
except as provided in this Indenture. Subject to certain limitations, the
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from the Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest or Liquidated Damages, if any, ) if it determines that
withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium, if any, that has become
due solely because of the acceleration) have been cured or waived.
The Issuers shall deliver to the Trustee annually a statement
regarding compliance with this Indenture. Upon becoming aware of any Default or
Event of Default, the Issuers shall deliver to the Trustee a statement
specifying such Default or Event of Default.
Section 6.03. Other Remedies.
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If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of interest or Liquidated Damages, if any, on, or the principal of, the
Notes (including in connection with an offer to purchase) (provided, however,
that the Holders of a majority in aggregate principal amount of the then
outstanding Notes may rescind an acceleration and its consequences, including
any related payment default that resulted from such acceleration). Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
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(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium, if any, and
Liquidated Damages, if any, and interest on the Note, on or after the respective
due dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Issuers for the whole
amount of principal of, premium, if any, and Liquidated Damages, if any, and
interest remaining unpaid on the Notes and interest on overdue principal and, to
the extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation and expenses of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation and expenses
of the Trustee, its agents and counsel) and the Holders of the Notes allowed in
any judicial proceedings relative to the Company (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation and expenses of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation and expenses of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 7.07 hereof out of
the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder
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any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the Trustee
and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and Liquidated Damages, if any, and
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal, premium, if
any, and Liquidated Damages, if any and interest, respectively; and
Third: to the Issuers or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
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(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
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(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both pursuant to Section
12.04 and 12.05 hereof. The Trustee shall not be liable for any action it takes
or omits to take in good faith in reliance on such Officers' Certificate or
Opinion of Counsel. The Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Issuers shall be sufficient if
signed by an Officer of the Issuers.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
(g) The Trustee shall not be bound to may any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuers, personally or by agent or attorney
at the sole cost of the Issuers and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.
(h) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Officer of the
Trustee, and such notice references the securities and this Indenture; and
(i) The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuers or any
Affiliate of the Issuers with the same rights
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it would have if it were not Trustee. However, in the event that the Trustee
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuers' use of the proceeds from the Notes or any money
paid to the Issuers or upon the Issuers' direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it
is actually known to a Responsible Officer the Trustee, the Trustee shall mail
to Holders of Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
of principal of, premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of the
Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each June 15 beginning with the June 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Issuers and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Issuers shall promptly notify the Trustee when the Notes are listed on any stock
exchange and of any delisting thereof.
Section 7.07. Compensation and Indemnity.
The Issuers shall pay to the Trustee from time to time such
compensation as the Trustee and the Issuers shall agree in writing for its
acceptance of this Indenture and services hereunder. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuers shall reimburse the Trustee promptly upon request for all
reasonable expenses incurred or made by it in addition to the compensation for
its services. Such expenses shall include the reasonable expenses of the
Trustee's agents and counsel.
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The Issuers shall indemnify the Trustee or any predecessor Trustee
and their agents for, and to hold them harmless against any and all losses,
damages, claims, liabilities or expenses including taxes (other than taxes based
upon, measured by or determined by the income of the Trustee) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against the Issuers (including this Section 7.07) and defending itself
against any claim (whether asserted by the Issuers or any Holder or any other
person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, damage,
claim, liability or expense may be attributable to its negligence or bad faith.
The Trustee shall notify the Issuers promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Issuers shall not relieve the
Issuers of its obligations hereunder. The Issuers shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Issuers shall pay the reasonable fees and expenses of such counsel. The
Issuers need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The obligations of the Issuers under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Issuers' payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Issuers. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Issuers in writing.
The Issuers may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
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(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting in the reasonable
judgment of the Company.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee, at the expense of the Issuers.
If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10 hereof, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Issuers' obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $50 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
Section 7.11. Preferential Collection of Claims Against Issuers.
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The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance.
The Issuers may, at the option of the Management Committee or Board
of Directors, as applicable, evidenced by a resolution set forth in an Officers'
Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be
applied to all outstanding Notes and Subsidiary Guarantees upon compliance with
the conditions set forth below in this Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Issuers and the Subsidiary Guarantors
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be deemed to have all its obligations discharged with respect to the
outstanding Notes and Subsidiary Guarantees on the date the conditions set forth
below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Issuers and each Subsidiary Guarantor shall be deemed
to have paid and discharged the entire Indebtedness represented by the
outstanding Notes and Subsidiary Guarantees, which shall thereafter be deemed to
be "outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes, Subsidiary Guarantees and
this Indenture (and the Trustee, on demand of and at the expense of the Issuers,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of or interest
or premium, if any, and Liquidated Damages, if any, on such Notes when such
payments are due, (b) the Issuers' obligations with respect to such Notes under
Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Issuers' and Subsidiary Guarantor's
obligations in connection therewith and (d) this Article Eight. Subject to
compliance with this Article Eight, the Issuers may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Issuers and each Subsidiary Guarantors
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be released from their obligations under the covenants contained in
Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19,
4.20, 4.21, 4.22 and 4.23 hereof and clause (iv) of Section 5.01 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and
the Notes and Subsidiary Guarantees shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the
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consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes and Subsidiary Guarantees shall not be deemed
outstanding for accounting purposes). For this purpose, Covenant Defeasance
means that, with respect to the outstanding Notes and Subsidiary Guarantees, the
Issuers and the Subsidiary Guarantors may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes and Subsidiary Guarantees shall be unaffected thereby. In addition, upon
the Issuers' exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(c) through 6.01(f) and 6.01(i) hereof shall
not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes and the Subsidiary
Guarantees:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuers must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, or interest and
premium, if any, and Liquidated Damages, if any, on the outstanding Notes on the
stated maturity or on the applicable redemption date, as the case may be, and
the Issuers must specify whether the Notes are being defeased to maturity or to
a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the
Issuers shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Issuers have
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Issuers shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
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(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(f) the Issuers shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that,
assuming no intervening bankruptcy of the Issuers or any Subsidiary Guarantor
between the date of deposit and the 91st day following the deposit and assuming
that no Holder is an "insider" of the Company or Capital under applicable
bankruptcy law, after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) the Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuers with the intent
of preferring the Holders of Notes over any other creditors of the Issuers or
with the intent of defeating, hindering, delaying or defrauding creditors of the
Issuers or others; and
(h) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company or any of its
Restricted Subsidiaries acting as Paying Agent) as the Trustee may determine, to
the Holders of such Notes of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Issuers shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
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Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon the written
request of the Issuers any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Issuers.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Issuers, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Issuers on its request or (if then held by the Issuers) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Issuers for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Issuers as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuers cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Issuers.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Issuers make any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Issuers shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Issuers, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture,
the Subsidiary Guarantees or the Notes without the consent of any Holder of a
Note:
(a) to cure any ambiguity, defect or inconsistency;
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(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(c) to provide for the assumption of the Company's, Capital's or any
Subsidiary Guarantor's obligations to the Holders of the Notes in the case of a
merger or consolidation or sale of all or substantially all of the Company's,
Capital's or such Subsidiary Guarantor's assets;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(f) to provide for the issuance of Additional Notes in accordance
with the limitations set forth in this Indenture as of the date hereof;
(g) to allow any Subsidiary Guarantor to execute a supplemental
indenture and/or a Subsidiary Guarantee with respect to the Notes; or
(h) to allow the Trustee, the Issuers and the Subsidiary Guarantors
to set forth or clarify the procedures for the issuance of any Additional Notes
under this Indenture.
Upon the request of the Issuers accompanied by a resolution of its
Management Committee or Board of Directors, as applicable, authorizing the
execution of any such amended or supplemental Indenture, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Issuers and the Subsidiary Guarantors in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Issuers and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereof), the Subsidiary Guarantees and the Notes with the consent of the
Holders of at least a majority in principal amount of the Notes (including
Additional Notes, if any) then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture, the Subsidiary Guarantees or
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including Additional Notes, if
any) (including consents obtained in connection with a purchase of, or tender
offer or exchange offer for, Notes).
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Without the consent of at least 75% in aggregate principal amount of
the Notes then outstanding (including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes), no waiver or
amendment to this Indenture may make any change in the provisions of Article 10
hereof that adversely affects the rights of any Holder of Notes. Section 2.08
hereof shall determine which Notes are considered to be "outstanding" for
purposes of this Section 9.02.
Upon the request of the Issuers accompanied by a resolution of its
Management Committee or Board of Directors, as applicable, authorizing the
execution of any such amended or supplemental Indenture, and upon the filing
with the Trustee of evidence satisfactory to the Trustee of the consent of the
Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Issuers in the
execution of such amended or supplemental Indenture unless such amended or
supplemental Indenture directly affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes (including Additional Notes,
if any) then outstanding may waive compliance in a particular instance by the
Issuers with any provision of this Indenture or the Notes. However, without the
consent of each Holder affected, an amendment or waiver under this Section 9.02
may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of the
Notes except as provided above with respect to Sections 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal
of or interest or premium, if any, or Liquidated Damages, if any, on the Notes
(except a rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the then outstanding Notes (including
Additional Notes, if any) and a waiver of the payment default that resulted from
such acceleration);
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(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
the rights of Holders of Notes to receive payments of principal of, or interest
or premium, if any, or Liquidated Damages, if any, on the Notes;
(g) waive a redemption payment with respect to any Note except as
provided above with respect to Sections 4.10 and 4.15 hereof; or
(h) make any change in the foregoing amendment and waiver
provisions; or
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall
be set forth in a amended or supplemental Indenture that complies with the TIA
as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Issuers in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Issuers may not sign an amendment or supplemental Indenture until the
Management Committee or Board of Directors, as applicable, approves it. In
executing any amended or supplemental indenture, the Trustee shall be entitled
to receive and (subject to Section 7.01 hereof) shall be fully protected in
relying upon, in addition to the documents
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required by Section 11.04 hereof, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Issuers agree, and each Holder by accepting a Note agrees, that
the payment of principal, interest and premium, if any, and Liquidated Damages,
if any, on the Notes is subordinated, to the extent and in the manner provided
in this Article 10, to the prior payment in full in cash or Cash Equivalents of
all Senior Debt of the Issuers (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of, and shall be enforceable directly by, the holders of
Senior Debt of the Issuers, and that each holder of Senior Debt of the Issuers
whether now outstanding or hereafter created, incurred, assumed or guaranteed
shall be deemed to have acquired such Senior Debt in reliance upon the covenants
and provisions contained in this Indenture and the Notes.
Section 10.02. Liquidation; Dissolution; Bankruptcy.
Upon any payment or distribution of assets of either Issuer of any
kind or character, whether in cash, property or securities, to creditors of
either Issuer (i) in a liquidation or dissolution of such Issuer, (ii) in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to such Issuer or its property, (iii) in an assignment for the benefit
of creditors or (iv) in any marshaling of such Issuer's assets and liabilities:
(a) the holders of Senior Debt shall be entitled to receive payment in full in
cash or Cash Equivalents of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt whether or not such interest is an
allowable claim) before Holders of the Notes shall be entitled to receive any
payment or distribution of any kind or character with respect to any Obligation
on, or relating to, the Notes (except that Holders of Notes may receive and
retain (A) Permitted Junior Securities and (B) payments made from any defeasance
trust created pursuant to Article 8 hereof, so long as the trust was created in
accordance with all relevant conditions specified in this Indenture at the time
it was created); and (b) until all Obligations with respect to Senior Debt of
the Issuers (as provided in subsection (a) above) are paid in full in cash or
Cash Equivalents (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt whether or not
such interest is an allowable claim), any payment or distribution of assets of
the Issuers of any kind or character, whether in cash, properties or securities
to which Holders would be entitled but for this Article 10 shall be made to
holders of such Senior Debt (except that Holders of Notes may receive (A)
Permitted Junior Securities and (B) payments and other distributions made from
any defeasance trust created pursuant to Section 8.01 hereof, so long as the
trust was created in accordance with all relevant conditions specified in this
Indenture at the time it was created).
Section 10.03. Default on Designated Senior Debt.
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(a) The Issuers may not make any payment or distribution of any kind
or character to the Trustee or any Holder of Notes with respect to any
Obligation on, or with respect to, the Notes or acquire any Notes for cash or
property or otherwise (except in (A) Permitted Junior Securities and (B)
payments and other distributions made from any defeasance trust created pursuant
to Article 8 hereof, so long as the trust was created in accordance with all
relevant conditions specified in this Indenture at the time it was created)
until all principal and other Obligations with respect to the Senior Debt have
been paid in full if:
(i) a default in the payment when due, whether at maturity,
upon redemption, by declaration or otherwise, of any principal of,
interest on, unpaid drawings for letters of credit issued in respect of,
or any other Obligations with respect to Designated Senior Debt occurs and
is continuing; or
(ii) a default, other than a payment default, on Designated
Senior Debt occurs and is continuing that permits holders of that series
of Designated Senior Debt to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from the
Issuers or the holders of any representative of any such Designated Senior
Debt. If the Trustee receives any such Payment Blockage Notice, no
subsequent Payment Blockage Notice shall be effective for purposes of this
Section unless and until (A) at least 360 days shall have elapsed since
the delivery of the immediately prior Payment Blockage Notice and (B) all
scheduled payments of principal, interest and premium, if any, and
Liquidated Damages, if any, on the Notes that have come due have been paid
in full in cash. No nonpayment default that existed or was continuing on
the date of delivery of any Payment Blockage Notice to the Trustee shall
be, or be made, the basis for a subsequent Payment Blockage Notice unless
such default shall have been waived for a period of not less than 90 days.
(b) The Issuers may and shall resume payments on and distributions
in respect of the Notes and may acquire them upon the earlier of:
(i) with respect to a default referred to in clause (i) of
Section 10.03(a) hereof, the date upon which such default is cured or
waived, or
(ii) in the case of a default referred to in clause (ii) of
Section 10.03(a) hereof, the earlier of the date upon which such non
payment default is cured or waived, 179 days after the date on which the
applicable Payment Blockage Notice is received or the date upon which the
Trustee receives notice from the representative for such Designated Senior
Debt rescinding the Payment Blockage Notice, unless the maturity of such
Designated Senior Debt has been accelerated, if this Article 10 otherwise
permits the payment, distribution or acquisition at the time of such
payment or acquisition.
Section 10.04. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of
Default, the Issuers shall promptly notify holders of Senior Debt (or their
representative) of the acceleration.
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Section 10.05. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment or
distribution of any kind or character with respect to any Obligations on, or
with respect to, the Notes (except in (A) Permitted Junior Securities and (B)
payments and other distributions made from any defeasance trust created pursuant
to Article 8 hereof, so long as the trust was created in accordance with all
relevant conditions specified in this Indenture at the time it was created) when
payment is prohibited by this Article 10, such payment shall be held by the
Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith
over and delivered, upon written request, to the holders of Senior Debt as their
interests may appear or to their representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such Obligations in full in cash or Cash Equivalents in accordance with
their terms, after giving effect to any concurrent payment or distribution to or
for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Issuers
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
To the extent any payment of Senior Debt of the Issuers (whether by
or on behalf of the Issuers, as proceeds of security or enforcement of any right
of setoff or otherwise) is declared to be fraudulent or preferential, set aside
or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, the Senior Debt of the Issuers or part
thereof originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred.
Section 10.06. Notice by Issuers.
The Issuers shall promptly notify the Trustee and the Paying Agent
of any facts known to the Issuers that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 10.
Section 10.07. Subrogation.
After all Senior Debt is paid in full in cash or Cash Equivalents
and until the Notes are paid in full, Holders of Notes shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Notes) to
the rights of holders of Senior Debt to receive distributions applicable
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to Senior Debt to the extent that distributions otherwise payable to the Holders
of Notes have been applied to the payment of Senior Debt. A distribution made
under this Article 10 to holders of Senior Debt that otherwise would have been
made to Holders of Notes is not, as between the Issuers and Holders, a payment
by the Issuers on the Notes.
Section 10.08. Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(i) impair, as between the Issuers and Holders of Notes, the
obligation of the Issuers, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Notes and
creditors of either of the Issuers other than their rights in relation to
holders of Senior Debt; or
(iii) prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of Notes.
If the Issuers fail because of this Article 10 to pay principal of
or interest on a Note on the due date, the failure is still a Default or Event
of Default.
Section 10.09. Subordination May Not Be Impaired by Issuers.
No right of any holder of Senior Debt of the Issuers to enforce the
subordination of the Indebtedness evidenced by the Notes as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act by the Issuers or any Holder or by the failure of the Issuers or any Holder
to comply with this Indenture, regardless of any knowledge thereof which any
such Holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt of the Issuers may, at any time and from
time to time, without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article 10 or the obligations
hereunder of the Holders of the Notes to the holders of the Senior Debt of the
Issuers, do any one or more of the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, Senior
Debt of the Issuers, or otherwise amend or supplement in any manner Senior Debt
of the Issuers, or any instrument evidencing the same or any agreement under
which Senior Debt of the Issuers is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Debt of the Issuers; (iii) release any Person liable in any manner for the
payment or collection of Senior Debt of the Issuers; and (iv) exercise or
refrain from exercising any rights against the Issuers and any other Person.
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Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders
of Senior Debt, the distribution may be made and the notice given to their
representative.
Upon any payment or distribution of assets of the Issuers referred
to in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Issuers, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Section 10.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least two Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Issuers or a
representative of the Senior Debt may give the notice. Nothing in this Article
10 shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
Section 10.12. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the representative of the Senior Debt is hereby authorized to file
an appropriate claim for and on behalf of the Holders of the Notes.
Section 10.13. Amendments.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the parties holding a majority of the outstanding
Indebtedness under each credit agreement included in the Senior Credit
Facilities.
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ARTICLE 11
SUBSIDIARY GUARANTEES
Section 11.01. Subsidiary Guarantees.
Subject to this Article 11, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees on an unsecured,
senior subordinated basis to each Holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns, irrespective
of the validity and enforceability of this Indenture, the Notes or the
obligations of the Issuers hereunder or thereunder, that: (a) the principal of
and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Issuers to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and
severally obligated on an unsecured, senior subordinated basis to pay the same
immediately. Each Subsidiary Guarantor agrees that this is a guarantee of
payment and not a guarantee of collection.
The Subsidiary Guarantors hereby agree that their obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Issuers, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Subsidiary Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Issuers, any right to require a proceeding first against the Issuers,
protest, notice and all demands whatsoever and covenant that this Subsidiary
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise
to return to the Issuers, the Subsidiary Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Issuers or
the Subsidiary Guarantors, any amount paid by either to the Trustee or such
Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the
Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 hereof for the purposes of this Subsidiary
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
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the event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Guarantors for the purpose of
this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to
seek contribution from any non-paying Subsidiary Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Subsidiary Guarantee.
Section 11.02. Subordination of Subsidiary Guarantee.
Each Guarantor agrees, and each Holder by accepting a Note agrees,
that the Obligations of each Guarantor under its Subsidiary Guarantee, are
subordinated and junior in right of payment to the prior payment of all Senior
Debt of each Guarantor on the same basis as the Obligations on, or relating to
the Notes, are subordinated and junior in right of payment to the prior payment
of all Senior Debt of the Issuers pursuant to Article 10. In furtherance of the
foregoing, each Guarantor agrees, and the Trustee and each Holder by accepting a
Note agrees, that the subordination and related provisions applicable to the
Obligations of each Guarantor under its Subsidiary Guarantee by virtue of the
preceding sentence shall be as set forth in Article 10 as if each reference to
"Issuers" therein were instead a reference to "a Guarantor", each reference to
"Senior Debt of the Issuers" therein were instead a reference to "Senior Debt of
each Guarantor" and each reference to "Notes" therein were instead a reference
to "this Subsidiary Guarantee", with such appropriate modifications as the
context may require. For the purposes of the foregoing sentence, the Trustee and
the Holders shall have the right to receive and/or retain payments by any of the
Guarantors only at such times as they may receive and/or retain payments in
respect of the Notes pursuant to this Indenture, including Article 10 hereof.
The provisions of this Section 11.02 may not be amended or modified without the
written consent of the parties holding a majority of the outstanding
Indebtedness under each credit agreement included in the Senior Credit
Facilities.
Section 11.03. Limitation on Subsidiary Guarantor Liability.
Each Subsidiary Guarantor, and by its acceptance of Notes, each
Holder, hereby confirms that it is the intention of all such parties that the
Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
state law to the extent applicable to any Subsidiary Guarantee. To effectuate
the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors
hereby irrevocably agree that the obligations of such Subsidiary Guarantor will,
after giving effect to such maximum amount and all other contingent and fixed
liabilities of such Subsidiary Guarantor that are relevant under such laws, and
after giving effect to any collections from, rights to receive contribution from
or payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under this Article 11, result
in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee
not constituting a fraudulent transfer or conveyance.
Section 11.04. Execution and Delivery of Subsidiary Guarantee.
To evidence its Subsidiary Guarantee set forth in Section 11.01
hereof, each Subsidiary Guarantor hereby agrees to cause one of its officers to
execute its Subsidiary Guarantee, the form of which is provided in Exhibit E
hereto, and which is to be annexed to each Note that is
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authenticated and delivered by the Trustee, and that this Indenture shall be
executed on behalf of such Subsidiary Guarantor by its President or one of its
Vice Presidents or by a duly authorized officer acting on its behalf.
Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 11.01 hereof shall remain in full force and
effect notwithstanding any failure to execute its Subsidiary Guarantee, the form
of which is provided in Exhibit E hereto, and which is annexed to each Note.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee of
such Note set forth in this Indenture on behalf of such Subsidiary Guarantor.
In the event that the Issuers create or acquire any new Restricted
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.23 hereof, the Issuers shall cause such Restricted Subsidiaries to execute
supplemental indentures to this Indenture and Subsidiary Guarantees in
accordance with Section 4.23 hereof and this Article 11, to the extent
applicable.
Section 11.05. Subsidiary Guarantors May Consolidate, etc., on
Certain Terms.
Except as otherwise provided in Section 11.06 hereof, no Subsidiary
Guarantor may sell or otherwise dispose of all or substantially all of its
assets to, or consolidate with or merge with or into (whether or not such
Subsidiary Guarantor is the surviving Person) another Person, other than the
Company or another Subsidiary Guarantor, unless:
(a) subject to Section 11.06 hereof, either (i) the Person acquiring
the property in such sale or disposition or the Person formed by or surviving
any such consolidation or merger (if other than such Subsidiary Guarantor)
unconditionally assumes all the obligations of such Subsidiary Guarantor,
pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Notes, this Indenture, the Subsidiary
Guarantee and the Registration Rights Agreement on the terms set forth herein or
therein or (ii) the Net Proceeds of such a sale or other disposition are applied
in accordance with Sections 3.09 and 4.10 hereof and
(b) if such merger or consolidation is with a Person other than
either of the Issuers or a Restricted Subsidiary, immediately after giving
effect to such transaction, no Default or Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon or annexed to the Notes and the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Subsidiary Guarantor, such successor Person shall succeed
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to and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor. Such successor Person thereupon
may cause to be signed any or all of the Subsidiary Guarantees to be endorsed
upon or annexed to all of the Notes issuable hereunder which theretofore shall
not have been signed by the Issuers and delivered to the Trustee. All the
Subsidiary Guarantees so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Subsidiary Guarantees theretofore and
thereafter issued in accordance with the terms of this Indenture as though all
of such Subsidiary Guarantees had been issued at the date of the execution
hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Subsidiary Guarantor with
or into the Company or another Subsidiary Guarantor, or shall prevent any sale
or conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety to the Company or another Subsidiary Guarantor.
Section 11.06. Releases Following Sale of Assets.
In the event of (i) a sale or other disposition of all or
substantially all of the assets of any Subsidiary Guarantor, by way of merger,
consolidation or otherwise, or (ii) a sale or other disposition of all of the
Capital Stock of any Subsidiary Guarantor, in each case to a Person that is not
(either before or after giving effect to such transactions) a Restricted
Subsidiary of the Company, then such Subsidiary Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the Capital Stock of such Subsidiary Guarantor) or the corporation acquiring
the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Subsidiary Guarantor) will be released
and relieved of any obligations under its Subsidiary Guarantee; provided that
the Net Proceeds of such sale or other disposition are applied in accordance
with Sections 3.09 and 4.10 hereof. In addition, in the event that the Company
properly designates any Restricted Subsidiary that is a Subsidiary Guarantor as
an Unrestricted Subsidiary, such Subsidiary Guarantor will be released and
relieved of any obligations under its Subsidiary Guarantee. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to
the effect that such sale or other disposition was made by the Company in
accordance with Section 4.10 hereof, or notification by the Company that a
Restricted Subsidiary was designated as an Unrestricted Subsidiary, the Trustee
shall execute any documents reasonably required in order to evidence the release
and relieve of any Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee.
Any Subsidiary Guarantor that is not released from its obligations
under its Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other obligations of any
Subsidiary Guarantor under this Indenture as provided in this Article 11.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
<PAGE>
93
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss.318(c), the imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by the Issuers, any Subsidiary Guarantor
or the Trustee to the others is duly given if in writing and delivered in Person
or mailed by first class mail (registered or certified, return receipt
requested), telecopier (promptly confirmed in writing) or overnight air courier
guaranteeing next day delivery, to the others' address:
If to the Issuers and/or any Subsidiary Guarantor:
Consolidated Container Company LLC
Consolidated Container Capital, Inc.
2515 McKinney Avenue
Suite 850
Dallas, Texas 75201
Attention: Chief Financial Officer
and to each of Vestar Capital Partners III, L.P. and Reid Plastics
Holdings, Inc.
c/o Vestar Capital Partners, Inc.
Seventeenth Street Plaza,
1225 17th Street,, Suite 1660
Denver, Colorado 80202
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 455-2502
Attention: Stephan Feder, Esq.
If to the Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
The Issuers, any Subsidiary Guarantor or the Trustee, by notice to
the others may designate additional or different addresses for subsequent
notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days
<PAGE>
94
after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Issuers mail a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders
of Notes.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Issuers, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers to the Trustee to
take any action under this Indenture, the Issuers shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants, if any, have been satisfied.
Section 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
<PAGE>
95
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.07. No Personal Liability of Managers, Directors,
Officers, Employees, Stockholders and Members.
No past, present or future manager, director, officer, employee,
incorporator, stockholder or member of the Company, Capital or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Company,
Capital or the Subsidiary Guarantors under the Notes, the Subsidiary Guarantees,
this Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.
Section 12.08. Governing Law.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
Section 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Issuers or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
Section 12.10. Successors.
All agreements of the Issuers in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors. All agreements of each Subsidiary Guarantor in this Indenture
shall bind its successors, except as otherwise provided in Section 11.06 hereof.
Section 12.11. Severability.
<PAGE>
96
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 12.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE>
97
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and attested as of the date first written above.
CONSOLIDATED CONTAINER COMPANY
LLC
By: Consolidated Container Holdings LLC, as its
Sole Member and Manager
By: /s/ Steven M. Silver
--------------------------------------------
Name: Steven M. Silver
Title: Vice President
CONSOLIDATED CONTAINER CAPITAL, INC.
By: /s/ Steven M. Silver
--------------------------------------------
Name: Steven M. Silver
Title: Vice President
THE BANK OF NEW YORK, AS TRUSTEE
By: /s/ Remos Reale
--------------------------------------------
Name: Remos Reale
Title: Vice President
REID PLASTICS GROUP LLC, AS
GUARANTOR
By: Consolidated Container Company LLC, as its
Sole Member and Manager
By: Consolidated Container Holdings LLC, as its
Sole Member and Manager
By: /s/ Steven M. Silver
--------------------------------------------
Name: Steven M. Silver
Title: Vice President
<PAGE>
98
PLASTIC CONTAINERS LLC, AS
GUARANTOR
By: Consolidated Container Company LLC, as its
Sole Member and Manager
By: Consolidated Container Holdings LLC, as its
Sole Member and Manager
By: /s/ Steven M. Silver
--------------------------------------------
Name: Steven M. Silver
Title: Vice President
CONTINENTAL PLASTIC CONTAINERS
LLC, AS GUARANTOR
By: Plastic Containers LLC, as its Sole Member
and Manager
By: Consolidated Container Company LLC, as its
Sole Member and Manager
By: Consolidated Container Holdings LLC, as its
Sole Member and Manager
By: /s/ Steven M. Silver
--------------------------------------------
Name: Steven M. Silver
Title: Vice President
CONTINENTAL CARIBBEAN CONTAINERS,
INC., AS GUARANTOR
By: /s/ Steven M. Silver
--------------------------------------------
Name: Steven M. Siler
Title: Vice President
<PAGE>
EXHIBIT A1
[Face of Note]
================================================================================
CUSIP/CINS ____________
10 1/8% Senior Subordinated Notes due 2009
No. 1 $____________
CONSOLIDATED CONTAINER COMPANY LLC
AND
CONSOLIDATED CONTAINER CAPITAL, INC.
promises to pay to Cede & Co. or registered assigns,
the principal sum of ___________________________________________________________
Dollars on July 15, 2009.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 1
CONSOLIDATED CONTAINER COMPANY
LLC
By: Consolidated Container Holdings LLC,
as its Sole Member and Manager
By:
--------------------------------------
Name:
Title:
CONSOLIDATED CONTAINER CAPITAL, INC.
By:
--------------------------------------
Name:
Title:
Dated: July 1, 1999
This is one of the Notes referred to
in the within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By:
----------------------------------
Authorized Signatory
================================================================================
A1-1
<PAGE>
[Back of Note]
10 1/8% Senior Subordinated Notes due 2009
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Consolidated Container Company LLC, a Delaware limited
company (the "Company") and Consolidated Container Capital, Inc., a Delaware
corporation ("Capital," and together with the Company, the "Issuers"), promises
to pay interest on the principal amount of this Note at 10 1/8% per annum from
July 1, 1999 until maturity and shall pay the Liquidated Damages, if any,
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Issuers will pay interest and Liquidated Damages, if any,
semi-annually in arrears on January 15 and July 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or duly provided for or, if no interest has
been paid, from the date of issuance; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be January
15, 2000. The Issuers shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time at a rate that is equal to the rate then in effect on the
Notes pursuant to Section 2.12 of the Indenture; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time at the same rate to the extent
lawful on the Notes pursuant to Section 2.12 of the Indenture. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Holders of Notes at
the close of business on the January 1 or July 15 next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.12 of the
Indenture with respect to defaulted interest. The Notes will be payable as to
principal, premium, if any, and Liquidated Damages, if any, and interest at the
office or agency of the Issuers maintained for such purpose within or without
the City and State of New York, or, at the option of the Issuers, payment of
interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, provided that payment by
wire transfer of immediately available funds will be required with respect to
principal of and interest, premium, if any, and Liquidated Damages on, all
Global Notes and all other Notes the Holders of which shall have provided wire
transfer instructions to the Issuers or the Paying Agent. Such payment shall be
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will initially act as Paying Agent and Registrar.
The Issuers may change any
A1-2
<PAGE>
Paying Agent or Registrar without notice to any Holder. The Company or any of
its Restricted Subsidiaries may act in any such capacity.
4. INDENTURE. The Issuers issued this Note under an Indenture, dated
as of July 1, 1999 ("Indenture"), between the Issuers, the Subsidiary Guarantors
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are obligations of the Issuers limited to
$300.0 million in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Issuers shall not have the option to redeem the Notes prior to July 15, 2004.
Thereafter, the Issuers may redeem all or part of the Notes upon not less than
30 nor more than 90 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on July 15 of the
years indicated below:
Year Percentage
- ---- ----------
2004 105.0625%
2005 103.3750%
2006 101.6875%
2007 and thereafter 100.0000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to July 15, 2002, the Issuers may on any one or
more occasions redeem up to 40% of the aggregate principal amount of Notes
issued under the Indenture at a redemption price of 110.125% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
to the redemption date, with the net cash proceeds of one or more Equity
Offerings of the Company (or of Holdings to the extent such proceeds are
contributed to the Company); provided that (i) at least 60% of the aggregate
principal amount of Notes issued under the Indenture remains outstanding
immediately after the occurrence of such redemption (excluding Notes held by the
Company and its Subsidiaries) and (ii) the redemption occurs within 90 days of
the date of the closing of such Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Issuers shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, as defined in Section 1.01 of
the Indenture, the Issuers shall be required to make an offer (a "Change of
Control Offer") to repurchase all or any part
A1-3
<PAGE>
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, the "Change of Control Payment"). Within 30 days following any
Change of Control, the Issuers shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, within ten Business Days of each date on which the aggregate amount of
Excess Proceeds exceeds $15.0 million, the Issuers shall commence an offer to
all Holders of Notes and all holders of other Indebtedness that is pari passu
with the Notes containing provisions similar to those set forth in the Indenture
with respect to offers to purchase or redeem with the proceeds of sales of
assets (as "Asset Sale Offer") pursuant to Sections 3.09 and 4.10 of the
Indenture to purchase the maximum principal amount of Notes (including any
Additional Notes) and such other pari passu Indebtedness that may be purchased
out of the Excess Proceeds at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of Notes and such other pari passu Indebtedness tendered into
such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes and such other pari passu Indebtedness to be purchased on a pro
rata basis based on the principal amount of Notes and such other pari passu
Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero. Holders of Notes that are the subject of
an offer to purchase will receive an Asset Sale Offer from the Issuers prior to
any related purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Issuers may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Issuers need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Issuers
need not exchange or register the transfer of any Notes for a period of 15 days
before the mailing of a notice of Notes to be redeemed or during the period
between a record date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
A1-4
<PAGE>
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Subsidiary Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Notes and Additional Notes, if any including,
without limitation, consents obtained in connection with a tender offer or
exchange offer for Notes, and any existing default or compliance with any
provision of the Indenture, the Subsidiary Guarantees or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes and Additional Notes, if any including, without limitation,
consents obtained in connection with a tender offer or exchange offer for Notes.
Without the consent of any Holder of a Note, the Indenture, the Subsidiary
Guarantees or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's,
Capital's or any Subsidiary Guarantor's obligations to Holders of the Notes in
case of a merger or consolidation or sale of all or substantially all of the
Company's, Capital's or such Subsidiary Guarantor's asset, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act, to
provide for the Issuance of Additional Notes in accordance with the limitations
set forth in the Indenture, or to allow any Subsidiary Guarantor to execute a
supplemental indenture to the Indenture and/or a Subsidiary Guarantee with
respect to the Notes.
12 DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest on, or premium, if any, or
Liquidated Damages, if any, on the Notes; (ii) default in payment when due of
principal of the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
(iii) failure by the Company to comply with Section 4.10 or 4.15 of the
Indenture; (iv) failure by the Company or any of its Subsidiaries for 60 days
after notice to the Company by the Trustee or the Holders of at least 25% in
principal amount of the Notes (including Additional Notes, if any) then
outstanding to observe or perform any other covenant, representation, warranty
or other agreements in the Indenture or the Notes; (v) default under certain
other agreements relating to Indebtedness of the Company which default is caused
by a failure to pay principal at the final stated maturity of such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default") or results in the acceleration of
such Indebtedness prior to its express maturity, and, in each case, the
principal amount of such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $20.0.
million or more; (vi) failure by the Company or any of its Restricted
Subsidiaries to pay judgements, aggregating in excess of $20.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days after such
judgment have become final and nonappealable, and in the event such judgment is
covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgment or decree that is not promptly stayed; (vii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law; and (viii) except as permitted by the Indenture, any Subsidiary
Guarantee of a Significant Subsidiary shall be held in any judicial proceeding
to be unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Subsidiary Guarantor that is a Significant Subsidiary or any
Person acting on its behalf shall deny or disaffirm its obligations under such
Subsidiary Guarantor's Subsidiary Guarantee. If any
A1-5
<PAGE>
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company, all outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Issuers are required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Issuers are required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13 TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Issuers or its Affiliates, and may otherwise deal with the
Issuers or its Affiliates, as if it were not the Trustee.
14 NO RECOURSE AGAINST OTHERS. A manager, director, officer,
employee, incorporator, stockholder or member, of any of the Issuers, as such,
shall not have any liability for any obligations of the Issuers under the Notes
or the Subsidiary Guarantors under the Guarantees or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15 AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16 ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A ( =Uniform Gifts
to Minors Act).
17 ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of July 1, 1999, between the Issuers and the parties named on
the signature pages thereof (the "Registration Rights Agreement").
18 CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes
A1-6
<PAGE>
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
The Issuers will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Consolidated Container Company LLC
Consolidated Container Capital, Inc.
2513 McKinney Avenue
Suite 850
Dallas, Texas 75201
Attention: Chief Financial Officer
A1-7
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
----------------------------------
(Insert assignee's legal name)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Issuers. The agent may substitute
another to act for him.
Date:___________________
Your Signature:____________________________
(Sign exactly as your name
appears on the face of this
Note)
Signature Guarantee*:_________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
|_| Section 4.10 |_| Section 4.15
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$_________________
Date:___________________
Your Signature:____________________________
(Sign exactly as your name
appears on the face of this
Note)
Tax Identification No.:____________________
Signature Guarantee*:_________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-9
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount
of Signature of
Amount of decrease Amount of increase this Global Note authorized signatory
in Principal Amount in Principal Amount following such of
of of decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
---------------- ---------------- ---------------- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A1-10
<PAGE>
EXHIBIT A2
[Face of Regulation S Temporary Global Note]
================================================================================
CUSIP/CINS ____________
10 1/8% Senior Subordinated Notes due 2009
No. S-1 $____________
CONSOLIDATED CONTAINER COMPANY LLC
AND
CONSOLIDATED CONTAINER CAPITAL, INC.
promises to pay to Cede & Co. or registered assigns,
the principal sum of ___________________________________________________________
Dollars on July 15, 2009.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 1
CONSOLIDATED CONTAINER COMPANY LLC
By: Consolidated Container Holdings LLC,
as its Sole Member and Manager
By:
--------------------------------------
Name:
Title:
CONSOLIDATED CONTAINER CAPITAL, INC.
By:
--------------------------------------
Name:
Title:
Dated: July 1, 1999
This is one of the Notes referred to
in the within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By:
----------------------------------
Authorized Signatory
================================================================================
A2-1
<PAGE>
[Back of Regulation S Temporary Global Note]
10 1/8% Senior Subordinated Notes due 2009
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUERS.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TO THE ISSUERS OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE,
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN."
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A) (1), (2), (3) OR (7) OR REGULATION D UNDER THE SECURITIES ACT (AN
"IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE ISSUERS OR ANY OF OUR RESPECTIVE SUBSIDIARIES, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF THE
SECURITIES ACT, (D) IN A
A2-2
<PAGE>
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E)
TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Consolidated Container Company LLC, a Delaware limited
company (the "Company") and Consolidated Container Capital, Inc., a Delaware
corporation ("Capital," and together with the Company, the "Issuers"), promises
to pay interest on the principal amount of this Note at 10 1/8% per annum from
July 1, 1999 until maturity and shall pay the Liquidated Damages, if any,
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Issuers will pay interest and Liquidated Damages, if any,
semi-annually in arrears on January 15 and July 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or duly provided for or, if no interest has
been paid, from the date of issuance; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be January
15, 2000. The Issuers shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time at a rate that is equal to the rate then in effect on the
Notes pursuant to Section 2.12 of the Indenture; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time at the same rate to the extent
lawful on the Notes pursuant to Section 2.12 of the Indenture. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one
or more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Subordinated Notes under the Indenture.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Holders of Notes at
the close of business on the January 1 or July 15 next preceding the Interest
Payment Date, even if such Notes are canceled after
A2-3
<PAGE>
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium, if any, and Liquidated Damages, if
any, and interest at the office or agency of the Issuers maintained for such
purpose within or without the City and State of New York, or, at the option of
the Issuers, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest, premium, if any, and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Issuers or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will initially act as Paying Agent and Registrar.
The Issuers may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Restricted Subsidiaries may act in any such
capacity.
4. INDENTURE. The Issuers issued this Note under an Indenture, dated
as of July 1, 1999 ("Indenture"), between the Issuers, the Subsidiary Guarantors
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are obligations of the Issuers limited to
$300.0 million in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5,
the Issuers shall not have the option to redeem the Notes prior to July 15,
2004. Thereafter, the Issuers may redeem all or part of the Notes upon not less
than 30 nor more than 90 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on July 15 of the
years indicated below:
Year Percentage
- ---- ----------
2004 105.0625%
2005 103.3750%
2006 101.6875%
2007 and thereafter 100.0000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to July 15, 2002, the Issuers may on any one or
more occasions redeem up to 40% of the aggregate principal amount of Notes
issued under the Indenture at a redemption price of 110.125% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
to the redemption date, with the net cash proceeds of one or more Equity
Offerings of the Company (or of Holdings to the extent such proceeds are
contributed to the Company); provided that (i) at least 60% of the aggregate
principal amount of Notes issued under the Indenture remains outstanding
immediately after the occurrence of such redemption (excluding Notes held by the
Company and its
A2-4
<PAGE>
Subsidiaries) and (ii) the redemption occurs within 90 days of the date of the
closing of such Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Issuers shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, as defined in Section 1.01 of
the Indenture, the Issuers shall be required to make an offer (a "Change of
Control Offer") to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of each Holder's Notes at a purchase price equal to 101% of
the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase, the "Change of
Control Payment"). Within 30 days following any Change of Control, the Issuers
shall mail a notice to each Holder setting forth the procedures governing the
Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, within ten Business Days of each date on which the aggregate amount of
Excess Proceeds exceeds $15.0 million, the Issuers shall commence an offer to
all Holders of Notes and all holders of other Indebtedness that is pari passu
with the Notes containing provisions similar to those set forth in the Indenture
with respect to offers to purchase or redeem with the proceeds of sales of
assets (as "Asset Sale Offer") pursuant to Sections 3.09 and 4.10 of the
Indenture to purchase the maximum principal amount of Notes (including any
Additional Notes) and such other pari passu Indebtedness that may be purchased
out of the Excess Proceeds at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of Notes and such other pari passu Indebtedness tendered into
such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes and such other pari passu Indebtedness to be purchased on a pro
rata basis based on the principal amount of Notes and such other pari passu
Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero. Holders of Notes that are the subject of
an offer to purchase will receive an Asset Sale Offer from the Issuers prior to
any related purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the
A2-5
<PAGE>
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Issuers may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Issuers
need not exchange or register the transfer of any Note or portion of a Note
selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, the Issuers need not exchange or register the transfer
of any Notes for a period of 15 days before the mailing of a notice of Notes to
be redeemed or during the period between a record date and the corresponding
Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or
in part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Subsidiary Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Notes and Additional Notes, if any including,
without limitation, consents obtained in connection with a tender offer or
exchange offer for Notes, and any existing default or compliance with any
provision of the Indenture, the Subsidiary Guarantees or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes and Additional Notes, if any including, without limitation,
consents obtained in connection with a tender offer or exchange offer for Notes.
Without the consent of any Holder of a Note, the Indenture, the Subsidiary
Guarantees or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's,
Capital's or any Subsidiary Guarantor's obligations to Holders of the Notes in
case of a merger or consolidation or sale of all or substantially all of the
Company's, Capital's or such Subsidiary Guarantor's asset, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act, to
provide for the Issuance of Additional Notes in accordance with the limitations
set forth in the Indenture, or to allow any Subsidiary Guarantor to execute a
supplemental indenture to the Indenture and/or a Subsidiary Guarantee with
respect to the Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or premium, if any, or
Liquidated Damages, if any, on the Notes; (ii) default in payment when due of
principal of the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
(iii) failure by the Company to comply with Section 4.10 or 4.15 of the
Indenture; (iv) failure by the Company or any of its Subsidiaries for 60 days
after notice to the Company by the Trustee or the Holders of at least 25% in
principal amount of the Notes (including Additional Notes, if any) then
outstanding to observe or perform any other covenant, representation, warranty
or other agreements in the Indenture or the Notes; (v) default under certain
other agreements relating to Indebtedness of the Company which default is caused
by a failure to pay principal at the final stated
A2-6
<PAGE>
maturity of such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
or results in the acceleration of such Indebtedness prior to its express
maturity, and, in each case, the principal amount of such Indebtedness under
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $20.0. million or more; (vi) failure by the Company or
any of its Restricted Subsidiaries to pay judgements, aggregating in excess of
$20.0 million, which judgments are not paid, discharged or stayed for a period
of 60 days after such judgment have become final and nonappealable, and in the
event such judgment is covered by insurance, an enforcement proceeding has been
commenced by any creditor upon such judgment or decree that is not promptly
stayed; (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary pursuant to or
within the meaning of Bankruptcy Law; and (viii) except as permitted by the
Indenture, any Subsidiary Guarantee of a Significant Subsidiary shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Subsidiary Guarantor that is a
Significant Subsidiary or any Person acting on its behalf shall deny or
disaffirm its obligations under such Subsidiary Guarantor's Subsidiary
Guarantee. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Company, all outstanding Notes will become due
and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Issuers are required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Issuers are required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Issuers or its Affiliates, and may otherwise deal with the
Issuers or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A manager, director, officer,
employee, incorporator, stockholder or member, of any of the Issuers, as such,
shall not have any liability for any obligations of the Issuers under the Notes
or the Subsidiary Guarantors under the Guarantees or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=
tenants by the entireties),
A2-7
<PAGE>
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A ( =Uniform Gifts to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of July 1, 1999, between the Issuers and the parties named on
the signature pages thereof (the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Issuers will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Consolidated Container Company LLC
Consolidated Container Capital, Inc.
2513 McKinney Avenue
Suite 850
Dallas, Texas 75201
Attention: Chief Financial Officer
A2-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
----------------------------------
(Insert assignee's legal name)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Issuers. The agent may substitute
another to act for him.
Date:___________________
Your Signature:____________________________
(Sign exactly as your name
appears on the face of this
Note)
Signature Guarantee*:_________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A2-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
|_| Section 4.10 |_| Section 4.15
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$_________________
Date:___________________
Your Signature:____________________________
(Sign exactly as your name
appears on the face of this
Note)
Tax Identification No.:____________________
Signature Guarantee*:_________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A2-10
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or of other Restricted Global Notes
for an interest in this Regulation S Temporary Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount
of Signature of
Amount of decrease Amount of increase this Global Note authorized signatory
in Principal Amount in Principal Amount following such of
of of decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
---------------- ---------------- ---------------- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A2-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
FORM OF CERTIFICATE OF TRANSFER
Consolidated Container Company LLC
Consolidated Container Capital, Inc.
2515 McKinney Avenue
Suite 850
Dallas, Texas 75201
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Consolidated Container Company LLC's and Consolidated
Container Capital, Inc.'s $185,000,000 10 1/8% Senior
Subordinated Notes due 2009
Reference is hereby made to the Indenture, dated as of July 1, 1999
(the "Indenture"), among Consolidated Container Company LLC (the "Company") and
Consolidated Container Capital, Inc., ("Capital" and together with the Company,
the "Issuers"), the Subsidiary Guarantors named therein and The Bank of New
York, as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
___________________ (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of a beneficial
interest in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. |_| Check if Transferee will take delivery of a beneficial
interest in the Temporary Regulation S Global Note, the Regulation S Global Note
or a Definitive Note pursuant to Regulation S. The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the
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<PAGE>
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a person in the United States and (x) at
the time the buy order was originated, the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Note, the Temporary Regulation S Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
3. |_| Check and complete if Transferee will take delivery of a
beneficial interest in the IAI Global Note or a Definitive Note pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) |_| such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) |_| such Transfer is being effected to the Issuers or a
subsidiary thereof;
or
(c) |_| such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) |_| such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule
904, and the Transferor hereby further certifies that it has not engaged
in any general solicitation within the meaning of Regulation D under the
Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by the
Transferee and (2) if such Transfer is in respect of a principal amount of
Notes at the time of transfer of less than $250,000, an Opinion of Counsel
provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend
printed on the IAI Global Note and/or the Definitive Notes and in the
Indenture and the Securities Act.
B-2
<PAGE>
4. Check if Transferee will take delivery of a beneficial interest
in an Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) |_| Check if Transfer is pursuant to Rule 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state
of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order
to maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be
subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) |_| Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky
securities laws of any state of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption
from the registration requirements of the Securities Act other than Rule
144, Rule 903 or Rule 904 and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of
any State of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will not
be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes or Restricted
Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuers.
---------------------------------------------
[Insert Name of Transferor]
By:
------------------------------------------
Name:
Title:
Dated:__________________
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP ________), or
(ii) |_| Regulation S Global Note (CUSIP ________), or
(iii) |_| IAI Global Note (CUSIP _______), or
(b) |_| a Restricted Definitive Note.
2. After the Transfer the Transferee will hold: [CHECK ONE]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP ________), or
(ii) |_| Regulation S Global Note (CUSIP ________), or
(iii) |_| IAI Global Note (CUSIP _______), or
(iv) |_| Unrestricted Global Note (CUSIP ________); or
(b) |_| a Restricted Definitive Note; or
(c) |_| an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-1
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Consolidated Container Company LLC
Consolidated Container Capital, Inc.
2515 McKinney Avenue
Suite 850
Dallas, Texas 75201
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Consolidated Container Company LLC's and Consolidated
Container Capital, Inc.'s $185,000,000 10 1/8% Senior
Subordinated Notes due 2009
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of July 1, 1999
(the "Indenture"), among Consolidated Container Company LLC (the "Company") and
Consolidated Container Capital, Inc., ("Capital" and together with the Company,
the "Issuers"), the Subsidiary Guarantors named therein and The Bank of New
York, as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
__________________________, (the "Owner") owns and proposes to
exchange the Note[s] or interest in such Note[s] specified herein, in the
principal amount of $____________ in such Note[s] or interests (the "Exchange").
In connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests
in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial
Interests in an Unrestricted Global Note
(a) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to beneficial interest in an Unrestricted Global Note. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to Unrestricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private
C-1
<PAGE>
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Definitive Note is being acquired in compliance with
any applicable blue sky securities laws of any state of the United States.
(c) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) |_| Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes for Restricted Definitive Notes or Beneficial
Interests in Restricted Global Notes
(a) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to Restricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] |_| 144A Global Note, |_| Regulation S Global Note, |_| IAI Global
Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
C-2
<PAGE>
This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuers.
---------------------------------------------
[Insert Name of Transferor]
By:
------------------------------------------
Name:
Title:
Dated:________________
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Consolidated Container Company LLC
Consolidated Container Capital, Inc.
2515 McKinney Avenue
Suite 850
Dallas, Texas 75201
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Consolidated Container Company LLC's and Consolidated
Container Capital, Inc.'s $185,000,000 10 1/8% Senior
Subordinated Notes due 2009
Reference is hereby made to the Indenture, dated as of July 1, 1999
(the "Indenture"), among Consolidated Container Company LLC (the "Company") and
Consolidated Container Capital, Inc., ("Capital" and together with the Company,
the "Issuers"), the Subsidiary Guarantors named therein and The Bank of New
York, as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) |_| a beneficial interest in a Global Note, or
(b) |_| a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Issuers or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Issuers a signed letter
substantially in the form of this letter and [, if such transfer is in respect
of a principal amount of Notes, at the time of transfer of less than $250,000,
an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial
D-1
<PAGE>
interest in a Global Note from us in a transaction meeting the requirements of
clauses (A) through (E) of this paragraph a notice advising such purchaser that
resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Issuers such certifications, legal opinions and other information as you and the
Issuers may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion and without a view to the distribution thereof in
violation of the Securities Act.
You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
---------------------------------------------
[Insert Name of Accredited Investor]
By:
------------------------------------------
Name:
Title:
Dated:_________________
D-2
<PAGE>
EXHIBIT E
FORM OF NOTATION OF SUBSIDIARY GUARANTEE
For value received, each Subsidiary Guarantor (which term includes
any successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, on an unsecured, senior subordinated basis to the
extent set forth in the Indenture and subject to the provisions in the
Indenture, dated as of July 1, 1999 (the "Indenture"), among Consolidated
Container Company LLC (the "Company") and Consolidated Container Capital, Inc.
("Capital" and together with the Company, the "Issuers"), the Subsidiary
Guarantors named therein and The Bank of New York, as trustee (the "Trustee"),
(a) the due and punctual payment of the principal of, premium, if any, and
interest on the Notes (as defined in the Indenture), whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of interest
on overdue principal and premium, if any, and, to the extent permitted by law,
interest, and the due and punctual performance of all other obligations of the
Issuers to the Holders or the Trustee all in accordance with the terms of the
Indenture and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. The
obligations of the Subsidiary Guarantors to the Holders of Notes and to the
Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly set
forth in Article 11 of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Subsidiary Guarantee. Each Holder of a
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Subsidiary Guarantee shall cease to be so
subordinated and subject in right of payment upon any defeasance of this Note in
accordance with the provisions of the Indenture.
The Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which the
Subsidiary Guarantee is noted shall have been executed by the Trustee by the
manual of facsimile signature of one of its authorized officers.
Dated: July 1, 1999
REID PLASTICS GROUP LLC
By: Consolidated Container Company LLC, as its Sole
Member and Manager
By: Consolidated Container Holdings LLC, as its Sole
Member and Manager
By:
---------------------------------------------
Name:
Title:
E-1
<PAGE>
PLASTIC CONTAINERS LLC
By: Consolidated Container Company LLC, as its Sole
Member and Manager
By: Consolidated Container Holdings LLC, as its Sole
Member and Manager
By:
---------------------------------------------
Name:
Title:
CONTINENTAL PLASTIC CONTAINERS LLC
By: Plastic Containers LLC, as its Sole Member and
Manager
By: Consolidated Container Company LLC, as its Sole
Member and Manager
By: Consolidated Container Holdings LLC, as its Sole
Member and Manager
By:
---------------------------------------------
Name:
Title:
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By:
---------------------------------------------
Name:
Title:
E-2
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of ____________________ (or its permitted successor), a [Delaware]
corporation (the "Company"), the Issuers, the other Subsidiary Guarantors (as
defined in the Indenture referred to herein) and The Bank of New York, a New
York banking corporation, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Issuers have heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of July 1, 1999 providing for
the issuance of an aggregate principal amount of up to $300,000,000 of 10 1/8%
Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee on an unsecured, senior subordinated basis all of the Issuers'
Obligations under the Notes and the Indenture on the terms and conditions set
forth herein (the "Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Subsidiary Guarantors named in the
Indenture, to jointly and severally guarantee on an unsecured, senior
subordinated basis to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, the Notes
or the obligations of the Issuers hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be
promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all
other obligations of the Issuers to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal
of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the
Subsidiary Guarantors shall be jointly and severally obligated to
pay the same immediately.
F-1
<PAGE>
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or
the Indenture, the absence of any action to enforce the same, any waiver
or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Issuers, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence presentment,
demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuers, any right to require a proceeding
first against the Issuers, protest, notice and all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and the
Indenture, and the Guaranteeing Subsidiary accepts all obligations of a
Subsidiary Guarantor under the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Issuers, the Subsidiary Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting in
relation to either the Issuers or the Subsidiary Guarantors, any amount
paid by either to the Trustee or such Holder, this Subsidiary Guarantee,
to the extent theretofore discharged, shall be reinstated in full force
and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any
right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.
(g) As between the Subsidiary Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
of the Indenture for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such obligations as
provided in Article 6 of the Indenture, such obligations (whether or not
due and payable) shall forthwith become due and payable by the Subsidiary
Guarantors for the purpose of this Subsidiary Guarantee.
(h) The Subsidiary Guarantors shall have the right to seek
contribution from any non-paying Subsidiary Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Guarantee.
(i) Pursuant to Section 11.02 of the Indenture, after giving
effect to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or
fraudulent conveyance laws, and after giving effect to any collections
from, rights to receive contribution from or payments made by or on behalf
of any other Subsidiary Guarantor in respect of the obligations of such
other Subsidiary Guarantor under Article 11 of the Indenture, this new
Subsidiary Guarantee shall be limited to the maximum amount permissible
such that the obligations of such Subsidiary Guarantor under this
Subsidiary Guarantee will not constitute a fraudulent transfer or
conveyance under either federal or state law.
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that
the Subsidiary Guarantees shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
F-2
<PAGE>
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not sell or otherwise
dispose of all or substantially all of its assets to, or consolidate with or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person) another corporation, Person or entity whether or not affiliated with
such Subsidiary Guarantor unless:
(i) subject to Section 11.06 of the Indenture, either (i)
the Person acquiring the property in such sale or disposition or the
Person formed by or surviving any such consolidation or merger (if other
than a Subsidiary Guarantor or the Company) unconditionally assumes all
the obligations of such Subsidiary Guarantor, pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee,
under the Notes, the Indenture and the Subsidiary Guarantee on the terms
set forth herein or therein or (ii) the Net Proceeds of such a sale or
other disposition are applied in accordance with Section 4.10 of the
Indenture; and
(ii) if such merger or consolidation is with a Person other
than either of the Issuers or a Restricted Subsidiary immediately after
giving effect to such transaction, no Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to the
Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and
punctual performance of all of the covenants and conditions of the Indenture to
be performed by the Subsidiary Guarantor, such successor corporation shall
succeed to and be substituted for the Subsidiary Guarantor with the same effect
as if it had been named herein as a Subsidiary Guarantor. Such successor
corporation thereupon may cause to be signed any or all of the Subsidiary
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under the Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of the Indenture
as though all of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
(c) Except as set forth in Articles 4 and 5 of the Indenture,
and notwithstanding clauses (a) and (b) above, nothing contained in the
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor,
or shall prevent any sale or conveyance of the property of a Subsidiary
Guarantor as an entirety or substantially as an entirety to the Company or
another Subsidiary Guarantor.
5. RELEASES.
(a) In the event of (i) a sale or other disposition of all or
substantially all of the assets of any Subsidiary Guarantor, by way of merger,
consolidation or otherwise, or (ii) a sale or other disposition of all of the
Capital Stock of any Subsidiary Guarantor, in each case to a Person that is not
(either before or after giving effect to such transactions) a Restricted
Subsidiary of the Company, then such Subsidiary Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the Capital Stock of such Subsidiary Guarantor) or the corporation acquiring
the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Subsidiary Guarantor) will be released
and relieved of any obligations under its Subsidiary Guarantee; provided that
the Net Proceeds of such sale or other disposition are applied in accordance
with the applicable provisions of this Indenture, including without limitation
Section 4.10 of the Indenture. In addition, in the event that the Company
properly designates any Restricted Subsidiary that is a Subsidiary Guarantor as
an Unrestricted Subsidiary, such Subsidiary Guarantor will be released and
relieved of any obligations under its Subsidiary Guarantee. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion of
F-3
<PAGE>
Counsel to the effect that such sale or other disposition was made by the
Company in accordance with the provisions of this Indenture, including without
limitation Sections 3.09 and 4.10 of the Indenture, or notification by the
Company that a Restricted Subsidiary was designated as an Unrestricted
Subsidiary, the Trustee shall execute any documents reasonably required in order
to evidence the release of any Subsidiary Guarantor from its obligations under
its Subsidiary Guarantee.
(b) Any Subsidiary Guarantor not released from its obligations
under its Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other obligations of any
Subsidiary Guarantor under the Indenture as provided in Article 11 of the
Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future manager,
director, officer, employee, incorporator, stockholder, member or agent of the
Guaranteeing Subsidiary, as such, shall have any liability for any obligations
of the Issuers or any Guaranteeing Subsidiary under the Notes, any Subsidiary
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the SEC that such a waiver is against
public policy.
7. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
8. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Issuers.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, ____
[GUARANTEEING SUBSIDIARY]
By:
---------------------------
Name:
Title:
F-4
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
By: Consolidated Container Holdings LLC,
as its Sole Member and Manager
By:
------------------------------
Name:
Title:
CONSOLIDATED CONTAINER CAPITAL, INC.
By:
----------------------------------
Name:
Title:
[EXISTING SUBSIDIARY GUARANTORS]
By:
----------------------------------
Name:
Title:
THE BANK OF NEW YORK
as Trustee
By:
----------------------------------
Name:
Title:
F-5
<PAGE>
Schedule I
SCHEDULE OF SUBSIDIARY GUARANTORS
The following schedule lists each Subsidiary Guarantor under the
Indenture as of the date of the Indenture:
Reid Plastics Group LLC
Plastic Containers LLC
Continental Plastic Containers LLC
Continental Caribbean Containers, Inc.
S-1
<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
- -----------------------------------------------x
IN RE: DIET DRUGS (PHENTERMINE/
FENFLURAMINE/DEXFENFLURAMINE) MDL Docket No. 1203
PRODUCTS LIABILITY LITIGATION
- -----------------------------------------------x
This document relates to:
MILDRED MILLER and DONALD MILLER,
Plaintiffs,
- against - Civ. 98-20520
WYETH-AYERST LABORATORIES,
a division of AMERICAN HOME PRODUCTS
CORPORATION, AMERICAN HOME
PRODUCTS CORPORATION, EON LABS
MANUFACTURING, INC., INTERNEURON
PHARMACEUTICALS, INC.,
Defendants.
- -----------------------------------------------x
STIPULATION AND PRETRIAL ORDER No:
AND NOW THIS _________ day of ________________, 1999, it is hereby
STIPULATED that the parties agree to the following extensions to discovery in
the above-captioned case:
1. Plaintiffs agree that they will complete expert disclosure on
August 19, 1999.
2. Defendants agree that they will complete their expert
disclosure pursuant to PreTrial Order 417 on September 30,
1999.
3. Plaintiffs and Defendants agree that the above extensions will
in no way prejudice the date of remand for this case as part
of Rapid Remand Group A.
<PAGE>
2
IT IS FURTHER STIPULATED that, to the extent necessary, the
following additional disclosure may take place after August 1, 1999, including
after the case has been remanded to the transferor court:
1. A limited number of additional depositions that are determined
to be necessary after the receipt of additional records
produced pursuant to the authorizations Ms. Miller provided at
her deposition;
2. Receipt of records pursuant to authorizations provided by Ms.
Miller at her deposition; and
3. Provision by Plaintiff of additional authorizations determined
to be necessary after the receipt of additional records
produced pursuant to the authorizations already provided by
Ms. Miller at her deposition.
<PAGE>
3
This Stipulation is filed on behalf of all defendants who have
appeared in the above captioned matter, those being American Home Products
Corporation(1) and Eon (?).
RHEINGOLD, VALET & RHEINGOLD, P.C.
By:____________________________
Paul D. Rheingold (PDR___)
David B. Rheingold (DBR___)
Hunter J. Shkolnik (HJS 4854)
113 East 37th Street
New York, New York 10016-3042
(212) 687-7714
Attorneys for Plaintiffs
Jennifer Lee Salmon
and Scott E. Salmon
SIMPSON THACHER & BARTLETT
By:____________________________
Charles E. Koob (CEK (1601)
Thomas C. Rice (TCR 1996)
Mark G. Cunha (MC 1189)
Edward D. Hassi (EDH 5339)
Office and P.O. Address
425 Lexington Avenue
New York, New York 10017-3954
(212) 455-2000
-and-
ARNOLD & PORTER
Craig N. Hentschel
555 Twelfth Street, N.W.
Washington, DC 20004
Attorneys for Defendants American Home
Products Corporation and Wyeth-Ayerst
Laboratories Company
- ----------
(1) On August 3, 1998, A.H. Robins Company, Inc. ("A.H. Robins") was merged
into American Home Products Corporation and ceased to exist as a separate
entity.
<PAGE>
4
LESTER, SCHWAB, KATZ & DWYER
By:____________________________
Frederick Fern (________)
120 Broadway, 38th Floor
New York, New York 10271
Counsel for Defendant
Eon Labs Manufacturing, Inc.
APPROVED AND SO ORDERED:
______________________________________
Louis C. Bechtle, Chief Judge Emeritus
<PAGE>
Exhibit 4.2
[Face of Note]
- --------------------------------------------------------------------------------
CUSIP 20902Y AC 6
10c% Senior Subordinated Notes due 2009
No. 1 $185,000,000
CONSOLIDATED CONTAINER COMPANY LLC
AND
CONSOLIDATED CONTAINER CAPITAL, INC.
promises to pay to Cede & Co., or registered assigns, the principal sum of ONE
HUNDRED EIGHTY FIVE MILLION DOLLARS on July 1, 2009.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 1
CONSOLIDATED CONTAINER COMPANY LLC
By: Consolidated Container Holdings LLC, as its
Sole Member and Manager
By: __________________________________
Name:
Title:
CONSOLIDATED CONTAINER CAPITAL, INC.
By: _____________________________________
Name:
Title:
Dated: __, 1999
This is one of the Notes referred to
in the within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By: __________________________________
Authorized Signatory
<PAGE>
[Back of Note]
10c% Senior Subordinated Notes due 2009
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUERS.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE,
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Consolidated Container Company LLC, a Delaware limited
company (the "Company"), and Consolidated Container Capital, Inc., a Delaware
corporation ("CAPITAL," and together with the Company, the "ISSUERS"), promise
to pay interest on the principal amount of this Note at 10c% per annum from July
1, 1999 until maturity. The Issuers will pay interest semi-annually in arrears
on January 15 and July 15 of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "INTEREST PAYMENT DATE").
Interest on the Notes will accrue from the most recent date to which interest
has been paid or duly provided for or, if no interest has been paid, from the
date of issuance; PROVIDED that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; PROVIDED, FURTHER, that
the first Interest Payment Date shall be January 15, 2000. The Issuers shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time at a
rate that is equal to the rate then in effect on the Notes pursuant to Section
2.12 of the Indenture; it shall
2
<PAGE>
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time at the same rate to the extent
lawful on the Notes pursuant to Section 2.12 of the Indenture. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Issuers will pay interest on the Notes (except
defaulted interest) to the Holders of Notes at the close of business on the
January 1 or July 15 next preceding the Interest Payment Date, even if such
Notes are canceled after such record date and on or before such Interest Payment
Date, except as provided in Section 2.12 of the Indenture with respect to
defaulted interest. The Notes will be payable as to principal, premium, if any,
and interest at the office or agency of the Issuers maintained for such purpose
within or without the City and State of New York, or, at the option of the
Issuers, payment of interest may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, PROVIDED that payment by wire
transfer of immediately available funds will be required with respect to
principal of and interest, premium, if any, all Global Notes and all other Notes
the Holders of which shall have provided wire transfer instructions to the
Issuers or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. Paying Agent And Registrar. Initially, The Bank of New York, the
Trustee under the Indenture, will initially act as Paying Agent and Registrar.
The Issuers may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Restricted Subsidiaries may act in any such
capacity.
4. Indenture. The Issuers issued this Note under an Indenture, dated as of
July 1, 1999 ("INDENTURE"), between the Issuers, the Subsidiary Guarantors and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders aRE referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are obligations of the Issuers limited to
$300.0 million in aggregate principal amount.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this paragraph 5, the
Issuers shall not have the option to redeem the Notes prior to July 15, 2004.
Thereafter, the Issuers may redeem all or part of the Notes upon not less than
30 nor more than 90 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest to the applicable redemption date, if redeemed during the twelve-month
period beginning on July 15 of the years indicated below:
3
<PAGE>
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004......................................... 105.0625%
2005......................................... 103.3750%
2006......................................... 101.6875%
2007 and thereafter.......................... 100.0000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this paragraph
5, at any time prior to July 15, 2002, the Issuers may on any one or more
occasions redeem up to 40% of the aggregate principal amount of Notes issued
under the Indenture at a redemption price of 110.125% of the principal amount
thereof, plus accrued and unpaid interest to the redemption date, with the net
cash proceeds of one or more Equity Offerings of the Company (or of Holdings to
the extent such proceeds are contributed to the Company); PROVIDED that (i) at
least 60% of the aggregate principal amount of Notes issued under the Indenture
remains outstanding immediately after the occurrence of such redemption
(excluding Notes held by the Company and its Subsidiaries) and (ii) the
redemption occurs within 90 days of the date of the closing of such Equity
Offering.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Issuers shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, as defined in Section 1.01 of the
Indenture, the Issuers shall be required to make an offer (a "CHANGE OF CONTROL
OFFER") to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder's Notes at a purchase price equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest to the date
of purchase, the "CHANGE OF CONTROL PAYMENT"). Within 30 days following any
Change of Control, the Issuers shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales,
within ten Business Days of each date on which the aggregate amount of Excess
Proceeds exceeds $15.0 million, the Issuers shall commence an offer to all
Holders of Notes and all holders of other Indebtedness that is PARI PASSU with
the Notes containing provisions similar to those set forth in the Indenture with
respect to offers to purchase or redeem with the proceeds of sales of assets (as
"ASSET SALE OFFER") pursuant to Sections 3.09 and 4.10 of the Indenture to
purchase the maximum principal amount of Notes (including any Additional Notes)
and such other PARI PASSU Indebtedness that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest to the date of purchase, in
accordance with the procedures set forth in the Indenture. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
such Excess Proceeds for any purpose not otherwise prohibited by the Indenture.
If the aggregate principal amount of Notes and such other PARI PASSU
4
<PAGE>
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis based on the principal amount
of Notes and such other pari passu Indebtedness tendered. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
Holders of Notes that are the subject of an offer to purchase will receive an
Asset Sale Offer from the Issuers prior to any related purchase date and may
elect to have such Notes purchased by completing the form entitled "OPTION OF
HOLDER TO ELECT PURCHASE" on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuers may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuers need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Issuers
need not exchange or register the transfer of any Notes for a period of 15 days
before the mailing of a notice of Notes to be redeemed or during the period
between a record date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
11. Amendment, Supplement And Waiver. Subject to certain exceptions, the
Indenture, the Subsidiary Guarantees or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes and Additional Notes, if any including, without
limitation, consents obtained in connection with a tender offer or exchange
offer for Notes, and any existing default or compliance with any provision of
the Indenture, the Subsidiary Guarantees or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes and Additional Notes, if any including, without limitation, consents
obtained in connection with a tender offer or exchange offer for Notes. Without
the consent of any Holder of a Note, the Indenture, the Subsidiary Guarantees or
the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's, Capital's or
any Subsidiary Guarantor's obligations to Holders of the Notes in case of a
merger or consolidation or sale of all or substantially all of the Company's,
Capital's or such Subsidiary Guarantor's asset, to make any change that would
provide any
5
<PAGE>
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act, to provide for the
Issuance of Additional Notes in accordance with the limitations set forth in the
Indenture, or to allow any Subsidiary Guarantor to execute a supplemental
indenture to the Indenture and/or a Subsidiary Guarantee with respect to the
Notes.
12. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest on, or premium on the Notes; (ii)
default in payment when due of principal of the Notes when the same becomes due
and payable at maturity, upon redemption (including in connection with an offer
to purchase) or otherwise, (iii) failure by the Company to comply with Section
4.10 or 4.15 of the Indenture; (iv) failure by the Company or any of its
Subsidiaries for 60 days after notice to the Company by the Trustee or the
Holders of at least 25% in principal amount of the Notes (including Additional
Notes, if any) then outstanding to observe or perform any other covenant,
representation, warranty or other agreements in the Indenture or the Notes; (v)
default under certain other agreements relating to Indebtedness of the Company
which default is caused by a failure to pay principal at the final stated
maturity of such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "PAYMENT DEFAULT")
or results in the acceleration of such Indebtedness prior to its express
maturity, and, in each case, the principal amount of such Indebtedness under
which there has bee a Payment Default or the maturity of which has been so
accelerated, aggregates $20.0. million or more; (vi) failure by the Company or
any of its Restricted Subsidiaries to pay judgements, aggregating in excess of
$20.0 million, which judgments are not paid, discharged or stayed for a period
of 60 days after such judgment have become final and nonappealable, and in the
event such judgment is covered by insurance, an enforcement proceeding has been
commenced by any creditor upon such judgment or decree that is not promptly
stayed; (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary pursuant to or
within the meaning of Bankruptcy Law; and (viii) except as permitted by the
Indenture, any Subsidiary Guarantee of a Significant Subsidiary shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Subsidiary Guarantor that is a
Significant Subsidiary or any Person acting on its behalf shall deny or
disaffirm its obligations under such Subsidiary Guarantor's Subsidiary
Guarantee. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Company, all outstanding Notes will become due
and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by
6
<PAGE>
notice to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Issuers are required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Issuers are required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
13. Trustee Dealings with Issuers. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Issuers or its Affiliates, and may otherwise deal with the Issuers or
its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A manager, director, officer, employee,
incorporator, stockholder or member, of any of the Issuers, as such, shall not
have any liability for any obligations of the Issuers under the Notes or the
Subsidiary Guarantors under the Guarantees or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Issuers will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
Consolidated Container Company LLC
Consolidated Container Capital, Inc.
2513 McKinney Avenue
Suite 850
Dallas, Texas 75201
Attention: Chief Financial Officer
7
<PAGE>
NOTATION OF SUBSIDIARY GUARANTEE
For value received, each Subsidiary Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, on an unsecured, senior subordinated basis to the
extent set forth in the Indenture and subject to the provisions in the
Indenture, dated as of July 1, 1999 (the "INDENTURE"), among Consolidated
Container Company LLC (the "COMPANY") and Consolidated Container Capital, Inc.
("CAPITAL" and together with the Company, the "ISSUERS"), the Subsidiary
Guarantors named therein and The Bank of New York, as trustee (the "TRUSTEE"),
(a) the due and punctual payment of the principal of, premium, if any, and
interest on the Notes (as defined in the Indenture), whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of interest
on overdue principal and premium, if any, and, to the extent permitted by law,
interest, and the due and punctual performance of all other obligations of the
Issuers to the Holders or the Trustee all in accordance with the terms of the
Indenture and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. The
obligations of the Subsidiary Guarantors to the Holders of Notes and to the
Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly set
forth in Article 11 of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Subsidiary Guarantee. Each Holder of a
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to
take such actions as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; PROVIDED, HOWEVER, that the
Indebtedness evidenced by this Subsidiary Guarantee shall cease to be
subordinated and subject in right of payment upon any defeasance of this Note in
accordance with the provisions of the Indenture.
The Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which the Subsidiary
Guarantee is noted shall have been executed by the Trustee by the manual of
facsimile signature of one of its authorized officers.
Dated: ___________
REID PLASTICS GROUP LLC
By: Consolidated Container Company LLC, as its
Sole Member and Manager
By: Consolidated Container Holdings LLC, as its
Sole Member and Manager
By:___________________________________
Name:
Title:
8
<PAGE>
PLASTICS CONTAINERS LLC
By: Consolidated Container Company LLC, as its
Sole Member and Manager
By: Consolidated Container Holdings LLC, as its
Sole Member and Manager
By:___________________________________
Name:
Title:
CONTINENTAL PLASTICS CONTAINERS LLC
By: Plastics Containers LLC, as its Sole Member
and Manager
By: Consolidated Container Company LLC, as its
Sole Member and Manager
By: Consolidated Container Holdings LLC, as its
Sole Member and Manager
By:___________________________________
Name:
Title:
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By:___________________________________
Name:
Title:
9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: __________________________________
(Insert assignee's legal name)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Issuers. The agent may substitute
another to act for him.
Date: ________________
Your Signature:__________________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*: ____________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers pursuant
to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:
|_| Section 4.10 |_| Section 4.15
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$_____________________
Date: _______________
Your Signature: __________________________________
(Sign exactly as your name appears
on the face of this Note)
Tax Identification No.: __________________________
Signature Guarantee*: _______________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
11
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Date of Exchange Amount of decrease in Amount of increase in Principal Amount Signature of
Principal Amount Principal Amount of this authorized signatory
of of Global Note of
this Global Note this Global Note following such Trustee or Note
decrease Custodian
(or increase)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
Dated as of July 1, 1999
by and among
Consolidated Container Company LLC
Consolidated Container Capital, Inc.
and
The Subsidiary Guarantors Named Herein
and
Donaldson, Lufkin & Jenrette
Securities Corporation
Bear, Stearns & Co. Inc.
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
<PAGE>
2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of July 1, 1999, by and among Consolidated Container Company LLC, a
Delaware limited liability company (the "Company"), Consolidated Container
Capital, Inc., a Delaware corporation ("Capital" and, together with the Company,
the "Issuers"), the subsidiary guarantors set forth on the signature pages
hereto (the "Subsidiary Guarantors") and Donaldson, Lufkin & Jenrette Securities
Corporation, Bear, Stearns & Co. Inc., Deutsche Bank Securities Inc., J.P.
Morgan Securities Inc. (each an "Initial Purchaser" and, collectively, the
"Initial Purchasers"), each of whom has agreed to purchase the Issuers' 10 1/8%
Senior Subordinated Notes due 2009 (the "Senior Subordinated Notes") pursuant to
the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated June 24,
1999 and amended as of July 1, 1999 (the "Purchase Agreement"), by and among the
Issuers, the Subsidiary Guarantors and the Initial Purchasers. In order to
induce the Initial Purchasers to purchase the Senior Subordinated Notes, the
Issuers have agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 2 of the Purchase
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them the Indenture, dated as of July 1, 1999, among the
Issuers, the Subsidiary Guarantors and The Bank of New York, as Trustee,
relating to the Senior Subordinated Notes and the New Senior Subordinated Notes
(the "Indenture").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Certificated Securities: Definitive Notes, as defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the New Senior
Subordinated Notes to be issued in the Exchange Offer, (b) the maintenance of
such Exchange Offer Registration Statement
<PAGE>
3
continuously effective and the keeping of the Exchange Offer open for a period
not less than the period required pursuant to Section 3(b) hereof and (c) the
delivery by the Issuers to the Registrar under the Indenture of New Senior
Subordinated Notes in the same aggregate principal amount as the aggregate
principal amount of Senior Subordinated Notes tendered by Holders thereof
pursuant to the Exchange Offer.
Consummation Deadline: As defined in Section 3(b) hereof.
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The exchange and issuance by the Issuers of a principal
amount of New Senior Subordinated Notes (which shall be registered pursuant to
the Exchange Offer Registration Statement) equal to the outstanding principal
amount of Senior Subordinated Notes that are tendered by such Holders in
connection with such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Senior Subordinated Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act and in certain
offshore transactions as defined under and pursuant to Regulation S under the
Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Holders: As defined in Section 2 hereof.
New Senior Subordinated Notes: The Issuers' new 10 1/8% Senior
Subordinated Notes due 2009 to be issued pursuant to the Indenture: (i) in the
Exchange Offer or (ii) as contemplated by Section 4 hereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Issuers and the
Subsidiary Guarantors relating to (a) an offering of New Senior Subordinated
Notes pursuant to an
<PAGE>
4
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Regulation S: Regulation S promulgated under the Act.
Rule 144: Rule 144 promulgated under the Act.
Shelf Registration Statement: As defined in Section 4 hereof.
Suspension Notice: As defined in Section 6(d) hereof.
Suspension Period: As defined in Section 4(a) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each (A) Senior Subordinated Note, until
the earliest to occur of (i) the date on which such Senior Subordinated Note is
exchanged in the Exchange Offer for a New Senior Subordinated Note which is
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (ii) the date on which such
Senior Subordinated Note has been disposed of in accordance with a Shelf
Registration Statement (and the purchasers thereof have been issued New Senior
Subordinated Notes), or (iii) the date on which such Senior Subordinated Note is
distributed to the public pursuant to Rule 144 under the Act and each (B) New
Senior Subordinated Note held by a Broker Dealer until the date on which such
New Senior Subordinated Note is disposed of by a Broker-Dealer pursuant to the
"Plan of Distribution" or similarly titled caption contemplated by the
Prospectus contained in the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law or Commission policy (after the procedures set forth in Section 6(a)(i)
below have been complied with), the Issuers and the Subsidiary Guarantors shall
(i) cause the Exchange Offer Registration Statement to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 90 days after the Closing Date (such 90th day being the "Filing Deadline"),
<PAGE>
5
(ii) use their best efforts to cause such Exchange Offer Registration Statement
to become effective at the earliest possible time, but in no event later than
180 days after the Closing Date (such 180th day being the "Effectiveness
Deadline"), (iii) in connection with the foregoing, (A) file all pre-effective
amendments to such Exchange Offer Registration Statement as may be necessary in
order to cause it to become effective, (B) file, if applicable, a post-effective
amendment to such Exchange Offer Registration Statement pursuant to Rule 430A
under the Act and (C) cause all necessary filings, if any, in connection with
the registration and qualification of the New Senior Subordinated Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of such
Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting (i)
registration of the New Senior Subordinated Notes to be offered in exchange for
the Senior Subordinated Notes that are Transfer Restricted Securities and (ii)
resales of New Senior Subordinated Notes by Broker-Dealers that tendered into
the Exchange Offer Senior Subordinated Notes that such Broker-Dealer acquired
for its own account as a result of market making activities or other trading
activities (other than Senior Subordinated Notes acquired directly from the
Issuers or any of their respective Affiliates) as contemplated by Section 3(c)
below.
(b) The Issuers and the Subsidiary Guarantors shall use their respective
best efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of 30 Business
Days, or longer, if required under applicable federal and state securities laws
to Consummate the Exchange Offer. The Issuers and the Subsidiary Guarantors
shall cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the New Senior Subordinated Notes
shall be included in the Exchange Offer Registration Statement. The Issuers and
the Subsidiary Guarantors shall use their respective best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 30 business days thereafter (such 30th day being the "Consummation
Deadline").
(c) The Issuers shall include a "Plan of Distribution" (or similarly
titled caption) section in the Prospectus contained in the Exchange Offer
Registration Statement and indicate therein that any Broker-Dealer who holds
Transfer Restricted Securities that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities (other than Senior Subordinated Notes acquired directly from the
Issuers or any Affiliate of the Issuers), may exchange such Transfer Restricted
Securities pursuant to the Exchange Offer. Such "Plan of Distribution" (or
similarly titled caption) section shall also contain all other information with
respect to such exchanges by such Broker-Dealers that the Commission may require
in order to permit such exchanges pursuant thereto, but such "Plan of
Distribution" or similarly titled caption shall not name any such Broker-Dealer
or disclose the amount of Transfer Restricted Securities held by any such
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy, rules or regulations after the date of this Agreement. See the
Shearman & Sterling no-action letter (available July 2, 1993).
<PAGE>
6
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any New Senior
Subordinated Notes received by such Broker-Dealer in the Exchange Offer, the
Issuers and the Subsidiary Guarantors shall permit the use of the Prospectus
contained in the Exchange Offer Registration Statement by such Broker-Dealer to
satisfy such prospectus delivery requirement. To the extent necessary to ensure
that the Prospectus contained in the Exchange Offer Registration Statement is
available for sales of New Senior Subordinated Notes by Broker-Dealers, the
Issuers and the Subsidiary Guarantors agree to use their respective best efforts
to keep the Exchange Offer Registration Statement continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Section 6(a) and (c) hereof and in conformity with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period beginning when such New Senior
Subordinated Securities are first issued in the Exchange Offer and ending upon
the earlier of the expiration of the 180th day after the Exchange Offer has been
completed or such time as such Broker-Dealers no longer own any New Subordinated
Notes. The Issuers and the Subsidiary Guarantors shall provide sufficient copies
of the latest version of such Prospectus to such Broker-Dealers, promptly upon
request, and in no event later than one day after such request, at any time
during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law (after the Issuers and the Subsidiary Guarantors have complied
with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of
Transfer Restricted Securities shall notify the Issuers within 20 Business Days
following the Consummation Deadline that (A) such Holder was prohibited by law
or Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the New Senior Subordinated Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and the Prospectus contained
in the Exchange Offer Registration Statement is not appropriate or available for
such resales by such Holder or (C) such Holder is a Broker-Dealer and holds
Senior Subordinated Notes acquired directly from the Issuers or any of their
respective Affiliates, then the Issuers and the Subsidiary Guarantors shall:
(x) use their best efforts to cause to be filed, on or prior to 90 days
after the earlier of (i) the date on which the Issuers determine that the
Exchange Offer Registration Statement cannot be filed as a result of clause
(a)(i) above and (ii) the date on which the Issuers receive the notice specified
in clause (a)(ii) above, (such earlier date, the "Filing Deadline"), a shelf
registration statement pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement (the "Shelf Registration
Statement")), relating to all Transfer Restricted Securities, and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 180 days after the
Filing Deadline for the Shelf Registration Statement (such 180th day the
"Effectiveness Deadline").
<PAGE>
7
If, after the Issuers have filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Issuers are required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Issuers shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Issuers and
the Subsidiary Guarantors shall use their respective best efforts to keep any
Shelf Registration Statement required by this Section 4(a) continuously
effective, supplemented, amended and current (except during a Suspension Period)
as required by and subject to the provisions of Sections 6(b) and (c) hereof and
in conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section 6(c)(i)) following
the Closing Date, or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto. Notwithstanding the foregoing, the Issuers and the
Subsidiary Guarantors shall not be required to amend or supplement a
Registration Statement, any related Prospectus or any document incorporated
therein by reference, in the event that, and for a period not to exceed an
aggregate of 60 days in any calendar year (a "Suspension Period") if, (i) an
event occurs and is continuing as a result of which the Shelf Registration would
in the Issuers' good faith judgment, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (ii) (a) the Issuers determine in good faith judgment that the
disclosure of such event at such time would have a material adverse effect on
the business, operations or prospects of the Issuers or (b) the disclosure
otherwise related to a pending material business transaction that has not yet
been publicly disclosed.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Issuers in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Issuers by such Holder not materially misleading.
<PAGE>
8
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose (other than as a result of a Suspension Period) without
being succeeded immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself declared effective
immediately (each such event referred to in clauses (i) through (iv), a
"Registration Default"), then the Issuers and the Subsidiary Guarantors hereby
jointly and severally agree to pay to each Holder of Transfer Restricted
Securities affected thereby liquidated damages in an amount equal to $.05 per
week per $1,000 in principal amount of Transfer Restricted Securities held by
such Holder for each week or portion thereof that the Registration Default
continues for the first 90-day period immediately following the occurrence of
such Registration Default. The amount of the liquidated damages shall increase
by an additional $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of liquidated
damages of $.50 per week per $1,000 in principal amount of Transfer Restricted
Securities; provided that the Issuers and the Subsidiary Guarantors shall in no
event be required to pay liquidated damages for more than one Registration
Default at any given time. Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Issuers and the Subsidiary Guarantors to pay liquidated damages with respect to
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.
<PAGE>
9
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Issuers and the Subsidiary Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use their respective best
efforts to effect such exchange and to permit (subject to any Prospectus
delivery requirements) the resale of New Senior Subordinated Notes by
Broker-Dealers that tendered in the Exchange Offer Senior Subordinated Notes
that such Broker-Dealer acquired for its own account as a result of its market
making activities or other trading activities (other than Senior Subordinated
Notes acquired directly from the Issuers or any of their respective Affiliates)
being sold in accordance with the intended method or methods of distribution
thereof, and (z) comply with all of the following provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Issuers raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Issuers and the Subsidiary Guarantors hereby
agree to seek a no-action letter or other favorable decision from the
Commission allowing the Issuers and the Subsidiary Guarantors to
Consummate an Exchange Offer for such Transfer Restricted Securities. The
Issuers and the Subsidiary Guarantors hereby agree to pursue the issuance
of such a decision to the Commission staff level. In connection with the
foregoing, the Issuers and the Subsidiary Guarantors hereby agree to take
all such other actions as may be requested by the Commission or otherwise
required in connection with the issuance of such decision, including
without limitation (A) participating in telephonic conferences with the
Commission, (B) delivering to the Commission staff an analysis prepared by
counsel to the Issuers setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be permitted
and (C) diligently pursuing a resolution (which need not be favorable) by
the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker Dealer) shall furnish, upon the request of the
Issuers, prior to the Consummation of the Exchange Offer, a written
representation to the Issuers and the Subsidiary Guarantors (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an Affiliate of
the Issuers, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate in,
a distribution of the New Senior Subordinated Notes to be issued in the
Exchange Offer and (C) it is acquiring the New Senior Subordinated Notes
in its ordinary course of business. As a condition to its participation in
the Exchange Offer each Holder using the Exchange Offer to participate in
a distribution of the New Senior Subordinated Notes shall acknowledge and
agree that, if the resales are of New Senior Subordinated Notes obtained
by such Holder in exchange for Senior Subordinated Notes acquired directly
from the Issuers or an Affiliate thereof, it (1) could not, under
Commission policy as in effect on the date of this Agreement, rely
<PAGE>
10
on the position of the Commission enunciated in Morgan Stanley and Co.,
Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and similar no-action letters
(including, if applicable, any no-action letter obtained pursuant to
clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers and the Subsidiary Guarantors shall provide a
supplemental letter to the Commission (A) stating that the Issuers and the
Subsidiary Guarantors are registering the Exchange Offer in reliance on
the position of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
(available June 5, 1991) as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action
letter obtained pursuant to clause (i) above, (B) including a
representation that neither Issuer nor any Subsidiary Guarantor has
entered into any arrangement or understanding with any Person to
distribute the New Senior Subordinated Notes to be received in the
Exchange Offer and that, to the best of the Issuers' and each Subsidiary
Guarantors' information and belief, each Holder participating in the
Exchange Offer is acquiring the New Senior Subordinated Notes in its
ordinary course of business and has no arrangement or understanding with
any Person to participate in the distribution of the New Senior
Subordinated Notes received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth in
any no-action letter obtained pursuant to clause (i) above, if applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Issuers and the Subsidiary Guarantors shall:
(i) comply with all the provisions of Section 6(c) below and use
their respective best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof (as indicated in
the information furnished to the Issuer pursuant to Section 4(b) hereof),
and pursuant thereto the Issuers and the Subsidiary Guarantors will
prepare and file with the Commission a Shelf Registration Statement
relating to the registration on any appropriate form under the Act, which
form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof
within the time periods and otherwise in accordance with the provisions
hereof;
(ii) issue, upon the request of any Holder or purchaser of Senior
Subordinated Notes covered by any Shelf Registration Statement
contemplated by this Agreement,
<PAGE>
11
New Senior Subordinated Notes having an aggregate principal amount equal
to the aggregate principal amount of Senior Subordinated Notes sold
pursuant to the Shelf Registration Statement and surrendered to the Issuer
for cancellation pursuant to the Indenture; the Issuer shall register New
Senior Subordinated Notes on the Shelf Registration Statement for this
purpose and issue the New Senior Subordinated Notes to the purchaser(s) of
securities subject to the Shelf Registration Statement in the names as
such purchaser(s) shall designate pursuant to the Indenture;
(iii) make the Issuers' and the Subsidiary Guarantors'
representatives available for discussion of any document that is to be
incorporated by reference into a Shelf Registration Statement or
Prospectus and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such selling
Holders may reasonably request;
(iv) make available, at reasonable times, for inspection by
representatives of the selling Holders of a majority of the aggregate
principal amount of Notes outstanding and any attorney or accountant
retained by such representatives on behalf of the selling Holders that
enters into a customary confidentiality agreement with the Issuers, all
financial and other records, pertinent corporate documents of the Issuers
and the Subsidiary Guarantors and cause the Issuers' and the Subsidiary
Guarantors' officers, directors and employees to supply all information
reasonably requested by representatives of any such Holder, attorney or
accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness;
(v) if requested by any selling Holders in connection with such
sale, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" (or similarly titled caption) of the Transfer Restricted
Securities; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Issuers are
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(vi) deliver to each Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Issuers and
the Subsidiary Guarantors hereby consent to the use (in accordance with
law) of the Prospectus and any amendment or supplement thereto by each
selling Holder in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto; and
(vii) upon the request of the representative of the selling Holders
of a majority of the aggregate principal amount of the outstanding Notes,
enter into such agreements
<PAGE>
12
(including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in
order to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any applicable Registration Statement contemplated
by this Agreement as may be reasonably requested by such representative in
connection with any sale or resale pursuant to any applicable Registration
Statement. In such connection, the Issuers and the Subsidiary Guarantors
shall:
(A) upon request of the representative of the selling Holders
of a majority of the aggregate principal amount of the outstanding
Notes, furnish (or in the case of paragraphs (2) and (3), use its
best efforts to cause to be furnished) to each such Holder, upon the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated such date, signed by the
Presidents and the Chief Financial Officers of the Issuers,
confirming, as of the date thereof, the matters set forth in
Sections 6(dd), 9(a) and 9(b) of the Purchase Agreement and
such other similar matters as such Holders may reasonably
request;
(2) an opinion, dated the date of effectiveness of the
Shelf Registration Statement, of counsel for the Issuers and
the Subsidiary Guarantors covering matters similar to those
set forth Exhibit C of the Purchase Agreement and such other
matter as such Holder may reasonably request and are customary
and appropriate for transactions of this kind, and in any
event including a statement to the effect that such counsel
(a) has not independently verified the accuracy, completeness
or fairness of the statements made or included in the
Registration Statement or the Prospectus and take no
responsibility therefor, except as and to the extent set forth
in the paragraph regarding the "Description of Notes"
contained elsewhere in the opinion, and (b) in the course of
the preparation by the Issuers and the Subsidiary Guarantors
of the Registration Statement and the Prospectus, has
participated in conferences with certain officers and
employees of the Issuers and the Subsidiary Guarantors, with
representatives of auditors and with counsel to the Issuers
and the Subsidiary Guarantors, and based upon such counsel's
examination of the Registration Statement and the Prospectus,
such counsel's investigation made in connection with
preparation of the Registration Statement and the Prospectus,
and such counsel's participation in the conferences referred
to above, (i) such
<PAGE>
13
counsel is of the opinion that the Registration Statement, as
of its effective date, and the Prospectus, as of the closing
date, complied as to form in all material respects with the
requirements of the Act, the Trust Indenture Act and the
applicable rules and regulations of the Commission thereunder,
except that in each case such counsel may state that it
expresses no opinion with respect to the financial statements
or other financial data contained or incorporated by reference
in the Registration Statement and the Prospectus, and (ii) it
has no reason to believe that the Registration Statement, as
of its effective date, contained any untrue statement of a
material fact or omitted to state any material fact required
to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus
contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, except that in each case
such counsel may state that it expresses no belief with
respect to the financial statements or other financial data
contained or incorporated by reference in the Registration
Statement or the Prospectus; and
(3) a customary comfort letter, dated the date of
effectiveness of the Shelf Registration Statement, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 9(g) of the Purchase
Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by such representative to evidence compliance
with the matters covered in clause (A) above and with any customary
conditions contained in the any agreement entered into by the
Issuers and the Subsidiary Guarantors pursuant to this clause (vii).
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Issuers and the
Subsidiary Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective (except, in the case of a Shelf
Registration Statement, during a Suspension
<PAGE>
14
Period) and provide all requisite financial statements for the period
specified in Section 3 or 4 of this Agreement, as applicable. Upon the
occurrence of any event (A) that makes any statement of a material fact
made in any such Registration Statement or the Prospectus contained
therein untrue, or that requires the making of any additions to or changes
in the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or (B) that
would cause any such Registration Statement or the Prospectus contained
therein not to be effective and usuable for its intended purpose for
resale of Transfer Restricted Securities during the period required by
this Agreement, the Issuers and the Subsidiary Guarantors shall file
promptly an appropriate amendment to such Registration Statement curing
such defect, and, if Commission review is required, use their respective
best efforts to cause such amendment to be declared effective as soon as
practicable;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as the case may be;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Act, and to comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner; and comply with the provisions of the
Act with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set
forth in such Registration Statement or supplement to the Prospectus;
(iii) advise each Holder promptly and, if requested by such Holder,
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect
to any applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act
or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or sale
in any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening of
any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Registration
Statement in order to make the statements therein not misleading, or that
requires the making of any additions to or changes in the Prospectus in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If at any time the Commission
shall issue any stop order suspending the
<PAGE>
15
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Issuers
and the Subsidiary Guarantors shall use their respective best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) except, in the case of a Shelf Registration Statement, during a
Suspension Period and subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(v) furnish to each selling Holder in connection with such exchange
or sale, if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or Prospectus
(including all documents incorporated by reference after the initial
filing of such Registration Statement), which documents will be subject to
the review of such selling Holders in connection with such sale, if any,
for a period of at least five Business Days, and the Issuer will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including all
such documents incorporated by reference) to which the representative of a
majority of such selling Holders shall reasonably object on behalf of the
selling Holders within five Business Days after the receipt thereof. If
such representative made an objection as set forth in the immediately
preceding sentence, a selling Holder shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains
an untrue statement of a material fact or omits to state any material fact
necessary to make the statements therein, in the case of any Prospectus,
in the light of the circumstances under which they were made, not
misleading or fails to comply with the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each selling Holder in connection with
such exchange or sale, if any;
(vii) furnish to each Initial Purchaser and each Holder who requests
in connection with such exchange or sale, without charge, at least one
copy of the Registration Statement, as first filed with the Commission,
and of each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
<PAGE>
16
(viii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may reasonably request and do any and
all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that neither Issuer
nor any Subsidiary Guarantor shall be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(ix) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations and
such names as the selling Holders may request at least two Business Days
prior to such sale of Transfer Restricted Securities;
(x) use their respective best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (ix) above;
(xi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering
such Transfer Restricted Securities and provide the Trustee under the
Indenture with printed certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with The Depository Trust
Company;
(xii) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xiii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee
and the Holders to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the
TIA; and execute and use their best efforts to cause the Trustee to
execute,
<PAGE>
17
all documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner; and
(xiv) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Issuers of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Issuers that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "Recommencement
Date"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Issuers with more
recently dated Prospectuses or (ii) deliver to the Issuers (at the Issuers'
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the date of delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' and the Subsidiary Guarantors'
performance of or compliance with this Agreement will be borne by the Issuers,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the New Senior Subordinated Notes to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Issuers, the Subsidiary Guarantors
and the Holders of Transfer Restricted Securities; (v) all application and
filing fees in connection with listing the New Senior Subordinated Notes on an
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Issuers and the Subsidiary Guarantors (including the expenses of any special
audit and comfort letters required by or incident to such performance).
<PAGE>
18
The Issuers will, in any event, bear their and the Subsidiary Guarantors'
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expenses
of any annual audit and the fees and expenses of any Person, including special
experts, retained by the Issuers or the Subsidiary Guarantors.
(b) In connection with any Shelf Registration Statement required by this
Agreement, the Issuers and the Subsidiary Guarantors will reimburse the Initial
Purchasers and the Holders of Transfer Restricted Securities who are selling or
reselling Senior Subordinated Notes or New Senior Subordinated Notes pursuant to
the "Plan of Distribution" or similarly titled caption contained in the Shelf
Registration Statement for the reasonable fees and disbursements of not more
than one counsel, who shall be Latham & Watkins, unless another firm shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Shelf Registration Statement is
being prepared.
SECTION 8. INDEMNIFICATION
(a) Each of the Issuers and each of the Subsidiary Guarantors agree,
jointly and severally, to indemnify and hold harmless each Holder, its
directors, its officers and each person, if any, who controls such Holder
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act),
from and against any and all losses, claims, damages, liabilities and judgments
(including without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action that
could give rise to any such losses, claims, damages, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus or Prospectus
(or any amendment or supplement thereto) provided by either Issuer or any
Subsidiary Guarantor to any Holder or any prospective purchaser of New Senior
Subordinated Notes or registered Senior Subordinated Notes, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any of the Holders furnished in
writing to the Issuers by any of the Holders.
(b) Each Holder of Transfer Restricted agrees, severally and not jointly,
to indemnify and hold harmless the Issuers and the Subsidiary Guarantors, and
their respective directors, managers (or Management Committee members) and
officers and each person, if any, who controls (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) the Issuers, or any Subsidiary
Guarantors to the same extent as the foregoing indemnity from the Issuers and
the Subsidiary Guarantors set forth in section (a) above, but only with
reference to information relating to such Holder furnished in writing to the
Issuers by such Holder expressly for use in any Registration Statement. In no
event shall any Holder, its directors, officers or any Person who controls such
Holder be liable or responsible for any amount in excess of the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Registration Statement.
<PAGE>
19
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying person") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Issuers, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
<PAGE>
20
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Issuers and
the Subsidiary Guarantors, on the one hand, and the Holders, on the other hand,
from their sale of Transfer Restricted Securities or (ii) if the allocation
provided by clause 8(d)(i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Issuers and the
Subsidiary Guarantors, on the one hand, and of the Holder, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Issuers and the Subsidiary
Guarantors, on the one hand, and of the Holder, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such Issuer or such
Subsidiary Guarantor, on the one hand, or by the Holder, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and judgments
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 8(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Issuers, the Subsidiary Guarantors and each Holder agree that it would
not be just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any matter,
including any action that could have given rise to such losses, claims, damages,
liabilities or judgments. Notwithstanding the provisions of this Section 8, no
Holder, its directors, its officers or any Person, if any, who controls such
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the total received by such Holder with respect to the
sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds (i) the amount paid by such Holder for such Transfer Restricted
Securities and (ii) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are
<PAGE>
21
several in proportion to the respective principal amount of Transfer Restricted
Securities held by each Holder hereunder and not joint.
The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 9. RULE 144A AND RULE 144
Each Issuer and each Subsidiary Guarantor agrees with each Holder, for so
long as any Transfer Restricted Securities remain outstanding and during any
period in which such Issuer or such Guarantor (i) is not subject to Section 13
or 15(d) of the Exchange Act, to make available, upon request of any Holder, to
such Holder or beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to
Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby
in a timely manner in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Issuers and the Subsidiary Guarantors acknowledge and
agree that any failure by the Issuers and/or the Subsidiary Guarantors to comply
with their respective obligations under Sections 3 and 4 hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Issuers' and the Subsidiary Guarantors' obligations
under Sections 3 and 4 hereof. The Issuers and the Subsidiary Guarantors further
agree to waive the defense in any action for specific performance that a remedy
at law would be adequate.
(b) No Inconsistent Agreements. Neither Issuer nor any Subsidiary
Guarantor will, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise violate with the provisions hereof.
Neither Issuer nor any Subsidiary Guarantor has previously entered into any
agreement granting any registration rights with respect to its securities to any
Person. The rights granted to the Holders hereunder do not in any way violate
with and are not inconsistent with the rights granted to the holders of the
Issuers' and the Subsidiary Guarantors' securities under any agreement in effect
on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Issuers have obtained the written consent
of Holders of all outstanding Transfer
<PAGE>
22
Restricted Securities and (ii) in the case of all other provisions hereof, the
Issuers have obtained the written consent of Holders of a majority of the
outstanding principal amount of Transfer Restricted Securities (excluding
Transfer Restricted Securities held by the Issuers or their respective
Affiliates). Notwithstanding the foregoing, a waiver or consent to departure
from the provisions hereof that relates exclusively to the rights of Holders
whose Transfer Restricted Securities are being tendered pursuant to the Exchange
Offer, and that does not affect directly or indirectly the rights of other
Holders whose Transfer Restricted Securities are not being tendered pursuant to
such Exchange Offer, may be given by the Holders of a majority of the
outstanding principal amount of Transfer Restricted Securities subject to such
Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuers and the
Subsidiary Guarantors, on the one hand, and the Initial Purchasers, on the other
hand, and shall have the right to enforce such agreements directly to the extent
they may deem such enforcement necessary or advisable to protect their rights or
the rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Issuers or the Subsidiary Guarantors:
2515 McKinney Avenue, Suite 850
Dallas, Texas 75201
Attention: Chief Financial Officer
with a copy to
Vestar Capital Partners III, L.P.
and Reid Plastics Holdings, Inc.
c/o Vestar Capital Partners, Inc.,
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
<PAGE>
23
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
<PAGE>
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CONSOLIDATED CONTAINER COMPANY LLC
By: Consolidated Container Holdings LLC,
as its Sole Member and Manager
By: /s/ Steven M. Silver
--------------------------------
Name: Steven M. Silver
Title: Vice President
CONSOLIDATED CONTAINER CAPITAL, INC.
By: /s/ Steven M. Silver
--------------------------------------
Name: Steven M. Silver
Title: Vice President
<PAGE>
25
REID PLASTICS GROUP LLC
By: Consolidated Container Company LLC, as its Sole
Member and Manager
By: Consolidated Container Holdings LLC, as its Sole
Member and Manager
By: /s/ Steven M. Silver
---------------------------------------------
Name: Steven M. Silver
Title: Vice President
PLASTIC CONTAINERS LLC
By: Consolidated Container Company LLC, as its Sole
Member and Manager
By: Consolidated Container Holdings LLC, as its Sole
Member and Manager
By: /s/ Steven M. Silver
---------------------------------------------
Name: Steven M. Silver
Title: Vice President
CONTINENTAL PLASTICS CONTAINERS LLC
By: Plastic Containers LLC, as its Sole Member and
Manager
By: Consolidated Container Company LLC, as its Sole
Member and Manager
By: Consolidated Container Holdings LLC, as its Sole
Member and Manager
By: /s/ Steven M. Silver
---------------------------------------------
Name: Steven M. Silver
Title: Vice President
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By: /s/ Steven M. Silver
----------------------------------------------------
Name: Steven M. Silver
Title: Vice President
<PAGE>
26
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
BEAR, STEARNS & CO. INC.
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By: /s/ Howard S. Rimerman
----------------------------
Name: Howard S. Rimerman
Title: Vice President
<PAGE>
EXHIBIT 5
[LETTERHEAD OF SIMPSON THACHER & BARTLETT]
September 30, 1999
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
2515 McKinney Avenue
Suite 850
Dallas, Texas 75201
Ladies and Gentlemen:
We have acted as counsel to Consolidated Container Company LLC, a
Delaware limited liability company (the "Company"), Consolidated Container
Capital, Inc., a Delaware corporation ("Capital" and, together with the Company,
the "Issuers"), and to Reid Plastics Group LLC, a Delaware limited liability
company ("Reid"), Plastic Containers LLC, a Delaware limited liability company
("Plastic Containers"), Continental Plastic Containers LLC, a Delaware limited
liability company ("Continental"), and Continental Caribbean Containers, Inc., a
Delaware corporation ("Caribbean" and, together with Reid, Plastic Containers
and Continental, the "Guarantors"), in connection with the Registration
Statement on Form S-4 (the "Registration Statement") filed by the Issuers and
the Guarantors with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended, relating to the issuance by the
Issuers of $185,000,000 aggregate principal amount of their 10 1/8% Senior
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC. -2- September 30, 1999
Subordinated Notes due 2009 (the "Exchange Securities") and the issuance by
the Guarantors of guarantees (the "Guarantees") with respect to the Exchange
Securities. The Exchange Securities and the Guarantees will be issued under
an indenture (the "Indenture") dated as of July 1, 1999 among the Company,
the Guarantors and The Bank of New York, as trustee (the "Trustee"). The
Exchange Securities and the Guarantees will be offered in exchange for
$185,000,000 aggregate principal amount of their outstanding 10 1/8% Senior
Subordinated Notes due 2009 and the related Guarantees of the Guarantors.
We have examined the Registration Statement and the Indenture,
which has been filed with the Commission as an exhibit to the Registration
Statement. We also have examined the originals, or duplicates or certified or
conformed copies, of such records, agreements, instruments and other documents
and have made such other investigations as we have deemed relevant and necessary
in connection with the opinions expressed herein. As to questions of fact
material to this opinion, we have relied upon certificates of public officials,
of officers and representatives of the Issuers and the Guarantors and of
officers and representatives of Consolidated Container Holdings LLC, a Delaware
limited liability company and the owner of 100% of the member units of the
Company.
In rendering the opinions set forth below, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as duplicates or certified
or conformed copies, and the authenticity of the originals of such latter
documents.
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC. -3- September 30, 1999
We also have assumed that the Indenture is the valid and legally binding
obligation of the Trustee.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. When the Exchange Securities have been duly executed,
authenticated, issued and delivered in accordance with the provisions
of the Indenture upon the exchange, the Exchange Securities will
constitute valid and legally binding obligations of the Issuers
enforceable against the Issuers in accordance with their terms.
2. When (a) the Exchange Securities have been duly executed,
authenticated, issued and delivered in accordance with the provisions
of the Indenture upon the exchange and (b) the Guarantees have been
duly issued, the Guarantees will constitute valid and legally binding
obligations of the Guarantors enforceable against the Guarantors in
accordance with their terms.
Our opinions set forth above are subject to the effects of (1)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, (2)
general equitable principles (whether considered in a proceeding in equity or at
law) and (3) an implied covenant of good faith and fair dealing.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the law of the State of
New York, the Federal law of the United States, the Delaware General Corporation
Law and the Delaware Limited Liability Company Act.
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC. -4- September 30, 1999
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus included in the Registration Statement.
Very truly yours,
/s/ SIMPSON THACHER & BARTLETT
------------------------------
SIMPSON THACHER & BARTLETT
<PAGE>
EXHIBIT 10.1
CREDIT AGREEMENT
among
CONSOLIDATED CONTAINER HOLDINGS LLC,
CONSOLIDATED CONTAINER COMPANY LLC,
VARIOUS BANKS,
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as DOCUMENTATION AGENT
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION,
as SYNDICATION AGENT
-------------------------------------------
Dated as of July 1, 1999
-------------------------------------------
$475,000,000
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION I. Amount and Terms of Credit.........................................1
1.01 The Commitments.....................................................1
1.02 Minimum Amount of Each Borrowing....................................3
1.03 Notice of Borrowing.................................................3
1.04 Disbursement of Funds...............................................4
1.05 Notes...............................................................5
1.06 Conversions.........................................................6
1.07 Pro Rata Borrowings.................................................7
1.08 Interest............................................................7
1.09 Interest Periods....................................................8
1.10 Increased Costs, Illegality, etc....................................9
1.11 Compensation.......................................................11
1.12 Change of Lending Office...........................................11
1.13 Replacement of Banks...............................................12
1.14 Additional Commitments.............................................12
1.15 Limitations on Additional Amounts, etc.............................16
SECTION II. Letters of Credit.................................................16
2.01 Letters of Credit..................................................16
2.02 Letter of Credit Requests..........................................18
2.03 Letter of Credit Participations....................................18
2.04 Agreement to Repay Letter of Credit Drawings.......................20
2.05 Increased Costs....................................................21
2.06 Minimum Stated Amount..............................................22
SECTION III. Commitment Commission; Fees; Reductions of Commitment............22
3.01 Fees...............................................................22
3.02 Voluntary Termination of Total Unutilized Revolving Loan
Commitment......................................................23
3.03 Mandatory Reduction of Commitments.................................23
SECTION IV. Prepayments; Payments; Taxes......................................24
4.01 Voluntary Prepayments..............................................24
4.02 Mandatory Repayments and Commitment Reductions.....................25
4.03 Method and Place of Payment........................................31
4.04 Net Payments; Taxes................................................31
SECTION V. Conditions Precedent...............................................33
5.01 Execution of Agreement; Notes......................................33
<PAGE>
5.02 No Default; Representations and Warranties.........................33
5.03 Officer's Certificate..............................................33
5.04 Opinions of Counsel................................................33
5.05 Corporate Documents; Proceedings...................................34
5.06 Plans; Shareholders' Agreements; Management Agreements;
Employment Agreements; Collective Bargaining Agreements;
Debt Agreements; Affiliate Contracts; Tax Sharing
Agreements and Material Contracts...............................34
5.07 Consummation of the Transaction....................................36
5.08 Pledge Agreement...................................................37
5.09 Security Agreement.................................................37
5.10 Subsidiaries Guaranty..............................................38
5.11 Material Adverse Change, etc.......................................38
5.12 Litigation.........................................................38
5.13 Fees, etc..........................................................38
5.14 Insurance..........................................................38
5.15 Approvals..........................................................39
5.16 Financial Statements; Projections; Management Letter Reports......39
5.17 Solvency Certificate...............................................40
5.18 Mortgage; Title Insurance; Surveys; etc............................40
5.19 Notice of Borrowing; Letter of Credit Request......................41
SECTION VI. Representations and Warranties....................................41
6.01 Status.............................................................41
6.02 Power and Authority................................................41
6.03 No Violation.......................................................42
6.04 Governmental Approvals.............................................42
6.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc...................................42
6.06 Litigation.........................................................43
6.07 True and Complete Disclosure.......................................43
6.08 Use of Proceeds; Margin Regulations................................44
6.09 Tax Returns and Payments...........................................44
6.10 ERISA..............................................................45
6.11 The Security Documents.............................................45
6.12 Properties.........................................................46
6.13 Capitalization.....................................................46
6.14 Subsidiaries.......................................................46
6.15 Compliance with Statutes, etc......................................46
6.16 Investment Company Act.............................................46
6.17 Public Utility Holding Company Act.................................46
6.18 Environmental Matters..............................................47
6.19 Labor Relations....................................................47
6.20 Patents, Licenses, Franchises and Formulas.........................48
6.21 Indebtedness.......................................................48
6.22 Senior Subordinated Notes..........................................48
6.24 Representations and Warranties in Documents........................48
6.25 Special Purpose Corporation........................................48
6.26 Insurance..........................................................49
<PAGE>
6.27 Year 2000..........................................................49
SECTION VII. Affirmative Covenants............................................49
7.01 Information Covenants..............................................49
7.02 Books, Records and Inspections.....................................52
7.03 Maintenance of Property; Insurance.................................52
7.04 Franchises.........................................................53
7.05 Compliance with Statutes, etc......................................53
7.06 Compliance with Environmental Laws.................................53
7.07 ERISA..............................................................54
7.08 End of Fiscal Years; Fiscal Quarters...............................55
7.09 Performance of Obligations.........................................55
7.10 Payment of Taxes...................................................55
7.10 Additional Mortgages; Further Assurances...........................55
7.12 Foreign Subsidiaries Security......................................56
7.13 Ownership of Subsidiaries..........................................57
7.14 Permitted Acquisitions.............................................57
7.15 Interest Rate Protection...........................................58
7.16 Landlord Waivers...................................................58
7.17 Post-Closing Actions...............................................58
SECTION VIII. Negative Covenants..............................................59
8.01 Liens..............................................................59
8.02 Consolidation, Merger, Sale of Assets, etc.........................61
8.03 Dividends..........................................................63
8.04 Indebtedness.......................................................65
8.05 Advances, Investments, Loans, Purchase of Assets...................66
8.06 Transactions with Affiliates.......................................68
8.07 Maximum Capital Expenditures.......................................69
8.08 Leverage Ratio.....................................................69
8.09 Interest Coverage Ratio............................................70
8.10 Fixed Charge Coverage Ratio........................................71
8.11 Limitation on Payments of Certain Indebtedness; Modifications
of Certain Indebtedness; Modifications of Certificate of
Incorporation, By-Laws and Certain Agreements; etc..............71
8.12 Limitation on Certain Restrictions on Subsidiaries.................72
8.13 Limitation on Issuance of Equity...................................73
8.14 Business...........................................................73
8.15 Limitation on the Creation of Subsidiaries.........................73
8.16 Designated Senior Debt.............................................74
SECTION IX. Events of Default.................................................74
9.01 Payments...........................................................74
9.02 Representations, etc...............................................74
9.03 Covenants..........................................................74
9.04 Default Under Other Agreements.....................................74
9.05 Bankruptcy, etc....................................................75
9.06 ERISA..............................................................75
9.07 Security Documents.................................................75
9.08 Guaranties.........................................................76
<PAGE>
9.09 Judgments..........................................................76
9.10 Change of Control..................................................76
SECTION X. Definitions and Accounting Terms...................................77
10.01 Defined Terms.....................................................77
SECTION XI. The Administrative Agent.........................................109
11.01 Appointment......................................................109
11.02 Nature of Duties.................................................110
11.03 Lack of Reliance on the Administrative Agent.....................110
11.04 Certain Rights of the Administrative Agent.......................110
11.05 Reliance.........................................................111
11.06 Indemnification..................................................111
11.07 The Administrative Agent in its Individual Capacity..............111
11.08 Holders..........................................................111
11.09 Resignation by the Administrative Agent..........................112
11.10 Documentation Agent; Syndication Agent...........................112
SECTION XII. Guaranty........................................................112
12.01 The Guaranty.....................................................112
12.02 Bankruptcy.......................................................113
12.03 Nature of Liability..............................................113
12.04 Guaranty Absolute................................................113
12.05 Independent Obligation...........................................113
12.06 Authorization....................................................114
12.07 Reliance.........................................................114
12.08 Subordination....................................................114
12.09 Waiver...........................................................115
12.10 Guaranty Continuing..............................................116
12.11 Binding Nature of Guaranties.....................................116
12.12 Judgments Binding................................................116
SECTION XIII. Miscellaneous..................................................117
13.01 Payment of Expenses, etc.........................................117
13.02 Right of Setoff..................................................118
13.03 Notices..........................................................119
13.04 Benefit of Agreement.............................................119
13.05 No Waiver; Remedies Cumulative...................................121
13.06 Payments Pro Rata................................................121
13.07 Calculations; Computations.......................................122
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL..................................................122
13.09 Counterparts.....................................................123
13.10 Effectiveness....................................................123
<PAGE>
13.11 Headings Descriptive.............................................123
13.12 Amendment or Waiver..............................................123
13.13 Confidentiality..................................................125
13.14 Register.........................................................125
<PAGE>
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Insurance
SCHEDULE IV Financial Statements
SCHEDULE V Real Property
SCHEDULE VI No Violation
SCHEDULE VII Convertible Securities, Options or Rights
SCHEDULE VIII Subsidiaries
SCHEDULE IX Existing Indebtedness
SCHEDULE X Existing Liens
SCHEDULE XI Permitted Affiliate Transactions
SCHEDULE XII Existing Investments
SCHEDULE XIII Existing Dividend Requirements
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of A Term Note
EXHIBIT B-2 Form of B Term Note
EXHIBIT B-3 Form of C Term Note
EXHIBIT B-4 Form of Revolving Note
EXHIBIT B-5 Form of Swingline Note
EXHIBIT C-1 Form of C Term Loan Commitment Agreement
EXHIBIT C-2 Form of Additional Revolving Loan Commitment Agreement
EXHIBIT D Form of Letter of Credit Request
EXHIBIT E Form of Section 4.04(b)(ii) Certificate
EXHIBIT F-1 Form of Opinion of Simpson, Thacher & Bartlett
EXHIBIT F-2 Form of Opinion of White & Case LLP
EXHIBIT G Form of Officers' Certificate
EXHIBIT H Form of Solvency Certificate
EXHIBIT I Form of Pledge Agreement
EXHIBIT J Form of Security Agreement
EXHIBIT K Form of Subsidiary Guaranty
EXHIBIT L Form of Intercompany Note
EXHIBIT M Form of Assignment and Assumption Agreement
EXHIBIT N Form of Shareholder Subordinated Note
<PAGE>
CREDIT AGREEMENT, dated as of July 1, 1999 among CONSOLIDATED
CONTAINER HOLDINGS LLC, a Delaware limited liability company ("Holdings"),
CONSOLIDATED CONTAINER COMPANY LLC, a Delaware limited liability company (the
"Borrower"), the Banks party hereto from time to time, BANKERS TRUST COMPANY, as
Administrative Agent, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Documentation Agent (the "Documentation Agent") and DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION, as Syndication Agent (the "Syndication Agent") (all
capitalized terms used herein and defined in Section 10 are used herein as
therein defined).
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrower the respective
credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION I. Amount and Terms of Credit.
1.01 The Commitments. (a) Subject to and upon the terms and
conditions set forth herein, each Bank with an A Term Loan Commitment severally
agrees to make on the Initial Borrowing Date a term loan or term loans (each an
"A Term Loan" and collectively, the "A Term Loans") to the Borrower, which A
Term Loans shall (i) at the option of the Borrower, be incurred and maintained
as, and/or converted into, Base Rate Loans or Eurodollar Loans, provided that
all A Term Loans shall initially be made as Base Rate Loans, (ii) be made and
maintained in Dollars and (iii) not exceed for any Bank, in initial aggregate
principal amount, that amount which equals the A Term Loan Commitment of such
Bank at the time of incurrence thereof (before giving effect to any reductions
thereto on such date pursuant to Section 3.03(a)). Once repaid, A Term Loans
incurred hereunder may not be reborrowed.
(b) Subject to and upon the terms and conditions set forth herein,
each Bank with a B Term Loan Commitment severally agrees to make on the Initial
Borrowing Date, a term loan or term loans (each a "B Term Loan" and,
collectively, the "B Term Loans") to the Borrower, which B Term Loans shall (i)
at the option of the Borrower, be incurred and maintained as, and/or converted
into, Base Rate Loans or Eurodollar Loans, provided that, all B Term Loans shall
initially be made as Base Rate Loans, (ii) be made and maintained in Dollars and
(iii) not exceed for any Bank, in initial aggregate principal amount, that
amount which equals the B Term Loan Commitment of such Bank at the time of
incurrence thereof (before giving effect to any reductions thereto on such date
pursuant to Section 3.03(a)). Once repaid, B Term Loans incurred hereunder may
not be reborrowed.
(c) Subject to and upon the terms and conditions herein set forth,
each Bank with a C Term Loan Commitment severally agrees to make a term loan or
term loans (each a "C Term Loan" and, collectively, the "C Term Loans") which C
Term Loans (i) shall be incurred on a C Term Loan Commitment Date, (ii) shall,
at the option of the Borrower, be incurred and maintained as, and/or converted
into, Base Rate Loans or Eurodollar loans, (iii) shall be made
1
<PAGE>
and maintained in Dollars and (iv) shall not exceed for any Bank, in initial
aggregate principal amount, that amount which equals the C Term Loan Commitment
of such Bank at the time of incurrence thereof (before giving effect to any
reductions thereto on such date pursuant to Section 3.03(b)). Once repaid, C
Term Loans incurred hereunder may not be reborrowed.
(d) Subject to and upon the terms and conditions set forth herein
(including, on and after the initial Additional Revolving Loan Commitment Date,
Section 1.14), each Bank with a Revolving Loan Commitment severally agrees to
make at any time and from time to time on or after the Initial Borrowing Date
and prior to the Revolving Loan Maturity Date, a loan or loans (each a
"Revolving Loan" and collectively the "Revolving Loans") which Revolving Loans
(i) shall be made and maintained in Dollars, (ii) at the option of the Borrower,
be incurred and maintained as, and/or converted into, Base Rate Loans or
Eurodollar Loans, (iii) may be repaid and reborrowed in accordance with the
provisions hereof and (iv) shall not exceed for any Bank at the time of the
making of any such Revolving Loans that aggregate principal amount which, when
added to the sum of (I) the aggregate principal amount of all other Revolving
Loans then outstanding from such Bank and (II) the product of (A) such Bank's
Revolving Percentage and (B) the sum of (1) aggregate amount of all Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, Revolving Loans) at such
time and (2) the aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Revolving Loan Commitment of such Bank at such time.
(e)(i) Subject to and upon the terms and conditions set forth
herein, the Swingline Bank agrees to make at any time and from time to time
after the Initial Borrowing Date and prior to the Swingline Expiry Date, a loan
or loans to the Borrower (each, a "Swingline Loan" and, collectively, the
"Swingline Loans"), which Swingline Loans (v) shall be made and maintained, at
the election of the Borrower, as Base Rate Loans, (w) may be repaid and
reborrowed in accordance with the provisions hereof, (x) shall not exceed
(giving effect to any incurrence thereof and the use of the proceeds of such
incurrence) in aggregate principal amount at any time outstanding that amount
which, when combined with the aggregate principal amount of all Revolving Loans
then outstanding and the Letter of Credit Outstandings at such time, equals the
Total Revolving Loan Commitment then in effect (after giving effect to any
changes thereto on such date) and (y) shall not exceed in aggregate principal
amount at any time outstanding the Maximum Swingline Amount. The Swingline Bank
shall not be obligated to make any Swingline Loans at a time when a Bank Default
exists unless the Swingline Bank has entered into arrangements satisfactory to
it and the Borrower to eliminate the Swingline Lender's risk with respect to
Defaulting Bank's or Banks' Revolving Percentage of the outstanding Swingline
Loans. The Swingline Bank will not make a Swingline Loan after it has received
written notice from the Borrower or the Required Banks stating that a Default or
an Event of Default exists until such time as the Swingline Bank shall have
received a written notice of (i) rescission of such notice from the party or
parties originally delivering the same or (ii) a waiver of such Default or Event
of Default from the Required Banks.
(ii) On any Business Day the Swingline Bank may, in its sole
discretion, give notice to the RC Banks that its outstanding Swingline Loans
shall be repaid with a Borrowing of
2
<PAGE>
Revolving Loans (provided that each such notice shall be deemed to have been
automatically given upon the occurrence of an Event of Default under Section
9.05 or upon the exercise of any of the remedies provided in the last paragraph
of Section 9), in which case a Borrowing of Revolving Loans constituting Base
Rate Loans (each such Borrowing, a "Mandatory Borrowing") shall be made on the
immediately succeeding Business Day by all RC Banks pro rata based on each RC
Bank's Revolving Percentage, and the proceeds thereof shall be applied directly
to repay the Swingline Bank for such outstanding Swingline Loans. Each RC Bank
hereby irrevocably agrees to make Base Rate Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the manner specified
in the preceding sentence and on the date specified in writing by the Swingline
Bank notwithstanding: (v) that the amount of the Mandatory Borrowing may not
comply with the Minimum Borrowing Amount otherwise required hereunder, (w)
whether any conditions specified in Section 5.02 are then satisfied, (x) whether
a Default or an Event of Default has occurred and is continuing, (y) the date of
such Mandatory Borrowing and (z) the amount of the Total Revolving Loan
Commitment at such time. In the event that any Mandatory Borrowing cannot for
any reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the Bankruptcy
Code in respect of the Borrower), each RC Bank (other than the Swingline Bank)
shall forthwith purchase from the Swingline Bank (without recourse or warranty)
such assignment of the outstanding Swingline Loans as shall be necessary to
cause such RC Banks to share in such Swingline Loans ratably based upon their
respective Revolving Percentages, provided that all interest payable on the
Swingline Loans shall be for the account of the Swingline Bank until the date
the respective assignment is purchased and, to the extent attributable to the
purchased assignment, shall be payable to the RC Bank purchasing same from and
after such date of purchase.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
amount of each Borrowing shall not be less than the Minimum Borrowing Amount for
such Tranche. More than one Borrowing may occur on the same date, but at no time
shall there be outstanding more than 15 Borrowings of Eurodollar Loans
hereunder.
1.03. Notice of Borrowing. (a) Whenever the Borrower desires to
incur Loans hereunder (other than Swingline Loans), it shall give the
Administrative Agent at its Notice Office at least one Business Day's prior
written notice (or telephonic notice promptly confirmed in writing) of each Base
Rate Loan, and at least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of each Eurodollar Loan, provided that any
such notice shall be deemed to have been given on a certain day only if given
before 11:00 A.M. (New York time) on such day. Each such written notice or
written confirmation of telephonic notice (each a "Notice of Borrowing"), shall
be irrevocable and shall be given by the Borrower in the form of Exhibit A,
appropriately completed to specify (i) the date of such incurrence (which shall
be a Business Day), (ii) whether the Loans being made shall constitute A Term
Loans, B Term Loans, C Term Loans or Revolving Loans, (iii) the aggregate
principal amount of the Loans to be made, (iv) whether the Loans being made are
to be initially maintained as Base Rate Loans or Eurodollar Loans and (v) in the
case of Eurodollar Loans, the initial Interest Period to be applicable thereto.
The Administrative Agent shall promptly (and in any event within one Business
Day after its receipt of a Notice of Borrowing) give each Bank which is required
to make Loans of the Tranche specified in the respective Notice of Borrowing,
notice of such
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proposed incurrence, of such Bank's proportionate share thereof and of the other
matters required by the immediately preceding sentence to be specified in the
Notice of Borrowing.
(b) (i) Whenever the Borrower desires to incur a Swingline Loan, it
shall give the Swingline Bank, prior to 11:00 A.M. (New York time) on the day
such Swingline Loan is to be made, written notice (or telephonic notice promptly
confirmed in writing) of the Swingline Loan to be made hereunder. Each such
notice shall be irrevocable and shall specify in each case (x) the date of such
Borrowing (which shall be a Business Day) and (y) the aggregate principal amount
of the Swingline Loan to be so made.
(b) (ii) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(e)(ii), with the Borrower irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of Mandatory Borrowings as set
forth in such Section 1.01(e)(ii).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any incurrence of Loans, the
Administrative Agent or the Swingline Bank may act without liability upon the
basis of telephonic notice of such incurrence, believed by the Administrative
Agent or the Swingline Bank, as the case may be, in good faith to be from an
Authorized Officer of the Borrower prior to receipt of written confirmation. In
each such case, the Borrower hereby waives the right to dispute the
Administrative Agent's or the Swingline Bank's, as the case may be, record of
the terms of such telephonic notice of such incurrence of Loans absent manifest
error.
1.04 Disbursement of Funds. No later than 12:00 Noon (New York time)
on the date specified in each Notice of Borrowing or (x) in the case of
Swingline Loans, not later than 2:00 P.M. (New York time) on the date specified
in Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not later than
12:00 Noon (New York time) on the date specified in Section 1.01(e), each Bank
with a Commitment of the respective Tranche will make available its pro rata
portion of each Borrowing of Loans requested to be made on such date, in
immediately available funds at the Payment Office of the Administrative Agent.
The Administrative Agent will make available to the Borrower at the Payment
Office in immediately available funds, the aggregate of the amounts so made
available by the Banks prior to 1:00 P.M. (New York time) on such day, to the
extent of funds actually received by the Administrative Agent. Unless the
Administrative Agent shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the Administrative
Agent such Bank's portion of any Borrowing to be made on such date, the
Administrative Agent may assume that such Bank has made such amount available to
the Administrative Agent on such date of Borrowing and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Bank, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Bank. If such
Bank does not pay such corresponding amount forthwith upon the Administrative
Agent's demand therefor, the Administrative Agent shall promptly notify the
Borrower and the Borrower shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
on demand from such Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
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amount was made available by the Administrative Agent to the Borrower until the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (i) if recovered from such Bank, the overnight Federal
Funds Rate and (ii)if recovered from the Borrower, the rate of interest
applicable to the respective Borrowing, as determined pursuant to Section 1.08.
Nothing in this Section 1.04 shall be deemed to relieve any Bank from its
obligation to make Loans hereunder or to prejudice any rights which the Borrower
may have against any Bank as a result of any failure by such Bank to make Loans
hereunder.
1.05 Notes. (a) At the request of any Bank, the Borrower's
obligation to pay the principal of, and interest on, the Loans made by such Bank
to the Borrower shall be evidenced (i) if A Term Loans, by a promissory note
duly executed and delivered by the Borrower substantially in the form of Exhibit
B-1 with blanks appropriately completed in conformity herewith (each an "A Term
Note" and, collectively, the "A Term Notes"), (ii) if B Term Loans, by a
promissory note duly executed and delivered by the Borrower substantially in the
form of Exhibit B-2 with blanks appropriately completed in conformity herewith
(each a "B Term Note" and, collectively, the "B Term Notes"), (iii) if C Term
Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-3 with blanks appropriately completed in
conformity herewith (each, a "C Term Note" and, collectively the "C Term
Notes"), (iv) if Revolving Loans, by a promissory note duly executed and
delivered by the Borrower substantially in the form of Exhibit B-4 with blanks
appropriately completed in conformity herewith (each, a "Revolving Note" and,
collectively, the "Revolving Notes") and (v) if Swingline Loans, by a promissory
note substantially in the form of Exhibit B-5, with blanks appropriately
completed in conformity herewith (the "Swingline Note").
(b) The A Term Note issued by the Borrower to any Bank that has an A
Term Loan Commitment shall (i) be executed by the Borrower, (ii) be payable to
the order of such Bank and be dated the date of issuance, (iii) be in a stated
principal amount equal to the A Term Loan Commitment of such Bank on the Initial
Borrowing Date (or, if issued after the Initial Borrowing Date, the outstanding
A Term Loans of such Bank at such time), (iv) mature on the A Term Loan Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the Guaranties and be secured by
the Security Documents.
(c) The B Term Note issued by the Borrower to any Bank that has a B
Term Loan Commitment shall (i) be executed by the Borrower, (ii) be payable to
the order of such Bank and be dated the date of issuance, (iii) be in a stated
principal amount equal to the B Term Loan Commitment of such Bank on the Initial
Borrowing Date (or, if issued after the Initial Borrowing Date, the outstanding
B Term Loans of such Bank at such time), (iv) mature on the B Term Loan Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the Guaranties and be secured by
the Security Documents.
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(d) The C Term Note issued by the Borrower to any Bank that has a C
Term Loan Commitment shall (i) be executed by the Borrower, (ii) be payable to
the order of such Bank and be dated the date of issuance, (iii) be in a stated
principal amount equal to the C Term Loan Commitment of such Bank on the
respective C Term Loan Commitment Date (or, in the case of any C Term Note
issued after such C Term Loan Commitment Date, in a stated principal amount
equal to the outstanding principal amount of the C Term Loan of such Bank on the
date of the issuance thereof), (iv) mature on the respective C Term Loan
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary prepayment as provided
in Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the Guaranties and be secured by
the Security Documents.
(e) The Revolving Note issued by the Borrower to any Bank that has a
Revolving Loan Commitment shall (i) be executed by the Borrower, (ii) be payable
to the order of such Bank and be dated the date of issuance, (iii) be in a
stated principal amount equal to the Revolving Loan Commitment of such Bank,
(iv) mature on the Revolving Loan Maturity Date, (v) bear interest as provided
in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01 and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the Guaranties and be secured by the Security Documents.
(f) The Swingline Note issued to the Swingline Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of the Swingline Bank and
be dated the date of issuance, (iii) be in a stated principal amount equal to
the Maximum Swingline Amount and be payable in the principal amount of Swingline
Loans evidenced thereby, (iv) mature on the Swingline Expiry Date, (v) bear
interest as provided in Section 1.08 in respect of the Base Rate Loans evidenced
thereby, (vi) be subject to voluntary prepayment as provided in Section 4.01 and
mandatory repayment as provided in Section 4.02 and (vii) be entitled to the
benefits of this Agreement and the Guaranties and be secured by the Security
Documents.
(g) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
shall not affect the respective Borrower's obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to convert on
any Business Day all or a portion equal to at least the applicable Minimum
Borrowing Amount for such Tranche of the outstanding principal amount of the
Loans (other than Swingline Loans) made to the Borrower pursuant to one or more
Borrowings (so long as of the same Tranche) of one or more Types of Loans into a
Borrowing or Borrowings (of the same Tranche) of another Type of Loan, provided
that (i) except as otherwise provided in Section 1.10(b), Eurodollar Loans may
be converted into Base Rate Loans only on the last day of an Interest Period
applicable to the Eurodollar Loans being converted and no such partial
conversion of Eurodollar
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Loans shall reduce the outstanding principal amount of such Eurodollar Loans
made pursuant to a single Borrowing to less than the applicable Minimum
Borrowing Amount for such Tranche, (ii) Base Rate Loans may not be converted
into Eurodollar Loans if any Default or Event of Default is in existence on the
date of the conversion (unless the Administrative Agent and the Required Banks
otherwise agree), (iii) no conversion pursuant to this Section 1.06 shall result
in a greater number of Borrowings of Eurodollar Loans than is permitted under
Section 1.02 and (iv) prior to the Syndication Date, no Loan may be converted
into Eurodollar Loans except on the first day of a Pre-Syndication Interest
Period. Each such conversion (other than automatic conversions pursuant to the
last paragraph of Section 1.09) shall be effected by the Borrower's giving the
Administrative Agent at its Notice Office prior to 12:00 Noon (New York time) at
least three Business Days' prior written notice (each a "Notice of Conversion")
specifying the Loans to be so converted, the Borrowing or Borrowings pursuant to
which such Loans were made, the date of such conversion (which shall be a
Business Day) and, if to be converted into Eurodollar Loans, the Interest Period
to be initially applicable thereto. The Administrative Agent shall give each
Bank prompt notice of any such proposed conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. All Borrowings of Loans (other than
Swingline Loans) under this Agreement shall be incurred from the Banks pro rata
on the basis of their A Term Loan Commitments (and after the termination
thereof, A Term Loans), B Term Loan Commitments (and after the termination
thereof, B Term Loans), C Term Loan Commitments (and after the termination
thereof, C Term Loans) or Revolving Loan Commitments, as the case may be;
provided that all Borrowings of Revolving Loans made pursuant to a Mandatory
Borrowing shall be incurred from the RC Banks pro rata on the basis of their
Revolving Percentages. It is understood that no Bank shall be responsible for
any default by any other Bank of its obligation to make Loans hereunder and that
each Bank shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Bank to make its Loans
hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Base Rate Loan from the date the proceeds
thereof are made available to the Borrower until the conversion or maturity
(whether by acceleration or otherwise) of such Base Rate Loan, at a rate per
annum which shall be equal to the sum of the Applicable Margin plus the Base
Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof are
made available to the Borrower until the conversion or maturity (whether by
acceleration or otherwise) of such Eurodollar Loan, at a rate per annum which
shall, during each Interest Period applicable thereto, be equal to the sum of
the Applicable Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the rate which
is 2% in excess of the rate then borne by such Loans (or in the case of overdue
amounts other than Loans, an amount equal to the sum of (i) the Base Rate in
effect from time to time, (ii) the Applicable Margin in respect of Base Rate
Loans and (iii) 2%), in each case with such interest to be payable on demand.
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(d) Accrued (and theretofore unpaid) interest shall be payable (i)
in respect of each Base Rate Loan, quarterly in arrears on each Quarterly
Payment Date, (ii) in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in respect of each Loan, on any
repayment or prepayment (on the amount repaid or prepaid), at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the respective interest rate for each Interest Period applicable
to the Eurodollar Loans for which such determination is being made and shall
promptly notify the Borrower and the Banks thereof. Each such determination
shall, absent manifest error, be final and conclusive and binding on all parties
hereto.
1.09 Interest Periods. (a) At the time it gives any Notice of
Borrowing in respect of the making of any Loan, or any Notice of Conversion in
respect of the conversion of any Loan (in the case of the initial Interest
Period applicable thereto) or on the third Business Day prior to the expiration
of an Interest Period applicable to such Loan (in the case of any subsequent
Interest Period), the Borrower shall have the right to elect, by giving the
Administrative Agent notice thereof, the interest period (each an "Interest
Period") applicable to such Loan, which Interest Period shall, at the option of
such Borrower, be a one, two, three or six-month period, or if available to each
Bank making such Loan, a nine or twelve-month period (provided that prior to the
Syndication Date, only Pre-Syndication Interest Periods may be selected by the
Borrower); provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion thereto from a Borrowing of Base Rate Loans) and each
Interest Period occurring thereafter in respect of such Loans shall
commence on the day on which the next preceding Interest Period applicable
thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins on
a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall end
on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
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(v) no Interest Period may be selected at any time when a Default or
an Event of Default is then in existence (unless the Administrative Agent
and the Required Banks otherwise agree);
(vi) no Interest Period for a Borrowing under a Tranche shall be
selected which extends beyond the respective Maturity Date of such
Tranche; and
(vii) no Interest Period in respect of any Borrowing of A Term
Loans, B Term Loans or C Term Loans shall be selected which extends beyond
any date upon which a Scheduled Repayment of A Term Loans, B Term Loans or
C Term Loans, as the case may be, will be required to be made under
Sections 4.02(b), (c) or (d) if the aggregate principal amount of A Term
Loans, B Term Loans or C Term Loans, as the case may be, which have
Interest Periods which will expire after such date will be in excess of
the aggregate principal amount of such Tranche of Term Loans then
outstanding less the aggregate amount of such Scheduled Repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any
Bank shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto but, with respect to
clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the London
interbank market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition
of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan which such Bank deems to be material because of any
change since the date of this Agreement in any applicable law or
governmental rule, regulation, order, guideline or request (whether or not
having the force of law) or in the interpretation or administration
thereof and including the introduction of any new law or governmental
rule, regulation, order, guideline or request (a "Change in Law"), which
(A)changes the basis of taxation of payment to any Bank of the principal
of or interest on such Eurodollar Loan or any other amounts payable
hereunder (except for changes in the rate of tax on, or determined by
reference to, the net income or profits of such Bank, pursuant to the laws
of the jurisdiction in which such Bank is organized or in which such
Bank's principal office or applicable lending office is located or any
subdivision thereof or therein and Taxes for which a payment is required
pursuant to Section 4.04(a)), (B) changes official reserve requirements
(but, in all events, excluding reserves required under Regulation D to the
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extent included in the computation of the Eurodollar Rate) and/or (C)
imposes any other condition affecting such Bank or the London interbank
market or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any Change in Law, (y) impossible by
compliance by any Bank in good faith with any governmental request made
after the date of this Agreement (whether or not having force of law) or
(z) impracticable as a result of a Change in Law which materially and
adversely affects the London interbank market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i)) shall promptly give notice (by telephone confirmed in writing) to
the Borrower and, except in the case of clause (i) above, to the Administrative
Agent of such determination (which notice the Administrative Agent shall
promptly transmit to each of the other Banks). Thereafter (x) in the case of
clause (i) above, Eurodollar Loans shall no longer be available until such time
as the Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to Eurodollar Loans which have not yet been incurred (including by
way of conversion) shall be deemed rescinded by the Borrower, (y) in the case of
clause (ii) above, the Borrower shall pay to such Bank, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank in its
reasonable discretion shall determine) as shall be required to compensate such
Bank for such increased costs or reductions in amounts received or receivable
hereunder (a written notice as to the additional amounts owed to such Bank,
showing the basis for the calculation thereof, based on averaging and
attribution methods among customers which are reasonable, submitted to the
respective Borrower by such Bank in good faith shall, absent manifest error, be
final and conclusive and binding on all the parties hereto) and (z) in the case
of clause (iii) above, the Borrower shall take one of the actions specified in
Section 1.10(b) as promptly as possible and, in any event, within the time
period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Bank or
the Administrative Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if the
affected Eurodollar Loan is then outstanding, upon at least three Business Days'
written notice to the Administrative Agent and the affected Bank, and subject to
Section 4.02(l), require the affected Bank to convert such Eurodollar Loan into
a Base Rate Loan or repay such Eurodollar Loan in full provided, that if more
than one Bank is affected at any time, then all affected Banks must be treated
the same pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that, after the date hereof,
the adoption or effectiveness of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental
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authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank or any corporation
controlling such Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's or such other corporation's capital or assets as a consequence of
such Bank's Commitment or Commitments or Loans hereunder or its obligations
hereunder to a level below that which such Bank or such other corporation could
have achieved but for such adoption, effectiveness, change or compliance (taking
into consideration such Bank's or such other corporation's policies with respect
to capital adequacy), then from time to time, upon written demand by such Bank
(with a copy to the Administrative Agent), accompanied by the notice referred to
in the penultimate sentence of this clause (c), the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank or such
other corporation for such reduction. In determining such additional amounts,
each Bank will act reasonably and in good faith and will use reasonable
averaging and attribution methods. Each Bank, upon determining that any
additional amounts will be payable pursuant to this Section 1.10(c), will give
prompt written notice thereof to the Borrower (a copy of which shall be sent by
such Bank to the Administrative Agent), which notice shall set forth in
reasonable detail the basis of the calculation of such additional amounts,
although the failure to give any such notice shall not release or diminish the
Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c) upon the subsequent receipt of such notice. A Bank's reasonable good
faith determination of compensation owing under this Section 1.10(c) shall,
absent manifest error, be final and conclusive and binding on all the parties
hereto.
1.11 Compensation. The Borrower shall compensate each Bank, upon its
written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans) which such Bank may sustain: (i) if for any reason
(other than a default by such Bank or the Administrative Agent) a Borrowing of,
or conversion from or into, Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by the Borrower); (ii) if any repayment (including any repayment made
pursuant to Section 4.01 or 4.02 or a result of an acceleration of the Loans
pursuant to Section 9 or as a result of the replacement of a Bank pursuant to
Section 1.13 or 13.12(b)) or conversion of any Eurodollar Loans occurs on a date
which is not the last day of an Interest Period with respect thereto; (iii) if
any prepayment of any Eurodollar Loans is not made on any date specified in a
notice of prepayment given by the Borrower; or (iv) as a consequence of (x) any
other default by the Borrower to repay its Loans when required by the terms of
this Agreement or any Note held by such Bank or (y) any election made pursuant
to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.05 or Section 4.04 with respect to such Bank,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Loans or Letters of Credit affected by such event, provided that such
designation is made on such terms that such Bank and its lending office suffer
no economic, legal or regulatory
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disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of such Section. Nothing in this Section 1.12 shall affect
or postpone any of the obligations of the Borrower or the right of any Bank
provided in Sections 1.10, 2.05 and 4.04.
1.13 Replacement of Banks. (a) If any Bank becomes a Defaulting Bank
or otherwise defaults in its obligations to make Loans or fund Unpaid Drawings,
(ii) if any Bank refuses to consent to certain proposed changes, waivers,
discharges or terminations with respect to this Agreement which have been
approved by the Required Banks as provided in Section 13.12(b) or (iii) upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.05 or Section 4.04 with respect to any Bank
which results in such Bank charging to the Borrower increased costs, the
Borrower shall have the right, in accordance with the requirements of Section
13.04(b), if no Event of Default will exist after giving effect to such
replacement, to replace such Bank (the "Replaced Bank") with an Eligible
Transferee or Transferees, none of which shall constitute a Defaulting Bank at
the time of such replacement (collectively, the "Replacement Bank"), reasonably
acceptable to the Administrative Agent and the Issuing Banks, provided that (i)
at the time of any replacement pursuant to this Section 1.13, the Replacement
Bank shall enter into one or more Assignment and Assumption Agreements pursuant
to Section 13.04(b) (and with the assignment fee payable pursuant to said
Section 13.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Commitments and outstanding Loans of,
and in each case participations in Letters of Credit by, the Replaced Bank and,
in connection therewith, shall pay to (x) the Replaced Bank in respect thereof
an amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Replaced Bank, (B) an amount
equal to all Unpaid Drawings that have been funded by (and not reimbursed to)
such Replaced Bank, together with all then unpaid interest with respect thereto
at such time and (C) an amount equal to all accrued, but theretofore unpaid,
Fees owing to the Replaced Bank pursuant to Section 3.01, (y) the Issuing Bank
an amount equal to such Replaced Bank's Revolving Percentage of any Unpaid
Drawing (which at such time remains an Unpaid Drawing) to the extent such amount
was not theretofore funded by such Replaced Bank and (z) the Swingline Bank, any
portion of a Mandatory Borrowing that the Replaced Bank failed to fund and (ii)
all obligations of the Borrower owing to the Replaced Bank (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Bank concurrently with such replacement.
(b) Upon the execution of the respective Assignment and Assumption
Agreements, the payment of amounts referred to in clauses (i) and (ii) of the
proviso contained in Section 1.13(a) and, if so requested by the Replacement
Bank, delivery to the Replacement Bank of the appropriate Note or Notes executed
by the Borrower, the Replacement Bank shall become a Bank hereunder and the
Replaced Bank shall cease to constitute a Bank hereunder, except with respect to
indemnification provisions applicable to the Replaced Bank under this Agreement
(including, without limitation, Sections 1.10, 1.11, 2.05, 4.04, 13.01 and
13.06), which shall survive as to such Replaced Bank.
1.14 Additional Commitments. (a) The Borrower shall have the right
at any time and from time to time and upon at least 30 days prior written notice
to the Administrative Agent,
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to request on one or more occasions that one or more Banks (and/or one or more
other Persons which will become Banks as provided below) provide:
(I) C Term Loan Commitments and, subject to the applicable terms and
conditions contained in this Agreement and the relevant C Term Loan
Commitment Agreement, make C Term Loans pursuant thereto, it being
understood and agreed, however, that (i) no Bank shall be obligated to
provide a C Term Loan Commitment as a result of any request by the
Borrower, (ii) until such time, if any, as (x) such Bank has agreed in its
sole discretion to provide a C Term Loan Commitment and executed and
delivered to the Administrative Agent a C Term Loan Commitment Agreement
in respect thereof as provided in Section 1.14(b) below and (y) the other
conditions set forth in Section 1.14(b) shall have been satisfied, such
Bank shall not be obligated to fund any C Term Loans, (iii) any Bank (or,
in the circumstances contemplated by clause (vii) below, any other Person
which will qualify as an Eligible Transferee) may so provide a C Term Loan
Commitment without the consent of any other Bank, (iv) each provision of C
Term Loan Commitments pursuant to this Section 1.14 on a given date, and
the amount of each C Term Loan Sub-Facility, shall be in a minimum
aggregate amount (for all Banks (including, in the circumstances
contemplated by clause (viii) below, Eligible Transferees who will become
Banks)) of at least $25,000,000, (v) the aggregate amount of all C Term
Loan Commitments permitted to be provided pursuant to this Section 1.14
and the aggregate principal amount of C Term Loans permitted to be made
pursuant to Section 1.01(c) shall not, in either case, when added to the
aggregate amount of all Additional Revolving Loan Commitments permitted to
be provided pursuant to this Section 1.14, exceed $100,000,000, (vi) the
up-front fees payable in respect of the C Term Loan Commitments and C Term
Loans under a C Term Loan Sub-Facility shall be as set forth in the C Term
Loan Commitment Agreement for such C Term Loan Sub-Facility, (vii) the
Applicable Margins, C Term Loan Maturity Date and C Term Loan Scheduled
Repayments in respect of the C Term Loan Commitments and C Term Loans
under a C Term Loan Sub-Facility shall be as set forth in the C Term Loan
Commitment Agreement for such C Term Loan Sub-Facility, (viii) if, after
the Borrower has requested the then existing Banks (other than Defaulting
Banks) to provide C Term Loan Commitments pursuant to this Section 1.14 on
the terms to be applicable to the respective C Term Loan Sub-Facility, the
Borrower has not received C Term Loan Commitments in an aggregate amount
equal to that amount of C Term Loan Commitments which the Borrower desires
to obtain pursuant to such request (as set forth in the notice provided by
the Borrower to the Administrative Agent as provided above), then the
Borrower may request C Term Loan Commitments from Persons which would
qualify as Eligible Transferees hereunder in aggregate amount equal to
such deficiency on terms which are no more favorable to such Eligible
Transferee in any respect than the terms offered to the Banks, provided
that any such C Term Loan Commitments provided by any such Eligible
Transferee which is not already a Bank shall be in a minimum amount (for
such Eligible Transferee) of at least $5,000,000, and (ix) all actions
taken by the Borrower pursuant to this Section 1.14(a)(I) shall be done in
coordination with the Administrative Agent; and/or
(II) Additional Revolving Loan Commitments and, subject to the
applicable terms and conditions contained in this Agreement and the
relevant Additional Revolving
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Loan Commitment Agreement, make Revolving Loans pursuant to Section
1.01(d), it being understood and agreed, however, that (i) no Bank shall
be obligated to provide an Additional Revolving Loan Commitment as a
result of any request by the Borrower, (ii) until such time, if any, as
(x) such Bank has agreed in its sole discretion to provide an Additional
Revolving Loan Commitment and executed and delivered to the Administrative
Agent an Additional Revolving Loan Commitment Agreement in respect thereof
as provided in Section 1.14(c) and (y) such other conditions set forth in
Section 1.14(c) shall have been satisfied, such Bank shall not be
obligated to fund any Revolving Loans, or participate in any Letters of
Credit, in excess of the amounts provided for in Section 1.01(b) or 2.03,
as the case may be, before giving effect to such Additional Revolving Loan
Commitments provided pursuant to this Section 1.14, (iii) any Bank (or, in
the circumstances contemplated by clause (vii) below, any other Person
which will qualify as an Eligible Transferee) may so provide an Additional
Revolving Loan Commitment without the consent of any other Bank (it being
understood and agreed that the consent of the Administrative Agent and the
Issuing Bank (such consent not to be unreasonably withheld or delayed)
shall be required if any such Additional Revolving Loan Commitments are to
be provided by a Person which is not already a Bank), (iv) each provision
of Additional Revolving Loan Commitments on a given date pursuant to this
Section 1.14 shall be in a minimum aggregate amount (for all Banks
(including, in the circumstances contemplated by clause (vii) below,
Eligible Transferees who will become Banks)) of at least $25,000,000, (v)
the aggregate amount of all Additional Revolving Loan Commitments
permitted to be provided pursuant to this Section 1.14, when added to the
aggregate amount of all C Term Loan Commitments permitted to be provided
pursuant to this Section 1.14 or the aggregate principal amount of C Term
Loans permitted to be made pursuant to Section 1.01(c), shall not, in
either case, exceed $100,000,000, (vi) the up-front fees payable to any
Bank providing an Additional Revolving Loan Commitment shall be as set
forth in the relevant Additional Revolving Loan Commitment Agreement,
(vii) if, after the Borrower has requested the then existing Banks (other
than Defaulting Banks) to provide Additional Revolving Loan Commitments
pursuant to this Section 1.14 on the terms to be applicable thereto, the
Borrower has not received Additional Revolving Loan Commitments in an
aggregate amount equal to that amount of the Additional Revolving Loan
Commitments which the Borrower desires to obtain pursuant to such request
(as set forth in the notice provided by the Borrower to the Administrative
Agent as provided above), then the Borrower may request Additional
Revolving Loan Commitments from Persons which would qualify as Eligible
Transferees hereunder in aggregate amount equal to such deficiency on
terms which are no more favorable to such Eligible Transferee in any
respect than the terms offered to the Banks, provided that any such
Additional Revolving Loan Commitments provided by any such Eligible
Transferee which is not already a Bank shall be in a minimum amount (for
such Eligible Transferee) of at least $5,000,000, and (viii) all actions
taken by the Borrower pursuant to this Section 1.14(a)(II) shall be done
in coordination with the Administrative Agent.
(b) At the time of any provision of C Term Loan Commitments pursuant
to this Section 1.14, (i) the Borrower, the Administrative Agent and each such
Bank or other Eligible Transferee which agrees to provide a C Term Loan
Commitment (each, a "C Term Loan Bank")
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shall execute and deliver to the Administrative Agent a C Term Loan Commitment
Agreement substantially in the form of Exhibit C-1, subject to such
modifications in form and substance reasonably satisfactory to the
Administrative Agent as may be necessary or appropriate in the case of any C
Term Loan Sub-Facility (with the effectiveness of such C Term Loan Bank's C Term
Loan Commitment to occur upon delivery of such C Term Loan Commitment Agreement
to the Administrative Agent, the payment of any fees required in connection
therewith and the satisfaction of the other conditions in this Section 1.14(b)
to the reasonable satisfaction of the Administrative Agent), (ii) if the
proceeds of the C Term Loans of the respective C Term Loan Sub-Facility are to
be utilized to finance a Permitted Acquisition on the respective C Term Loan
Commitment Date, the Borrower shall deliver to the Administrative Agent the
officer's certificate required to be delivered pursuant to Section 7.14(vi) in
connection with such Permitted Acquisition, and (iii) the Borrower shall deliver
to the Administrative Agent an opinion, in form and substance reasonably
satisfactory to the Agents, from counsel to the Borrower reasonably satisfactory
to the Agents and dated such date, covering such matters similar to those set
forth in the opinion of counsel delivered to the Administrative Agent on the
Initial Borrowing Date pursuant to Section 5.04 and such other matters as the
Agents may reasonably request. The Administrative Agent shall promptly notify
each Bank as to the occurrence of each C Term Loan Commitment Date, and (x) on
each such date Schedule I shall be deemed modified to reflect the C Term Loan
Commitments of such C Term Loan Banks and (y) to the extent requested by such C
Term Loan Banks, C Term Notes will be issued, at the Borrower's expense, to such
C Term Loan Banks, to be in conformity with the requirements of Section 1.05
(with appropriate modifications) to the extent needed to reflect the new C Term
Loan Commitments.
(c) At the time of any provision of Additional Revolving Loan
Commitments pursuant to this Section 1.14, (i) the Borrower, the Administrative
Agent and each such Bank or other Eligible Transferee which agrees to provide an
Additional Revolving Loan Commitment (each, an "Additional Revolving Loan Bank")
shall execute and deliver to the Administrative Agent a Revolving Loan
Commitment Agreement substantially in the form of Exhibit C-2, subject to such
modifications in form and substance reasonably satisfactory to the
Administrative Agent as may be necessary or appropriate (with the effectiveness
of such Additional Revolving Loan Bank's Additional Revolving Loan Commitment to
occur upon delivery of such Revolving Loan Commitment Agreement to the
Administrative Agent, the payment of any fees required in connection therewith
and the satisfaction of the other conditions in this Section 1.14(c) to the
reasonable satisfaction of the Administrative Agent), (ii) if the proceeds of
the Revolving Loans to be incurred pursuant to such Additional Revolving Loan
Commitment are to be utilized to finance a Permitted Acquisition on the
respective Additional Revolving Loan Commitment Date, the Borrower shall deliver
to the Administrative Agent the officer's certificate required to be delivered
pursuant to Section 7.14(vi) in connection with such proposed Permitted
Acquisition, and (iii) the Borrower shall, in coordination with the
Administrative Agent, repay all outstanding Revolving Loans of the RC Banks, and
incur additional Revolving Loans from other RC Banks in each case so that the RC
Banks participate in each Borrowing of Revolving Loans pro rata on the basis of
their respective Revolving Loan Commitments (after giving effect to any increase
in the Total Revolving Loan Commitment pursuant to this Section 1.14) and with
the Borrower being obligated to pay the respective RC Banks the costs of the
type referred to in Section 1.11 in connection with any such repayment and/or
Borrowing and (iv) the Borrower shall deliver to the
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Administrative Agent an opinion, in form and substance reasonably satisfactory
to the Agents, from counsel to the Borrower reasonably satisfactory to the
Agents and dated such date, covering such matters similar to those set forth in
the opinion of counsel delivered to the Administrative Agent on the Initial
Borrowing Date pursuant to Section 5.04 and such other matters as the Agents may
reasonably request. The Administrative Agent shall promptly notify each Bank as
to the occurrence of each Additional Revolving Loan Commitment Date, and (w) on
each such date, the Total Revolving Loan Commitment under, and for all purposes
of, this Agreement shall be increased by the aggregate amount of such Additional
Revolving Loan Commitments, (x) on each such date Schedule I shall be deemed
modified to reflect the revised Revolving Loan Commitments of the affected
Banks, (y) upon surrender of any old Revolving Notes by the respective
Additional Revolving Loan Bank (or, if lost, a standard lost note indemnity in
form and substance reasonably satisfactory to the Borrower), to the extent
requested by any Additional Revolving Loan Bank, a new Revolving Note will be
issued, at the Borrower's expense, to such Additional Revolving Loan Bank, to be
in conformity with the requirements of Section 1.05 (with appropriate
modifications) to the extent needed to reflect the revised Revolving Loan
Commitment of such Bank and (z) on such date with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to
the participations by the Banks in such Letters of Credit and Unpaid Drawings to
reflect the new Revolving Percentages of the RC Banks.
1.15 Limitations on Additional Amounts, etc. Notwithstanding
anything to the contrary contained in Section 1.10, 1.11, 2.05 or 4.04 of this
Agreement, unless a Bank gives notice to the Borrower that it is obligated to
pay an amount under the respective Section within 180 days after the date such
Bank incurs the respective increased costs, Taxes, loss, expense or liability,
reduction in amounts received or receivable or reduction in return on capital,
then such Bank shall only be entitled to be compensated for such amount by the
Borrower pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be,
to the extent the costs, Taxes, loss, expense or liability, reduction in amounts
received or receivable or reduction in return on capital are incurred or
suffered on or after the date which occurs 180 days prior to such Bank giving
notice to the Borrower that it is obligated to pay the respective amounts
pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be; provided
that if the circumstances giving rise to such claims have a retroactive effect,
then such 180-day period shall be extended to include the period of such
retroactive effect. This Section 1.15 shall have no applicability to any Section
of this Agreement other than said Sections 1.10, 1.11, 2.05 and 4.04.
SECTION II. Letters of Credit.
2.01. Letters of Credit. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request the Issuing Bank at any
time and from time to time on or after the Initial Borrowing Date and prior to
the tenth Business Day (or 30th day in the case of Trade Letters of Credit)
immediately preceding the Revolving Loan Maturity Date, to issue, and subject to
the terms and conditions set forth herein, the Issuing Bank shall issue, (x) for
the account of the Borrower and for the benefit of any holder (or any trustee,
Administrative Agent or other similar representative for any such holders) of
L/C Supportable Obligations of the Borrower or any of its Subsidiaries, an
irrevocable sight standby letter of credit, in a form customarily used by the
Issuing Bank or in such other form as has been approved by the Issuing Bank
(each such
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standby letter of credit, a "Standby Letter of Credit") in support of such L/C
Supportable Obligations and (y) for the account of the Borrower and for the
benefit of sellers of goods to the Borrower or any of its Subsidiaries, an
irrevocable sight documentary letter of credit in a form customarily used by the
Issuing Bank or in such other form as has been approved by the Issuing Bank
(each such documentary letter of credit, a "Trade Letter of Credit," and each
such Trade Letter of Credit and Standby Letter of Credit, a "Letter of Credit")
in support of commercial transactions of the Borrower or any such Subsidiary.
All Letters of Credit shall be denominated in Dollars.
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued if the Stated Amount of which, when added to all Letter of Credit
Outstandings at such time, would exceed $15,000,000, (ii) no Letter of Credit
shall be issued the Stated Amount of which, when added to the sum of (I) all
Letter of Credit Outstandings at such time and (II) the aggregate outstanding
principal amount of all Revolving Loans and Swingline Loans would exceed the
Total Revolving Loan Commitment then in effect, (iii) each Standby Letter of
Credit shall by its terms terminate on or before the earlier of (x) the date
which occurs 12 months after the date of issuance thereof (although any such
Standby Letter of Credit may be extendible for successive periods of up to 12
months (but not beyond the tenth Business Day immediately preceding the
Revolving Loan Maturity Date) on terms acceptable to the Issuing Bank) and (y)
the tenth Business Day immediately preceding the Revolving Loan Maturity Date
and (iv) each Trade Letter of Credit shall by its terms terminate on or before
the earlier of (x) the date which occurs 180 days after the date of issuance
thereof and (y) the date which occurs 30 days prior to the Revolving Loan
Maturity Date.
(c) Notwithstanding the foregoing, the Issuing Bank shall not be
under any obligation to issue any Letter of Credit if any of the applicable
conditions contained in Section 5 shall not be met at the time of such issuance
or if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain the Issuing
Bank from issuing such Letter of Credit or any requirement of law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any governmental authority with jurisdiction
over the Issuing Bank shall prohibit, or request that the Issuing Bank
refrain from, the issuance of letters of credit generally or the Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to
such Letter of Credit any restriction or reserve or capital requirement
(for which the Issuing Bank is not otherwise compensated) not in effect on
the date hereof, or shall result in any unreimbursable loss, cost or
expense to the Issuing Bank which would not have resulted from any law,
request or directive in effect as of the date hereof and which the Issuing
Bank in good faith deems material to it;
(ii) the Issuing Bank shall have received notice from the Required
Banks of the type described in Section 2.02(b); or
(iii) a Bank Default exists, unless the Borrower and the Issuing
Bank shall have entered into arrangements satisfactory to the Borrower and
the Issuing Bank to eliminate
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the Issuing Bank's risk with respect to the respective Defaulting Bank's
or Banks' Revolving Percentage of the Letter of Credit Outstandings.
2.02 Letter of Credit Requests. (a) Whenever the Borrower desires
that a Letter of Credit be issued for its account it shall have executed and
delivered to the Issuing Bank (with copies having been sent to the
Administrative Agent) at least three Business Days prior to the issuance thereof
(or such shorter period of time as is acceptable to the Issuing Bank), a Letter
of Credit Request in the form of Exhibit D (each a "Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be deemed to
be a representation and warranty by the Borrower that all of the applicable
conditions set forth in Section 5 shall be met at the time of such issuance. The
Issuing Bank shall not issue any Letter of Credit after it has received written
notice from the Borrower or the Required Banks stating that a Default or an
Event of Default exists until such time as the Issuing Bank shall have received
written notice of (i) rescission of such notice from the party or parties
originally delivering the same or (ii) a waiver of such Default or Event of
Default from the Required Banks. Upon its issuance of any Standby Letter of
Credit, the Issuing Bank shall promptly notify the Administrative Agent and each
Bank of such issuance and deliver a copy thereof to the Administrative Agent.
2.03 Letter of Credit Participations. (a) Immediately upon the
issuance by the Issuing Bank of any Letter of Credit, the Issuing Bank shall be
deemed to have sold to each other RC Bank (each such other RC Bank, in its
capacity under this Section 2.03, a "Participant"), and each such Participant
shall be deemed irrevocably and unconditionally to have purchased and received
from the Issuing Bank, without recourse or warranty, an undivided interest and
participation (each a "Participation"), to the extent of such Participant's
Revolving Percentage in such Letter of Credit, each substitute letter of credit,
each drawing made thereunder and the obligations of the Borrower under this
Agreement with respect thereto, and any security therefor or guaranty pertaining
thereto (although Letter of Credit Fees will be paid directly to the
Administrative Agent for the ratable account of the Participants as provided in
Section 3.01(b) and the Participants shall have no right to receive any portion
of any Facing Fees). Upon any change in the Revolving Loan Commitments of the
Banks pursuant to Section 1.13 or 13.04, it is hereby agreed that, with respect
to all outstanding Letters of Credit, and Unpaid Drawings, there shall be an
automatic adjustment to the Participations pursuant to this Section 2.03 to
reflect the new Revolving Percentages of the assignor and assignee Bank.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Bank shall have no obligation relative to the Participants other than to
confirm that any documents required to be delivered under such Letter of Credit
have been delivered and that they appear to substantially comply on their face
with the requirements of such Letter of Credit. Any action taken or omitted to
be taken by the Issuing Bank under or in connection with any Letter of Credit,
if taken or omitted in the absence of gross negligence or willful misconduct,
shall not create for the Issuing Bank any resulting liability.
(c) In the event that the Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to the Issuing Bank
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pursuant to Section 2.04(a), the Issuing Bank shall promptly notify the
Administrative Agent and after receipt of such notice, the Administrative Agent
will notify each Participant of such failure, and each Participant shall
promptly and unconditionally pay to the Administrative Agent, for the account of
the Issuing Bank, the amount of such Participant's Revolving Percentage of such
unreimbursed payment in Dollars and in same day funds. If the Administrative
Agent so notifies, prior to 11:00 A.M. (New York time) on any Business Day, any
Participant required to fund a payment under a Letter of Credit, such
Participant shall make available to the Administrative Agent for the account of
the Issuing Bank such Participant's Revolving Percentage of the amount of such
payment on such Business Day in Dollars and in same day funds. If and to the
extent such Participant shall not have so made its Revolving Percentage of the
amount of such payment available to the Administrative Agent for the account of
the Issuing Bank, such Participant agrees to pay to the Administrative Agent for
the account of the Issuing Bank, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Administrative Agent for the account of the Issuing Bank at the overnight
Federal Funds Rate. The failure of any Participant to make available to the
Administrative Agent for the account of the Issuing Bank its Revolving
Percentage of any payment under any Letter of Credit shall not relieve any other
Participant of its obligation hereunder to make available to the Administrative
Agent for the account of the Issuing Bank its Revolving Percentage of any
payment under any Letter of Credit on the date required, as specified above, but
no Participant shall be responsible for the failure of any other Participant to
make available to the Administrative Agent, such other Participant's Revolving
Percentage of any such payment.
(d) Whenever the Issuing Bank receives a payment of a reimbursement
obligation as to which the Administrative Agent has received for the account of
the Issuing Bank any payments from the Participants pursuant to clause (c)
above, the Issuing Bank shall pay to the Administrative Agent and the
Administrative Agent shall promptly pay to each Participant which has paid its
Revolving Percentage thereof, in Dollars and in same day funds, an amount equal
to such Participant's Revolving Percentage of the principal amount of such
reimbursement and of interest reimbursed thereon accruing from and after the
date of the purchase of the respective Participations.
(e) As between the Borrower and the Issuing Bank, the Borrower
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit by, the respective beneficiaries or transferees of such Letters of
Credit. Further, and not in limitation of the foregoing, absent gross negligence
or willful misconduct on its part, the Issuing Bank shall not be responsible for
the following:
(i) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any documents submitted by any party in connection with the
application for and issuance of or any drawing under such Letters of
Credit, even if it should in fact prove to be in any and all respects
invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any such Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason;
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(iii) errors, omissions, interruptions or delays in the transmission
or delivery of any messages by mail, cable, telegraph, telecopier, telex
or otherwise, whether or not they be in cipher;
(iv) errors in interpretation of technical terms;
(v) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter of
Credit or the proceeds thereof;
(vi) the misapplication by the beneficiary of any such Letter of
Credit or the proceeds of any drawing of any such Letter of Credit; and
(vii) any consequences arising from causes beyond the control of the
Issuing Bank, including without limitation any acts of governments.
(f) The obligations of the Participants to make payments to the
Administrative Agent for the account of the Issuing Bank with respect to Letters
of Credit shall be irrevocable and not subject to counterclaim, set-off or any
other defense or any other qualification or exception whatsoever and shall be
made in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following circumstances
(other than in the case of gross negligence or willful misconduct of the Issuing
Bank):
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), the Administrative Agent, the
Issuing Bank, any Bank, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transaction
between the Borrower and the beneficiary named in any such Letter of
Credit);
(iii) any draft, certificate or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
hereby agrees to reimburse the Issuing Bank, by making payment to the
Administrative Agent for the account of the Issuing Bank, in Dollars and in
immediately available funds at the Payment Office
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of the Administrative Agent, for any payment or disbursement made by the Issuing
Bank under any Letter of Credit (each such amount, so paid or disbursed until
reimbursed, an "Unpaid Drawing") within one Business Day after the date of such
payment or disbursement, with interest on the amount so paid or disbursed by the
Issuing Bank, to the extent not reimbursed prior to 2:00 P.M. (New York time) on
the date of such payment, from and including the date paid to but excluding the
date reimbursement is made, at a rate per annum which shall be the Applicable
Margin for Revolving Loans which are maintained as Base Rate Loans (plus 2% if
not reimbursed by 2:00 P.M. (New York time) on the second Business Day following
receipt by the Borrower of notice of any such payment or disbursement) plus the
Base Rate in effect from time to time, such interest to be payable on demand.
The Issuing Bank shall notify the Borrower and the Administrative Agent of its
paying any payment under a Letter of Credit created thereunder as soon as
practical after such payment, provided, that the failure to give any such notice
shall in no way affect, impair or diminish the Borrower's obligations hereunder.
(b) The Borrower's obligation under this Section 2.04 to reimburse
the Issuing Bank with respect to Unpaid Drawings (including, in each case,
interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against any Participant, the Issuing
Bank, the Administrative Agent, any Bank or any other Person, including, without
limitation, any defense based upon the failure of any payment under a Letter of
Credit (each a "Drawing") to conform to the terms of the Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of such
Drawing; provided, however, that the Borrower shall not be obligated to
reimburse the Issuing Bank for any wrongful payment made by the Issuing Bank
under a Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the Issuing Bank.
2.05 Increased Costs. If the Issuing Bank or any Participant
determines that after the Initial Borrowing Date the adoption or effectiveness
of any applicable law, rule or regulation, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Issuing Bank or any Participant
with any request or directive (whether or not having the force of law) by any
such authority, central bank or comparable agency shall either (i) impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against Letters of Credit issued by the Issuing Bank or such
Participant's participation therein, or (ii) impose on the Issuing Bank or any
Participant any other conditions affecting this Agreement, any Letter of Credit,
or such Participant's participation therein, and the result of any of the
foregoing is to increase the cost to the Issuing Bank or such Participant of
issuing, maintaining or participating in any Letter of Credit, or to reduce the
amount of any sum received or receivable by the Issuing Bank or any Participant
hereunder with respect to Letters of Credit (except for changes in the rate of
tax on, or determined by reference to, the net income or profits of the Issuing
Bank or such Participant pursuant to the laws of the United States of America,
the jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or therein) or
reduce the rate of return on its capital with respect to Letters of Credit then,
upon demand to the Borrower by the Issuing Bank or the Participant (a copy of
which notice shall be sent by the Issuing Bank or such Participant to the
Administrative Agent), the Borrower shall pay to the Issuing Bank or such
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Participant, as the case may be, without duplication of any amounts due under
Section 1.10(c) hereof, such additional amount or amounts as will compensate the
Issuing Bank or such Participant, as the case may be, for such increased cost or
reduction in the amount receivable or reduction on the rate of return on its
capital. In determining such additional amounts, the Issuing Bank and each
Participant will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable, provided that the Issuing Bank's or
such Participant's, as the case may be, determination of compensation owing
under this Section 2.05 shall, absent manifest error, be final and conclusive
and binding on all the parties hereto. The Issuing Bank or any Participant, upon
determining that any additional amounts are payable to it pursuant to this
Section 2.05, will give prompt written notice thereof, setting forth the basis
of the calculation of such amounts, although the failure to give any such notice
shall not release or diminish the Borrower's obligations to pay additional
amounts pursuant to this Section 2.05 upon receipt of such certificate. The
certificate submitted to the Borrower by the Issuing Bank or such Participant,
as the case may be (a copy of which certificate shall be sent by the Issuing
Bank or such Participant to the Administrative Agent), shall set forth the basis
for the determination of such additional amount or amounts necessary to
compensate the Issuing Bank or such Participant as provided above in this
Section 2.05.
2.06 Minimum Stated Amount. The Stated Amount of each Trade Letter
of Credit shall be not less than $100,000 or such lesser amount as is acceptable
to the Issuing Bank and the Stated Amount of each Standby Letter of Credit shall
be not less than $250,000 or such lesser amount as is acceptable to the Issuing
Bank.
SECTION III. Commitment Commission; Fees; Reductions of Commitment.
3.01 Fees. (a) The Borrower agrees to pay to the Administrative
Agent for distribution to each RC Bank a commitment fee (the "Commitment Fee")
for the period from and including the Effective Date to but not including the
date the Total Revolving Loan Commitment has been terminated, computed at a rate
equal to the Applicable Commitment Fee Percentage on the average daily
Unutilized Commitment of such Bank. Accrued Commitment Fees shall be due and
payable quarterly in arrears on each Quarterly Payment Date and the date upon
which the Total Revolving Loan Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each RC Bank a fee in respect of each Letter of Credit issued
hereunder (the "Letter of Credit Fee"), for the period from and including the
date of issuance of such Letter of Credit to and including the date of
termination of such Letter of Credit, computed at a rate per annum equal to the
Applicable Margin for Revolving Loans which are maintained as Eurodollar Loans
of the daily Stated Amount of such Letter of Credit. Letter of Credit Fees shall
be distributed by the Administrative Agent to the Banks on the basis of the
respective Revolving Percentages as in effect from time to time. Accrued Letter
of Credit Fees shall be due and payable quarterly in arrears on each Quarterly
Payment Date and on the first date after the termination of the Total Revolving
Loan Commitment on which no Letters of Credit remain outstanding.
(c) The Borrower agrees to pay to the Issuing Bank, for its own
account, a facing fee in respect of each Letter of Credit issued by it hereunder
(the "Facing Fee") for the period
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from and including the date of issuance of such Letter of Credit to and
including the termination of such Letter of Credit (it being understood,
however, that if such Letter of Credit is drawn on in full or canceled by the
beneficiary thereof prior to the time at which such Letter of Credit expires in
accordance with its terms, the calculation of such fee shall not include the
date of such drawing being honored or cancellation), computed at a rate equal to
1/4 of 1% per annum of the daily Stated Amount of such Letter of Credit;
provided that in no event shall the annual Facing Fee with respect to each
Letter of Credit be less than $500, it being agreed that, on the date of
issuance of any Letter of Credit and on each anniversary thereof prior to the
termination of such Letter of Credit, if $500 will exceed the amount of Facing
Fees that will accrue with respect to such Letter of Credit for the immediately
succeeding 12-month period, the full $500 shall be payable on the date of
issuance of such Letter of Credit and on each such anniversary thereof prior to
the termination of such Letter of Credit. Except as provided in the immediately
preceding sentence, accrued Facing Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the first day on or after the
termination of the Total Revolving Loan Commitment upon which no Letters of
Credit remain outstanding.
(d) The Borrower agrees to pay to the Issuing Bank, upon each
payment under, issuance of, or amendment to, any Letter of Credit issued by it,
such amount as shall at the time of such event be the administrative charge
which the Issuing Bank is generally imposing in connection with such occurrence
with respect to letters of credit.
(e) The Borrower agrees to pay to each Agent, for its own account,
such other fees as have been agreed to in writing by the Borrower and each
Agent.
3.02 Voluntary Termination of Total Unutilized Revolving Loan
Commitment. Upon at least two Business Days' prior notice to the Administrative
Agent at its Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, at any time
or from time to time, without premium or penalty, to permanently reduce the
Total Unutilized Revolving Commitment, in whole or in part, in integral
multiples of $1,000,000 in the case of partial reductions to the Total
Unutilized Revolving Commitment, provided that each such reduction shall apply
proportionately to permanently reduce the Revolving Loan Commitment of each RC
Bank.
3.03 Mandatory Reduction of Commitments. (a) The Total A Term Loan
Commitment (and the A Term Loan Commitment of each Bank) and the Total B Term
Loan Commitment (and the B Term Loan Commitment of each Bank) shall be
terminated on the Initial Borrowing Date, in each case after giving effect to
the incurrence of A Term Loans and B Term Loans on such date.
(b) The Total C Term Loan Commitment (and the C Term Loan Commitment
of each Bank) shall terminate in its entirety on each C Term Loan Commitment
Date (after giving effect to the making of C Term Loans on such date).
(c) The Total Revolving Loan Commitment (and the Revolving Loan
Commitment of each RC Bank) shall terminate in its entirety on the earlier to
occur of (x) the Revolving Loan Maturity Date and (y) the date on which any
Change of Control occurs.
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(d) On each date after the Initial Borrowing Date upon which a
mandatory repayment of Term Loans pursuant to any of Sections 4.02(e) through
(i), inclusive, is required and exceeds in amount the aggregate principal amount
of Term Loans then outstanding (or would be required if such Term Loans were
then outstanding), the Total Revolving Loan Commitment shall be permanently
reduced by the amount, if any, by which the amount required to be applied
pursuant to said Sections (determined as if an unlimited amount of Term Loans
were actually outstanding) exceeds the aggregate principal amount of such Term
Loans then outstanding.
(e) Each reduction to the Total Revolving Loan Commitment pursuant
to this Section 3.03 shall be applied proportionately to reduce the Revolving
Loan Commitment of each Bank with such a Commitment.
SECTION IV. Prepayments; Payments; Taxes.
4.01 Voluntary Prepayments. The Borrower shall have the right to
prepay Loans, without premium or penalty, in whole or in part from time to time
on the following terms and conditions:
(i) the Borrower shall give the Administrative Agent at its Notice
Office (x) written notice prior to 12:00 Noon (New York time) at least
three Business Days prior to the date of such prepayment in the case of
Eurodollar Loans, (y) written notice prior to 12:00 Noon (New York time)
at least one Business Day prior to the date of such prepayment in the case
of Base Rate Loans and (z) written notice no later than 12:00 Noon (New
York time) on the date of such prepayment in the case of Swingline Loans,
of its intent to prepay the Loans, whether A Term Loans, B Term Loans, C
Term Loans, Revolving Loans or Swingline Loans shall be prepaid (subject
to clause (iv) below in the case of any prepayment of Term Loans), the
amount of such prepayment and the Types of Loans to be prepaid and, in the
case of Eurodollar Loans, the specific Borrowing or Borrowings pursuant to
which made, which notice the Administrative Agent shall, except in the
case of Swingline Loans, promptly transmit to each of the Banks;
(ii) each prepayment shall be in an aggregate principal amount of at
least the applicable Minimum Borrowing Amount and, if greater, in integral
multiples of $500,000, in the case of all Loans; provided that no partial
prepayment of Eurodollar Loans made pursuant to any Borrowing shall reduce
the outstanding Loans made pursuant to such Borrowing to an amount less
than the applicable Minimum Borrowing Amount;
(iii) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans provided, however,
that at the Borrower's election in connection with any prepayment of
Revolving Loans pursuant to this Section 4.01, such prepayment shall not
be applied to any Revolving Loan of a Defaulting Bank at any time when the
aggregate amount of Revolving Loans of any Non-Defaulting Bank exceeds
such Non-Defaulting Bank's Revolving Percentage of all Revolving Loans
then outstanding;
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(iv) each prepayment of Term Loans pursuant to this Section 4.01
must consist of a prepayment of A Term Loans (in an amount equal to the A
Tranche Percentage of such prepayment), B Term Loans (in an amount equal
to the B Tranche Percentage of such prepayment) and C Term Loans (in an
amount equal to the C Tranche Percentage of such prepayment), provided
that in lieu of such pro rata application the Borrower may at the time of
any prepayment of Term Loans under this Section 4.01 elect first to prepay
the A Term Loans in an amount not to exceed the then next four A Term Loan
Scheduled Repayments, with any remaining prepayment to be applied as set
forth above; and
(v) each prepayment of Term Loans pursuant to this Section 4.01
shall be applied to reduce the then remaining Scheduled Repayments of the
respective Tranche being repaid in direct order of maturity (based upon
the then remaining principal amount of each such Scheduled Repayment)
provided that each prepayment of C Term Loans pursuant to this Section
4.01 shall be applied pro rata to each C Term Loan Sub-Facility (then
existing) and be applied within each C Term Loan Sub-Facility to reduce
the respective C Term Loan Scheduled Repayments applicable thereto in
direct order of maturity (based upon the then remaining unpaid principal
amount of such Scheduled Repayment).
4.02 Mandatory Repayments and Commitment Reductions. (a) If, on
any day the sum of (I) the aggregate outstanding principal amount of
Revolving Loans and Swingline Loans and (II) the aggregate amount of Letter
of Credit Outstandings exceeds the Total Revolving Loan Commitment as then in
effect, the Borrower shall on such day repay Swingline Loans, and if no
Swingline Loans remain outstanding, Revolving Loans in an amount equal to
such excess. If, after giving effect to the repayment of all outstanding
Revolving Loans and Swingline Loans, the aggregate amount of Letter of Credit
Outstandings exceeds the Total Revolving Loan Commitment as then in effect,
the Borrower shall pay to the Administrative Agent at the Payment Office an
amount of cash or Cash Equivalents equal to the amount of such excess, such
cash or Cash Equivalents to be held as security for all obligations of the
Borrower hereunder in a cash collateral account to be established by, and
satisfactory to, the Administrative Agent and the Borrower until all Letters
of Credit have been terminated or expire.
(b) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, the Borrower shall be required to
repay on each date set forth below (to the extent any day set forth below is not
a Business Day then the required date of repayment shall be the immediately
preceding Business Day) the principal amount of A Term Loans, to the extent then
outstanding, set forth below opposite such date (each such repayment as the same
may be reduced as provided in Sections 4.01 and 4.02, an "A Term Loan Scheduled
Repayment"):
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A Term Loan Scheduled Repayment Date Amount
- ------------------------------------ ------
December 31, 1999 $3,750,000
March 31, 2000 1,875,000
June 30, 2000 1,875,000
September 30, 2000 3,750,000
December 31, 2000 3,750,000
March 31, 2001 3,750,000
June 30, 2001 3,750,000
September 30, 2001 5,625,000
December 31, 2001 5,625,000
March 31, 2002 5,625,000
June 30, 2002 5,625,000
September 30, 2002 7,500,000
December 31, 2002 7,500,000
March 31, 2003 7,500,000
June 30, 2003 7,500,000
September 30, 2003 9,375,000
December 31, 2003 9,375,000
March 31, 2004 9,375,000
June 30, 2004 9,375,000
September 30, 2004 9,375,000
December 31, 2004 9,375,000
March 31, 2005 9,375,000
June 30, 2005 9,375,000
(c) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, the Borrower shall be required to
repay on each date set forth below (to the extent any day set forth below is not
a Business Day then the required date of repayment shall be the immediately
preceding Business Day) the principal amount of B Term Loans, to the extent then
outstanding, set forth below opposite such date (each such repayment as the same
may be reduced as provided in Sections 4.01 and 4.02, a "B Term Loan Scheduled
Repayment"):
B Term Loan Scheduled Repayment Date Amount
- ------------------------------------ ------
December 31, 1999 $1,175,000
December 31, 2000 2,350,000
December 31, 2001 2,350,000
December 31, 2002 2,350,000
December 31, 2003 2,350,000
December 31, 2004 2,350,000
September 30, 2005 27,760,000
December 31, 2005 27,760,000
March 31, 2006 27,760,000
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B Term Loan Scheduled Repayment Date Amount
- ------------------------------------ ------
June 30, 2006 27,760,000
September 30, 2006 27,760,000
December 31, 2006 27,760,000
March 31, 2007 27,760,000
June 30, 2007 27,755,000
(d) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, the Borrower shall be required to
make, with respect to each C Term Loan Sub-Facility, to the extent then
outstanding, scheduled amortized repayments of C Term Loans on the dates and in
the principal amounts set forth in the relevant C Term Loan Commitment Agreement
(each such repayment, as the same may be reduced as provided in Sections 4.01
and 4.02, a "C Term Loan Scheduled Repayment" and the A Term Loan Scheduled
Repayments and the B Term Loan Scheduled Repayments, together with the C Term
Loan Scheduled Repayments, collectively referred to as the "Scheduled
Repayments").
(e) On each date after the Initial Borrowing Date upon which
Holdings receives any proceeds from any issuance of equity (excluding (w)
proceeds received from the sale or issuance of equity (including, without
limitation, Qualified Preferred Equity) which are used to effect Permitted
Acquisitions pursuant to Section 7.14, (x) so long as (1) no Default or Event of
Default then exists or would result therefrom and (2) the Senior Leverage Ratio
is less than 3.0:1.0, proceeds received from the issuance by Holdings of its
common stock pursuant to a registered initial public offering (a "Holdings IPO")
to the extent such proceeds are used as provided in clause (z) of the proviso to
Section 8.11(i), (y) proceeds received from the sale or issuance of equity by
Holdings, to the extent used to repurchase equity from management pursuant to
Section 8.03(iv) and (z) proceeds (if any) from the issuance by Holdings of
preferred equity in satisfaction of indemnity obligations pursuant to the terms
of the Contribution and Merger Agreement), an amount equal to 100% of the cash
proceeds therefrom (net of underwriting discounts or placement discounts and
commissions and other reasonable fees and costs associated therewith) shall be
applied as a mandatory repayment of principal of outstanding Term Loans in
accordance with the requirements of Section 4.02(k) (subject to modification of
such application as set forth in Section 4.02(n)).
(f) On each date after the Initial Borrowing Date upon which
Holdings and/or any of its Subsidiaries receives any proceeds from any
incurrence of Indebtedness (including Permitted Refinancing Subordinated
Indebtedness incurred by the Borrower, but excluding (i) any other Indebtedness
permitted to be incurred pursuant to Section 8.04 as in effect on the Initial
Borrowing Date and (ii) proceeds from the issuance of additional Senior
Subordinated Notes under Section 8.04(viii) to the extent applied to finance a
Permitted Acquisition (or to repay Revolving Loans the proceeds of which were
used to finance a Permitted Acquisition)), an amount equal to 100% of the cash
proceeds therefrom (net of underwriting discounts or placement discounts and
commissions and other reasonable fees and costs associated therewith) shall be
applied as a mandatory repayment of principal of outstanding Term Loans in
accordance with the requirements of Section 4.02(k) (subject to modification of
such application as set forth in Section 4.02(n)), provided, however, that so
long as no Default or Event of Default then exists
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or would result therefrom, the Borrower may use the proceeds from the issuance
of Permitted Refinancing Subordinated Indebtedness to concurrently repurchase,
redeem or otherwise retire outstanding Senior Subordinated Notes.
(g) On each date on and after the Initial Borrowing Date upon which
Holdings and/or any of its Subsidiaries receives Cash Proceeds from any Asset
Sale, an amount equal to 100% of the Net Cash Proceeds therefrom shall be
applied as a mandatory repayment of principal of outstanding Term Loans in
accordance with the requirements of Section 4.02(k) (subject to modification of
such application as set forth in Section 4.02(n)), provided that such Net Cash
Proceeds shall not be required to be so applied on such date if no Default or
Event of Default then exists and the Borrower delivers a certificate to the
Administrative Agent on or prior to such date stating that such Net Cash
Proceeds shall be used either (i) to purchase assets used in the ordinary course
of business in compliance with this Agreement or (ii) to purchase equity
interests in a Person engaged in a business of a type described in Section
8.14(a) in connection with a Permitted Acquisition, in each case within 360 days
following the date of such Asset Sale (which certificate shall set forth the
estimates of the proceeds to be so expended), and provided further, that if all
or any portion of such Net Cash Proceeds not so applied to the repayment of Term
Loans are not so used within such 360 day period, such remaining portion shall
be applied on the last day of such period as a mandatory repayment of principal
of outstanding Term Loans as provided above in this Section 4.02(g).
(h) On each Excess Cash Payment Date, an amount equal to 75% (50% if
as of the last day of the relevant Excess Cash Payment Period the Leverage Ratio
is less than 3.5:1.0) of the Excess Cash Flow for the relevant Excess Cash
Payment Period shall be applied as a mandatory repayment of principal of
outstanding Term Loans in accordance with the requirements of Section 4.02(k)
(subject to modification of such application as set forth in Section 4.02(n)).
(i) Within 10 days following each date after the Initial Borrowing
Date on which Holdings or any of its Subsidiaries receives any proceeds from any
Recovery Event, an amount equal to 100% of the proceeds of such Recovery Event
(net of reasonable costs including, without limitation, legal costs and expenses
and taxes incurred in connection with such Recovery Event) shall be applied as a
mandatory repayment of principal of outstanding Term Loans in accordance with
the requirements of Section 4.02(k) (subject to modification of such application
as set forth in Section 4.02(n)); provided that so long as no Default or Event
of Default then exists and to the extent such proceeds do not exceed
$30,000,000, such proceeds shall not be required to be so applied on such date
to the extent that the Borrower has delivered a certificate to the
Administrative Agent on or prior to such date stating that such proceeds shall
be used to repair, replace or restore any properties or assets in respect of
which such proceeds were paid within 360 days following the date of such
Recovery Event (which certificate shall set forth the estimates of the proceeds
to be so expended), and provided further, that if all or any portion of such
proceeds not required to be applied to the repayment of Term Loans pursuant to
the preceding proviso are not so used within such 360 day period, such remaining
portion shall be applied on the last day of such period as a mandatory repayment
of principal of outstanding Term Loans in accordance with the requirements of
Section 4.02(k).
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(j) On (i) the date, if any, on which any Change of Control occurs
and (ii) the date, if any, prior to the Revolving Loan Maturity Date on which
the Total Revolving Loan Commitment is terminated, the outstanding principal
amount of the Term Loans, if any, shall become due and payable in full.
(k) The amount of each principal repayment of Term Loans made as
required by Sections 4.02(e), (f), (g) and (i) shall be applied to reduce the
principal amount of A Term Loans, B Term Loans and C Term Loans pro rata based
on the A Tranche Percentage, the B Tranche Percentage and C Tranche Percentage,
respectively, and based on the outstanding principal amounts thereof and to
reduce the then remaining Scheduled Repayments of each respective Tranche of
Term Loans on a pro rata basis based on the amount of such Scheduled Repayments
after giving effect to all prior reductions thereto. The amount of each
principal repayment of Term Loans made as required by Section 4.02(h) shall be
applied (i) first, to reduce the principal amount of A Term Loans and (ii)
second, to reduce the principal amount of B Term Loans and C Term Loans pro rata
based on the B Tranche Percentage and C Tranche Percentage (with reductions of C
Term Loans to be applied pro rata to each C Term Loan Sub-Facility (then
existing)), respectively, and based on the outstanding principal amounts thereof
and to reduce the then remaining Scheduled Repayments of each respective Tranche
of Term Loans in direct order of maturity.
(l) With respect to each repayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans which are to be repaid and,
in the case of Eurodollar Loans, the specific Borrowing or Borrowings of the
respective Tranche pursuant to which such Loans were made, provided that: (i) if
any repayment of Eurodollar Loans made pursuant to a single Borrowing shall
reduce the outstanding Eurodollar Loans made pursuant to such Borrowing to an
amount less than the applicable Minimum Borrowing Amount, such Borrowing shall
be immediately converted into a Borrowing of Base Rate Loans; and (ii) each
repayment of any Loans made pursuant to a Borrowing shall be applied pro rata
among such Loans; provided that no repayment pursuant to Section 4.02(a) shall
be applied to any Revolving Loans of a Defaulting Bank at any time when the
aggregate amount of the Revolving Loans of any Non-Defaulting Bank exceeds such
Non-Defaulting Bank's Revolving Percentage of Revolving Loans then outstanding.
In the absence of a designation by the Borrower as described in the preceding
sentence, the Administrative Agent shall, subject to the above, make such
designation in its sole discretion. Notwithstanding the foregoing provisions of
this Section 4.02, if any time the mandatory prepayment of Term Loans pursuant
to Sections 4.02(e) through (i) above, or repayments of Eurodollar Loans
pursuant to Section 1.10(b) would result, after giving effect to the procedures
set forth above, in the Borrower incurring breakage costs under Section 1.11 as
a result of Eurodollar Loans being prepaid other than on the last day of an
Interest Period applicable thereto (the "Affected Eurodollar Loans"), then the
Borrower may in its sole discretion initially deposit a portion (up to 100%) of
the amounts that otherwise would have been paid in respect of the Affected
Eurodollar Loans with the Administrative Agent (which deposit must be equal in
amount to the amount of Affected Eurodollar Loans not immediately prepaid) to be
held as security for the obligations of the Borrower hereunder pursuant to a
cash collateral arrangement to be agreed upon in form and substance satisfactory
to the Administrative Agent and the Borrower, with such cash collateral to be
directly applied upon the first occurrence (or occurrences) thereafter of the
last day of an Interest Period applicable to the relevant Term Loans
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that are Eurodollar Loans (or such earlier date or dates as shall be requested
by the Borrower), to repay an aggregate principal amount of such Term Loans
equal to the Affected Eurodollar Loans not initially repaid pursuant to this
sentence. Notwithstanding anything to the contrary contained in the immediately
preceding sentence, all amounts deposited as cash collateral pursuant to the
immediately preceding sentence shall be held for the sole benefit of the Banks
whose Term Loans would otherwise have been immediately repaid with the amounts
deposited and upon the taking of any action by the Administrative Agent or the
Banks pursuant to the remedial provisions of Section 9, any amounts held as cash
collateral pursuant to this Section 4.02(l) shall, subject to the requirements
of applicable law, be immediately applied to the Term Loans.
(m) All outstanding A Term Loans shall be repaid in full on the A
Term Loan Maturity Date. All outstanding B Term Loans shall be repaid in full on
the B Term Loan Maturity Date. All outstanding C Term Loans shall be repaid in
full on the respective C Term Loan Maturity Date. All outstanding Revolving
Loans shall be repaid on the Revolving Loan Maturity Date. All outstanding
Swingline Loans shall be repaid in full on the Swingline Expiry Date.
(n) Notwithstanding anything to the contrary contained in this
Section 4.02 or elsewhere in this Agreement (including, without limitation, in
Section 13.12), the Borrower shall have the option, in its sole discretion, to
give the Banks with outstanding B Term Loans (the "B Banks") and/or the Banks
with outstanding C Term Loans (the "C Banks") the option to waive a mandatory
repayment of such Loans pursuant to Sections 4.02(e), (f), (g), (h) and/or (i)
(each such repayment, a "Waivable Mandatory Repayment") upon the terms and
provisions set forth in this Section 4.02(n). If the Borrower elects to exercise
the option referred to in the preceding sentence, the Borrower shall give to the
Administrative Agent written notice of its intention to give the B Banks and/or
the C Banks the right to waive a Waivable Mandatory Repayment at least five
Business Days prior to such repayment, which notice the Administrative Agent
shall promptly forward to all B Banks and/or C Banks, as the case may be
(indicating in such notice the amount of such repayment to be applied to each
such Bank's outstanding B Term Loans and/or C Term Loans, as the case may be).
The Borrower's offer to permit such Banks to waive any such Waivable Mandatory
Repayment may apply to all or part of such repayment, provided that any offer to
waive part of such repayment must be made ratably to such Banks on the basis of
their outstanding B Term Loans or C Term Loans, as the case may be. In the event
any such B Bank or C Bank desires to waive such Bank's right to receive any such
Waivable Mandatory Repayment in whole or in part, such Bank shall so advise the
Administrative Agent no later than the close of business two Business Days after
the date of such notice from the Administrative Agent, which notice shall also
include the amount such Bank desires to receive in respect of such repayment. If
any Bank does not reply to the Administrative Agent within the two Business
Days, it will be deemed not to have waived any part of such repayment. If any
Bank does not specify an amount it wishes to receive, it will be deemed to have
accepted 100% of the total payment. In the event that any such Bank waives all
or part of such right to receive any such Waivable Mandatory Repayment, the
Administrative Agent shall apply 100% of the amount so waived by such Bank to
the A Term Loans in accordance with Section 4.02(k) (provided that once all A
Term Loans have been repaid in full, the amount so waived may be retained by the
Borrower).
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4.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the account of the Bank or Banks entitled thereto
no later than 12:00 Noon (local time in the city in which such payments are to
be made) on the date when due and shall be made in Dollars in immediately
available funds at the Payment Office of the Administrative Agent. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension.
4.04 Net Payments; Taxes. (a) All payments made by the Borrower
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 4.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, except as provided in the second succeeding sentence, any income
or franchise tax imposed on or measured by the net income of a Bank pursuant to
the laws of the jurisdiction in which it is organized or the jurisdiction in
which the principal office or applicable lending office of such Bank is located
or any subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (collectively, "Taxes"). If any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any Note, after withholding or deduction for
or on account of any Taxes, will not be less than the amount provided for herein
or in such Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Bank, upon the written
request of such Bank, for taxes imposed on or measured by the net income of such
Bank pursuant to the laws of the jurisdiction or any political subdivision or
taxing authority thereof or therein in which such Bank is organized or in which
the principal office or applicable lending office of such Bank is located as
such Bank shall determine are payable by, or withheld from, such Bank in respect
of such amounts so paid to or on behalf of such Bank pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Bank
pursuant to this sentence. The Borrower will furnish to the Administrative Agent
within 45 days after the date of the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by the
Borrower. The Borrower agrees to indemnify and hold harmless each Bank, and
reimburse such Bank upon its written request, for the amount of any Taxes so
levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Initial Borrowing Date, or in
the case of a Bank that is an assignee or transferee of an interest under this
Agreement pursuant to Section 1.13 or 13.04 (unless the respective Bank was
already a Bank hereunder immediately prior to such assignment or transfer), on
the date of such assignment or transfer to such Bank, (i) two accurate and
complete original signed copies of Internal Revenue Service Form W-8ECI or Form
W-8BEN (with respect to a complete exemption under an income tax treaty) (or
successor forms) certifying to such Bank's entitlement
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to a complete exemption from United States withholding tax with respect to
payments to be made under this Agreement and under any Note or (ii) if the Bank
is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and
cannot deliver either Internal Revenue Service Form W-8ECI or Form W-8BEN (with
respect to a complete exemption under an income tax treaty) pursuant to clause
(i) above, (x)a certificate substantially in the form of Exhibit E (any such
certificate, a "Section 4.04(b)(ii) Certificate") and (y)two accurate and
complete original signed copies of Internal Revenue Service Form W-8BEN (with
respect to the portfolio interest exemption) (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank agrees that from time to time after the
Initial Borrowing Date, when a lapse in time or change in circumstances renders
the previous certification obsolete or inaccurate in any material respect, it
will deliver to the Borrower and the Administrative Agent two new accurate and
complete original signed copies of Internal Revenue Service Form W-8ECI or Form
W-8BEN (with respect to a complete exemption under an income tax treaty), or
Form W-8BEN (with respect to the portfolio interest exemption) and a Section
4.04(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Bank to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note or it shall immediately
notify the Borrower and the Administrative Agent of its inability to deliver any
such Form or Certificate in which case such Bank shall not be required to
deliver any such Form of Certificate pursuant to this Section 4.04(b).
Notwithstanding anything to the contrary contained in Section 4.04(a), but
subject to Section 13.04(b) and the immediately succeeding sentence, (x)the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
Fees or other amounts payable hereunder for the account of any Bank which is not
a United States person (as such term is defined in Section 7701(a)(30) of the
Code) for U.S. Federal income tax purposes to the extent that such Bank has not
provided to the Borrower U.S. Internal Revenue Service Forms that establish a
complete exemption from such deduction or withholding and (y)the Borrower shall
not be obligated pursuant to Section 4.04(a) to gross-up payments to be made to
a Bank in respect of income or similar taxes imposed by the United States if (I)
such Bank has not provided to the Borrower the Internal Revenue Service Forms
required to be provided to the Borrower pursuant to this Section 4.04(b) or (II)
in the case of a payment, other than interest, to a Bank described in clause
(ii) above, to the extent that such Forms do not establish a complete exemption
from withholding of such taxes. Notwithstanding anything to the contrary
contained in the preceding sentence or elsewhere in this Section 4.04 and except
as set forth in Section 13.04(b), the Borrower agrees to pay additional amounts
and to indemnify each Bank in the manner set forth in Section 4.04(a) (without
regard to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it as described
in the immediately preceding sentence as a result of any changes after the
Initial Borrowing Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of such income or similar Taxes.
(c) If the Borrower pays any additional amount under this Section
4.04 to a Bank and such Bank determines in its sole discretion that it has
actually received or realized in connection therewith any refund or any
reduction of, or credit against, its Tax liabilities in or
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with respect to the taxable year in which the additional amount is paid (a "Tax
Benefit"), such Bank shall pay to Borrower an amount that the Bank shall, in its
sole discretion, determine is equal to the net benefit, after tax, which was
obtained by the Bank in such year as a consequence of such Tax Benefit;
provided, however, that (i) any Bank may determine in its sole discretion
consistent with the policies of such Bank whether to seek a Tax Benefit; (ii)
any Taxes that are imposed on a Bank as a result of a disallowance or reduction
(including through the expiration of any tax carryover or carryback of such Bank
that otherwise would not have expired) of any Tax Benefit with respect to which
such Bank has made a payment to the Borrower pursuant to this Section 4.04(c)
shall be treated as a Tax for which the Borrower is obligated to indemnify such
Bank pursuant to this Section 4.04 without any exclusions or defenses; and (iii)
nothing in this Section 4.04(c) shall require a Bank to disclose any
confidential information to the Borrower (including, without limitation, its tax
returns).
SECTION V. Conditions Precedent. The obligation of each Bank
to make Loans, and the obligation of each the Issuing Bank to issue Letters of
Credit hereunder is subject, at the time of the making of each such Credit
Event, to the satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the Initial
Borrowing Date (i) this Agreement shall have been executed and delivered as
provided in Section 13.10 and (ii) there shall have been delivered to the
Administrative Agent for the account of each of the Banks requesting them the
appropriate Term Notes and/or Revolving Notes executed by the Borrower, in each
case in the amount, maturity and as otherwise provided herein.
5.02 No Default; Representations and Warranties. At the time of each
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of the making of such Credit Event (it
being understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be true and correct in
all material respects only as of such specified date).
5.03 Officer's Certificate. On the Initial Borrowing Date, the
Administrative Agent shall have received a certificate dated such date signed by
the President or any Vice President of the Borrower stating that all of the
applicable conditions set forth in Section 5.02, 5.07, 5.11, 5.12 and 5.15 have
been met.
5.04 Opinions of Counsel. On the Initial Borrowing Date, the
Administrative Agent shall have received from (i) Simpson Thacher & Bartlett,
counsel to Holdings and its Subsidiaries, an opinion addressed to the
Administrative Agent, the Collateral Agent and each of the Banks and dated the
Initial Borrowing Date covering the matters set forth in Exhibit F-1, (ii) White
& Case LLP, counsel to the Administrative Agent and the banks, an opinion
addressed to the Administrative Agent and the Banks and dated the Initial
Borrowing Date and covering the matters set forth in Exhibit F-2, (iii) unless
otherwise agreed by the Administrative Agent, counsel rendering such opinions,
reliance letters addressed to the Administrative Agent, the Collateral Agent and
each of the Banks dated the Initial Borrowing Date with respect to all legal
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opinions delivered in connection with the Acquisitions, which reliance letters
shall be in form and substance reasonably satisfactory to the Administrative
Agent and (iv) from local counsel to Holdings and its Subsidiaries reasonably
satisfactory to the Administrative Agent, opinions addressed to the
Administrative Agent, the Collateral Agent and each of the Banks and dated the
Initial Borrowing Date, each of which shall be in form and substance
satisfactory to the Administrative Agent and shall cover the perfection and
priority of the security interests granted pursuant to the Security Documents
and such other matters incident to the transactions contemplated herein and in
the other Credit Documents as the Administrative Agent may reasonably request.
5.05 Corporate Documents; Proceedings. (a) On the Initial Borrowing
Date, the Administrative Agent shall have received a certificate, dated the
Initial Borrowing Date, signed by an Authorized Officer of each Credit Party,
and attested to by the Secretary or any Assistant Secretary of such Credit
Party, substantially in the form of Exhibit G with appropriate insertions,
together with copies of the Certificate of Incorporation and By-Laws (or their
equivalents) of such Credit Party and the resolutions of such Credit Party
referred to in such certificate, and the foregoing shall be reasonably
acceptable to the Administrative Agent.
(b) All corporate and legal proceedings and all instruments and
agreements relating to the transactions contemplated by this Agreement and the
other Documents shall be satisfactory in form and substance to the
Administrative Agent, and the Administrative Agent shall have received all
information and copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams, if any, which the Administrative Agent may have reasonably
requested in connection therewith, such documents and papers where appropriate
to be certified by proper corporate or governmental authorities.
5.06 Plans; Shareholders' Agreements; Management Agreements;
Employment Agreements; Collective Bargaining Agreements; Debt Agreements;
Affiliate Contracts; Tax Sharing Agreements and Material Contracts. On or prior
to the Initial Borrowing Date, there shall have been delivered to the
Administrative Agent a list or schedule of all of the documents listed below,
which list or schedule shall be certified as true and complete by an appropriate
officer of Holdings or the Borrower (and copies of any of the documents set
forth on such list or schedule shall have been made available to the
Administrative Agent):
(i) all material Plans (and for each material Plan that is required
to file an annual report on Internal Revenue Service Form 5500-series, a
copy of the most recent such report (including, to the extent required,
the related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information), and for
each material Plan that is a "single-employer plan," as defined in Section
4001(a)(15) of ERISA, the most recently prepared actuarial valuation
therefor shall have been made so available) and any other material
"employee benefit plans," as defined in Section 3(3) of ERISA, and any
other material agreements, plans or arrangements, with or for the benefit
of current or former employees of Holdings or any of its Subsidiaries or
any ERISA Affiliate (provided that the foregoing shall have been made so
available in the case of any multiemployer plan, as defined in 4001(a)(3)
of
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ERISA, only to the extent that any document described therein is in the
possession of Holdings or any Subsidiary of Holdings or any ERISA
Affiliate or reasonably available thereto from the sponsor or trustee of
any such plan) (collectively, the "Employee Benefit Plans");
(ii) all material agreements entered into by Holdings or any
Subsidiary of Holdings as of the Initial Borrowing Date governing the
terms and relative rights of its capital stock (collectively, the
"Shareholders' Agreements");
(iii) all material agreements with members of, or with respect to
the, management of Holdings or any Subsidiary of Holdings as of the
Initial Borrowing Date other than Employment Agreements (collectively, the
"Management Agreements");
(iv) any material employment agreements entered into by Holdings or
any Subsidiary of Holdings as of the Initial Borrowing Date (collectively,
the "Employment Agreements");
(v) all material collective bargaining agreements applying or
relating to any employee of Holdings or any Subsidiary of Holdings
(collectively, the "Collective Bargaining Agreements");
(vi) all agreements evidencing or relating to material Indebtedness
of Holdings or any Subsidiary of Holdings to the extent such agreement is
to remain outstanding after giving effect to the incurrence of Loans on
the Initial Borrowing Date (collectively, the "Debt Agreements");
(vii) all material tax sharing, tax allocation and other similar
agreements entered into by Holdings or any Subsidiary of Holdings
(collectively, the "Tax Sharing Agreements");
(viii) all material contracts, agreements or understandings entered
into between Holdings or any of its Subsidiaries on the one hand, and any
Person (other than Holdings and its Subsidiaries) who is an Affiliate of
Holdings, on the other hand (collectively, the "Affiliate Contracts"); and
(ix) all material contracts and licenses of Holdings or any of its
Subsidiaries, each of which involve a sum in excess of $1,000,000, that
are to remain in effect after giving effect to the consummation of the
Transaction (collectively, the "Material Contracts");
all of which Plans, Shareholders' Agreements, Management Agreements, Employment
Agreements, Collective Bargaining Agreements, Debt Agreements, Tax Sharing
Agreements, Affiliate Contracts and Material Contracts shall be in form and
substance reasonably satisfactory to the Administrative Agent and shall be in
full force and effect on the Initial Borrowing Date.
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5.07 Consummation of the Transaction. (a) Each Acquisition,
including all of the terms and conditions thereof, shall have been duly approved
by the board of directors and (if required by applicable law) the shareholders
of the parties thereto, and all Acquisition Documents shall have been duly
executed and delivered by the parties thereto and shall be in full force and
effect. Each of the Acquisitions shall have been consummated in accordance with
all applicable law and the respective Acquisition Documents.
(b) On or prior to the Initial Borrowing Date, (i) Holdings shall
have received from Vestar Packaging LLC and/or its affiliates at least
$60,800,000 in cash in connection with the issuance of Holdings membership
interests (the "Equity Financing") and (ii) the Borrower shall have issued for
cash and at par unsecured senior subordinated notes (the "Senior Subordinated
Notes") in an aggregate principal amount of $185,000,000, and the proceeds of
each thereof shall have been utilized to make payments owing in connection with
the Acquisitions prior to or concurrently with any use of the proceeds of Loans.
(c) On the Initial Borrowing Date and concurrently with the
consummation of the Acquisitions and the making of the Loans, all existing
Indebtedness and preferred stock of Reid, Franklin and PCI and each of their
Subsidiaries shall have been repaid or redeemed in full and all security
interests and Liens on the capital stock of, and assets owned by, such entities
shall have been terminated and released (the "Refinancing") other than existing
capital leases in an aggregate amount not to exceed $10,000,000.
(d) On or prior to the Initial Borrowing Date (i) PCI shall have
consummated a tender offer/consent solicitation with respect to the outstanding
Existing PCI Notes (the "Existing PCI Notes Tender Offer"), pursuant to which
(1) PCI shall offer, subject to the terms and conditions contained in the
Existing PCI Notes Tender Offer, to purchase all of the outstanding Existing PCI
Notes at the cash price set forth in the Existing PCI Notes Tender Offer and (2)
consents shall be solicited to a proposed amendment to the Existing PCI Notes
Indenture, on terms and conditions reasonably satisfactory to the Administrative
Agent, which amendment shall provide for the substantial elimination of the
financial and certain operating covenants contained in the Existing PCI Notes
Indenture (including, without limitation, limitations on the incurrence of
liens, restricted payments, transactions with affiliates and indebtedness) and
the amendment or elimination of certain other provisions in the Existing PCI
Notes Collateral Documents; (ii) all terms and conditions of the Existing PCI
Notes Tender Offer shall be satisfactory to the Administrative Agent (it being
understood and agreed that the terms and conditions set forth in the documents
heretofore delivered to the Administrative Agent are satisfactory), and the
period for tendering Existing PCI Notes pursuant thereto shall terminate on or
prior to the Initial Borrowing Date; (iii) PCI shall have received sufficient
consents to authorize the execution and delivery of the Existing PCI Notes
Indenture Supplement; (iv) PCI and the trustee under the Existing PCI Notes
Indenture shall have duly executed and delivered the Existing PCI Notes
Indenture Supplement (which shall include the Existing PCI Notes Collateral
Documents Amendment); (v) PCI shall have repurchased or committed to repurchase
the Existing PCI Notes tendered, and not theretofore withdrawn, pursuant to the
Existing PCI Notes Tender Offer (the "Existing PCI Notes Tender Offer
Repurchases"); and (vi) the Existing PCI Notes Tender Offer shall have been
consummated in accordance with the Existing PCI Notes Tender Offer Documents and
all applicable laws;
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(e) On or prior to the Initial Borrowing Date, there shall have been
delivered to the Banks true and correct copies of all Documents entered into in
connection with the Transaction (including, without limitation, Acquisition
Documents, the Senior Subordinated Note Documents and the Existing PCI Tender
Offer Documents), and all of the material terms and conditions of such Documents
(including, without limitation, with respect to the Senior Subordinated Notes,
amortization, maturities, interest rates, covenants, defaults, remedies, sinking
fund provisions, and subordination provisions), as well as the structure of the
Transaction, shall be in form and substance reasonably satisfactory to the
Administrative Agent and the Required Banks.
(f) On the Initial Borrowing Date after giving effect to the
Transaction, the ownership and capital structure (including, without limitation,
the terms of any equity membership interests, options, warrants or other
securities issued or to be issued by Holdings or any of its Subsidiaries) as of
the Initial Borrowing Date and management of Holdings and its Subsidiaries shall
be in form and substance reasonably satisfactory to the Administrative Agent and
the Required Banks.
(g) On or prior to the Initial Borrowing Date, all material
conditions precedent to the consummation of the Transaction as is set forth in
the documentation related thereto shall have been satisfied and not waived.
5.08 Pledge Agreement. On the Initial Borrowing Date, each Credit
Party shall have duly authorized, executed and delivered a Pledge Agreement
substantially in the form of Exhibit I (as modified, supplemented or amended
from time to time, the "Pledge Agreement") and shall have delivered to the
Collateral Agent, as Pledgee thereunder all of the Pledged Securities referred
to therein then owned by Holdings and each such Credit Party (x) endorsed in
blank in the case of promissory notes constituting Pledged Securities and (y)
together with executed and undated irrevocable stock powers, in the case of
capital stock constituting Pledged Securities (it being understood and agreed
that the term "Pledged Securities" will not include any capital stock or other
securities issued by Reid Mexico).
5.09 Security Agreement. On the Initial Borrowing Date, each Credit
Party shall have duly authorized, executed and delivered a Security Agreement
substantially in the form of Exhibit J (as modified, supplemented or amended
from time to time, the "Security Agreement") covering all of such Credit Party's
present and future Security Agreement Collateral, together with:
(i) proper financing statements (Form UCC-1 or such other financing
statements or similar notices as shall be required by local law) fully
executed for filing under the UCC or other appropriate filing offices of
each jurisdiction as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests purported to
be created by the Security Agreement;
(ii) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, listing all judgment liens, tax liens or
effective financing statements that name Holdings or any of its
Subsidiaries (after giving effect to the Acquisitions), as
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debtor and that are filed in the jurisdictions referred to in said clause
(i), together with copies of such other financing statements (none of
which shall cover the Collateral except to the extent evidencing Permitted
Liens or for which the Collateral Agent shall receive termination
statements (Form UCC-3 or such other termination statements as shall be
required by local law) fully executed for filing);
(iii) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the reasonable opinion of the Collateral Agent, desirable to perfect the
security interests intended to be created by such Security Agreement; and
(iv) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect and protect the
security interests purported to be created by the Security Agreement have
been taken.
5.10 Subsidiaries Guaranty. On the Initial Borrowing Date, each
Subsidiary of Holdings (other than the Borrower) shall have duly authorized,
executed and delivered a Guaranty substantially in the form of Exhibit K (as
modified, supplemented or amended from time to time, the "Subsidiaries
Guaranty").
5.11 Material Adverse Change, etc. Since December 31, 1998, nothing
shall have occurred (and the Banks shall have become aware of no facts or
conditions not previously known) which the Administrative Agent or the Required
Banks shall determine (a) could reasonably be expected to have a material
adverse effect on the rights or remedies of the Banks or the Administrative
Agent, or on the ability of Holdings or any of its Subsidiaries to perform their
obligations to the Administrative Agent and the Banks under this Agreement or
any other Credit Document or (b) could reasonably be expected to have a
materially adverse effect on the business, assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of Holdings and its
Subsidiaries taken as a whole.
5.12 Litigation. On the Initial Borrowing Date, no litigation by any
entity (private or governmental) shall be pending or threatened with respect to
this Agreement, any other Document or any documentation executed in connection
herewith or with respect to the transactions contemplated hereby, or which the
Administrative Agent or Required Banks shall determine could reasonably be
expected to have a materially adverse effect on the Transaction or on the
business, assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of Holdings and its Subsidiaries taken as a whole.
5.13 Fees, etc. On the Initial Borrowing Date, the Borrower shall
have paid in full to the Administrative Agent and the Banks all costs, fees and
expenses (including, without limitation, all reasonable legal fees and expenses)
payable to the Administrative Agent and the Banks to the extent then due
pursuant hereto or as otherwise agreed between Holdings and the Administrative
Agent.
5.14 Insurance. On or prior to the Initial Borrowing Date, Holdings
shall cause to be delivered to the Administrative Agent and the Banks evidence
(including, without limitation,
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certificates with respect to each insurance policy listed on Schedule III) of
insurance, complying with the requirements of Section 7.03, with respect to the
business and properties of Holdings and its Subsidiaries, in scope, form and
substance reasonably satisfactory to the Administrative Agent and the Required
Banks and naming each of the Collateral Agent, the Administrative Agent and the
Banks as an additional insured and the Collateral Agent as mortgagee and/or loss
payee and stating that such insurance shall not be canceled or revised without
30 days' prior written notice by the insurer to the Collateral Agent.
5.15 Approvals. All necessary governmental and material third party
approvals in connection with the Transaction and the transactions contemplated
by the Documents and otherwise referred to herein or therein (including, but not
limited to, those approvals required in respect of existing permits, landlord
consents and transfers of contract rights) shall have been obtained and remain
in effect, and all applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents or
imposes, in the reasonable judgment of the Administrative Agent or the Required
Banks, adverse conditions upon the consummation of the Transaction or the other
transactions contemplated by the Documents and otherwise referred to herein or
therein. Additionally, there shall not exist any judgment, order, injunction or
other restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the Transaction, the transactions
contemplated by the Documents, the making of the Loans or the issuance of
Letters of Credit.
5.16 Financial Statements; Projections; Management Letter Reports.
(a) On or prior to the Initial Borrowing Date, the Banks shall have received:
(i) the balance sheet of each of Reid, Franklin and PCI as at the
respective dates set forth on Schedule IV annexed hereto and the related
statements of earnings and stockholders' equity and cash flows of each of
such companies (or similar financial statements as specified on such
Schedule), as applicable for the fiscal periods ended as of the dates
specified in such Schedule, which, in the case of the annual statements,
have been examined or reviewed (to the extent set forth on such Schedule)
by independent certified public accountants as specified on such Schedule,
who delivered unqualified opinions in respect thereto except as specified
on such Schedule; and
(ii) the pro forma (after giving effect to the Transaction and the
related financing thereof, as if same had occurred on such date)
consolidated balance sheet of the Borrower as at March 31, 1999,
all of which financial statements in clause (i) shall be prepared in accordance
with generally accepted accounting principles consistent with past practices and
shall be in form and substance reasonably satisfactory to the Administrative
Agent and the Required Banks, and shall not disclose any material adverse
differences in the business, properties, assets, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole from that previously disclosed to the
Administrative Agent and the Required Banks.
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5.17 Solvency Certificate. On the Initial Borrowing Date, Holdings
shall cause to be delivered to the Administrative Agent and the Banks a solvency
certificate substantially in the form of Exhibit H, executed by the Chief
Financial Officer of the Borrower which certificate shall be addressed to the
Administrative Agent and each of the Banks, be dated the Initial Borrowing Date
and set forth the conclusion that, after giving effect to the Transaction and
the incurrence of all financings contemplated herein, each of Holdings and its
Subsidiaries (on a consolidated basis), the Borrower and its Subsidiaries (on a
consolidated basis) and the Borrower (on a stand-alone basis) are not insolvent
and will not be rendered insolvent by the Indebtedness incurred in connection
herewith, will not be left with unreasonably small capital with which to engage
in their respective business and will not have incurred debts beyond their
ability to pay such debts as they mature and become due.
5.18 Mortgage; Title Insurance; Surveys; etc. On the Initial
Borrowing Date, the Collateral Agent shall have received:
(a) fully executed counterparts of a mortgage or deed to secure debt
or similar documents in form and substance reasonably satisfactory to the
Required Banks (as may be amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof, each, a "Mortgage"
and collectively, "Mortgages"), which Mortgages shall cover all of the
Real Property owned or leased by Holdings or any of its Subsidiaries as
designated on Schedule V (each, a "Mortgaged Property" and collectively,
the "Mortgaged Properties"), together with evidence that counterparts of
the Mortgages have been delivered to the title insurance company insuring
the Lien of the Mortgages for recording in all places to the extent
necessary or, in the reasonable opinion of the Collateral Agent, desirable
to effectively create a valid and enforceable first priority mortgage lien
on each Mortgaged Property in favor of the Collateral Agent (or such other
trustee as may be required or desired under local law) for the benefit of
the Secured Creditors;
(b) mortgagee title insurance policies or marked-up unconditional
binders for such insurance in connection with the Mortgaged Properties
issued by Fidelity National Title Insurance Company of New York or such
other title insurers reasonably satisfactory to the Administrative Agent
and the Required Banks, (the "Mortgage Policies") in amounts reasonably
satisfactory to the Administrative Agent and the Required Banks assuring
the Collateral Agent that the respective Mortgages on such Mortgaged
Properties are valid and enforceable first priority mortgage liens on the
respective Mortgaged Properties, free and clear of all defects and
encumbrances except Permitted Encumbrances and such Mortgage Policies
shall otherwise be in form and substance reasonably satisfactory to the
Administrative Agent and the Required Banks and shall include, as
appropriate, an endorsement for future advances under this Agreement, the
Notes and the Mortgages and for any other matter that the Administrative
Agent or the Required Banks in their discretion may reasonably request,
shall not include an exception for mechanics' liens unless such liens
would constitute Permitted Liens, and shall provide for affirmative
insurance and such reinsurance (including direct access agreements) as the
Administrative Agent or the Required Banks in their discretion may
reasonably request; and
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(c) if requested by the Collateral Agent, surveys in form and
substance reasonably satisfactory to the Collateral Agent of each
Mortgaged Property dated a recent date acceptable to the Collateral Agent,
certified in a manner reasonably satisfactory to the Collateral Agent by a
licensed professional surveyor satisfactory to the Collateral Agent.
5.19 Notice of Borrowing; Letter of Credit Request. (a) Prior to the
making of each Loan, the Administrative Agent shall have received a Notice of
Borrowing meeting the requirements of Section 1.03.
(b) Prior to the issuance of each Letter of Credit, the Issuing Bank
shall have received a Letter of Credit Request meeting the requirements of
Section 2.02.
SECTION VI. Representations and Warranties. In order to induce the
Banks to enter into this Agreement and to make the Loans, and issue (or
participate in) the Letters of Credit as provided herein, each of Holdings and
the Borrower makes the following representations and warranties, on behalf of
itself and its Subsidiaries, in each case after giving effect to the Transaction
consummated on the Initial Borrowing Date, with the occurrence of each Credit
Event on or after the Initial Borrowing Date being deemed to constitute a
representation and warranty that the matters specified in this Section 6 are
true and correct in all material respects on and as of the Initial Borrowing
Date and on the date of each such Credit Event (it being understood and agreed
that any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only as
of such specified date):
6.01 Status. Each of Holdings and its Subsidiaries (i) is a duly
organized and validly existing corporation or limited liability company in good
standing under the laws of the jurisdiction of its organization, except where
the failure to be in good standing could not reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole, (ii) has the corporate or company power and
authority to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage and (iii) is duly qualified and
is authorized to do business and is in good standing in each jurisdiction where
the conduct of its business requires such qualifications except for failures to
be so qualified which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities or condition (financial or otherwise) of Holdings
and its Subsidiaries taken as a whole.
6.02 Power and Authority. Each Credit Party has the corporate or
limited liability company power and authority to execute, deliver and perform
the terms and provisions of each of the Documents to which it is party and has
taken all necessary corporate or limited liability company action to authorize
the execution, delivery and performance by it of each such Document. Each Credit
Party has duly executed and delivered each of the Documents to which it is
party, and each such Document constitutes the legal, valid and binding
obligation of such Credit Party enforceable in accordance with its terms,
subject to the effects of bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws relating to
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or affecting creditors' rights generally, general equitable principles
(regardless of whether considered in proceedings in equity or at law) and an
implied covenant of good faith and fair dealing.
6.03 No Violation. Neither the execution, delivery or performance by
any Credit Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumentality, (ii) except
as set forth on Schedule VI, will conflict with, or result in any breach of any
of the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create
or impose) any Lien (except pursuant to the Security Documents) upon any of the
properties or assets of Holdings or any of its Subsidiaries pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other material agreement, contract or instrument, to which
Holdings or any of its Subsidiaries is a party or by which it or any of its
property or assets is bound or to which it may be subject or (iii) will violate
any provision of the certificate of incorporation or by-laws or other
organizational documents, as applicable, of Holdings or any of its Subsidiaries.
6.04 Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required (i) to authorize, or is required in connection with, the
execution, delivery and performance of any Document by any Credit Party or (ii)
to ensure the legality, validity, binding effect or enforceability of any such
Document with respect to any Credit Party, except those (A) which have been
obtained or made prior to the Initial Borrowing Date, (B) the absence of which,
either individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on either (x) the business, operations, property,
assets, liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole or (y) the rights or remedies of the Banks or the
Administrative Agent or on the ability of Holdings or any of its Subsidiaries to
perform their respective obligations hereunder and under the other Documents to
which they are, or will be, a party or (C) for filings and recordings required
to perfect the security interests created under the Security Documents, which
filings and recordings will be made within 10 Business Days after the Initial
Borrowing Date.
6.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. (a) The combined statements of financial
condition of the Acquired Businesses at December 31, 1998 and March 31, 1999 and
the related combined statements of income and cash flows of the Acquired
Businesses for the fiscal year or quarter, as the case may be, ended on such
date, as the case may be, and furnished to the Banks prior to the Initial
Borrowing Date, present fairly the combined financial condition of the Acquired
Businesses at the date of such combined statements of financial condition and
the combined results of the operations of the Acquired Businesses for the
respective fiscal year or quarter, as the case may be. All such combined
financial statements have been prepared in accordance with generally accepted
accounting principles and practices consistently applied. The pro forma
consolidated balance sheet of Holdings as of March 31, 1999, a copy of which has
heretofore been furnished to each Bank, presents good faith estimate of the
consolidated pro forma financial condition of Holdings
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after giving effect to the Transaction at the date thereof. Since December 31,
1998, there has been no material adverse change in the business, operations,
property, assets, liabilities or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole.
(b) On and as of the Initial Borrowing Date, on a pro forma basis
after giving effect to the Transaction occurring on such date and to all
Indebtedness (including the Loans) being incurred or assumed on such date and
Liens created by the Credit Parties in connection therewith, (x) the sum of the
assets, at a fair valuation, of Holdings and its Subsidiaries (on a consolidated
basis), the Borrower and its Subsidiaries (on a consolidated basis) and of the
Borrower (on a stand-alone basis) will exceed their respective debts, (y) each
of Holdings and its Subsidiaries (on a consolidated basis), the Borrower and its
Subsidiaries (on a consolidated basis) and the Borrower (on a stand-alone basis)
have not incurred and do not intend to incur, and do not believe that they will
incur, debts beyond their ability to pay such debts as such debts mature and (z)
each of Holdings and its Subsidiaries (on a consolidated basis), the Borrower
and its Subsidiaries (on a consolidated basis) and the Borrower (on a
stand-alone basis) have sufficient capital with which to conduct its business.
For purposes of this Section 6.05(b) "debt" means any liability on a claim, and
"claim" means (i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(c) Except as fully disclosed in the financial statements delivered
pursuant to Section 6.05(a), there were as of the Initial Borrowing Date no
liabilities or obligations with respect to Holdings or any of its Subsidiaries
of any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, could reasonably
be expected to be materially adverse to Holdings and its Subsidiaries taken as a
whole.
6.06 Litigation. There are no actions, suits or proceedings pending
or, to the best knowledge of Holdings or the Borrower, threatened (i) with
respect to any Document or (ii) that could reasonably be expected to materially
and adversely affect the business, operations, property, assets, liabilities or
condition (financial or otherwise) of Holdings and its Subsidiaries taken as a
whole.
6.07 True and Complete Disclosure. Except to the extent set forth in
the immediately succeeding sentence, all factual information (taken as a whole)
furnished by or on behalf of Holdings or any of its Subsidiaries in writing to
the Administrative Agent or any Bank (including, without limitation, all
information contained in the Credit Documents) for purposes of or in connection
with this Agreement, the other Credit Documents or any transaction contemplated
herein or therein is true and accurate in all material respects on the date as
of which such information is dated or certified and not incomplete by omitting
to state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information was provided. The financial projections and other
pro forma financial information contained therein are based on good faith
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estimates and assumptions believed by such Persons to be reasonable at the time
made, it being recognized by the Administrative Agent and the Banks that
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered thereby may differ from the
projected results.
6.08 Use of Proceeds; Margin Regulations. (a) All proceeds of the A
Term Loans and B Term Loans shall be used by the Borrower (i) to effect the
Transaction and (ii) to pay fees and expenses (including, without limitation,
cash restructuring expenses) related to the Transaction.
(b) All proceeds of the C Term Loans shall be used by the Borrower
(i) to effect Permitted Acquisitions and (ii) to pay fees and expenses
(including, without limitation, cash restructuring expenses) related to the
consummation of Permitted Acquisitions.
(c) All proceeds of Revolving Loans may be used (i) for working
capital and general corporate purposes (including, without limitation, Permitted
Acquisitions) and (ii) to effect the Transaction and pay fees and expenses
(including the payment of cash restructuring expenses) related thereto;
provided, that no more than $37,000,000 may be used on the Initial Borrowing
Date for the purposes set forth in clause (ii) above.
(d) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof nor the occurrence of any other Credit Event will violate or be
inconsistent with the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
6.09 Tax Returns and Payments. Each of Holdings and each of its
Subsidiaries has timely filed or caused to be timely filed (including pursuant
to any valid extensions of time for filing) thereof or with the appropriate
taxing authority, all material returns, statements, forms and reports for taxes
(the "Returns") required to be filed by or with respect to the income,
properties or operations of each of Holdings and its Subsidiaries, as the case
may be. The Returns accurately reflect in all material respects all liability
for taxes of Holdings and its Subsidiaries as a whole for the periods covered
thereby. Each of Holdings and its Subsidiaries have paid all material taxes
payable by them which have become due other than those contested in good faith
and for which adequate reserves have been established in accordance with
generally accepted accounting principles. There is no action, suit, proceeding,
investigation, audit, or claim now pending regarding any material taxes relating
to Holdings or any of its Subsidiaries. As of the Initial Borrowing Date,
neither Holdings, the Borrower nor any of their Subsidiaries has entered into an
agreement or waiver or been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
any material taxes of Holdings or any of its Subsidiaries. As of the Initial
Borrowing Date, none of Holdings and any of its Subsidiaries has provided, with
respect to it or property held by it, any consent under Section 341 of the Code.
None of Holdings or any of its Subsidiaries has incurred, or will incur, any
material tax liability in connection with the Transaction or any other
transactions contemplated hereby (it being understood that the representation
contained in this sentence does
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not cover any future tax liabilities of Holdings or any of its Subsidiaries
arising as a result of the operation of their businesses in the ordinary course
of business).
6.10 ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a material adverse effect on the business, operations, property,
assets, liabilities or condition (financial or otherwise) of the Borrower and
its Subsidiaries taken as a whole. The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No.87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No.87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of all such
underfunded Plans by more than $5,000,000.
6.11 The Security Documents. (a) The provisions of the Security
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in, and/or Lien on, all right, title and interest of each Credit Party
in the Security Agreement Collateral described therein, and each Security
Agreement (upon satisfaction of any filing or other requirements set forth
therein) creates a fully perfected first Lien on, and/or security interest in,
all right, title and interest of such Credit Party in all of the Security
Agreement Collateral described therein, subject to no other Liens other than
Permitted Liens. The recordation of the Assignment of Security Interest in U.S.
Patents and Trademarks in the form attached to the Security Agreement in the
United States Patent and Trademark Office together with filings on Form UCC-1
made pursuant to the Security Agreement will be effective, under applicable law,
to perfect the security interest granted to the Collateral Agent in the
trademarks and patents covered by the Security Agreement.
(b) The security interests created in favor of the Collateral Agent,
as Pledgee, for the benefit of the Secured Creditors under the Pledge Agreement
constitute (upon satisfaction of any filing or other requirements in respect of
the Pledged Stock issued by any Foreign Subsidiary) first priority perfected
security interests in the Pledged Securities (assuming, in respect of
certificated Pledged Stock and Pledged Securities constituting promissory notes,
the Collateral Agent's continuous possession thereof) described in the Pledge
Agreement, subject to no security interests of any other Person (other than
Liens permitted under Section 8.01(i)). Except as provided in the immediately
preceding sentence, no filings or recordings are required in order to perfect
(or maintain the perfection or priority of) the security interests created in
the Pledged Securities and the proceeds thereof under the Pledge Agreement
(other than filings of proper UCC-1 Financing Statements in respect of Pledged
Securities constituting promissory notes, which filings have been made).
(c) Each of the Mortgages (together with the Mortgage Amendments)
creates, as security for the obligations purported to be secured thereby, a
valid and enforceable (upon satisfaction of any filing or other requirements set
forth therein) and perfected security interest in and mortgage lien on the
respective Mortgaged Property in favor of the Collateral Agent (or such
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other trustee as may be required or desired under local law) for the benefit of
the Secured Creditors, superior to and prior to the rights of all third Persons
and subject to no other Liens (except, in each case, the security interest and
mortgage lien created in the Mortgaged Properties may be subject to Permitted
Liens). Schedule V contains a true and complete list of each parcel of Real
Property owned or leased by Holdings and its Subsidiaries on the Initial
Borrowing Date, and sets forth the type of interest therein held by Holdings or
such Subsidiary.
6.12 Properties. Each of Holdings and each of its Subsidiaries has
good and marketable title to all material properties owned by them, including
all material property reflected in the consolidated balance sheets of Holdings
referred to in Section 6.05(a) (except as sold or otherwise disposed of since
the date of such balance sheets as permitted by this Agreement or the
Acquisition Documents clear of all Liens, other than (i) as referred to in the
balance sheet or in the notes thereto or in the pro forma balance sheet or (ii)
Permitted Liens).
6.13 Capitalization. On the Initial Borrowing Date, the authorized
membership interests of (i) Holdings shall consist of 10,000,000 member units
and (ii) the Borrower shall consist of 100 member units all of which shall be
issued and outstanding and owned by Holdings. All such outstanding membership
interests have been duly and validly issued, are fully paid and nonassessable
and are free of preemptive rights. Except as set forth on Schedule VII, neither
Holdings nor any of its Subsidiaries has outstanding any securities convertible
into or exchangeable for its membership interests or outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its membership
interests.
6.14 Subsidiaries. Schedule VIII lists each Subsidiary of Holdings
and the Borrower, and the direct and indirect ownership interest of Holdings and
the Borrower therein, in each case as of the Initial Borrowing Date and after
giving effect to the Transaction.
6.15 Compliance with Statutes, etc. Each of Holdings and each of its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except such noncompliance as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities or condition (financial or
otherwise) of Holdings and its Subsidiaries taken as a whole.
6.16 Investment Company Act. Neither Holdings nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.17 Public Utility Holding Company Act. Neither of Holdings nor any
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
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6.18 Environmental Matters. (a) Each of Holdings and each of its
Subsidiaries has complied and is in compliance with all applicable Environmental
Laws and the requirements of any permits issued under such Environmental Laws.
There are no past, pending or, to the best knowledge of Holdings or any of its
Subsidiaries, threatened Environmental Claims against Holdings or any of its
Subsidiaries or any Real Property currently or, to the best knowledge of
Holdings or any of its Subsidiaries, previously owned or operated by Holdings or
any of its Subsidiaries. There are no facts, circumstances, conditions or
occurrences on any Real Property currently owned or operated by Holdings or any
of its Subsidiaries or, to the best knowledge of Holdings or any of its
Subsidiaries, on any formerly owned or operated Real Property or any property
adjoining or in the vicinity of any currently owned or operated Real Property
that could reasonably be expected (i) to form the basis of an Environmental
Claim against Holdings or any of its Subsidiaries or any currently owned or
operated Real Property or (ii) to cause any such Real Property to be subject to
any restrictions on the ownership, occupancy, use or transferability of such
Real Property by Holdings or any of its Subsidiaries under any applicable
Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, or Released on or from, any
Real Property owned or operated by Holdings or any of its Subsidiaries except in
compliance with all Environmental Laws and reasonably required in connection
with the operation, use and maintenance of any such Real Property by Holdings'
or such Subsidiary's business. There are not now any underground storage tanks
owned or operated by Holdings or of its Subsidiaries located on any Real
Property owned or operated by Holdings or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section 6.18,
the representations made in this Section 6.18 shall only be untrue if the effect
of the failures, noncompliance and other circumstances of the types described
above, either individually or in the aggregate, could reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole.
6.19 Labor Relations. None of Holdings and any of its Subsidiaries
is engaged in any unfair labor practice that could reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole. There is (i) no unfair labor practice complaint
pending against Holdings or any of its Subsidiaries or, to the best knowledge of
Holdings or the Borrower, threatened against any of them, before the National
Labor Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against Holdings or any of its Subsidiaries or, to the best knowledge of
Holdings or the Borrower, threatened against any of them, (ii) no strike, labor
dispute, slowdown or stoppage pending against Holdings or any of its
Subsidiaries or, to the best knowledge of Holdings or the Borrower, threatened
against Holdings or any of its Subsidiaries and (iii) no union representation
question exists with respect to the employees of Holdings or any of its
Subsidiaries, except (with respect to any matter specified in clause (i), (ii)
or (iii) above, either individually or in the aggregate) such as could not
reasonably be expected to have a
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material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole.
6.20 Patents, Licenses, Franchises and Formulas. Each of Holdings
and each of its Subsidiaries owns all patents, trademarks, permits, service
marks, trade names, copyrights, licenses, franchises and formulas, or rights
with respect to the foregoing, and has obtained assignments of all licenses and
other rights of whatever nature, necessary for the present and proposed conduct
of its business, without any known conflict with the rights of others except,
with respect to any matter specified in this Section 6.20, as could not
reasonably be expected to result in a material adverse effect on the business,
operations, property, assets, liabilities or condition (financial or otherwise)
of Holdings and its Subsidiaries taken as a whole.
6.21 Indebtedness. Schedule IX sets forth a true and complete list
of all Indebtedness of Holdings and its Subsidiaries as of the Initial Borrowing
Date and which is to remain outstanding after giving effect thereto (excluding
the Loans, the Letters of Credit, all such non-excluded Indebtedness, the
"Existing Indebtedness"), in each case showing the aggregate principal amount
thereof and the name of the respective borrower and any other entity which
directly or indirectly guaranteed such debt.
6.22 Senior Subordinated Notes. The subordination provisions
contained in the Senior Subordinated Notes are enforceable against the holders
thereof subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (regardless of whether
enforcement is sought in equity or at law) and an implied covenant of good faith
and fair dealing. As of the Initial Borrowing Date and after giving effect to
the Transaction, all Obligations of the Borrower are within the definition of
"Senior Debt" (as defined in the Senior Subordinated Note Documents).
6.23 Transaction. As of the Initial Borrowing Date, the Transaction
has been consummated in accordance with applicable law and the Documents.
6.24 Representations and Warranties in Documents. All
representations and warranties of each Credit Party set forth in the Documents
were true and correct in all material respects as of the time such
representations and warranties were made and shall be true and correct in all
material respects as of the Initial Borrowing Date as if such representations
and warranties were made on and as of such date, unless stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date.
6.25 Special Purpose Corporation. Holdings was formed solely to
effect the Transaction and, except in connection therewith (and as contemplated
by the Documents), has no significant assets (other than the membership
interests of the Borrower) or liabilities (other than under this Agreement and
the other Documents to which it is party) and has engaged in no substantial
business activities.
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6.26 Insurance. Set forth on Schedule III hereto is a true, correct
and complete summary of all insurance carried by each Credit Party on and as of
the Initial Borrowing Date, with the amounts insured set forth therein.
6.27 Year 2000. Each of Holdings and each of its Subsidiaries (i)
has commenced a review and assessment of all material areas within its business
and operations (including those affected by material suppliers and vendors) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
its computer applications (or those of its material suppliers and vendors) may
be unable to recognize and perform properly date-sensitive functions involving
certain dates after December 31, 1999), (ii) has received a review and
assessment relating to certain of the Year 2000 Problems, (iii) has commenced
development of a plan and timeline for addressing the Year 2000 Problem on a
timely basis, and (iv) is implementing or has implemented, as the case may be,
that plan in accordance with that timetable ("Year 2000 Plan"), except in each
case to the extent the failure to do so would not reasonably have a material
adverse effect on the business, assets, liabilities, operations, properties, or
condition (financial or otherwise) of Holdings and its Subsidiaries, taken as a
whole. Holdings reasonably believes that all computer applications that are
material to its or any of its Subsidiaries' business and operations will on a
timely basis be able to perform properly date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000 compliant"), except to
the extent that a failure to do so would not reasonably have a material adverse
effect on the performance, business, assets, nature of assets, liabilities,
operations, properties or condition (financial or otherwise) of Holdings and its
Subsidiaries, taken as a whole.
SECTION VII. Affirmative Covenants. Each of Holdings and the
Borrower hereby covenants and agrees for itself and each of its Subsidiaries
that on and after the Initial Borrowing Date and until the Total Commitment and
all Letters of Credit have terminated and the Loans, Notes and Unpaid Drawings,
together with interest, Fees and all other Obligations, are paid in full:
7.01 Information Covenants. The Borrower will furnish to the
Administrative Agent (which shall promptly distribute a copy to each Bank):
(a) Monthly Reports. As soon as practicable, and in any event within
45 days, after the end of each monthly accounting period of each fiscal year
(other than the last monthly accounting period in any fiscal quarter and fiscal
year) of Holdings and the Borrower, commencing with the period ending October
31, 1999, the consolidated balance sheet of Holdings each of its Subsidiaries as
at the end of such monthly accounting period and the related consolidated
statements of income for such monthly accounting period and for the elapsed
portion of the fiscal year ended with the last day of such monthly accounting
period, in each case setting forth comparative figures for the corresponding
monthly accounting period in the prior fiscal year.
(b) Quarterly Financial Statements. Within 45 days after the close
of the first three quarterly accounting periods in each fiscal year of Holdings
and the Borrower, commencing with the period ending September 30, 1999, the
consolidated balance sheet of Holdings and its Subsidiaries as at the end of
each such quarterly accounting period and the related consolidated
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statement of income and the related consolidated statement of cash flows for
each such quarterly accounting period and for the elapsed portion of the fiscal
year ended with the last day of each such quarterly accounting period (other
than the fourth quarterly accounting period), setting forth comparative figures
for the related periods in the prior fiscal year, all of which shall be in
reasonable detail and certified by the chief financial officer or treasurer of
the Borrower that they fairly present in all material respects the financial
condition of Holdings and its Subsidiaries as of the dates indicated and the
results of their operations and changes in their cash flows for the periods
indicated, subject to normal year-end audit adjustments and shall be accompanied
by a management discussion and analysis of the results of operations and
financial condition with respect to such period.
(c) Annual Financial Statements. Within 90 days after the close of
each fiscal year of Holdings and the Borrower, the consolidated balance sheet of
Holdings and its Subsidiaries as at the end of such fiscal year and the related
consolidated statement of income and the related consolidated statement of cash
flows for such fiscal year setting forth comparative figures for the preceding
fiscal year and certified by Deloitte & Touche LLP, any other independent
certified public accountants or such other independent certified public
accountants of recognized national standing reasonably acceptable to the
Administrative Agent, together with a report of such accounting firm stating
that in the course of its regular audit of the financial statements of Holdings,
the Borrower and each of their Subsidiaries, which audit was conducted in
accordance with generally accepted auditing standards, such accounting firm
obtained no knowledge of any Event of Default which has occurred and is
continuing under Sections 8.07 through 8.10, inclusive, or, if in the opinion of
such accounting firm such an Event of Default has occurred and is continuing, a
statement as to the nature thereof and shall be accompanied by a management
discussion and analysis of the results of operations and financial condition
with respect to such period.
(d) Budgets. No later than 60 days after the first day of each
fiscal year of Holdings, a budget in form reasonably satisfactory to the
Administrative Agent (including budgeted statements of income and cash flows and
balance sheets) prepared by the Borrower for (x) each monthly accounting period
in such fiscal year prepared in detail and (y) such fiscal year prepared in
summary form, in each case, of Holdings and its Subsidiaries, accompanied by the
statement of the chief financial officer or treasurer of the Borrower to the
effect that, to the best of such officer's knowledge, the budget is a reasonable
estimate of the period covered thereby. Additionally, within 60 days after the
consummation of each Permitted Acquisition, a revised budget in the form
described above taking into account the effects of such Permitted Acquisition on
the budget for the remainder of the fiscal year covered by the original budget.
(e) Officers' Certificates. At the time of the delivery of the
financial statements provided for in Section 7.01(b) and (c), a certificate of
the chief financial officer or treasurer of the Borrower to the effect that, no
Default or Event of Default has occurred and is continuing or, if any Default or
Event of Default has occurred and is continuing, specifying the nature and
extent thereof, which certificate shall (x) set forth the calculations required
to establish whether Holdings and its Subsidiaries were in compliance with the
provisions of Sections 8.03, 8.04, 8.05 and 8.07 through 8.10, inclusive, at the
end of such fiscal quarter or year, as the case may be and (y) if delivered with
the financial statements required by Section 7.01(c), set forth the amount of
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(and the calculations required to establish) Excess Cash Flow for the respective
Excess Cash Payment Period.
(f) Management Letters. Promptly after Holdings', the Borrower's or
any of their Subsidiaries' receipt thereof, a copy of any "management letter"
received by Holdings, the Borrower or such Subsidiary from its certified public
accountants and the management's responses thereto.
(g) Notice of Default or Litigation. Promptly, and in any event
within five Business Days after an officer of Holdings or the Borrower obtains
knowledge thereof, notice of (i) the occurrence of any event which constitutes a
Default or an Event of Default (provided such Default or Event of Default is
continuing) and (ii) any litigation or governmental investigation or proceeding
pending or threatened (x) against Holdings or any of its Subsidiaries which
could reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities or condition (financial or otherwise)
of Holdings and its Subsidiaries taken as a whole or (y) with respect to any
Credit Document.
(h) Other Reports and Filings. Promptly, copies of all financial
information, proxy materials and other information and reports, if any, which
Holdings or any of its Subsidiaries shall file with the Securities and Exchange
Commission or any successor thereto (the "SEC") or deliver to holders of its
Indebtedness pursuant to the terms of the documentation governing such
Indebtedness (or any trustee, Administrative Agent or other representative
therefor) and not otherwise required to be delivered hereunder.
(i) Environmental Matters. Promptly upon, and in any event within
fifteen Business Days after, an officer of Holdings or the Borrower obtains
knowledge thereof, notice of one or more of the following environmental matters,
unless such environmental matters could not, individually or when aggregated
with all other such environmental matters, be reasonably expected to materially
and adversely affect the business, operations, property, assets, liabilities or
condition (financial or otherwise) of Holdings and its Subsidiaries taken as a
whole, provided that in any event Holdings and its Subsidiaries shall deliver to
the Banks all material notices relating to such matters received by Holdings or
any of its Subsidiaries from any government or governmental agency under, or
pursuant to, CERCLA:
(i) any pending or threatened (in writing) Environmental Claim
against Holdings or any of its Subsidiaries or any Real Property
owned or operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on, or arising from, any Real
Property owned or operated by Holdings or any of its Subsidiaries
that (a) results in noncompliance by Holdings or any of its
Subsidiaries with any applicable Environmental Law or (b) could
reasonably be expected to form the basis of an Environmental Claim
against Holdings or any of its Subsidiaries or any such Real
Property;
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(iii) any condition or occurrence on any Real Property owned
or operated by Holdings or any of its Subsidiaries that could
reasonably be expected to cause such Real Property to be subject to
any restrictions on the ownership, occupancy, use or transferability
by Holdings or any of its Subsidiaries of such Real Property under
any Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any
Real Property owned or operated by Holdings or any of its
Subsidiaries as required by any Environmental Law or any
governmental or other administrative agency.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and
Holdings', the Borrower's or such Subsidiary's response thereto.
(j) Annual Meetings with Banks. At the request of the Administrative
Agent, the Borrower shall, once during each fiscal year of the Borrower, hold a
meeting (at a mutually agreeable location and time) with all of the Banks at
which meeting the financial results of the previous fiscal year and the
financial condition of the Borrower and the budgets presented for the current
fiscal year shall be reviewed.
(k) Other Information. From time to time, such other information or
documents (financial or otherwise) with respect to Holdings or any of its
Subsidiaries as the Administrative Agent or any Bank may reasonably request in
writing.
7.02 Books, Records and Inspections. Holdings and the Borrower will,
and will cause each of their Subsidiaries to, keep proper books of record and
account in which full, true and correct entries in conformity with generally
accepted accounting principles (or the comparable foreign equivalent thereof)
and all requirements of law shall be made of all material dealings and
transactions in relation to its business and activities. Holdings and the
Borrower will, and will cause each of their Subsidiaries to, permit officers and
designated representatives of the Administrative Agent or any Bank to visit and
inspect, during regular business hours and under guidance of officers of
Holdings, such Borrower or such Subsidiary, any of the properties of Holdings or
any of its Subsidiaries, and to examine the books of account of Holdings and any
of its Subsidiaries and discuss the affairs, finances and accounts of Holdings
and any of its Subsidiaries with, and be advised as to the same by, its and
their officers and independent accountants, all at such reasonable times and
intervals, upon such reasonable notice and to such reasonable extent as the
Administrative Agent or such Bank may request.
7.03 Maintenance of Property; Insurance. (a) Holdings and the
Borrower will, and will cause each of their Subsidiaries to, (i) keep all
material property necessary and useful in its business in good working order and
condition, (ii) maintain insurance on its property with reputable and solvent
insurance companies in at least such amounts and against at least such risks as
is consistent and in accordance with industry practice and (iii) furnish to each
Bank, upon written request, full information as to the insurance carried.
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(b) Holdings and the Borrower will, and will cause each of their
Subsidiaries to, at all times keep their respective property in which a Lien has
been granted to the Collateral Agent insured in favor of the Collateral Agent,
and all policies (including the Mortgage Policies) or certificates (or certified
copies thereof) with respect to such insurance (and any other insurance
maintained by Holdings, the Borrower or any such Subsidiary) (i) shall be
endorsed to the Collateral Agent's reasonable satisfaction for the benefit of
the Collateral Agent (including, without limitation, by naming the Collateral
Agent as loss payee (with respect to Collateral) or, to the extent permitted by
applicable law, as an additional insured), (ii) shall state that such insurance
policies shall not be canceled without 30 days' prior written notice thereof (or
10 days' prior written notice in the case of cancellation for the non-payment of
premiums) by the respective insurer to the Collateral Agent and (iii) shall be
deposited with the Collateral Agent.
(c) If Holdings or any of its Subsidiaries shall fail to maintain
all insurance in accordance with this Section 7.03, or if Holdings or any of its
Subsidiaries shall fail to so endorse and deposit all policies or certificates
with respect thereto, the Administrative Agent and/or the Collateral Agent shall
have the right (but shall be under no obligation), upon notice to the Borrower,
to procure such insurance, and Holdings and each of the Borrower agree to
reimburse the Administrative Agent or the Collateral Agent, as the case may be,
for all costs and expenses of procuring such insurance.
7.04 Franchises. Holdings and the Borrower will, and will cause each
of their Subsidiaries to, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses, trademarks, copyrights and patents; provided,
however, that nothing in this Section 7.04 shall prevent (i) transactions
permitted by Section 8.02 or (ii) the withdrawal by Holdings or any of its
Subsidiaries of qualification as a foreign corporation in any jurisdiction where
such withdrawal could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities or condition
(financial or otherwise) of Holdings and its Subsidiaries taken as a whole.
7.05 Compliance with Statutes, etc. Holdings and the Borrower will,
and will cause each of their Subsidiaries to, comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except such noncompliance as could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities or
condition (financial or otherwise) of Holdings and its Subsidiaries taken as a
whole.
7.06 Compliance with Environmental Laws. (a) (i) Holdings and the
Borrower will comply, and will use their best efforts to cause each of their
Subsidiaries to comply, with all Environmental Laws applicable to the ownership
or use of its Real Property now or hereafter owned or operated by Holdings or
any of its Subsidiaries, will promptly pay or cause to be paid all costs and
expenses incurred in connection with such compliance, and will keep or cause to
be kept all such Real Property free and clear of any Liens imposed pursuant to
such Environmental Laws and (ii) neither Holdings, the Borrower nor any of their
Subsidiaries will generate, use, treat, store, release or dispose of, or permit
the generation, use, treatment, storage, release or
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disposal of Hazardous Materials on any Real Property now or hereafter owned or
operated by Holdings or any of its Subsidiaries, or transport or permit the
transportation of Hazardous Materials to or from any such Real Property, except
to the extent that the failure to comply with the requirements specified in
clause (i) or (ii) above, either individually or in the aggregate, could not
reasonably be expected to result in liability under Environmental Laws that
could have a material adverse effect on the business, operations, property,
assets, liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole. If required to do so under any applicable legally
binding directive or order of any governmental agency, Holdings and the Borrower
agrees to undertake, and cause each of their Subsidiaries to undertake, to the
extent required under applicable Environmental Laws, any clean up, removal,
remedial or other action necessary to remove and clean up any Hazardous
Materials from any Real Property owned or operated by Holdings or any of its
Subsidiaries in accordance with the requirements of all applicable Environmental
Laws and in accordance with such legally binding orders and directives of all
governmental authorities, except to the extent that (x) Holdings, such Borrower
or such Subsidiary is contesting such order or directive in good faith and by
appropriate proceedings and for which adequate reserves have been established to
the extent required by generally accepted accounting principles or (y) the
failure to take any such action could not reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole.
(b) At the written request of the Administrative Agent or the
Required Banks, at any time and from time to time as is reasonable after (i) the
Obligations have become due and payable pursuant to Section 9 or (ii) the Banks
receive notice under Section 7.01(i) for any event for which notice is required
to be delivered for any Real Property, the Borrower will provide, at its sole
cost and expense, an environmental site assessment report of reasonable scope
and expense concerning any relevant Real Property now or hereafter owned or
operated by Holdings or any of its Subsidiaries, prepared by an environmental
consulting firm approved by the Administrative Agent, indicating the presence or
absence of Hazardous Materials and the potential cost of any removal or remedial
action in connection with any Hazardous Materials on such Real Property. If the
Borrower fails to provide the same within 45 days after such request was made,
the Administrative Agent may order the same, and the Borrower, to the extent the
Borrower has the authority to do so, shall grant and hereby grants, to the
Administrative Agent and the Banks and their Administrative Agents, access to
such Real Property and specifically grants the Administrative Agent and the
Banks an irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment, all at the Borrower's expense.
7.07 ERISA. The Borrower will furnish to the Administrative Agent
prompt written notice of the occurrence of any ERISA Event that, alone or
together with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Borrower and its Subsidiaries in an
aggregate amount exceeding $1,000,000. Each notice delivered under this Section
7.07 shall be accompanied by a statement of an Authorized Officer of the
Borrower setting forth the details of the event or development requiring such
notice and any action taken or proposed to be taken with respect thereto.
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7.08 End of Fiscal Years; Fiscal Quarters. Holdings will cause (i)
each of its fiscal years to end on December 31 and (ii) each of its fiscal
quarters to end on March 31, June 30, September 30 and December 31 of each year.
7.09 Performance of Obligations. Holdings and the Borrower will, and
will cause each of their Subsidiaries to, perform all of its obligations under
the terms of each mortgage, deed of trust, indenture, loan agreement or credit
agreement and each other material agreement, contract or instrument by which it
is bound, except such non-performances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities or condition (financial or
otherwise) of Holdings and its Subsidiaries taken as a whole; provided, that the
failure to pay any Indebtedness shall not constitute a breach of this Section
7.09 unless it shall give rise to an Event of Default under Section 9.04.
7.10 Payment of Taxes. Holdings and the Borrower will pay and
discharge, and will cause each of their Subsidiaries to pay and discharge, all
material taxes, assessments and governmental charges or levies imposed upon
Holdings, the Borrower or their Subsidiaries or upon the income or profits of
Holdings, the Borrower or their Subsidiaries, or upon any properties belonging
to it, prior to the date on which penalties would otherwise attach thereto, and
all lawful claims which, if unpaid, might become a lien or charge not otherwise
permitted under Section 8.01(i) upon any properties of Holdings, the Borrower or
any such Subsidiary; provided that none of Holdings, the Borrower, and any such
Subsidiary shall be required to pay any such material tax, assessment, charge,
levy or claim which is being contested in good faith and by proper proceedings
if Holdings, any such Borrower or any such Subsidiary has maintained adequate
reserves with respect thereto in accordance with generally accepted accounting
principles.
7.11 Additional Mortgages; Further Assurances. (a) In the event that
the Borrower or any of its Subsidiaries acquires any Real Property after the
Initial Borrowing Date, the Borrower or such Subsidiary shall promptly notify
the Administrative Agent and, at the request of the Administrative Agent or the
Required Banks from time to time, Holdings and the Borrower will, and will cause
each of their Subsidiaries to, grant to the Collateral Agent security interests
and mortgages (an "Additional Mortgage") in such additional material Real
Property of Holdings, the Borrower or any of such Subsidiaries (each such Real
Property, an "Additional Mortgaged Property"). All such Additional Mortgages
shall be granted pursuant to documentation reasonably satisfactory in form and
substance to the Administrative Agent and shall constitute valid and enforceable
perfected Liens superior to and prior to the rights of all third Persons and
subject to no other Liens, in either case except Permitted Liens. The Additional
Mortgages or instruments related thereto shall have been duly recorded or filed
in such manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens in favor of the Collateral Agent required to be
granted pursuant to the Additional Mortgages and all taxes, fees and other
charges payable in connection therewith shall have been paid in full.
Notwithstanding anything to the contrary contained above in this Section
7.11(a), in connection with any (x) Leasehold that has been designated as an
Additional Mortgaged Property, none of Holdings, the Borrower, or any such
Subsidiaries shall be required to grant an Additional Mortgage therein to the
extent that such a grant is prohibited by the applicable lease
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(and the lessor thereunder or its mortgagees has not consented thereto) and (y)
Real Property that has been designated as an Additional Mortgaged Property, none
of Holdings, the Borrower, or any such Subsidiaries shall be required to grant
an Additional Mortgage therein to the extent that (i) such a grant is prohibited
by the terms of any document evidencing a prior Lien thereon to the extent
permitted under Section 8.01(vii), (viii), (xiv) or (xv) (and the senior
lienholder has not consented thereto) or (ii) the value of such Real Property,
together with improvements thereon, is less than $1,000,000.
(b) Holdings and the Borrower will, and will cause each of their
Subsidiaries to, at the expense of Holdings, the Borrower and such Subsidiaries,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such conveyances, financing statements, transfer endorsements,
powers of attorney, certificates, and other assurances or instruments and take
such further steps relating to the Collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require to ensure the validity,
enforceability, perfection or priority of the Collateral Agent's security
interest in the Collateral or to enable the Collateral Agent to realize or
exercise the rights and benefits intended to be created by the Security
Documents. Furthermore, Holdings and each of the Borrower shall cause to be
delivered to the Collateral Agent such opinions of counsel, title insurance,
appraisals, surveys and other related documents as may be reasonably requested
by the Collateral Agent to assure itself that this Section 7.11 has been
complied with.
(c) In the event the Administrative Agent or the Required Banks
reasonably determine the following are required or advisable under applicable
law or regulation, the Borrower shall obtain real estate appraisals with respect
to each Mortgaged Property, which real estate appraisal shall follow the
valuation procedures set forth in 12 CFR, Part 34 - Subpart C, and shall
otherwise be in form and substance reasonably satisfactory to the Administrative
Agent.
(d) Holdings and each of the Borrower agree that each action
required above by this Section 7.11 shall be completed as soon as possible, but
in no event later than 90 days after such action is requested in writing to be
taken by the Administrative Agent or the Required Banks.
7.12 Foreign Subsidiaries Security. If following a change in the
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower reasonably acceptable to the Administrative Agent does not within 30
days after a request from the Administrative Agent or the Required Banks deliver
evidence mutually satisfactory to the Borrower and the Administrative Agent
that, with respect to any Foreign Subsidiary of the Borrower which has not
already had all of its stock pledged pursuant to a Pledge Agreement, (i) a
pledge of 66-2/3% or more of the total combined voting power of all classes of
capital stock of such Foreign Subsidiary entitled to vote and (ii) the entering
into by such Foreign Subsidiary of a guaranty in substantially the form of the
Subsidiary Guaranty, with such changes as are required to comply with local law
(the "Foreign Subsidiary Guaranty"), in any such case, would cause the
undistributed earnings of such Foreign Subsidiary as determined for Federal
income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for Federal income tax purposes in each case
as a result of such Foreign Subsidiary pledging its assets (directly or
indirectly) to secure the
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Obligations of the Borrower and each Subsidiary Borrower under the Credit
Documents and the obligations of the Borrower under any Interest Rate Protection
Agreement or Other Hedging Agreement, then in the case of a failure to deliver
the evidence described in clause (i) above, that portion of such Foreign
Subsidiary's outstanding capital stock not theretofore pledged pursuant to a
Pledge Agreement shall be pledged to the Collateral Agent pursuant to a Pledge
Agreement (or another pledge agreement in substantially similar form, if
needed), and in the case of a failure to deliver the evidence described in
clause (ii) above, such Foreign Subsidiary shall execute and deliver the Foreign
Subsidiary Guaranty (or another guaranty in substantially similar form, if
needed), guaranteeing the Obligations of the Borrower and each Subsidiary of the
Borrower under the Credit Documents and the obligations of the Borrower under
any Interest Rate Protection Agreement or Other Hedging Agreement to the extent
that the entering into of the Foreign Subsidiary Guaranty, the pledge of the
additional shares of capital stock and the amendment to such Security Documents
is permitted by the laws of the respective foreign jurisdiction and would not,
in the reasonable opinion of the Borrower and the Administrative Agent, result
in any adverse tax consequences to the Borrower or their Subsidiaries, and with
all documents delivered pursuant to this Section 7.12 to be in form and
substance reasonably satisfactory to the Administrative Agent and the Required
Banks.
7.13 Ownership of Subsidiaries. The Borrower will at all times
ensure that each of its Subsidiaries remains as a Wholly-Owned Subsidiary of the
Borrower except (i) to the extent that any such Subsidiary is merged,
consolidated or liquidated in a transaction permitted by Section 8.02(v) or (vi)
and (ii) for non-Wholly-Owned Subsidiaries acquired pursuant to a Permitted
Acquisition.
7.14 Permitted Acquisitions. Subject to the provisions of this
Section 7.14 and the requirements contained in the definition of Permitted
Acquisition, the Borrower and each other Credit Party (to the extent such other
Credit Party is able to, and does, grant a Lien to the Collateral Agent for the
benefit of the Secured Creditors on and security interest in assets acquired
thereby in connection with such Permitted Acquisition) may from time to time
after the Initial Borrowing Date effect Permitted Acquisitions, so long as (i)
the Borrower shall have given the Administrative Agent and the Banks at least 15
Business Days' prior written notice of any Permitted Acquisition, (ii) no
Default or Event of Default is in existence at the time of the consummation of
such Permitted Acquisition or would result after giving effect thereto and all
representations and warranties contained herein or in the other Credit Documents
shall be true and correct in all material respects with the same effect as
though such representations and warranties were made on and as of the date of
such Permitted Acquisition (both before and after giving effect thereto), unless
stated to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date, (iii) calculations are made by the Borrower of compliance with the
covenants contained in Sections 8.08 through 8.10 (in each case, giving effect
to the last sentence appearing therein) for the period of four consecutive
fiscal quarters (taken as one accounting period) most recently ended prior to
the date of such Permitted Acquisition (each, a "Calculation Period"), on a Pro
Forma Basis as if the respective Permitted Acquisition (as well as all other
Permitted Acquisitions theretofore consummated after the first day of such
Calculation Period) had occurred on
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the first day of such Calculation Period and such recalculations shall show that
such financial covenants would have been complied with if the Permitted
Acquisition had occurred on the first day of such Calculation Period (it being
understood and agreed that with respect to any Permitted Acquisition consummated
prior to December 31, 1999, (x) the "Calculation Period" for purposes of this
clause (iii) shall be the period from January 1, 1999 to the last day of the
then most recently ended fiscal quarter, and for purposes of determining
calculation on a Pro Forma Basis with the covenants contained in Sections 8.08
through 8.10, Consolidated EBITDA, Consolidated Cash Interest Expense and
Consolidated Fixed Charges shall be the respective amounts calculated for such
Calculation Period multiplied by 2 (in the case of Permitted Acquisitions
consummated prior to September 30, 1999) or by 4/3 (in the case of Permitted
Acquisitions consummated thereafter but prior to December 31, 1999) and (y) the
applicable covenant levels shall be the levels set forth in Sections 8.08, 8.09
and 8.10 for the Test Period ending December 31, 1999), (iv) the Total
Unutilized Revolving Loan Commitment shall be at least $35,000,000 after giving
effect to the respective Permitted Acquisition, (v) with respect to any
Permitted Acquisition the aggregate consideration in connection with which is
$15,000,000 or more, projections prepared by the Borrower in good faith for the
period from the date of the consummation of such Permitted Acquisition to the
date which is one year thereafter shall reflect that the Borrower shall be in
compliance with the covenants set forth in Sections 8.08 through 8.10, inclusive
for such period and (vi) the Borrower shall have delivered to the Administrative
Agent an officer's certificate executed by an Authorized Officer of the
Borrower, certifying to the best of his knowledge, compliance with the
requirements of preceding clauses (i) through (v) and containing the
calculations required by preceding clauses (iii) and (v).
7.15 Interest Rate Protection. The Borrower shall no later than 90
days following the Initial Borrowing Date enter into, and thereafter maintain,
Interest Rate Protection Agreements, satisfactory to the Administrative Agent,
with a term of at least two years, establishing a fixed or maximum interest rate
acceptable to the Administrative Agent in respect of at least $75,000,000 of the
outstanding Term Loans.
7.16 Landlord Waivers. In connection with leases as to which
landlord consents have otherwise been obtained in connection with the
Acquisitions, Holdings and the Borrower shall use commercially reasonable
efforts to obtain, as promptly as possible but in no event later than within 45
days following the Initial Borrowing Date, agreements from landlords of material
Real Property leased by Holdings or any of its Subsidiaries acknowledging, among
other things, the Collateral Agent's security interest in the property
maintained on the leased premises and the Collateral Agent's authority to obtain
access to such property.
7.17 Post-Closing Actions. Notwithstanding anything to the contrary
contained in the Credit Agreement or any other Credit Document:
(a) Holdings shall, and shall cause each of its Subsidiaries to, use
reasonable best efforts to obtain agreements from landlords of Real Property
leased by Holdings or any of its Subsidiaries and designated on Schedule V as a
Mortgaged Property to the extent not obtained on or prior to the Initial
Borrowing Date, acknowledging, among other things, the Collateral Agent's
security interests in property maintained on the leased premises and the
Collateral Agent's authority to obtain access to such property.
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(b) Holdings shall cause Stewart/Walter Plastics, Ltd. to deliver
and pledge in accordance with the Pledge Agreement, no later than 10 Business
Days after the Initial Borrowing Date, a stock certificate or certificates
representing 65% of the outstanding capital stock of Master Plastics, Inc., an
Alberta, Canada corporation.
(c) With respect to the Liens created pursuant to certain equipment
lease financings of PCI on assets other than the equipment being financed and
designated on Schedule X as "liens to be amended, removed or subordinated
post-closing" (the "Non-Equipment Liens"), Holdings shall, and shall cause each
of its relevant Subsidiaries to, use reasonable best efforts to obtain a release
of the Non-Equipment Liens, or an amendment thereto, or subordination thereof,
in form and substance reasonably satisfactory to the Collateral Agent which
limits the Liens created pursuant to such designated lease financings to only
the equipment being financed and other assets directly related thereto or, as
the case may be, subordinates such Non-Equipment Liens to the Liens granted by
PCI in favor of the Collateral Agent under the Security Agreement.
(d) Holdings shall, and shall cause each of its relevant
Subsidiaries to, no later than 30 days after the Initial Borrowing Date, deliver
executed UCC-3 termination statements relating to the items designated by "***"
on Schedule X.
SECTION VIII. Negative Covenants. Each of Holdings and the Borrower
hereby covenants and agrees for itself and each of its Subsidiaries that on and
after the Initial Borrowing Date and until the Total Commitment and all Letters
of Credit have terminated and the Loans, Notes and Unpaid Drawings, together
with interest, Fees and all other Obligations, are paid in full:
8.01 Liens. Holdings and the Borrower will not, and will not permit
any of their Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon or with respect to any property or assets (real or personal, tangible or
intangible) of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable with recourse to Holdings or
any of its Subsidiaries), or assign any right to receive income, provided that
the provisions of this Section 8.01 shall not prevent the creation, incurrence,
assumption or existence of the following (Liens described below are herein
referred to as "Permitted Liens"):
(i) Liens for taxes, assessments or governmental charges or levies
not yet due and payable or Liens for taxes, assessments or governmental
charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves have been established to the
extent required by generally accepted accounting principles;
(ii) Liens in respect of property or assets of Holdings or any of
its Subsidiaries imposed by law, which were incurred in the ordinary
course of business and do not secure Indebtedness, such as carriers',
warehousemen's, materialmen's and mechanics' liens and other similar Liens
arising in the ordinary course of business, and (x)which do not in the
aggregate materially detract from the value of the Borrower's or such
Subsidiary's property or assets or materially impair the use thereof in
the operation of the business of
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the Borrower or such Subsidiary or (y)which are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to any
such Lien;
(iii) Liens in existence on the Initial Borrowing Date which are
listed, and the property subject thereto described, in Schedule X, but no
renewals or extensions of such Liens shall be permitted except to the
extent specifically permitted to be so renewed or extended as set forth on
such Schedule X, provided that (x) the aggregate principal amount of the
Indebtedness, if any, secured by such Liens does not increase from that
amount outstanding at the time of any such renewal or extension and (y)
any such renewal or extension does not encumber any additional assets or
properties of Holdings or any of its Subsidiaries;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) leases or subleases granted to other Persons in the ordinary
course of business not materially interfering with the conduct of the
business of Holdings or any of its Subsidiaries;
(vii) Liens upon assets subject to Capitalized Lease Obligations to
the extent permitted by Section 8.04(iv), provided that (x) such Liens
only serve to secure the payment of Indebtedness arising under such
Capitalized Lease Obligation and (y) the Lien encumbering the asset giving
rise to the Capitalized Lease Obligation does not encumber any other asset
of Holdings or any of its Subsidiaries;
(viii) Liens placed upon assets at the time of acquisition thereof
by the Borrower or any such Subsidiary or within 90 days thereafter to
secure Indebtedness incurred to pay all or a portion of the purchase price
thereof, provided that, in either case, (x) the aggregate outstanding
principal amount of all Indebtedness secured by Liens permitted by this
clause (viii) shall not at any time exceed the amount permitted under
Section 8.04(iv) and (y) in all events, the Lien encumbering the assets so
acquired does not encumber any other asset of Holdings or any of its
Subsidiaries;
(ix) any Lien existing on any property or asset prior to the
acquisition thereof by Holdings, the Borrower or any of their Subsidiaries
or existing on any property or asset of any Person that becomes a
Subsidiary of Holdings or the Borrower after the date hereof prior to the
time such Person becomes a Subsidiary of Holdings or the Borrower;
provided that (i) such Lien was not created in contemplation of or in
connection with such acquisition or such Person becoming a Subsidiary of
Holdings or the Borrower, as the case may be, (ii) such Lien shall not
apply to any other property or assets of Holdings, the Borrower or any of
their Subsidiaries and (iii) such Lien shall secure only those obligations
which it secures on the date of such acquisition or the date such Person
becomes a Subsidiary of Holdings or the Borrower, as the case may be;
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(x) easements, rights-of-way, restrictions, encroachments and other
similar charges or encumbrances, and minor title deficiencies, in each
case not materially interfering with the conduct of the business of
Holdings or any of its Subsidiaries;
(xi) Liens arising from precautionary UCC financing statement
filings or similar filings regarding operating leases;
(xii) statutory and common law landlords' liens under leases to
which Holdings or any of its Subsidiaries is a party;
(xiii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety bonds (other than appeal bonds),
bids, government contracts, performance and return-of-money bonds and
other similar obligations incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed money);
(xiv) Liens in favor of customers and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with the
importation of goods;
(xv) normal and customary rights of set-off upon deposits of cash in
favor of banks and other depositary institutions;
(xvi) the Borrower may sell or assign overdue accounts receivable in
connection with the collection thereof in the ordinary course of business;
and
(xvii) Liens not otherwise permitted pursuant to this Section 8.01
which secure obligations permitted under this Agreement not exceeding
$2,500,000 in the aggregate at any one time outstanding.
8.02 Consolidation, Merger, Sale of Assets, etc. Holdings and the
Borrower will not, and will not permit any of their Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its property or
assets, or enter into any sale-leaseback transactions, except that:
(i) the Borrower and its Subsidiaries may make sales of inventory,
including sales to the Borrower and other Subsidiaries, in the ordinary
course of business;
(ii) the Borrower and its Subsidiaries may make sales of assets,
provided that (x) each such sale results in consideration at least 75% of
which (taking into account the amount of cash and the principal amount of
any promissory notes received as consideration) shall be in the form of
cash (provided that in lieu of cash the Borrower may receive, as
consideration, assets which the Borrower would have been permitted to
reinvest in under the terms of Section 402(g) if the Borrower had received
cash
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consideration), (y) the aggregate sale proceeds from all assets subject to
such sales shall not exceed $2,500,000 in any fiscal year of the Borrower;
(iii) the Borrower and its Subsidiaries may make sales of assets, in
the ordinary course of business, provided that (x) each such sale results
in consideration at least 75% of which (taking into account the amount of
cash and the principal amount of any promissory notes received as
consideration) shall be in the form of cash (provided that in lieu of cash
the Borrowers may receive, as consideration, assets which the Borrower
would have been permitted to reinvest in under the terms of Section 402(g)
if the Borrower had received cash consideration), (y) the aggregate sale
proceeds from all assets subject to such sales shall not exceed
$30,000,000 in any fiscal year of the Borrower and (z) the Net Cash
Proceeds therefrom are either applied as provided in Section 4.02(g) or
reinvested in assets to the extent permitted by Section 4.02(g);
(iv) the Borrower and its Subsidiaries may lease (as lessee) real or
personal property in the ordinary course of business (so long as any such
lease does not create a Capitalized Lease Obligation except to the extent
permitted by Section 8.04(iv));
(v) any Foreign Subsidiary of the Borrower may be merged with and
into, or be dissolved or liquidated, or sell or otherwise transfer any of
its assets to (x) the Borrower or (y) any Wholly-Owned Subsidiary of the
Borrower;
(vi) any Domestic Subsidiary of the Borrower may be merged with and
into, or be dissolved or liquidated into, or transfer any of its assets to
(x) the Borrower or (y) any Wholly-Owned Domestic Subsidiary of the
Borrower;
(vii) the Borrower and its Wholly-Owned Domestic Subsidiaries may
sell or otherwise transfer assets (other than any Mortgaged Properties)
between or among one another in the ordinary course of business;
(viii) the Borrower and its Subsidiaries may sell or discount
accounts receivable in the ordinary course of business, but only in
connection with the collection or compromise thereof;
(ix) the Borrower and its Subsidiaries may, in the ordinary course
of business, license patents, trademarks, copyrights and know-how to third
Persons, so long as each such license does not prohibit the granting of a
Lien by the Borrower or such Subsidiary in the intellectual property
covered by such license;
(x) the Borrower and its Subsidiaries may liquidate any Inactive
Subsidiary;
(xi) the Transaction shall be permitted;
(xii) the sale of 100% of the capital stock of, or all or
substantially all the assets of, PCI shall be permitted, provided that (w)
such sale shall be for an amount at least equal to the fair market value
thereof (as determined in good faith by senior management
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of the Borrower), (x) such sale results in consideration at least 75% of
which (taking into account the amount of cash and the principal amount of
any promissory notes received as consideration) shall be in the form of
cash and (y) the Net Cash Proceeds therefrom are applied to repay Term
Loans as provided in Section 4.02(g) (it being understood and agreed that
the reinvestment option contained in Section 4.02(g) shall not apply to
any sale pursuant to this Section 8.02(xii), although part of such sale
may be deemed by the Borrower to be a sale pursuant to clause (iii) above
(up to the available portion of the amount of asset sales permitted under
such clause (iii) in the fiscal year in which such sale occurs), and such
part so deemed to have been made under such clause (iii) may be reinvested
as provided in such clause (iii));
(xiii) the sale of one or more facilities as a result of or in
connection with the integration of the businesses of Reid, PCI and
Franklin, provided that (w) any such sale shall occur prior to the second
anniversary of the Initial Borrowing Date, (x) any such sale shall be for
an amount at least equal to the fair market value thereof (determined in
good faith by senior management of the Borrower), (y) such sale results in
consideration at least 75% of which (taking into account the amount of
cash and the principal amount of any promissory notes received as
consideration) shall be in the form of cash and (z) the Net Cash Proceeds
therefrom are either applied to repay Term Loans as provided in Section
4.02(g) or reinvested in assets to the extent permitted by Section
4.02(g); and
(xiv) Holdings may merge or consolidate with and into any of its
members (or any successors to or Affiliates of such members), so long as
(x) such corporation has no material assets (other than its interest in
Holdings) and no material liabilities prior to such merger or
consolidation, (y) such corporation expressly assumes all liabilities and
obligations of Holdings under each Credit Document to which Holdings is a
party pursuant to an assumption agreement in form and substance
satisfactory to the Administrative Agent, and (z) such corporation shall
take such other actions and deliver such other documents to the
Administrative Agent as the Administrative Agent shall reasonably request
in order to protect and perfect the position of the Administrative Agent,
the Collateral Agent and the Banks under the Credit Documents.
To the extent the Required Banks waive the provisions of this Section 8.02 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or otherwise disposed of as permitted by this Section 8.02, such Collateral
(unless transferred to a Credit Party or a Subsidiary thereof) shall in each
case be sold or otherwise disposed of free and clear of the Liens created by the
Security Documents and the Administrative Agent shall take such actions
(including, without limitation, directing the Collateral Agent to take such
actions) as are appropriate in connection therewith.
8.03 Dividends. Holdings and the Borrower will not, and will not
permit any of their Subsidiaries to, authorize, declare or pay any Dividends
with respect to Holdings or any of its Subsidiaries, except that:
(i) any Subsidiary of the Borrower may pay Dividends to (x) the
Borrower or (y) any Wholly-Owned Subsidiary of the Borrower;
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(ii) the Borrower may pay cash Dividends to Holdings in the amounts
and at the times of any payment by Holdings in respect of taxes
(including, without limitation, any payments to be made by Holdings
pursuant to clause (v) of this Section 8.03), provided that any refunds
received by Holdings shall promptly be returned by Holdings to the
Borrower;
(iii) the Borrower may pay cash Dividends to Holdings in an amount
not to exceed $2,000,000 in any fiscal year so long as the proceeds
thereof are promptly used by Holdings to pay expenses in the ordinary
course of business;
(iv) (a) Holdings may redeem or purchase shares of its capital stock
or other equity interests (or options to purchase its capital stock or
other equity interests) held by management of Holdings or any of its
Subsidiaries, provided that (x) the only consideration paid by Holdings in
respect of such redemptions and/or purchases shall be cash and Shareholder
Subordinated Notes, (y) the sum of (A) the aggregate amount paid by
Holdings in cash in respect of all such redemptions and/or purchases plus
(B) the aggregate amount of all principal and interest payments made on
Shareholder Subordinated Notes, shall not exceed $5,000,000 in any fiscal
year of Holdings (plus the amount available to be used pursuant to this
clause (iv)(a)(y) in prior fiscal years and not so used, but in no event
more than $20,000,000 in the aggregate after the Effective Date), provided
that such amount shall be increased by an amount equal to the net cash
proceeds received by Holdings after the Effective Date from the sale or
issuance of its equity interests (to the extent not used to effect a
Permitted Acquisition) and (z) at the time of any cash payment permitted
to be made pursuant to this Section 8.03(iv), including any cash payment
under a Shareholder Subordinated Note, no Default or Event of Default
shall then exist or result therefrom; and (b) so long as no Default or
Event of Default then exists or would result therefrom, the Borrower may
pay cash Dividends to Holdings so long as Holdings promptly uses such
proceeds for the purposes described in clause (iv)(a) of this Section
8.03;
(v) so long as the Borrower is a limited liability company treated
as a partnership or an entity disregarded as separate from its owner for
federal and state income tax purposes (and prior to any distribution of
any Tax Amount, the Borrower delivers an officers' certificate to the
Administrative Agent to such effect), the Borrower may make distributions
to its members (and, in turn, Holdings may make distributions to its
members) in an amount, with respect to any period after December 31, 1998,
not to exceed the Tax Amount with respect to the Borrower for such period;
(vi) Holdings may pay Dividends required by any contract or
agreement listed on Schedule XIII, as any such contract or agreement is in
effect on the Effective Date, and (b) the Borrower may pay Dividends to
Holdings (x) at such times and in such amounts as required to enable
Holdings to pay Dividends under clause (vi)(a) of this Section 8.03 and
(y) to enable Holdings to make other payments required to be made by it
pursuant to the contracts and other agreements listed on Schedule XIII, as
such contracts and other agreements are in effect on the Effective Date;
and
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(vii) Holdings may pay Dividends on any outstanding Qualified
Preferred Equity solely through the issuance of additional shares or units
of Qualified Preferred Equity, or through accretion, but not in cash.
8.04 Indebtedness. Holdings and the Borrower will not, and will not
permit any of their Subsidiaries to, contract, create, incur, assume or suffer
to exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Existing Indebtedness to the extent the same is listed on
Schedule IX, but no refinancings or renewals thereof except to the extent
specifically permitted to be so refinanced or renewed as set forth on such
Schedule IX, provided that any such refinancings and renewals shall not
exceed the principal amount of, and shall not be for a shorter maturity
than, such Existing Indebtedness outstanding at the time of the
refinancing or renewal thereof;
(iii) Permitted Earn-Out Debt issued in connection with a Permitted
Acquisition;
(iv) Indebtedness evidenced by Capitalized Lease Obligations and
purchase money Indebtedness of Holdings and its Subsidiaries, including
any Indebtedness assumed in connection with the acquisition of assets,
provided that in no event shall the aggregate principal amount of
Capitalized Lease Obligations, and the principal amount of all such
Indebtedness incurred or assumed in each case after the Initial Borrowing
Date, permitted by this clause (iv) exceed $25,000,000 at any time
outstanding;
(v) intercompany Indebtedness among the Borrower and its
Subsidiaries to the extent permitted by Section 8.05;
(vi) Indebtedness of the Borrower under Interest Rate Protection
Agreements entered into to protect the Borrower against fluctuations in
interest rates in respect of the Obligations so long as management of the
Borrower has determined that the entering into of such Interest Rate
Protection Agreements are bona fide hedging activities;
(vii) Indebtedness of the Borrower and its Subsidiaries under Other
Hedging Agreements providing protection against fluctuations in currency
values in connection with the Borrower's or any of its Subsidiaries'
operations so long as management of the Borrower or such Subsidiary, as
the case may be, has determined that the entering into of such Other
Hedging Agreements are bona fide hedging activities;
(viii) Indebtedness of the Borrower and the Subsidiary Guarantors
under the Senior Subordinated Notes in an aggregate principal amount not
to exceed $185,000,000 (less any repayments or prepayments of principal
thereof) as set forth in the Senior Subordinated Note Documents, provided
that the Borrower may issue additional Senior Subordinated Notes in
accordance with the terms of the Senior Subordinated Note Documents so
long as (x) the net proceeds of such Senior Subordinated Notes are used to
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effect one or more Permitted Acquisitions (or to refinance Revolving Loans
the proceeds of which were used to finance one or more Permitted
Acquisitions) and/or applied to repay outstanding Term Loans as set forth
in Section 4.02(f) and (y) the aggregate principal amount of such
additional Senior Subordinated Notes shall not exceed $50,000,000;
(ix) the Borrower may become liable as a guarantor with respect to
obligations of any of its Subsidiaries, which obligations are otherwise
permitted under this Agreement;
(x) Indebtedness in respect of those accounts receivable permitted
to be sold or discounted pursuant to Section 8.02(viii);
(xi) Permitted Seller Notes not to exceed $10,000,000 in aggregate
principal amount;
(xii) Permitted Refinancing Subordinated Indebtedness so long as (x)
no Default or Event of Default then exists or would result therefrom and
(y) the proceeds thereof are used to promptly repurchase, redeem or
otherwise retire outstanding Senior Subordinated Notes and/or applied to
repay outstanding Term Loans as set forth in Section 4.02(f);
(xiii) Indebtedness representing deferred compensation to employees
of the Borrower or its Subsidiaries, provided that the aggregate principal
amount of Indebtedness permitted by this clause (xiii) shall not exceed
$10,000,000 at any time outstanding;
(xiv) Shareholder Subordinated Notes; and
(xv) additional Indebtedness of the Borrower and its Subsidiaries
not otherwise permitted under this Section 8.04 not to exceed $10,000,000
in aggregate principal amount at any one time outstanding.
8.05 Advances, Investments, Loans, Purchase of Assets. Holdings and
the Borrower will not, and will not permit any of their Subsidiaries to,
directly or indirectly, (w) lend money or credit or make advances to any Person,
(x) purchase or otherwise acquire (in one or a series of related transactions)
any part of the property or assets of any Person (including, without limitation,
any stock, obligations or securities of, or any other interest in, any other
Person, but excluding purchases or other acquisitions of inventory, materials
and equipment (and, to the extent consistent with the Borrowers past practices,
other tangible and intangible assets) in the ordinary course of business), (y)
make any capital contribution to any other Person or (z) purchase or own a
futures contract or otherwise become liable for the purchase or sale of currency
or other commodities at a future date in the nature of a futures contract,
except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold accounts
receivables owing to any of them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
customary terms;
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(ii) Holdings and its Subsidiaries may acquire and hold cash and
Cash Equivalents;
(iii) Holdings and its Subsidiaries may (x) make loans and advances
in the ordinary course of business to their respective employees so long
as the aggregate principal amount thereof at any time outstanding
(determined without regard to any write-downs or write-offs of such loans
and advances) shall not exceed $5,000,000 and (y) make loans to members of
management to fund their purchase of equity interests of Holdings so long
as no cash is paid by Holdings or any of its Subsidiaries in connection
therewith (or any cash so paid is promptly (and in any event within one
Business Day) returned to Holdings or such Subsidiary;
(iv) the Borrower may enter into Interest Rate Protection Agreements
to the extent permitted by Section 8.04(vi);
(v) the Borrower and its Subsidiaries may enter into Other Hedging
Agreements to the extent permitted by Section 8.04(vii);
(vi) investments in existence on the Initial Borrowing Date and
listed on Schedule XII shall be permitted, without giving effect to any
additions thereto or replacements thereof;
(vii) the Borrower may make intercompany loans to any Subsidiary
Guarantor, any Subsidiary of the Borrower may make intercompany loans to
the Borrower, and any Subsidiary Guarantor may make intercompany loans to
any other Subsidiary Guarantor (collectively, "Intercompany Loans"),
provided, that (x) each Intercompany Loan shall be evidenced by an
Intercompany Note and (y) each Intercompany Note issued to the Borrower or
any Subsidiary Guarantor shall be pledged to the Collateral Agent pursuant
to the Pledge Agreement;
(viii) the Borrower may make intercompany loans to, or investments
in, any of its Foreign Subsidiaries (collectively, "Foreign Subsidiary
Loans"), provided that such Foreign Subsidiary Loans shall not exceed
$10,000,000 at any time outstanding;
(ix) the Borrower and its Subsidiaries shall be permitted to make
Capital Expenditures to the extent permitted under Section 8.07;
(x) the Borrower and its Subsidiaries may enter into transactions
permitted under Section 8.02;
(xi) the Borrower and its Subsidiaries may enter into guarantees to
the extent permitted by Section 8.04;
(xii) the Borrower and any other Credit Party may make Permitted
Acquisitions in accordance with the definition thereof and the other
provisions of this Agreement;
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(xiii) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(xiv) investments of any Person existing at the time such Person
becomes a Subsidiary of the Borrower or at the time such Person merges or
consolidates with the Borrower or any of its Subsidiaries, in either case,
as the result of a Permitted Acquisition in compliance with the terms of
this Agreement, provided that such investments were not made by such
Person in connection with, or in anticipation or contemplation of, such
Person becoming a Subsidiary of the Borrower or such merger or
consolidation;
(xv) investments made after the Initial Borrowing Date in joint
ventures in an aggregate amount not to exceed $10,000,000; and
(xvi) the Borrower and its Subsidiaries may make additional
advances, investments and loans after the Initial Borrowing Date to the
extent not otherwise permitted under this Section 8.05 so long as the
Unrecovered Amount of such advances, investments and loans does not exceed
$5,000,000 in the aggregate.
8.06 Transactions with Affiliates. Holdings and the Borrower will
not, and will not permit any of their Subsidiaries to, enter into any
transaction or series of related transactions, whether or not in the ordinary
course of business, with any Affiliate of Holdings or any of its Subsidiaries,
other than on terms and conditions substantially as favorable to Holdings, the
Borrower or such Subsidiary as would reasonably be obtained by Holdings, the
Borrower or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that:
(i) Dividends may be paid to the extent provided in Section 8.03;
(ii) transactions permitted under Section 8.02 shall be permitted;
(iii) loans may be made and other transactions may be entered into
by Holdings and its Subsidiaries to the extent permitted by Section 8.05;
(iv) the Borrower may make payments under the Vestar Management
Agreement and under other agreements listed on Schedule XI (in each case
as in effect on the Initial Borrowing Date);
(v) other transactions between or among Holdings and its
Subsidiaries not involving any other Affiliate; and
(vi) customary fees paid to members of the Management Committee of
Holdings and its Subsidiaries for their services as directors not in
excess of fees paid to directors who are not Affiliates.
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8.07 Maximum Capital Expenditures. (a) Holdings and the Borrower
will not, and will not permit any of their Subsidiaries to, make any Capital
Expenditures, except that during any fiscal period set forth below (taken as one
accounting period), the Borrower and its Subsidiaries may make Capital
Expenditures so long as the aggregate amount of such Capital Expenditures does
not exceed in any fiscal period set forth below the amount set forth opposite
such fiscal period below:
Fiscal Period Amount
------------- ------
Six Quarter Period ending December 31, 2000 $100,000,000
Fiscal Year ending December 31, 2001 60,000,000
Fiscal Year ending December 31, 2002 60,000,000
Fiscal Year ending December 31, 2003 65,000,000
Fiscal Year ending December 31, 2004 65,000,000
Fiscal Year ending December 31, 2005 65,000,000
Fiscal Year ending December 31, 2006 65,000,000
Two Quarter Period ending June 30, 2007 35,000,000
To the extent that the amount of Capital Expenditures made by the Borrower and
its Subsidiaries during any fiscal period set forth in the table above is less
than the amount applicable to the respective fiscal period set forth in the
table above (without giving effect to any increase in such amount as provided
below in this clause (a)), such unused amount (the "Rollover Amount") may be
carried forward and utilized by the Borrower and its Subsidiaries to make
additional Capital Expenditures in the immediately succeeding fiscal period,
provided that no amount once carried forward to the next fiscal period may be
carried forward to a fiscal period thereafter, and provided further, that
Capital Expenditures made during any fiscal period shall be first deemed made in
respect of the Rollover Amount and then deemed made in respect of the scheduled
amount permitted for such fiscal period.
(b) In addition to the Capital Expenditures permitted to be made
pursuant to clause (a) of this Section 8.07, the Borrower and its Subsidiaries
may make Capital Expenditures (i) with the proceeds of Asset Sales to the extent
such proceeds are not required to be applied to repay Term Loans pursuant to
Section 4.02(g), (ii) to the extent that any Permitted Acquisition in accordance
with Section 7.14 constitutes a Capital Expenditure, (iii)in an amount equal to
the then Available Retained ECF Amount and (iv) with the proceeds of insurance.
8.08 Leverage Ratio. Holdings and the Borrower will not permit the
Leverage Ratio as of the last day of any Test Period ending on a date set forth
below to be more than the ratio set forth opposite such date below:
Date Ratio
---- -----
December 31, 1999 5.50:1.00
March 31, 2000 5.50:1.00
June 30, 2000 5.25:1.00
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Date Ratio
---- -----
September 30, 2000 5.25:1.00
December 31, 2000 5.00:1.00
March 31, 2001 5.00:1.00
June 30, 2001 4.75:1.00
September 30, 2001 4.75:1.00
December 31, 2001 4.50:1.00
March 31, 2002 4.50:1.00
June 30, 2002 4.25:1.00
September 30, 2002 4.25:1.00
December 31, 2002 4.00:1.00
March 31, 2003 4.00:1.00
June 30, 2003 3.75:1.00
September 30, 2003 3.75:1.00
December 31, 2003 3.50:1.00
March 31, 2004 3.50:1.00
June 30, 2004 3.50:1.00
September 30, 2004 3.50:1.00
December 31, 2004 3.50:1.00
March 31, 2005 3.50:1.00
June 30, 2005 3.50:1.00
Thereafter 3.25:1.00
Notwithstanding anything to the contrary contained in this Agreement, all
calculations of compliance with this Section 8.08 shall be made on a Pro Forma
Basis.
8.09 Interest Coverage Ratio. Holdings and the Borrower will not
permit the Interest Coverage Ratio for any Test Period ending on a date set
forth below to be less than the ratio set forth opposite such date below:
Date Ratio
---- -----
December 31, 1999 1.90:1.00
March 31, 2000 1.90:1.00
June 30, 2000 1.90:1.00
September 30, 2000 2.05:1.00
December 31, 2000 2.05:1.00
March 31, 2001 2.05:1.00
June 30, 2001 2.05:1.00
September 30, 2001 2.20:1.00
December 31, 2001 2.20:1.00
March 31, 2002 2.20:1.00
June 30, 2002 2.20:1.00
September 30, 2002 2.35:1.00
December 31, 2002 2.35:1.00
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Date Ratio
---- -----
March 31, 2003 2.35:1.00
June 30, 2003 2.35:1.00
September 30, 2003 2.50:1.00
December 31, 2003 2.50:1.00
March 31, 2004 2.50:1.00
June 30, 2004 2.50:1.00
September 30, 2004 2.50:1.00
December 31, 2004 2.50:1.00
March 31, 2005 2.50:1.00
June 30, 2005 2.50:1.00
Thereafter 2.65:1.00
Notwithstanding anything to the contrary contained in this Agreement, all
calculations of compliance with this Section 8.09 shall be made on a Pro Forma
Basis.
8.10 Fixed Charge Coverage Ratio. Holdings and the Borrower will not
permit the Fixed Charge Coverage Ratio for any Test Period ending on a date set
forth below to be less than the ratio set forth opposite such date below:
Date Ratio
---- -----
June 30, 2000 1.00:1.00
September 30, 2000 1.00:1.00
December 31, 2000 1.00:1.00
March 31, 2001 1.00:1.00
June 30, 2001 1.00:1.00
September 30, 2001 1.00:1.00
December 31, 2001 1.00:1.00
March 31, 2002 1.00:1.00
June 30, 2002 1.00:1.00
Thereafter 1.10:1.00
Notwithstanding anything to the contrary contained in this Agreement, all
calculations of compliance with this Section 8.10 shall be made on a Pro Forma
Basis.
8.11 Limitation on Payments of Certain Indebtedness; Modifications
of Certain Indebtedness; Modifications of Certificate of Incorporation, By-Laws
and Certain Agreements; etc. Holdings and the Borrower will not, and will not
permit any of their Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for value
of, or any prepayment or redemption as a result of any change of control,
asset sale or similar event of (1) any of the Senior Subordinated Notes,
or, after the incurrence thereof, any Permitted Seller
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Notes or Permitted Refinancing Subordinated Indebtedness, provided that
the Borrower may (w) issue Series B Senior Subordinated Notes in exchange
for a like principal amount of Series A Senior Subordinated Notes in
accordance with the terms of the Senior Subordinated Note Indenture, (x)
repurchase outstanding Senior Subordinated Notes with the then Available
Retained ECF Amount, (y) repurchase, redeem or otherwise retire
outstanding Senior Subordinated Notes with the proceeds of Permitted
Refinancing Subordinated Indebtedness and (z) repurchase, redeem or
otherwise retire outstanding Senior Subordinated Notes pursuant to the IPO
clawback provisions thereof with the proceeds received from Holdings as a
result of a Holdings IPO so long as (A) no Default or Event of Default
then exists or would result therefrom and (B) the Senior Leverage Ratio at
such time (determined on a Pro Forma Basis) is less than 3.00:1.00, or (2)
after the issuance thereof, any of the Shareholder Subordinated Notes
except as provided in Section 8.03(iv);
(ii) amend or modify, or permit the amendment or modification of,
any provision of any documentation entered into in connection with the
Indebtedness referred to in clause (i) above (including, without
limitation, (x) the Senior Subordinated Note Documents but excluding any
immaterial change not requiring the consent of the holders of the Senior
Subordinated Notes, or (y) after the incurrence thereof, the Permitted
Seller Notes, Permitted Refinancing Subordinated Indebtedness or any
Shareholder Subordinated Notes, as the case may be); or
(iii) amend, modify or change its certificate of incorporation or
limited liability company agreement or by-laws (if any), or any agreement
entered into by it, with respect to its capital stock or other equity
interests, or enter into any new agreement with respect to its capital
stock or other equity interests, other than any amendments, modifications
or changes pursuant to this clause (iii) or any such new agreements which
are not adverse in any material respect to the interests of the Banks.
8.12 Limitation on Certain Restrictions on Subsidiaries. Holdings
and the Borrower will not, and will not permit any of their Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any such Subsidiary
to (a) pay dividends or make any other distributions on its capital stock or any
other interest or participation in its profits owned by Holdings or any of its
Subsidiaries, or pay any Indebtedness owed to Holdings or any of its
Subsidiaries, (b) make loans or advances to Holdings or any of its Subsidiaries,
or (c) transfer any of its properties or assets to Holdings or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) applicable law, (ii) this Agreement and the other Credit
Documents, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of Holdings or any of its Subsidiaries,
(iv) customary provisions restricting assignment of any agreement entered into
by the Borrower or any Subsidiary of the Borrower in the ordinary course of
business, (v) customary provisions restricting the transfer of assets subject to
Liens permitted under Section 8.01(iii), (vii) and (viii), (vi) any restrictions
contained in contracts for the sale of assets permitted in accordance with
Section 8.02 solely in respect of the assets to be sold pursuant to such
contract, (vii) any restrictions or conditions imposed by any agreement relating
to secured Indebtedness permitted by this Agreement if such restrictions or
conditions
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apply only to the property or assets securing such Indebtedness and (viii) any
restrictions in the Senior Subordinated Note Documents or, after the issuance
thereof, the Permitted Refinancing Subordinated Indebtedness and the Permitted
Seller Notes.
8.13 Limitation on Issuance of Equity. (a) Holdings will not permit
any of its Subsidiaries to issue any capital stock or other equity interests
(including by way of sales of treasury stock) or any options or warrants to
purchase, or securities convertible into, capital stock or other equity
interests, except (i) for transfers and replacements of then outstanding shares
of capital stock or other equity interests, (ii) for stock splits, stock
dividends and similar issuances which do not decrease the percentage ownership
of Holdings or any of its Subsidiaries in any class of the capital stock or
other equity interests of such Subsidiary, (iii) for issuances to the Borrower
or any of its Subsidiaries in connection with the creation of new Wholly-Owned
Subsidiaries permitted under Section 8.15 or (iv) to qualify directors to the
extent required by applicable law.
(b) Holdings will not, and will not permit any of its Subsidiaries
to, issue (i) any class of preferred equity (provided that Holdings may issue
(x) Qualified Preferred Equity so long as the aggregate amount thereof shall not
exceed $50,000,000, (y) Permitted Earn-Out Preferred Equity and (z) preferred
equity in satisfaction of indemnity obligations pursuant to the terms of the
Contribution and Merger Agreement) or (ii) any class of redeemable (except at
the sole option of Holdings or such Subsidiary) common equity.
8.14 Business. (a) The Borrower will not, and will not permit any of
its Subsidiaries to, engage (directly or indirectly) in any business other than
any of the lines of business conducted by the Borrower and its Subsidiaries on
the Effective Date and any business similar, ancillary or related thereto or
which constitutes a reasonable extension or expansion thereof, including in
connection with the Borrower's existing and future technology, trademarks and
patents.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Holdings will not engage in any business activities and will not have
any significant assets or liabilities other than its ownership of the equity
interests of the Borrower, liabilities imposed by law, its obligations with
respect to this Agreement and the other Documents to which it is a party and
Shareholder Subordinated Notes.
8.15 Limitation on the Creation of Subsidiaries. Notwithstanding
anything to the contrary contained in this Agreement, Holdings will not, and
will not permit any of its Subsidiaries to, establish, create or acquire any
Subsidiary; provided that, the Borrower and its Subsidiaries shall be permitted
to establish or create Wholly-Owned Subsidiaries so long as, subject to the
terms and conditions of Section 7.12 hereof, (i) the capital stock of such new
Subsidiary to the extent owned by the Borrower (up to 65% of the capital stock
of any such new Foreign Subsidiary) or any other Credit Party is promptly
pledged pursuant to, and to the extent required by, the respective Pledge
Agreement and the certificates representing such stock, together with stock
powers duly executed in blank, are delivered to the Collateral Agent and (ii)
such new Subsidiary (to the extent it is a Domestic Subsidiary) promptly
executes a counterpart of the Subsidiary Guaranty, a Pledge Agreement and a
Security Agreement, in each case on the
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same basis (and to the same extent) as such Subsidiary would have executed such
Credit Documents if it were a Credit Party on the Initial Borrowing Date. In
addition, at the reasonable request of the Administrative Agent, each new
Wholly-Owned Subsidiary shall execute and deliver, or cause to be executed and
delivered, all other relevant documentation of the type described in Section 5
as such new Wholly-Owned Subsidiary would have had to deliver if such new
Wholly-Owned Subsidiary were a Credit Party on the Initial Borrowing Date.
8.16 Designated Senior Debt. The Borrower will not, and will not
permit any of its Subsidiaries to (i) designate any Indebtedness (other than the
Obligations) as "Designated Senior Debt" for purposes of, and as defined in, the
Senior Subordinated Note Indenture or (ii) designate any documents with respect
to any Indebtedness (other than this Agreement) as the "Credit Agreement" as
defined in the Senior Subordinated Note Indenture for purposes of the receipt of
notices by the Administrative Agent, and delivery of blockage notices pursuant
to the subordination provisions of the Senior Subordinated Note Documents.
SECTION IX. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
9.01 Payments. (a) The Borrower shall (i) default in the payment
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for three or more days, in the payment when
due of any Unpaid Drawings or interest on any Loan or Note, or any Fees or any
other amounts owing hereunder or under any other Credit Document or (b) any
Guarantor shall default in the payment of any amount, in respect of any payment
of the type described in clause (a)(ii) above pursuant to its Guaranty, and such
default shall continue unremedied for three or more days; or
9.02 Representations, etc. Any representation, warranty or statement
made by any Credit Party herein or in any other Credit Document or in any
certificate delivered pursuant hereto or thereto shall prove to be untrue in any
material respect on the date as of which made or deemed made; or
9.03 Covenants. Any Credit Party shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 7.01(g)(i), Section 7.11, Section 7.14 or Section 8 or (ii) default in
the due performance or observance by it of any other term, covenant or agreement
contained in this Agreement (other than as provided in Section 9.01) and such
default shall continue unremedied for a period of 30 days after written notice
to the defaulting party by the Administrative Agent or the Required Banks; or
9.04 Default Under Other Agreements. (i) Holdings or any of its
Subsidiaries shall (x) default in any payment of any Indebtedness (other than
the Obligations) beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created or (y) default in the
observance or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or Administrative Agent on
behalf of such holder or holders) to cause
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(determined without regard to whether any notice is required), any such
Indebtedness to become due prior to its stated maturity, or (ii) any such
Indebtedness of Holdings or any of its Subsidiaries shall be declared to be due
and payable, or required to be prepaid other than by a regularly scheduled
prepayment or required prepayment (other than pursuant to a "due-on-sale" clause
in a mortgage or similar security agreement) (unless such required prepayment
results from a default thereunder or an event of the type that constitutes an
Event of Default), prior to the stated maturity thereof, provided that it shall
not be a Default or an Event of Default under this Section 9.04 unless the
aggregate outstanding principal amount of all Indebtedness as described in
preceding clauses (i) and (ii) is at least $5,000,000; or
9.05 Bankruptcy, etc. Holdings or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against
Holdings or any of its Subsidiaries and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of Holdings or any of its
Subsidiaries, or Holdings or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Holdings or any of
its Subsidiaries, or there is commenced against Holdings or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or Holdings or any of its Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or
Holdings or any of its Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by Holdings or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
9.06 ERISA. An ERISA Event shall have occurred that, in the opinion
of the required Banks, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount that could have a material adverse
effect on the business, operations, property, assets, liabilities or condition
(financial or otherwise) of the Borrower and its Subsidiaries taken as a whole;
or
9.07 Security Documents. Except (x) in each case to the extent
resulting from the failure of the Collateral Agent to retain possession of the
applicable Pledged Securities and (y) in respect of an immaterial portion of the
Collateral, at any time after the execution and delivery thereof, any of the
Security Documents shall cease to be in full force and effect, or shall cease to
give the Collateral Agent for the benefit of the Secured Creditors the Liens,
rights, powers and privileges purported to be created thereby (including,
without limitation, a perfected security interest in, and Lien on, all of the
Collateral), in favor of the Collateral Agent, superior to and prior to the
rights of all third Persons (except as permitted by Section 8.01), and subject
to no other Liens, or any Credit Party shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any of the Security
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Documents and, (i) with respect to Sections 3.2, 4.3 and 5.3 of the Security
Agreement and any affirmative covenant in any Mortgage, the failure to comply
with which would not affect the creation, perfection or priority of the mortgage
lien thereunder, such default shall continue unremedied for a period of 30 days
after written notice to the defaulting party by the Administrative Agent or the
Required Banks and (ii) with respect to Section 12(a) of the Pledge Agreement
and Sections 3.7 and 6.3 of the Security Agreement such default shall continue
unremedied for a period of 15 days after written notice to the defaulting party
by the Administrative Agent or the Required Banks; or
9.08 Guaranties. (a) Any Guaranty or any provision thereof shall
cease to be in full force or effect as to the relevant Guarantor, or any
Guarantor or Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under the relevant Guaranty, or (b)
except as otherwise provided in Section 9.01(b), any Guarantor shall default in
the due performance or observance of any term, covenant or agreement on its part
to be performed or observed pursuant to such Guaranty; provided that, with
respect to defaults under Section 12 of the Guaranty which relate to covenants
in Section 7 of this Agreement for which a grace period is applicable under
Section 9.03(ii), such Guarantors shall have the benefit of the grace period set
forth in Section 9.03(ii); or
9.09 Judgments. One or more judgments or decrees shall be entered
against Holdings or any of its Subsidiaries involving in the aggregate for
Holdings and its Subsidiaries a liability of $5,000,000 or more (not paid or
fully covered by a reputable and solvent insurance company) and such judgments
or decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within 60 days from the entry thereof; or
9.10 Change of Control. A Change of Control shall have occurred;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of the Administrative
Agent, any Bank or the holder of any Note to enforce its claims against any
Credit Party (provided, that, if an Event of Default specified in Section 9.05
shall occur with respect to the Borrower, the result which would occur upon the
giving of written notice by the Administrative Agent to the Borrower as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitment terminated,
whereupon all Commitments of each Bank shall forthwith terminate immediately and
any Commitment Fee shall forthwith become due and payable without any other
notice of any kind; (ii) declare the principal of and any accrued interest in
respect of all Loans and the Notes and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; (iii) terminate any Letter of Credit
which may be terminated in accordance with its terms; (iv) direct the Borrower
to pay (and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default specified in Section 9.05 with respect to the
Borrower or the Borrower, it will pay) to the Collateral Agent at the Payment
Office such additional amount of cash, to be held as security by the Collateral
Agent, as is equal to the aggregate Stated Amount of all Letters of Credit
issued for the account
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of the Borrower and then outstanding; (v) enforce, as Collateral Agent, all of
the Liens and security interests created pursuant to the Security Documents; and
(vi) apply any cash collateral held pursuant to this Agreement to pay
Obligations.
SECTION X. Definitions and Accounting Terms.
10.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"A Term Loan" shall have the meaning provided in Section 1.01(a).
"A Term Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name or Schedule I directly below the
column entitled "A Term Loan Commitment", as the same may be reduced or
terminated pursuant to Section 3.03 and/or 9.
"A Term Loan Maturity Date" shall mean June 30, 2005.
"A Term Loan Scheduled Repayment" shall have the meaning provided in
Section 4.02(b).
"A Term Loan Scheduled Repayment Date" shall have the meaning
provided in Section 4.02(b).
"A Term Note" shall have the meaning provided in Section 1.05(a)(i).
"A Tranche Percentage" shall mean, at any time, a fraction
(expressed as a percentage) the numerator of which is the aggregate principal
amount of A Term Loans then outstanding and the denominator is the aggregate
principal amount of Term Loans then outstanding.
"Acquired Businesses" shall mean Reid, PCI and Franklin.
"Acquisition Documents" shall mean the Contribution and Merger
Agreement and all other material documentation related to the Acquisitions.
"Acquisitions" shall mean the acquisition (i) by the Borrower of all
or substantially all of the assets of Reid and (ii) by the Borrower of all or
substantially all of the assets of Franklin, including PCI and its Subsidiaries,
in each case pursuant to the Acquisition Documents.
"Additional Mortgage" shall have the meaning provided in Section
7.11(a).
"Additional Mortgaged Property" shall have the meaning provided in
Section 7.11(a).
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"Additional Revolving Loan Bank" shall have the meaning provided in
Section 1.14(c).
"Additional Revolving Loan Commitment" shall mean, for each Bank,
any commitment to make Revolving Loans provided by such Bank pursuant to Section
1.14, in such amount as agreed to by such Bank in the respective Revolving Loan
Commitment Agreement; provided that on the Additional Revolving Loan Commitment
Date upon which an Additional Revolving Loan Commitment of any Bank becomes
effective, such Additional Revolving Loan Commitment of such Bank shall be added
to (and thereafter become a part of) the Revolving Loan Commitment of such Bank
for all purposes of this Agreement as contemplated by Section 1.14.
"Additional Revolving Loan Commitment Agreement" shall mean a
Revolving Loan Commitment Agreement substantially in the form of Exhibit C-2
(appropriately completed).
"Additional Revolving Loan Commitment Date" shall mean each date
upon which an Additional Revolving Loan Commitment under an Additional Revolving
Loan Commitment Agreement becomes effective as provided in Section 1.14(c)(i).
"Adjusted Consolidated Net Income" for any period shall mean
Consolidated Net Income for such period plus, without duplication, the sum of
the amount of all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense and non-cash interest expense
and net non-cash losses which were included in arriving at Consolidated Net
Income for such period) for such period less (i) the sum of the amount of all
net non-cash gains (exclusive of items reflected in Adjusted Consolidated
Working Capital) included in arriving at Consolidated Net Income for such period
and (ii) gains or losses for such period from sales of assets other than sales
in the ordinary course of business.
"Adjusted Consolidated Working Capital" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities.
"Administrative Agent" shall mean BTCo, in its capacity as
Administrative Agent for the Banks hereunder, and shall include any successor to
the Administrative Agent appointed pursuant to Section 11.09.
"Affected Eurodollar Loans" shall have the meaning provided in
Section 4.02(k).
"Affiliate" shall mean, with respect to any Person, any other Person
(i) directly or indirectly controlling (including, but not limited to, all
directors, officers and partners of such Person) controlled by, or under direct
or indirect common control with, such Person or (ii) that directly or indirectly
owns more than 10% of any class of the voting securities or capital stock of or
equity interests in such Person. A Person shall be deemed to control another
Person if such Person possesses, directly or indirectly, the power to direct or
cause the direction of the
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management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agent" shall mean the Administrative Agent, the Documentation Agent
and the Syndication Agent.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed, refinanced or replaced from
time to time.
"Applicable Commitment Fee Percentage" shall mean, for purposes of
calculating the applicable Commitment Fee on the daily Unutilized Commitment of
any Bank, the appropriate applicable percentage corresponding to the Leverage
Ratio in effect as of the most recent Determination Date:
================================================================================
Pricing Level Leverage Ratio Commitment Fee
- --------------------------------------------------------------------------------
I >5.0:1.00 0.50%
- --------------------------------------------------------------------------------
II >4.5:1.0 ( 5.0:1.0 0.50%
- --------------------------------------------------------------------------------
III >3.5:1.0 ( 4.5:1.0 0.40%
- --------------------------------------------------------------------------------
IV >3.0:1.0 ( 3.5:1.0 0.35%
- --------------------------------------------------------------------------------
V >2.5:1.0 ( 3.0:1.0 0.30%
- --------------------------------------------------------------------------------
VI ( 2.5:1.0 0.25%
================================================================================
The Applicable Commitment Fee Percentage shall be determined and
adjusted quarterly on the date (each a "Determination Date") five Business Days
after the date by which Holdings is required to provide the officer's
certificate in accordance with the provisions of Section 7.01(e) for the most
recently ended fiscal quarter of Holdings; provided, however, that (i) the
Applicable Commitment Fee Percentage shall be 0.40% until the Determination Date
for the fiscal quarter of Holdings ending on December 31, 1999, on and after
which time such Applicable Commitment Fee Percentage shall be determined by the
Leverage Ratio as of the last day of the most recently ended fiscal quarter of
Holdings preceding the applicable Determination Date, and (ii) if Holdings fails
to provide the officer's certificate to the Administrative Agent as required by
Section 7.01(e) for the last day of the most recently ended fiscal quarter of
Holdings preceding the Determination Date, the Applicable Commitment Fee
Percentage from such Determination Date shall be based on Pricing Level I until
such time as an appropriate officer's certificate is provided, whereupon such
Applicable Commitment Fee Percentage shall be determined by the Leverage Ratio
as of the last day of the most recently ended fiscal quarter of Holdings
preceding such Determination Date. Each Applicable Commitment Fee Percentage
shall be effective from one Determination Date until the next Determination
Date. Any adjustments in the Applicable Commitment Fee Percentage shall be
applicable to the Revolving Loan Commitment of such Bank.
"Applicable Margin" shall mean, for purposes of calculating the
applicable interest rate for any day for any Revolving Loan, any A Term Loan or
any B Term Loan, the
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appropriate applicable percentage corresponding to the Leverage Ratio in effect
as of the most recent Determination Date:
================================================================================
Applicable Margin
- --------------------------------------------------------------------------------
For Revolving Loans and For B Term Loans
ATerm Loans
- --------------------------------------------------------------------------------
Base
Pricing Leverage Ratio Eurodollar Base Rate Eurodollar Rate
Level Loans Loans Loans Loans
- --------------------------------------------------------------------------------
I >5.0:1.00 2.25% 1.25% 2.75% 1.75%
- --------------------------------------------------------------------------------
II >4.5:1.0 ( 5.0:1.0 2.00% 1.00% 2.50% 1.50%
- --------------------------------------------------------------------------------
III >3.5:1.0 ( 4.5:1.0 1.75% 0.75% 2.25% 1.25%
- --------------------------------------------------------------------------------
IV >3.0:1.0 ( 3.5:1.0 1.50% 0.50% 2.00% 1.00%
- --------------------------------------------------------------------------------
V >2.5:1.0 ( 3.0:1.0 1.25% 0.25% 2.00% 1.00%
- --------------------------------------------------------------------------------
VI ( 2.5:1.0 1.00% 0% 2.00% 1.00%
================================================================================
The Applicable Margin shall be determined and adjusted quarterly on
each Determination Date; provided, however, that (i) the Applicable Margins
shall remain unchanged at Pricing Level III (as shown above) until the
Determination Date for the fiscal quarter of Holdings ending on December 31,
1999, on and after which time the Applicable Margins shall be determined by the
Leverage Ratio as of the last day of the most recently ended fiscal quarter of
Holdings preceding the applicable Determination Date, and (ii) if Holdings fails
to provide the officer's certificate to the Administrative Agent as required by
Section 7.01(e) for the last day of the most recently ended fiscal quarter of
Holdings preceding the Determination Date, the Applicable Margins from such
Determination Date shall be based on Pricing Level I until such time as an
appropriate officer's certificate is provided, whereupon the Applicable Margins
shall be determined by the Leverage Ratio as of the last day of the most
recently ended fiscal quarter of Holdings preceding such Determination Date.
Each Applicable Margin shall be effective from one Determination Date until the
next Determination Date. Any adjustments in the Applicable Margins shall be
applicable to all existing Loans and Letters of Credit as well as any new Loans
and Letters of Credit made or issued. Notwithstanding anything to the contrary
contained herein, with respect to each C Term Loan Sub-Facility, to the extent
then outstanding, the Applicable Margins shall be that percentage set forth in
or calculated in accordance with the relevant C Term Loan Commitment Agreement.
"Approved Bank" shall have the meaning provided in the definition of
"Cash Equivalents."
"Asset Sale" shall mean any sale, transfer or other disposition by
the Borrower or any of its Subsidiaries to any Person other than the Borrower or
any of its Wholly-Owned
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Subsidiaries of any asset (including, without limitation, any capital stock or
other equity interests or securities of another Person), of the Borrower or any
of its Subsidiaries other than any sale, transfer or disposition permitted by
Sections 8.02(i), (ii), (iv), (v), (vi), (vii), (viii), (ix), (x) or (xi).
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit M (appropriately
completed).
"Authorized Officer" of any Credit Party shall mean any of the
President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
any Vice-President, the Secretary or the General Counsel of such Credit Party or
any other officer of such Credit Party which is designated in writing to the
Administrative Agent and the relevant Issuing Bank by any of the foregoing
officers of such Credit Party as being authorized to give such notices under
this Agreement.
"Available Retained ECF Amount" shall mean, from and after any
complete fiscal year of the Borrower ending on or after December 31, 2000, (i)
an amount which is initially equal to zero, plus (ii) an amount of Excess Cash
Flow permitted to be retained by the Borrower in any Excess Cash Flow Period
after giving effect to the calculation of Excess Cash Flow for the previous
Excess Cash Flow Period and the payment of Loans required pursuant to Section
4.02(h) during such Excess Cash Flow Period, minus (iii) the amount of Excess
Cash Flow for any Excess Cash Flow Period in which Excess Cash Flow was a
negative number, minus (iv) any amount of the Excess Cash Flow retained by the
Borrower as described by clause (ii) above and used to make Capital Expenditures
as permitted by Section 8.07(b)(iii), minus (v) any amount designated as
Available Retained ECF Amount and utilized to repurchase Senior Subordinated
Notes in accordance with the proviso to Section 8.11(i). Notwithstanding
anything to the contrary contained above, the Available Retained ECF Amount
shall be zero until the occurrence of the first Excess Cash Payment Date.
"B Banks" shall have the meaning provided in Section 4.02(n).
"B Term Loan" shall have the meaning provided in Section 1.01(b).
"B Term Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name on Schedule I directly below the
column entitled "B Term Loan Commitment", as the same may be reduced or
terminated pursuant to Section 3.03 and/or 9.
"B Term Loan Maturity Date" shall mean June 30, 2007.
"B Term Loan Scheduled Repayment" shall have the meaning provided in
Section 4.02(c).
"B Term Loan Scheduled Repayment Date" shall have the meaning
provided in Section 4.02(c).
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"B Term Note" shall have the meaning provided in Section
1.05(a)(ii).
"B Tranche Percentage" shall mean, at any time, a fraction
(expressed as a percentage) the numerator of which is the aggregate principal
amount of B Term Loans then outstanding and the denominator of which is the
aggregate principal amount of Term Loans then outstanding.
"Bank" shall mean each financial institution listed on Schedule II,
as well as any Person which becomes a "Bank" hereunder pursuant to 13.04(b).
"Bank Default" shall mean (i)the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or to fund
its portion of any unreimbursed payment under Section 2.03(c) or (ii)a Bank
having notified in writing the Borrower and/or the Administrative Agent that it
does not intend to comply with its obligations under Section 1.01(a), (b), (c)
or (d) or Section 2, in the case of either clause (i) or (ii) as a result of any
takeover of such Bank by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher of (i) the rate which
is 1/2 of 1% in excess of the overnight Federal Funds Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan designated or deemed
designated as such by the Borrower at the time of the incurrence thereof or
conversion thereto.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from all the Banks having Commitments in respect of or outstanding Loans
under the respective Tranche on a given date (or resulting from a conversion or
conversions on such date) and, in the case of Eurodollar Loans, having the same
Interest Period, provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of the related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company, in its individual capacity,
and any successor thereto by merger.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the London interbank Eurodollar market and which shall not be a legal
holiday or a day on which banking institutions.
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"C Banks" shall have the meaning provided in Section 4.02(n).
"C Term Loan" shall have the meaning provided in Section 1.01(c).
"C Term Loan Bank" shall have the meaning provided in Section
1.14(b).
"C Term Loan Borrowing Date" shall mean each date on which C Term
Loans are incurred pursuant to Section 1.01(c), each of which dates shall be the
date of the effectiveness of the respective C Term Loan Commitment Agreement
pursuant to which such C Term Loans are to be made.
"C Term Loan Commitment" shall mean, for each Bank, any commitment
to make C Term Loans provided by such Bank pursuant to Section 1.14, in such
amount as agreed to by such Bank in the respective C Term Loan Commitment
Agreement and as set forth opposite such Bank's name in Schedule I hereto (as
modified in accordance with Section 1.14) directly below the column entitled "C
Term Loan Commitment" as the same may be terminated or reduced from time to time
pursuant to Sections 3.03 and/or 9.
"C Term Loan Commitment Agreement" shall mean and include each C
Term Loan Commitment Agreement in the form of Exhibit C-1 attached hereto
executed in accordance with Section 1.14 hereof.
"C Term Loan Commitment Date" shall mean each date upon which a C
Term Loan Commitment under a C Term Loan Commitment Agreement becomes effective
as provided in Section 1.14(b)(i).
"C Term Loan Maturity Date" shall mean, for each C Term Loan
Sub-Facility, the date set forth in the C Term Loan Commitment Agreement
pursuant to which such C Term Loan was made.
"C Term Loan Scheduled Repayment" shall have the meaning provided in
Section 4.02(d).
"C Term Loan Sub-Facility" shall mean a sub-facility under the
facility evidenced by the Total C Term Loan Commitment relating to the C Term
Loan Commitments of one or more Banks extended pursuant to a given C Term Loan
Commitment Agreement to make a C Term Loan or C Term Loans under such
sub-facility.
"C Term Note" shall have the meaning provided in Section
1.05(a)(iii).
"C Tranche Percentage" shall mean, at any time, a fraction
(expressed as a percentage) the number of which is the aggregate principal
amount of C Term Loans then outstanding and the denominator is the aggregate
principal amount of Term Loans then outstanding.
"Calculation Period" shall have the meaning provided in Section
7.14.
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"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which would be required to be capitalized in
accordance with generally accepted accounting principles, including all such
expenditures with respect to fixed or capital assets (including, without
limitation, expenditures for maintenance and repairs which should be capitalized
in accordance with generally accepted accounting principles) and, without
duplication, the amount of Capitalized Lease Obligations incurred by such
Person.
"Capitalized Lease Obligations" shall mean, with respect to any
Person, all rental obligations which, under generally accepted accounting
principles, are or will be required to be capitalized on the books of such
Person, in each case taken at the amount thereof accounted for as indebtedness
in accordance with such principles.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers acceptances of (x) any Bank and
(y) any bank which has, or whose parent company has, a short-term commercial
paper rating from S&P of at least A-1 or the equivalent thereof or from Moody's
of at least P-1 or the equivalent thereof (any such bank or Bank, an "Approved
Bank"), in each case with maturities of not more than one year from the date of
acquisition, (iii) commercial paper issued by any Approved Bank or by the parent
company of any Approved Bank and commercial paper issued by, or guaranteed by,
any company with a short-term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's,
or guaranteed by any company with a long term unsecured debt rating of at least
A or A2, or the equivalent of each thereof, from S&P or Moody's, as the case may
be, and in each case maturing within six months after the date of acquisition,
(iv) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's and (v) investments in money market funds
substantially all the assets of which are comprised of securities of the types
described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, but
only as and when so received) received by the Borrower or any of its
Subsidiaries from such Asset Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. ss.9601 et seq.
"Change in Law" shall have the meaning provided in Section 1.10.
"Change of Control" shall mean (i) Holdings shall cease to own 100%
of the outstanding equity interests of the Borrower, (ii) prior to a Holdings
IPO, the Permitted Holders
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shall cease to own a majority of the capital stock or other equity interests of
Holdings on a fully diluted basis, (iii) following a Holdings IPO, any "Person"
or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act), excluding Permitted Holders, is or shall become the "beneficial owner" (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of 40% or more on a fully diluted basis of the voting and economic
equity interests of Holdings, (iv) the Management Committee of Holdings shall
cease to consist of a majority of Continuing Members or (v) any "change of
control" or similar event shall occur under the Senior Subordinated Note
Documents or, after the issuance thereof, any documents evidencing or relating
to the Permitted Seller Subordinated Indebtedness or Permitted Refinancing
Subordinated Indebtedness.
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect on the date of this
Agreement, and to any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purported to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement Collateral, all Security Agreement Collateral, all Mortgaged
Properties, all Additional Mortgage Properties and all cash and Cash Equivalents
delivered as collateral pursuant to Sections 4.02 or 9 hereof.
"Collateral Agent" shall mean the Administrative Agent acting as
Collateral Agent for the Secured Creditors pursuant to the Security Documents.
"Commitment" shall mean any of the commitments of any Bank, i.e.,
whether the A Term Loan Commitment, B Term Loan Commitment, C Term Loan
Commitment or Revolving Loan Commitment.
"Commitment Fee" shall have the meaning provided in Section 3.01(a).
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate amount of Capital Expenditures made by Holdings and its Subsidiaries
during such period.
"Consolidated Cash Interest Expense" shall mean, for any period,
Consolidated Interest Expense (net of cash interest income) for such period but
only to the extent such Consolidated Interest Expense is payable in cash in
respect of such period. Notwithstanding anything to the contrary contained
above, to the extent Consolidated Cash Interest Expense is to be determined for
any Test Period which ends prior to June 30, 2000, Consolidated Cash Interest
Expense for all portions of such period occurring prior to July 1, 1999 shall be
calculated in accordance with the definition of Test Period contained herein.
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"Consolidated Current Assets" shall mean, at any time, the
consolidated current assets of Holdings and its Subsidiaries.
"Consolidated Current Liabilities" shall mean, at any time, the
consolidated current liabilities of Holdings and its Subsidiaries at such time,
but excluding the current portion of any Indebtedness under this Agreement and
the current portion of any other long-term Indebtedness which would otherwise be
included therein.
"Consolidated Debt" shall mean, at any time, an amount equal to (i)
the average outstanding principal amount of Revolving Loans, calculated on the
basis of the outstanding principal amount of such Revolving Loans on the last
Business Day of each month during the period (the "Revolver Calculation Period")
of 12 months then most recently ended (or, if shorter, the number of months
beginning with July, 1999 and ending with the then most recently ended month),
provided that if during such Revolver Calculation Period the Borrower
consummated a Permitted Acquisition financed in whole or in part with Revolving
Loans, then for purposes of this clause (i) there shall be added to each month
occurring in such Revolver Calculation Period prior to the consummation of such
Permitted Acquisition an amount equal to the principal amount of Revolving Loans
incurred to finance such Permitted Acquisition, plus (ii) the aggregate
principal amount of all other Indebtedness of Holdings and its Subsidiaries
(including, without limitation, Loans hereunder other than Revolving Loans) at
such time minus (iii) cash and Cash Equivalents held by Holdings and its
Subsidiaries at such time.
"Consolidated EBIT" shall mean, for any period, the Consolidated Net
Income of Holdings and its Subsidiaries for such period, before Consolidated
Interest Expense for such period, the aggregate amount of letter of credit fees
for such period and provision for taxes and without giving effect to any
extraordinary gains or losses for such period or gains or losses from sales of
assets other than in the ordinary course of business.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the following amounts (without duplication), in each
case to the extent deducted in arriving at Consolidated EBIT for such period:
(i) all amortization of intangibles and depreciation, (ii) all non-cash
extraordinary and non-cash non-recurring losses or charges, (iii) all non-cash
expenses incurred in the ordinary course of business, (iv) non-cash expenses
resulting from the grant of stock and stock options and other compensation to
management personnel of the Borrower or its Subsidiaries pursuant to a written
plan or agreement or the treatment of such options under variable plan
accounting, (v) step-up in inventory valuation as a result of purchase
accounting for Permitted Acquisitions, (vi) non-cash amortization of financing
costs by the Borrower and its Subsidiaries for such period, (vii) any fees,
expenses or charges related to any equity offering, permitted investment,
acquisition or recapitalization or Indebtedness permitted by this Agreement
(whether or not successful) and fees, expenses or charges related to the
Transaction (including fees paid to Vestar and/or its Affiliates), (viii) the
amount of any minority interest expense deducted in calculating Consolidated Net
Income, and (ix) any amounts payable under the Rokus Agreement; it being
expressly understood and agreed, however, that, notwithstanding anything to the
contrary set forth in this definition or in the definitions of Consolidated Net
Income or Consolidated EBIT, if any restructuring charges are taken or incurred
by Holdings and its Subsidiaries after the Initial Borrowing Date (other than
any such
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charges related to the Transaction or the integration of the businesses acquired
pursuant to the Acquisitions), same shall reduce Consolidated EBITDA, provided
that such reductions to Consolidated EBITDA shall be made at the times, and to
the extent, that cash amounts are paid in respect thereof (whether such cash
amounts reduce reserves previously established, reduce Consolidated Net Income
or otherwise). Notwithstanding anything to the contrary contained above, to the
extent Consolidated EBITDA is to be determined for any Test Period which ends
prior to June 30, 2000, Consolidated EBITDA for all portions of such period
occurring prior to July 1, 1999 shall be calculated in accordance with the
definition of Test Period contained herein.
"Consolidated Fixed Charges" shall mean, for any period, the sum of,
without duplication, (i) Consolidated Cash Interest Expense for such period,
(ii) the amount of all cash Consolidated Capital Expenditures for such period
(other than (x) Consolidated Capital Expenditures constituting Capitalized Lease
Obligations, (y) Consolidated Capital Expenditures made during such period using
the Rollover Amount from a previous period and (z) Excluded Capital
Expenditures) and (iii) the scheduled principal amount of all amortization
payments on all Indebtedness (excluding payments pursuant to a revolving credit
facility or an over-draft facility as a result of the occurrence of the
scheduled termination date thereunder) of Holdings and its Subsidiaries for such
period (as determined on the first day of the respective period).
Notwithstanding anything to the contrary contained above, to the extent
Consolidated Fixed Charges is to be determined for any Test Period which ends
prior to June 30, 2000, Consolidated Fixed Charges for all portions of such
period occurring prior to July 1, 1999 shall be calculated in accordance with
the definition of Test Period contained herein.
"Consolidated Interest Expense" shall mean, for any period, the
total consolidated interest expense of Holdings and its Subsidiaries for such
period (calculated without regard to any limitations on the payment thereof)
plus, without duplication, that portion of Capitalized Lease Obligations of
Holdings and its Subsidiaries representing the interest factor for such period.
"Consolidated Net Income" shall mean, for any period, net after tax
income of Holdings and its Subsidiaries for such period; provided, however, that
there shall be excluded from Consolidated Net Income (i) the income (or loss) of
any Person accrued prior to the date it becomes a consolidated Subsidiary of
Holdings or is merged into or consolidated with Holdings or any of its
consolidated Subsidiaries or such Person's assets are acquired by Holdings or
any of its consolidated Subsidiaries, except to the extent of the amount of cash
dividends or distributions actually paid to Holdings or any of its consolidated
Subsidiaries by such Person during such period and (ii) the income of any
consolidated Subsidiary of Holdings to the extent the declaration or payment of
dividends or similar distributions by that Subsidiary of its income is not at
the time permitted by operation of the terms of its charter or any agreement or
instrument (other than this Agreement or any other Credit Document), judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary.
"Consolidated Senior Debt" shall mean Consolidated Debt less the
amount of Consolidated Debt attributable to the Senior Subordinated Notes or any
Permitted Refinancing Subordinated Indebtedness.
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"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv)otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; provided, however,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Members" shall mean the members of the Management
Committee, directors of Holdings on the Initial Borrowing Date and each other
member, if such member's nomination for election to the Management Committee of
Holdings is recommended by a majority of the then Continuing Members.
"Contribution and Merger Agreement" shall mean the Contribution and
Merger Agreement, dated as of April 29, 1999, among Suiza, Franklin, the "Suiza
Companies" identified therein, Vestar Packaging LLC, Reid, the "Reid Companies"
identified therein, Reid Plastics Group LLC, Holdings and the Borrower.
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Note, each Security Document and each Guaranty.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit.
"Credit Party" shall mean Holdings, the Borrower and each Subsidiary
Guarantor.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dividends" with respect to any Person shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders, members or other equity
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owners or authorized or made any other distribution, payment or delivery of
property or cash to its stockholders, members or other equity owners as such, or
redeemed, retired, purchased or otherwise acquired, directly or indirectly, for
consideration any shares of any class of its capital stock or other equity
securities outstanding on or after the Initial Borrowing Date (or any options or
warrants issued by such Person with respect to its capital stock or other equity
securities), or set aside any funds for any of the foregoing purposes, or shall
have permitted any of its Subsidiaries to purchase or otherwise acquire for
consideration any shares of any class of the capital stock or other equity
securities of such Person outstanding on or after the Initial Borrowing Date (or
any options or warrants issued by such Person with respect to its capital stock
or other equity securities). Without limiting the foregoing, "Dividends" with
respect to any Person shall also include all payments made or required to be
made by such Person with respect to any stock or equity appreciation rights,
plans, equity incentive or achievement plans or any similar plans or setting
aside of any funds for the foregoing purposes.
"Documentation Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Documents" shall mean and include the Acquisition Documents, the
Senior Subordinated Note Documents, the Existing PCI Notes Tender Offer
Documents and the Credit Documents.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower
that is incorporated or organized in the United States or any State or territory
thereof.
"Drawing" shall have the meaning provided in Section 2.04(b).
"Effective Date" shall have the meaning provided in Section 13.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in Regulation D
of the Securities Act).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings arising
under any Environmental Law (hereafter "Claims") or any permit issued under any
such law, including, without limitation, (a) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"Environmental Law" shall mean any applicable Federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
legally binding guideline or written policy
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and rule of common law now or hereafter in effect and in each case as amended,
and any legally binding judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment
relating to the environment, employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control
Act, 33 U.S.C. ss. 2601 et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.;
the Safe Drinking Water Act, 42 U.S.C. ss. 3803 et seq.; the Oil Pollution Act
of 1990, 33 U.S.C. ss.2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. ss. 11001 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. ss. 1801 et seq.; the Occupational Safety and
Health Act, 29 U.S.C. ss. 651 et seq.; and any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"Equity Financing" shall have the meaning provided in Section
5.07(b).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect on the
date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, taken together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for the purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
section 4043(c) of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived under
subsection.22,.23,.25,.27 or.28 of PBGC Regulation Section 4043); (b)the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c)the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d)the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan, from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of "withdrawal
liability" (within the meaning of Section 4201 of ERISA) or a determination that
a Multiemployer Plan is or is expected to be, insolvent or in reorganization,
within the meaning of Title iv of ERISA.
"Eurodollar Loan" shall mean each Dollar Loan designated as such by
the Borrower at the time of the incurrence thereof or conversion thereto.
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"Eurodollar Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period, (a) the rate appearing on Page 3750 of the Dow Jones
Market Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
interbank Eurodollar market) at approximately 11:00 A.M., New York time, two
Business Days prior to the commencement of such Interest Period, as the rate for
Dollar deposits with a maturity comparable to such Interest Period, provided
that in the event that such rate is not available at such time for any reason,
then this component of the "Eurodollar Rate" with respect to such Eurodollar
Loan for such Interest Period shall be the offered quotation to first-class
banks in the interbank Eurodollar market by BTCo for Dollar deposits of amounts
in immediately available funds comparable to the outstanding principal amount of
the Eurodollar Loan of BTCo with maturities comparable to the Interest Period
applicable to such Eurodollar Loan commencing two Business Days thereafter as of
11:00 A.M. (New York time) on the date which is two Business Days prior to the
commencement of such Interest Period; divided (and rounded off to the nearest
1/16 of 1%) by (b) a percentage equal to 100% minus the then stated maximum rate
of all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves required by applicable law)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency funding or liabilities as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Excess Cash Flow" shall mean, for any period, the difference
between (a) the sum of (i) Adjusted Consolidated Net Income for such period and
(ii) the decrease, if any, in Adjusted Consolidated Working Capital from the
first day to the last day of such period, and (b) the sum of (i) an amount equal
to (1) the amount of Consolidated Capital Expenditures (but excluding
Consolidated Capital Expenditures financed with equity or Indebtedness (other
than the Revolving Loans)) made during such period pursuant to and in accordance
with Section 8.07 (a)plus (or minus, if negative) (2) the Rollover Amount for
such period to be carried forward to the next period less the Rollover Amount
(if any) for the preceding period carried forward to the current period, (ii)
without duplication of amounts deducted under preceding clause (b)(i), the
amounts expended by Holdings and its Subsidiaries in respect of Permitted
Acquisitions (but excluding Permitted Acquisitions financed with equity or
Indebtedness other than the Revolving Loans), (iii) the aggregate amount of
permanent principal payments of Indebtedness of Holdings and its Subsidiaries
(but excluding repayments of (A) Indebtedness made with the proceeds of equity,
with other Indebtedness (other than the Revolving Loans) or with the Available
Retained ECF Amount and (B) Loans, provided that repayments of Loans shall be
deducted in determining Excess Cash Flow if such repayments were (x) required as
a result of a Scheduled Repayment under Section 4.02(b), (c) or (d) or (y) made
as a voluntary prepayment pursuant to Section 4.01 with internally generated
funds (but in the case of a voluntary prepayment of Revolving Loans, only to the
extent accompanied by a voluntary reduction to the Total Revolving Loan
Commitment)) during such period, (iv) the increase, if any, in Adjusted
Consolidated Working Capital from the first day to the last day of such period,
(v) an amount of cash spent during such period with respect to expenses accrued
on Holdings' or the Borrower's balance sheet in
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connection with the Transaction or a Permitted Acquisition including purchase
accounting reserves, (vi) the aggregate amount of Dividends paid during such
period under Section 8.03(iv) (other than any such Dividends paid with the
proceeds of an equity issuance), Section 8.03(v) (but without duplication of any
deduction under clause (vii) below) and Section 8.03(vi), (vii) taxes paid by
Holdings and its Subsidiaries during such period to the extent not deducted in
determining Adjusted Consolidated Net Income for such period, and including as a
deduction under this clause (vii) any taxes payable by Holdings and its
Subsidiaries in respect of such period even if such taxes are paid in a
subsequent period, provided that if a deduction is made during any period for
taxes payable in respect of, but not paid in, such period, then no deduction
shall be made for such taxes (under this clause (vii) or under clause (vi)
above) in the period in which such taxes are paid and (viii) reductions in
purchase accounting reserves or reductions in other long term liabilities on the
balance sheet of Holdings or the Borrower on the Initial Borrowing Date.
"Excess Cash Payment Date" shall mean the earlier of (x) the date of
delivery of the financial statements pursuant to Section 7.01(c) in respect of
Holding's fiscal year then last ended and (y) the date occurring 90 days after
the last day of each fiscal year of the Borrower (in either case beginning with
its fiscal year ended December 31, 2000).
"Excess Cash Payment Period" shall mean, with respect to the
repayment required on each Excess Cash Payment Date, the immediately preceding
fiscal year of the Borrower (beginning with its fiscal year ended December 31,
2000).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Capital Expenditures" shall mean Capital Expenditures made
under Section 8.07(b).
"Existing Indebtedness" shall have the meaning provided in Section
6.21.
"Existing PCI Notes" shall mean the 10% senior secured notes due
2006 issued by PCI and in an aggregate initial principal amount of $125,000,000.
"Existing PCI Notes Collateral Documents" shall mean the Stock
Pledge Agreement, the Pledge and Security Agreement, the Mortgages and the
Notice of Security Interest, each as defined in the Existing PCI Notes
Indenture.
"Existing PCI Notes Collateral Documents Amendment" shall mean the
amendments to the Existing PCI Notes Collateral Documents in form and substance
satisfactory to the Administrative Agent.
"Existing PCI Notes Documents" shall mean the Existing PCI Notes
Indenture and all other material documents relating to the Existing PCI Notes.
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"Existing PCI Notes Indenture" shall mean that certain indenture,
dated as of December 17, 1996 among PCI, Continental Plastic Containers LLC,
Continental Caribbean Containers, Inc. and United States Trust Company of New
York, as trustee, as in effect on the Initial Borrowing Date and as the same may
be amended, modified or supplemented from time to time pursuant to the terms
thereof and hereof.
"Existing PCI Notes Indenture Supplement" means the Supplemental
Indenture to the Existing PCI Notes Indenture in form and substance satisfactory
to the Administrative Agent.
"Existing PCI Notes Tender Offer" shall have the meaning provided in
Section 5.07(d).
"Existing PCI Notes Tender Offer Documents" shall mean the Existing
PCI Notes Indenture Supplement, the Existing PCI Notes Collateral Documents
Amendment and the Existing PCI Notes Tender Offer, as in effect on the Initial
Borrowing Date, and as the same may be amended, modified or supplemented from
time to time pursuant to the terms thereof and hereof.
"Existing PCI Notes Tender Offer Repurchases" shall have the meaning
provided in Section 5.07(d).
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Fixed Charge Coverage Ratio" shall mean, for any Test Period, the
ratio of Consolidated EBITDA to Consolidated Fixed Charges for such Test Period.
All calculations of the Fixed Charge Coverage Ratio shall be made on a Pro Forma
Basis, with determinations of the Fixed Charge Coverage Ratio to give effect to
all adjustments contained in the definition of "Pro Forma Basis" contained
herein.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower that
is not a Domestic Subsidiary.
"Foreign Subsidiary Guaranty" shall have the meaning provided in
Section 7.12.
"Franklin" shall mean Franklin Plastics, Inc., a Delaware
corporation.
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"Guaranteed Creditors" shall mean and include the Administrative
Agent, the Collateral Agent, the Issuing Bank, the Banks and each Person (other
than any Credit Party) party to an Interest Rate Protection Agreement or Other
Hedging Agreements to the extent such party constitutes a Secured Creditor under
the Security Documents.
"Guarantor" shall mean each of Holdings and each Subsidiary
Guarantor.
"Guaranty" shall mean and include the Holdings Guaranty, the
Subsidiary Guaranty executed by the Domestic Subsidiaries of Holdings (other
than the Borrower) and any guaranty entered into pursuant to Section 7.12.
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
and (b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous materials," "restrictive
hazardous wastes," "toxic substances," "toxic pollutants," "contaminants" or
"pollutants," or words of similar meaning and regulatory effect under any
applicable Environmental Law.
"Holdings" shall have the meaning provided in the first paragraph of
this Agreement (and shall include any successor thereto pursuant to a
transaction permitted under Section 8.02(xiv)).
"Holdings IPO" shall have the meaning provided in Section 4.02(e).
"Inactive Subsidiary" shall mean any Subsidiary of the Borrower that
does not have any assets in excess of $100,000 or has not had revenues in excess
of $100,000 for the Test Period then most recently ended.
"Indebtedness" shall mean, as to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, (ii) the maximum amount available to be
drawn under all letters of credit issued for the account of such Person and all
unpaid drawings in respect of such letters of credit, (iii) all Indebtedness of
the types described in clause (i), (ii), (iv), (v), (vi) or (vii) of this
definition secured by any Lien on any property owned by such Person, whether or
not such Indebtedness has been assumed by such Person, (iv) the aggregate amount
required to be capitalized under leases under which such Person is the lessee,
(v) all obligations of such person to pay a specified purchase price for goods
or services, whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, (vi) all Contingent Obligations of such Person and (vii) all net
obligations or exposure under any Interest Rate Protection Agreement or Other
Hedging Agreement or under any similar type of agreement or arrangement,
provided that Indebtedness shall not include trade payables and accrued
expenses, in each case arising in the ordinary course of business.
"Initial Borrowing Date" shall mean the date on which the initial
Credit Event occurs.
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"Intercompany Loans" shall have the meaning provided in Section
8.05(vii).
"Intercompany Note" shall mean promissory notes, substantially in
the form of Exhibit M evidencing Intercompany Loans.
"Interest Coverage Ratio" shall mean, for any Test Period, the ratio
of (x) Consolidated EBITDA for such Test Period to (y) Consolidated Cash
Interest Expense for such Test Period. All calculation of the Interest Coverage
Ratio shall be made on a Pro Forma Basis, with determinations of the Interest
Coverage Ratio to give effect to all adjustments contained in the definition of
"Pro Forma Basis" contained herein.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate
swap agreement, interest rate cap agreement, interest collar agreement, interest
rate hedging agreement, interest rate floor agreement or other similar agreement
or arrangement.
"Issuing Bank" shall mean BTCo (and any Lending Affiliate of BTCo
performing obligations on its behalf and reasonably acceptable to the Borrower).
"L/C Supportable Obligations" shall mean (i) obligations of the
Borrower or its Subsidiaries incurred in the ordinary course of business with
respect to insurance obligations and workers' compensation, surety bonds and
other similar obligations and (ii) such other obligations of the Borrower or any
of its Subsidiaries which would not be inconsistent with the policy of the
Issuing Bank and otherwise permitted to exist pursuant to the terms of this
Agreement.
"Leaseholds" of any Person means all the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Lending Affiliate" shall mean, with respect to any Person, any
other Person (i) directly or indirectly controlling (including, but not limited
to, all directors, officers and partners of such Person), controlled by, or
under direct or indirect common control with, such Person or (ii) that directly
or indirectly owns more than 50% of any class of the voting securities or
capital stock of or equity interests in such Person. A Person shall be deemed to
control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
other Person, whether through the ownership of voting securities, by contract or
otherwise.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
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"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the aggregate amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in
Section 2.02(a)
"Leverage Ratio" shall mean, at any time, the ratio of Consolidated
Debt at such time to Consolidated EBITDA for the Test Period most recently
ended. All calculations of the Leverage Ratio shall be made on a Pro Forma
Basis, with determinations of the Leverage Ratio to give effect to all
adjustments contained in the definition of "Pro Forma Basis" contained herein.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other) or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, and any lease having substantially the same effect as any of the
foregoing).
"Loan" shall mean each Term Loan, each Revolving Loan and each
Swingline Loan.
"Majority Banks" of any Tranche shall mean those Non-Defaulting
Banks which would constitute the Required Banks under, and as defined in, this
Agreement if all outstanding Obligations of the other Tranches under this
Agreement were repaid in full and all Commitments with respect thereto were
terminated.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(e)(ii).
"Margin Stock" shall have the meaning provided in Regulation U.
"Maturity Date" with respect to a Tranche shall mean either the A
Term Loan Maturity Date, the B Term Loan Maturity Date, the C Term Loan Maturity
Date or the Revolving Loan Maturity Date, as the case may be.
"Maximum Swingline Amount" shall mean $15,000,000.
"Minimum Borrowing Amount" shall mean (i) with respect to Term Loans
$5,000,000, (ii) with respect to Revolving Loans maintained as Eurodollar Loans,
$1,000,000 (and multiples of $500,000 in excess thereof), (iii) with respect to
Revolving Loans maintained as Base Rate Loans, $500,000 (and multiples of
$100,000 in excess thereof) and (iii) with respect to Swingline Loans, $100,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall have the meaning provided in Section 5.18(a) and,
after the execution and delivery thereof, shall include each Additional
Mortgage.
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"Mortgage Policies" shall have the meaning provided in Section
5.18(b).
"Mortgaged Property" shall have the meaning provided in Section
5.18(a) and, after the execution and delivery of any Additional Mortgage, shall
include the respective Additional Mortgaged Property.
"Multiemployer Plan" shall mean any multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of (x) cash expenses of sale (including
brokerage fees, if any, and payment of principal, premium and interest of
Indebtedness (other than the Loans) required to be repaid as a result of such
Asset Sale) and (y) incremental income taxes paid or payable as a result
thereof.
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Note" shall mean each Term Note, each Revolving Note and the
Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, or such other office as
the Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
"Obligations" shall mean all amounts owing to the Administrative
Agent, the Collateral Agent or any Bank pursuant to the terms of this Agreement
or any other Credit Document.
"Other Creditor" shall have the meaning provided in the respective
Security Documents.
"Other Hedging Agreements" shall mean any foreign exchange
contracts, currency swap agreements, commodity agreements or other similar
agreements or arrangements designed to protect against fluctuations of currency
values.
"Participant" shall have the meaning provided in Section 2.03(a).
"Participation" shall have the meaning provided in Section 2.03(a).
"Payment Office" shall mean in respect of all Loans made to the
Borrower, Letters of Credit, Fees and, all other amounts owing under this
Agreement, the office of the Administrative Agent located at One Bankers Trust
Plaza, New York, New York, 10006, or such
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other office as the Administrative Agent may hereafter designate in writing as
such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"PCI" shall mean Plastic Containers, Inc., a Delaware corporation.
"Permitted Acquisition" shall mean the acquisition by the Borrower
or any other Credit Party (to the extent such other Credit Party would be able
to, and does, grant a Lien to the Collateral Agent for the benefit of the
Secured Creditors on and security interest in assets acquired thereby in
connection with such Permitted Acquisition) of (x) assets constituting all or
substantially all of a business or division of any Person not already a
Subsidiary of the Borrower or (y) all or substantially all of the capital stock
or other ownership interests of any such Person which Person shall, as a result
of such acquisition, become a Subsidiary of the Borrower or such Credit Party,
provided that (A) the consideration paid by the Borrower and/or its Domestic
Subsidiaries can be in the form of (i)cash proceeds received from a Borrowing of
Revolving Loans and/or C Term Loans, (ii) the issuance to any such Person of
Permitted Seller Notes, (iii) the issuance to such Person of Permitted Earn-Out
Debt and/or Permitted Earn-Out Preferred Equity, (iv) the cash proceeds of
additional Senior Subordinated Notes issued in accordance with Section
8.04(viii) and/or (v) the issuance to any such Person of common equity of
Holdings or Qualified Preferred Equity issued by Holdings, and (B) the assets
acquired, or the business of the Person whose stock is acquired, shall be in the
same or related line of business in which the Borrower and its Subsidiaries are
already engaged. Notwithstanding anything to the contrary contained in the
immediately preceding sentence, an acquisition shall be a Permitted Acquisition
only if all requirements of Section 7.14 are met with respect thereto.
"Permitted Acquisition Additional Cost Savings" shall mean, at any
time of measurement, in connection with each Permitted Acquisition, those
demonstrable cost savings (other than those included in the definition of
Permitted Acquisition Cost Savings) reasonably anticipated by the Borrower to be
achieved in connection with or as a result of such Permitted Acquisition during
the three-month period following such time of measurement, provided that such
cost savings either (i) would be permitted to be recognized in pro forma
statements prepared in accordance with Regulations S-X of the Securities Act,
(ii) result from a variable in the cost of purchasing resin and are estimated in
good faith by the Borrower and certified in writing by the Chief Financial
Officer of the Borrower or (iii) result from head count reductions estimated in
good faith by the Borrower to be achieved and certified in writing by the chief
Financial Officer of the Borrower.
"Permitted Acquisition Cost Savings" shall mean, at any time of
measurement, in connection with each Permitted Acquisition, those demonstrable
cost savings actually achieved in connection with or as a result of such
Permitted Acquisition at any time after the consummation of such Permitted
Acquisition and prior to such time of measurement, provided that such cost
savings either (i) would be permitted to be recognized in pro forma statements
prepared in accordance with Regulation S-X of the Securities Act, (ii) result
from a variable in the cost of purchasing resin and are certified in writing by
the Chief Financial Officer of the
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Borrower or (iii) result from head count reductions which are certified in
writing by the Chief Financial Officer of the Borrower.
"Permitted Earn-Out Debt" shall mean Indebtedness of Holdings
incurred in connection with a Permitted Acquisition and in accordance with
Section 7.14, which Indebtedness is not secured by any assets of Holdings or any
of its Subsidiaries (including, without limitation, the assets so acquired) and
is not guaranteed by any Subsidiary of Holdings and is only payable by Holdings
in the event certain future performance goals are achieved with respect to the
assets acquired and is not payable in accordance with its terms to the extent
there exists a Default or an Event of Default; provided that such Indebtedness
shall only constitute Permitted Earn-Out Debt to the extent the terms of such
Indebtedness expressly limit the maximum potential liability of Holdings with
respect thereto.
"Permitted Earn-Out Preferred Equity" shall mean preferred equity of
Holdings issued in connection with a Permitted Acquisition and in accordance
with Section 7.14, which preferred equity is not secured by any assets of
Holdings or any of its Subsidiaries (including, without limitation, the assets
so acquired) and is not guaranteed by any Subsidiary of Holdings and is only
payable by Holdings in the event certain future performance goals are achieved
with respect to the assets acquired and is not payable in accordance with its
terms to the extent there exists a Default or an Event of Default; provided that
such preferred equity shall only constitute Permitted Earn-Out Preferred Equity
to the extent the terms of such preferred equity expressly limit the maximum
potential liability of Holdings with respect thereto.
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be acceptable to the Administrative Agent in its reasonable
discretion.
"Permitted Holders" shall mean Persons holding the equity interests
of Holdings on the Initial Borrowing Date and their respective Affiliates and
partners and, in the case of any such Person who is an individual, the immediate
family members of such Person and trusts for the benefit of such Person and/or
his or her immediate family members.
"Permitted Liens" shall have the meaning provided in Section 8.01.
"Permitted Refinancing Subordinated Indebtedness" shall mean any
unsecured Indebtedness incurred by the Borrower which is subordinated to all
Obligations hereunder and any other obligations secured pursuant to the Security
Documents in a manner which, in the reasonable judgment of the Administrative
Agent, is customary for such Indebtedness, so long as (i) such Indebtedness
shall require no amortization, sinking fund payment or any other scheduled
maturity of the principal amount thereof on any date which is earlier than the
date occurring one year after the then latest Maturity Date, (ii) the interest
rate for such Indebtedness shall not be in excess of that of the Senior
Subordinated Notes and (iii) the terms governing any such Indebtedness shall not
contain any provision (including, without limitation, covenants, defaults and
remedies) which, in the opinion of the Administrative Agent, is more restrictive
than the
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provisions in the Senior Subordinated Note Documents and, in any event, shall be
satisfactory to the Administrative Agent.
"Permitted Seller Notes" shall mean notes issued by Holdings to
sellers of stock (or other equity interests) or assets in a Permitted
Acquisition and issued in accordance with Section 7.14, which notes shall be
subordinated, unsecured and unguaranteed, and shall otherwise be in form and
substance satisfactory to the Administrative Agent.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Borrower or a Subsidiary of the Borrower or an
ERISA Affiliate, and each such plan for the five year period immediately
following the latest date on which the Borrower, or a Subsidiary of the Borrower
or an ERISA Affiliate maintained, contributed to or had an obligation to
contribute to such plan.
"Pledge Agreement" shall have the meaning provided in Section 5.08.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined
in each Pledge Agreement.
"Pledged Securities" shall have the meaning provided in the Pledge
Agreements.
"Pledged Stock" shall have the meaning provided in the Pledge
Agreements.
"Pre-Syndication Interest Period" shall mean successive one week
Interest Periods which shall apply to all outstanding Eurodollar Loans and the
first of which shall commence not earlier than the third Business Day following
the Initial Borrowing Date provided that no Pre-Syndication Interest Period
shall begin after the Syndication Date.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Pro Forma Basis" shall mean, in connection with any calculation of
compliance with any financial covenant or financial term, the calculation
thereof after giving effect on a pro forma basis to (w) if the relevant period
to be tested includes any period prior to June 30, 2000, the consummation of the
Transaction as if the same had occurred on the first day of such period (giving
pro forma effect to synergies and cost savings which have been, or may be,
realized in connection with the Transaction, but only for the portion of such
period after June 30, 1999, with the synergies and cost savings for the period
on or prior to June 30, 1999 having been
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independently accounted for in the last sentence of the definition of
"Consolidated EBITDA"), (x) the incurrence of any Indebtedness (other than
revolving Indebtedness, except to the extent same is incurred to finance the
Transaction, to refinance other outstanding Indebtedness or to finance Permitted
Acquisitions) or Qualified Preferred Equity after the first day of the relevant
Calculation Period as if such Indebtedness or Qualified Preferred Equity had
been incurred or issued (and the proceeds thereof applied) on the first day of
the relevant Calculation Period, (y) the permanent repayment of any Indebtedness
(other than revolving Indebtedness except to the extent paid with other
permitted Indebtedness) or Qualified Preferred Equity after the first day of the
relevant Calculation Period as if such Indebtedness or Qualified Preferred
Equity had been retired or redeemed on the first day of the relevant Calculation
Period and (z) the Permitted Acquisition, if any, then being consummated as well
as any other Permitted Acquisition consummated after the first day of the
relevant Calculation Period and on or prior to the date of the respective
Permitted Acquisition then being effected, with the following rules to apply in
connection therewith:
(i) all Indebtedness and Qualified Preferred Equity (x) (other than
revolving Indebtedness, except to the extent same is incurred to finance
the Transaction, to refinance other outstanding Indebtedness, or to
finance Permitted Acquisitions) incurred or issued after the first day of
the relevant Calculation Period (whether incurred to finance a Permitted
Acquisition, to refinance Indebtedness or otherwise) shall be deemed to
have been incurred or issued (and the proceeds thereof applied) on the
first day of the respective Calculation Period and remain outstanding
through the date of determination (and thereafter in the case of
projections pursuant to Section 7.14(v)) and (y) (other than Revolving
Indebtedness) permanently retired or redeemed after the first day of the
relevant Calculation Period shall be deemed to have been retired or
redeemed on the first day of the respective Calculation Period and remain
retired through the date of determination (and thereafter in the case of
projections pursuant to Section 7.14(v));
(ii) all Indebtedness or Qualified Preferred Equity assumed to be
outstanding pursuant to preceding clause (i) shall be deemed to have borne
interest or accrued dividends, as the case may be, at (x) the rate
applicable thereto, in the case of fixed rate indebtedness or Qualified
Preferred Equity or (y) the rates which would have been applicable thereto
during the respective period when same was deemed outstanding, in the case
of floating rate Indebtedness or Qualified Preferred Equity (although
interest expense with respect to any Indebtedness or Qualified Preferred
Equity for periods while same was actually outstanding during the
respective period shall be calculated using the actual rates applicable
thereto while same was actually outstanding); provided that for purposes
of calculations pursuant to Section 7.14(v), all Indebtedness or Qualified
Preferred Equity (whether actually outstanding or deemed outstanding)
bearing interest at a floating rate of interest shall be tested on the
basis of the rates applicable at the time the determination is made
pursuant to said provisions;
(iii) in making any determination of Consolidated EBITDA, pro forma
effect shall be given to all Transaction Cost Savings and Transaction
Additional Cost Savings, as if such Transaction Cost Savings and
Transaction Additional Cost Savings were realized on the first day of the
relevant period; and
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(iv) in making any determination of Consolidated EBITDA, pro forma
effect shall be given to all Permitted Acquisition Cost Savings and all
Permitted Acquisition Additional Cost Savings, as if such Permitted
Acquisition Cost Savings and Permitted Acquisition Additional Cost Savings
were realized on the first day of the relevant period.
"Qualified Preferred Equity" shall mean any preferred equity of
Holdings the express terms of which shall provide that Dividends thereon shall
not be required to be paid in cash at any time that such cash payment would be
prohibited by the terms of this Agreement (and any refinancings, replacements or
extensions hereof) and in either case which, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable), or
upon the happening of any event (including an event which would constitute a
Change of Control), cannot mature (excluding any maturity as the result of an
optional redemption by the issuer thereof) and is not mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, and is not redeemable, or
required to be repurchased, at the sole option of the holder thereof (including,
without limitation, upon the occurrence of an event which would constitute a
Change of Control), in whole or in part, on or prior to the first anniversary of
the then latest Maturity Date.
"Quarterly Payment Date" shall mean the last Business Day of each
March, June, September and December.
"RC Bank" shall mean, at any time, each Bank with a Revolving Loan
Commitment (or after the termination of the Total Revolving Loan Commitment,
each Bank which had a Revolving Loan Commitment immediately prior to such
termination).
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. ss.6901 et seq.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements thereto and fixtures
thereon, including Leaseholds.
"Recovery Event" shall mean the receipt by Holdings, the Borrower or
any of their respective Subsidiaries of any cash insurance proceeds or
condemnation award payable (i) by reason of theft, loss, physical destruction or
damage or any other similar event with respect to any Mortgaged Property, and
(ii) under any policy of insurance required to be maintained under Section 7.03
as relating to any Mortgaged Property.
"Refinancing" shall have the meaning provided in Section 5.07(c).
"Register" shall have the meaning provided in Section 13.14.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
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"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Reid" shall mean Reid Plastics Holdings, Inc., a Delaware
corporation.
"Reid Mexico" shall mean Reid Mexico, S.A. de C.V., a Mexican
corporation.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migration into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Required Banks" shall mean Non-Defaulting Banks the sum of whose
outstanding Term Loans and Revolving Loan Commitments (or, if after the Total
Revolving Loan Commitment has been terminated, outstanding Revolving Loans and
Revolving Percentages of outstanding Swingline Loans and Letter of Credit
Outstandings) constitute greater than 50% of the sum of (i) the total
outstanding Term Loans of Non-Defaulting Banks and (ii) the Total Revolving Loan
Commitment less the aggregate Revolving Loan Commitments of Defaulting Banks
(or, if after the Total Revolving Loan Commitment has been terminated, the total
outstanding Revolving Loans of Non-Defaulting Banks and the aggregate Revolving
Percentages of all Non-Defaulting Banks of the total outstanding Swingline Loans
and Letter of Credit Outstandings at such time).
"Returns" shall have the meaning provided in Section 6.09.
"Revolving Loan" shall have the meaning provided in Section 1.01(d).
"Revolving Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Revolving Loan Commitment," as the same may be (x) reduced from time
to time pursuant to Sections 3.02, 3.03 and/or 9, (y) increased from time to
time pursuant to Section 1.14 and (z)adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
"Revolving Loan Maturity Date" shall mean June 30, 2005.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"Revolving Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the Total
Revolving Loan Commitment at such time, provided that if the Revolving
Percentage of any Bank is to be determined after the Total
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Revolving Loan Commitment has been terminated, then the Revolving Percentages of
the Banks shall be determined immediately prior (and without giving effect) to
such termination.
"Rokus Agreement" shall mean the Assumption Agreement made, executed
and delivered as of the July 1, 1999, among Reid, Holdings and the Borrower.
"Rollover Amount" shall have the meaning provided in Section
8.07(a).
"S&P" shall mean Standard & Poor's Ratings Services.
"Scheduled Repayments" shall mean each A Term Loan Scheduled
Repayment, each B Term Loan Scheduled Repayment and each C Term Loan Scheduled
Repayment.
"SEC" shall have the meaning provided in Section 7.01(h).
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b).
"Secured Creditors" shall have the meaning assigned to that term in
the respective Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section
5.09.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in each Security Agreement.
"Security Documents" shall mean the Pledge Agreement, the Security
Agreement and each Mortgage.
"Senior Leverage Ratio" shall mean, at any time, the ratio of
Consolidated Senior Debt at such time to Consolidated EBITDA for the Test Period
most recently ended. All calculations of the Senior Leverage Ratio shall be made
on Pro Forma Basis, with determinations of the Senior Leverage Ratio to give
effect to all adjustments contained in the definition of "Pro Forma Basis
contained herein.
"Senior Subordinated Note Documents" shall mean and include each of
the material documents, instruments (including, without limitation, the Senior
Subordinated Notes) and other agreements entered into by the Borrower
(including, without limitation, the Senior Subordinated Note Indenture) relating
to the issuance by the Borrower of the Senior Subordinated Notes, as in effect
on the Initial Borrowing Date.
"Senior Subordinated Note Indenture" shall mean (i) the Indenture,
dated as of July 1, 1999, entered into by and between the Borrower and The Bank
of New York, as trustee
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thereunder, with respect to the Senior Subordinated Notes as in effect on the
Initial Borrowing Date and (ii) any additional indenture entered into to govern
the terms of any Senior Subordinated Notes referred to in clause (ii) of the
definition thereof, so long as such indenture is substantially the same as the
indenture referred to in clause (i) above.
"Senior Subordinated Notes" shall mean (i) the 10-1/8% Senior
Subordinated Notes due 2009 issued by the Borrower under the Senior Subordinated
Note Indenture and (ii) any additional senior subordinated notes issued in
accordance with Section 8.04(viii) having terms substantially the same as those
referred to in clause (i) above.
"Shareholder Subordinated Note" shall mean an unsecured junior
subordinated note issued by Holdings (and not guaranteed or supported in any way
by the Borrower or any of its Subsidiaries) in the form of Exhibit N, as the
same may be amended, modified or supplemented from time to time pursuant to the
terms hereof and thereof.
"Standby Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Stated Amount" shall mean, for each Letter of Credit, the maximum
amount available to be drawn thereunder, in each case determined without regard
to whether any conditions to drawing could then be met.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person and/or
one or more Subsidiaries of such Person has more than a 50% equity interest at
the time.
"Subsidiary Guarantor" shall mean each Domestic Subsidiary of the
Borrower (after giving effect to the Transaction).
"Subsidiary Guaranty" shall have the meaning provided in Section
5.10.
"Suiza" shall mean Suiza Foods Corporation, a Delaware corporation.
"Swingline Bank" shall mean BTCo.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Revolving Loan Maturity Date.
"Swingline Loans" shall have the meaning provided in Section
1.01(e).
"Swingline Note" shall have the meaning provided in Section
1.05(a)(v).
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"Syndication Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Syndication Date" shall mean the earlier of (x) the 30th day
following the Initial Borrowing Date and (y) that date upon which the
Administrative Agent determines (and notifies the Borrower) that the primary
syndication (and the resultant addition of Persons as Banks pursuant to Section
13.04) has been completed.
"Tax Amount" shall mean:
(1) for so long as Holdings is a pass-through entity for income tax
purposes and the sole asset of Holdings is its membership interest in the
Borrower (and prior to any distribution of any Tax Amount, the Borrower
delivers an officers' certificate to the Administrative Agent to such
effect), the tax amount that Holdings is required to distribute to its
members pursuant to Section 6.4 of its Limited Liability Company Agreement
as in effect on the Effective Date, or
(2) if Holdings holds other assets in addition to its membership
interest in the Borrower, the tax amount that Holdings is required to
distribute to its members pursuant to Section 6.4 of its Limited Liability
Company Agreement less any amounts for taxes related to assets other than
the membership interests in the Borrower, or
(3) if Holdings is no longer a pass-through entity for income tax
purposes, zero.
"Tax Benefit" shall have the meaning provided in Section 4.04(c).
"Tax Distribution" shall mean a distribution in respect of taxes to
the members of the Borrower (and to the extent applicable, the members of
Holdings) pursuant to Section 8.03(v).
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Loan" shall mean each A Term Loan, each B Term Loan and each C
Term Loan (if any).
"Term Loan Commitments" shall mean the A Term Loan Commitments, the
B Term Loan Commitments and the C Term Loan Commitments.
"Term Note" shall mean each A Term Note, B Term Note and C Term
Note.
"Test Period" shall mean, at any time, each period of four
consecutive fiscal quarters then last ended, in each case taken as one
accounting period. Notwithstanding anything to the contrary contained above or
in Section 13.07 or otherwise required by generally accepted accounting
principles, in the case of any Test Period ending prior to June 30, 2000, such
period shall be a one-year period ending on the last day of the fiscal quarter
last ended, with any
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calculations of (x) Consolidated Cash Interest Expense required in determining
compliance with Section 8.09 to be made on a pro forma basis in accordance with,
and to the extent provided in, the immediately succeeding sentence, (y)
Consolidated EBITDA required in determining compliance with Sections 8.08, 8.09
and 8.10 to be made on a pro forma basis in accordance with, and to the extent
provided in, the second succeeding sentence and (z) Consolidated Fixed Charges
required in determining compliance with Section 8.10 to be made on a pro forma
basis in accordance with, and to the extent provided in, the third succeeding
sentence. To the extent the respective Test Period (i) includes the fiscal
quarter ended March 31, 1999, Consolidated Interest Expense for such fiscal
quarter shall be deemed to be $12,400,000 and (ii) includes the fiscal quarter
ended June 30, 1999, Consolidated Interest Expense for such fiscal quarter shall
be deemed to be $12,400,000; provided that any additional adjustments required
by the definition of Pro Forma Basis for occurrences after June 30, 1999 shall
also be made. To the extent the respective Test Period (i) includes the fiscal
quarter ended March 31, 1999, Consolidated EBITDA for such fiscal quarter shall
be deemed to be $30,300,000 and (ii) includes the fiscal quarter ended June 30,
1999, Consolidated EBITDA for such fiscal quarter shall be deemed to be
$34,800,000; provided that any additional adjustments required by the definition
of Pro Forma Basis for occurrences after the June 30, 1999 shall also be made.
To the extent the respective Test Period (i) includes the fiscal quarter ended
March 31, 1999, Consolidated Fixed Charges for such quarter shall be deemed to
be $24,200,000 and (ii) includes the fiscal quarter ended June 30, 1999,
Consolidated Fixed Charges for such quarter shall be deemed to be $24,200,000;
provided that any additional adjustment required by the definition of Pro Forma
Basis for occurrences after June 30, 1999 shall also be made.
"Total A Term Loan Commitment" shall mean, at any time, the sum of
the A Term Loan Commitments of each of the Banks.
"Total B Term Loan Commitment" shall mean, at any time, the sum of
the B Term Loan Commitments of each of the Banks.
"Total C Term Loan Commitment" shall mean, at any time, the sum of
the C Term Loan Commitments of each of the Banks.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any time, the sum
of the Revolving Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean, at any time, the sum of the
A Term Loan Commitments, B Term Loan Commitments and the C Term Loan Commitments
of each of the Banks.
"Total Unutilized Revolving Commitment" shall mean, at any time, an
amount equal to the remainder of (x) the then Total Revolving Loan Commitment
less (y) the sum of the aggregate principal amount of Revolving Loans and
Swingline Loans plus the then aggregate amount of Letter of Credit Outstandings.
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"Trade Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Tranche" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being five separate Tranches,
i.e., A Term Loans, B Term Loans, C Term Loans, Revolving Loans and Swingline
Loans.
"Transaction" shall mean (i) the consummation of the Acquisitions,
(ii) the consummation of the Equity Financing, (iii) the issuance of the Senior
Subordinated Notes, (iv) the consummation of the Refinancing, (v) the
consummation of the Existing PCI Notes Tender Offer and the making of the
Existing PCI Notes Tender Offer Repurchases pursuant thereto and the amendments
to the Existing PCI Notes Indenture and the Existing PCI Notes Collateral
Documents as contemplated therein, and (vi) the incurrence of the Loans
hereunder on the Initial Borrowing Date and (vii) the payment of fees and
expenses in connection with the foregoing.
"Transaction Additional Cost Savings" shall mean, at any time of
measurement, those demonstrable cost savings (other than those included in the
definition of Transaction Cost Savings) reasonably anticipated by the Borrower
to be achieved in connection with or as a result of the Transaction during the
six month period following such time of measurement (or, if shorter the period
from the time of measurement to and including December 31, 2001), which cost
savings shall be estimated on a good faith basis by the Borrower, provided that
the Transaction Additional Cost Savings shall be zero at all times after
December 31, 2001.
"Transaction Cost Savings" shall mean, at any time of measurement,
those demonstrable cost savings actually achieved in connection with or as a
result of the Transaction at any time after the consummation of the Transaction
and prior to such time of measurement.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Uniform Customs" shall mean the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.04(a).
"Unrecovered Amount" shall mean, with respect to any investment,
loan or advance at any time, the cost of such investment, loan or advance less
(i) any return of capital with respect thereto and (ii) the net cash proceeds of
any sale of all or any part thereof; provided that the "Unrecovered Amount" of
any investment, loan or advance shall not be less than zero.
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"Unutilized Commitment" with respect to any Bank at any time shall
mean such Bank's Revolving Loan Commitment at such time, if any, less the sum of
(x) the aggregate outstanding principal amount of all Revolving Loans made by
such Bank and (y) such Bank's Revolving Percentage of the Letter of Credit
Outstandings.
"Vestar" shall mean Vestar Capital Partners III, L.P.
"Vestar Management Agreement" shall mean the Management Agreement,
made as of April 29, 1999, among Vestar Capital Partners, Holdings and the
Borrower.
"Waivable Mandatory Repayment" shall have the meaning provided in
Section 4.02(n).
"Wholly-Owned Domestic Subsidiary" shall mean any Domestic
Subsidiary of the Borrower that is a Wholly-Owned Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean any Foreign Subsidiary
of the Borrower that is a Wholly-Owned Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock or other equity interests (other than
(a)director's qualifying shares and (b) any other shares of equity interests of
a Foreign Subsidiary of the Borrower (not to exceed 5% of such Foreign
Subsidiary's total equity interests (determined on a fully diluted basis)
required by law to be issued to Persons other than the Borrower and its
Wholly-Owned Subsidiaries) is at the time owned by such Person and/or one or
more Wholly-Owned Subsidiaries of such Person and (ii) any partnership, limited
liability company, association, joint venture or other entity in which such
Person and/or one or more Wholly-Owned Subsidiaries of such Person has a 100%
equity interest at such time (other than a portion of such equity interest of
any Foreign Subsidiary (not to exceed 5% of such Foreign Subsidiary's total
equity interest (determined on a fully diluted basis) required by law to be
issued to Persons other than the Borrower and its Wholly-Owned Subsidiaries).
"Year 2000 compliant" shall have the meaning provided in Section
6.27.
"Year 2000 Plan" shall have the meaning provided in Section 6.27.
SECTION XI. The Administrative Agent.
11.01 Appointment. The Banks hereby designate BTCo as the
Administrative Agent (for purposes of this Section 11, the term "Administrative
Agent" shall include BTCo in its capacity as Administrative Agent and as
Collateral Agent pursuant to the Security Documents) to act as specified herein
and in the other Credit Documents. Each Bank hereby irrevocably authorizes, and
each holder of any Note by the acceptance of such Note shall be deemed
irrevocably to authorize, the Administrative Agent to take such action on its
behalf under the provisions of this Agreement, the other Credit Documents and
any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties
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hereunder and thereunder as are specifically delegated to or required of the
Administrative Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Administrative Agent may perform any of
its duties hereunder by or through its respective officers, directors,
Administrative Agents, employees or affiliates.
11.02 Nature of Duties. The Administrative Agent shall not have any
duties or responsibilities except those expressly set forth in this Agreement
and in the other Credit Documents. Neither the Administrative Agent nor any of
its respective officers, directors, Administrative Agents, employees or
affiliates shall be liable for any action taken or omitted by it or them
hereunder or under any other Credit Document or in connection herewith or
therewith, unless caused by its or their gross negligence or willful misconduct.
The duties of the Administrative Agent shall be mechanical and administrative in
nature; the Administrative Agent shall not have by reason of this Agreement or
any other Credit Document a fiduciary relationship in respect of any Bank or the
holder of any Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
the Administrative Agent any obligations in respect of this Agreement or any
other Credit Document except as expressly set forth herein or therein.
11.03 Lack of Reliance on the Administrative Agent. Independently
and without reliance upon the Administrative Agent, each Bank and the holder of
each Note, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of Holdings and its Subsidiaries in connection with the making and the
continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of
Holdings and its Subsidiaries and, except as expressly provided in this
Agreement, the Administrative Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to provide any Bank or the holder of
any Note with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter. The Administrative Agent shall not be responsible to any Bank
or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of Holdings and its Subsidiaries or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any other Credit Document, or the financial
condition of Holdings and its Subsidiaries or the existence or possible
existence of any Default or Event of Default.
11.04 Certain Rights of the Administrative Agent. If the
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Credit Document, the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from the Required Banks;
and the Administrative Agent shall not incur liability to any Bank or the holder
of any Note by reason of so refraining. Without limiting the foregoing, no Bank
or the holder of any Note shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative
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Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
11.05 Reliance. The Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that the Administrative Agent believed to be the proper
Person, and, with respect to all legal matters pertaining to this Agreement and
any other Credit Document and its duties hereunder and thereunder, upon advice
of counsel selected by the Administrative Agent.
11.06 Indemnification. (a) To the extent the Administrative Agent is
not reimbursed and indemnified by the Borrower, the Banks will reimburse and
indemnify the Administrative Agent, in proportion to their respective
"percentages" as used in determining the Required Banks (determined as if there
were no Defaulting Banks), for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Administrative Agent in performing its respective
duties hereunder or under any other Credit Document, in any way relating to or
arising out of this Agreement or any other Credit Document; provided that no
Bank shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent's gross negligence or willful
misconduct.
(b) The Administrative Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Credit Document
(except actions expressly required to be taken by it hereunder or under the
Credit Documents) unless it shall first be indemnified to its satisfaction by
the Banks pro rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
11.07 The Administrative Agent in its Individual Capacity. With
respect to its obligation to make Loans under this Agreement, the Administrative
Agent shall have the rights and powers specified herein for a "Bank" and may
exercise the same rights and powers as though it were not performing the duties
specified herein; and the term "Banks," "Required Banks," "holders of Notes" or
any similar terms shall, unless the context clearly otherwise indicates, include
the Administrative Agent in its individual capacity. The Administrative Agent
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with any Credit Party or any Affiliate of any
Credit Party as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower or any other Credit Party
for services in connection with this Agreement and otherwise without having to
account for the same to the Banks.
11.08 Holders. The Administrative Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be
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conclusive and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
11.09 Resignation by the Administrative Agent. (a) The
Administrative Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Credit Documents at any time by giving
15 Business Days' prior written notice to the Borrower and the Banks. Such
resignation shall take effect upon the appointment of a successor Administrative
Agent pursuant to clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Administrative Agent hereunder and under the other Credit
Documents who shall be a Bank, a commercial bank or a trust company in each case
reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with the
consent of the Borrower, shall then appoint a successor Administrative Agent who
shall serve as Administrative Agent hereunder and under the other Credit
Documents until such time, if any, as the Required Banks appoint a successor
Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 30th Business Day after the date such notice
of resignation was given by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Banks shall thereafter perform all
the duties of the Administrative Agent hereunder and/or under any of the Credit
Document until such time, if any, as the Required Banks appoint a successor
Administrative Agent as provided above.
11.10 Documentation Agent; Syndication Agent. Nothing in this
Agreement shall impose on the Documentation Agent or the Syndication Agent, in
each case in such capacity, any duties or obligations.
SECTION XII. Guaranty.
12.01 The Guaranty. In order to induce the Administrative Agent, the
Issuing Bank and the Banks to enter into this Agreement and to extend credit
hereunder and in recognition of the direct benefits to be received by Holdings
from the proceeds of the Loans and the issuance of the Letters of Credit,
Holdings hereby agrees with the Banks as follows: Holdings hereby
unconditionally and irrevocably guarantees as primary obligor and not merely as
surety the full and prompt payment when due, whether upon maturity, by
acceleration or otherwise, of any and all indebtedness of the Borrower to the
Guaranteed Creditors under this Agreement and the other Credit Documents and all
Interest Rate Agreement or Other Hedging Agreements entered into by a Guaranteed
Creditor or a Lending Affiliate of a Guaranteed Creditor. If any or all of the
indebtedness of the Borrower to the Guaranteed Creditors becomes due and payable
hereunder or under such other Credit Documents or Interest Rate Agreement or
Other Hedging Agreements, Holdings unconditionally promises to pay such
indebtedness to the Banks, on demand, together with any and all expenses which
may be incurred by the Administrative Agent or the Banks in collecting any of
the indebtedness. The word
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"indebtedness" is used in this Section 12 in its most comprehensive sense and
means any and all advances, debts, obligations and liabilities of the Borrower
arising in connection with this Agreement or any other Credit Documents or under
any Interest Rate Agreement or Other Hedging Agreement with a Guaranteed
Creditor or a Lending Affiliate of a Guaranteed Creditor, in each case,
heretofore, now, or hereafter made, incurred or created, whether voluntarily or
involuntarily, absolute or contingent, liquidated or unliquidated, determined or
undetermined, whether or not such indebtedness is from time to time reduced, or
extinguished and thereafter increased or incurred, whether the Borrower may be
liable individually or jointly with others, whether or not recovery upon such
indebtedness may be or hereafter become barred by any statute of limitations,
and whether or not such indebtedness may be or hereafter become otherwise
unenforceable.
12.02 Bankruptcy. Additionally, Holdings unconditionally and
irrevocably guarantees the payment of any and all indebtedness of the Borrower
to the Guaranteed Creditors whether or not due or payable by the Borrower upon
the occurrence of any of the events specified in Section 9.05, and
unconditionally and irrevocably promises to pay such indebtedness to the
Guaranteed Creditors, or order, on demand, in lawful money of the United States.
12.03 Nature of Liability. The liability of Holdings hereunder is
exclusive and independent of any security for or other guaranty of the
indebtedness of the Borrower whether executed by Holdings, any other guarantor
or by any other party, and the liability of Holdings hereunder shall not be
affected or impaired by (a)any direction as to application of payment by the
Borrower or by any other party, or (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
indebtedness of the Borrower, or (c) any payment on or in reduction of any such
other guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to any
Guaranteed Creditor on the indebtedness which such Guaranteed Creditor repays to
the Borrower pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and Holdings waives
any right to the deferral or modification of its obligations hereunder by reason
of any such proceeding.
12.04 Guaranty Absolute. No invalidity, irregularity or
unenforceability of all or any part of the indebtedness guaranteed hereby or of
any security therefor shall affect, impair or be a defense to this Guaranty, and
this Guaranty shall be primary, absolute and unconditional notwithstanding the
occurrence of any event or the existence of any other circumstances which might
constitute a legal or equitable discharge of a surety or guarantor except
payment in full of the indebtedness guaranteed herein.
12.05 Independent Obligation. The obligations of Holdings hereunder
are independent of the obligations of any other guarantor or the Borrower, and a
separate action or actions may be brought and prosecuted against Holdings
whether or not action is brought against any other guarantor or the Borrower and
whether or not any other guarantor or the Borrower be joined in any such action
or actions. Holdings waives, to the fullest extent permitted by law, the benefit
of any statute of limitations affecting its liability hereunder or the
enforcement thereof. Any payment by the Borrower or other circumstance which
operates to toll any statute of limitations as to the Borrower shall operate to
toll the statute of limitations as to Holdings.
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12.06 Authorization. Holdings authorizes the Guaranteed Creditors
without notice or demand, and without affecting or impairing its liability
hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, increase, accelerate or alter, any of
the indebtedness (including any increase or decrease in the rate of interest
thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the Guaranty herein made shall apply to the
indebtedness as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the indebtedness and
sell, exchange, release, surrender, realize upon or otherwise deal with in any
manner and in any order any property by whomsoever at any time pledged or
mortgaged to secure, or howsoever securing, the indebtedness or any liabilities
(including any of those hereunder) incurred directly or indirectly in respect
thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the indebtedness, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability (whether due or not) of
the Borrower to its creditors other than the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Guaranteed Creditors regardless
of what liability or liabilities of Holdings or the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements referred
to herein, or otherwise amend, modify or supplement this Agreement or any of
such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
Holdings from its liabilities under this Section 13.
12.07 Reliance. It is not necessary for any Guaranteed Creditors to
inquire into the capacity or powers of the Borrower or its Subsidiaries or the
officers, directors, partners or Administrative Agents acting or purporting to
act on its behalf, and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
12.08 Subordination. Any indebtedness of the Borrower now or
hereafter held by Holdings is hereby subordinated to the indebtedness of the
Borrower to the Administrative Agent and the Banks; and such indebtedness of the
Borrower to Holdings, if the Administrative Agent
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(at the direction of the Required Banks), after an Event of Default has
occurred, so requests, shall be collected, enforced and received by Holdings as
trustee for the Guaranteed Creditors and be paid over to the Guaranteed
Creditors on account of the indebtedness of the Borrower to the Guaranteed
Creditors, but without affecting or impairing in any manner the liability of
Holdings under the other provisions of this Guaranty. Prior to the transfer by
Holdings of any note or negotiable instrument evidencing any indebtedness of the
Borrower to Holdings, Holdings shall mark such note or negotiable instrument
with a legend that the same is subject to this subordination.
12.09 Waiver. (a) Holdings waives any right to require any
Guaranteed Creditors to (i) proceed against the Borrower, any other guarantor or
any other party, (ii) proceed against or exhaust any security held from the
Borrower, any other guarantor or any other party or (iii) pursue any other
remedy in any Guaranteed Creditor's power whatsoever. Holdings waives any
defense based on or arising out of any defense of the Borrower, any other
guarantor or any other party other than payment in full of the indebtedness,
including, without limitation, any defense based on or arising out of the
disability of the Borrower, any other guarantor or any other party, or the
unenforceability of the indebtedness or any part thereof from any cause, or the
cessation from any cause of the liability of the Borrower other than to the
extent of payment in full of the indebtedness. The Guaranteed Creditors may, in
accordance with the Credit Documents, at their election, foreclose on any
security held by the Administrative Agent, the Collateral Agent or any other
Guaranteed Creditors by one or more judicial or nonjudicial sales, whether or
not every aspect of any such sale is commercially reasonable (to the extent such
sale is permitted by applicable law), or exercise any other right or remedy the
Guaranteed Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of Holdings
hereunder except to the extent the indebtedness has been paid. Holdings waives
any defense arising out of any such election by the Guaranteed Creditors, even
though such election operates to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of Holdings against the Borrower or any
other party or any security.
(b) Except as otherwise specifically required hereunder, Holdings
waives all presentments, demands for performance, protests and notices,
including, without limitation, notices of nonperformance, notices of protest,
notices of dishonor, notices of acceptance of this Guaranty, and notices of the
existence, creation or incurring of new or additional indebtedness. Holdings
assumes all responsibility for being and keeping itself informed of the
Borrower's financial condition and assets, and of all other circumstances
bearing upon the risk of non-payment of the indebtedness and the nature, scope
and extent of the risks which Holdings assumes and incurs hereunder, and agrees
that the Guaranteed Creditors shall have no duty to advise Holdings of
information known to them regarding such circumstances or risks.
(c) Holdings hereby acknowledges and affirms that it understands
that to the extent the obligations guaranteed hereunder are secured by real
property located in the State of California, Holdings shall be liable for the
full amount of the liability hereunder notwithstanding foreclosure on such real
property by trustee sale or any other reason impairing Holdings' or any
Guaranteed Creditor's right to proceed against any Credit Party.
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(d) Holdings hereby waives, to the fullest extent permitted by
applicable law, all rights and benefits under Sections 580a, 580b, 580d and 726
of the California Code of Civil Procedure. Holdings hereby further waives, to
the fullest extent permitted by applicable law, without limiting the generality
of the foregoing or any other provision hereof, all rights and benefits which
might otherwise be available to Holdings under Sections 2809, 2810, 2815, 2819,
2821, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 of the California Civil Code.
(e) Holdings waives its rights of subrogation and reimbursement and
any other rights and defenses available to Holdings by reason of Sections 2787
to 2855, inclusive, of the California Civil Code, including, without limitation,
(i) any defenses Holdings may have to this Agreement by reason of an election of
remedies by the Guaranteed Creditors and (2) any rights or defenses Holdings may
have by reason of protection afforded to any Borrower pursuant to the
antideficiency or other laws of California limiting or discharging such
Borrower's indebtedness, including, without limitation, Section 580a, 580b, 580d
or 726 of the California Code of Civil Procedure. In furtherance of such
provisions, Holdings hereby waives all rights and defenses arising out of an
election of remedies by the Guaranteed Creditors, even though that election or
remedies, such as a nonjudicial foreclosure destroys Holdings' rights of
subrogation and reimbursement against the Borrower by the operation of Section
580d of the California Code of Civil Procedure or otherwise.
(f) Holdings warrants and agrees that each of the waivers set forth
above in this Section 12.09(c) is made with full knowledge of its significance
and consequences and that if any of such waivers are determined to be contrary
to any applicable law or public policy, such waivers shall be effective only to
the maximum extent permitted by law.
12.10 Guaranty Continuing. This Guaranty is a continuing one and all
liabilities to which it applies or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon. No failure or
delay on the part of any Guaranteed Creditors in exercising any right, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly specified are cumulative and
not exclusive of any rights or remedies which any Guaranteed Creditors or any
subsequent holder of a Note, or issuer of, or participant in, a Letter of Credit
would otherwise have. No notice to or demand on Holdings in any case shall
entitle Holdings to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Guaranteed Creditors
or any holder, creator or purchaser to any other or further action in any
circumstances without notice or demand.
12.11 Binding Nature of Guaranties. This Guaranty shall be binding
upon Holdings and its successors and assigns and shall inure to the benefit of
the Guaranteed Creditors and their successors and assigns.
12.12 Judgments Binding. If claim is ever made upon any Guaranteed
Creditor for repayment or recovery of any amount or amounts received in payment
or on account of any of the indebtedness and such Guaranteed Creditor repays all
or part of said amount by reason of (a) any judgment, decree or order of any
court or administrative body having jurisdiction over such
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payee or any of its property, or (b) any settlement or compromise of any such
claim effected by such Guaranteed Creditor with any such claimant (including the
Borrower) then and in such event Holdings agrees that any such judgment, decree,
order, settlement or compromise shall be binding upon Holdings, notwithstanding
any revocation hereof or the cancellation of any Note, or other instrument
evidencing any liability of the Borrower, and Holdings shall be and remain
liable to the Guaranteed Creditors hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by any such payee.
SECTION XIII. Miscellaneous.
13.01 Payment of Expenses, etc. Each of Holdings and the Borrower,
jointly and severally, agree to: (i) whether or not the transactions herein
contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the (A) Administrative Agent (for purposes of this Section 13.01,
the term "Administrative Agent" shall include BTCo in its capacity as Collateral
Agent pursuant to the Security Documents) (including, without limitation, the
reasonable fees and disbursements of White & Case LLP and local counsel) in
connection with the preparation, execution and delivery of this Agreement and
the other Credit Documents and the documents and instruments referred to herein
and therein and (B) Administrative Agent (including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent) in
connection with any amendment, waiver or consent relating hereto or thereto, and
the determination of compliance or non-compliance by Holdings and its
Subsidiaries with the provisions hereof or thereof, including, without
limitation, with respect to Permitted Acquisitions, (C) Administrative Agent in
connection with its syndication efforts with respect to this Agreement
(including, without limitation, the reasonable fees and disbursements of White &
Case LLP) and (D) Administrative Agent, the Issuing Bank and each of the Banks
in connection with the enforcement of this Agreement and the other Credit
Documents and the documents and instruments referred to herein and therein
(including, without limitation, the reasonable fees and disbursements of counsel
for the Administrative Agent and for each of the Banks); (ii) pay and hold each
of the Banks harmless from and against any and all present and future stamp,
excise and other similar taxes with respect to the execution, delivery or
enforcement of this Agreement or any other Credit Document or any document or
instrument referred to therein or herein and save each of the Banks harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such Bank) to pay
such taxes; and (iii) defend, protect, indemnify and hold harmless the
Administrative Agent, the Issuing Bank, each Bank and each of their respective
Affiliates, and each of their respective officers, directors, employees,
representatives, attorneys and Administrative Agents (collectively called the
"Indemnitees") from and against any and all liabilities, obligations (including
removal or remedial actions), losses, damages (including foreseeable and
unforeseeable consequential damages and punitive damages), penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants fees and disbursements) of any kind or
nature whatsoever that may at any time be incurred by, imposed on or assessed
against the Indemnitees directly or indirectly based on, or arising or resulting
from, or in any way related to, or by reason of (a) any investigation,
litigation or other proceeding (whether or not the Administrative Agent, the
Collateral Agent or any Bank is a party thereto and whether or not any such
investigation, litigation or other proceeding is between or among the
Administrative Agent, the Collateral Agent, any Bank, the Borrower or any third
person or otherwise) related to the
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entering into and/or performance of this Agreement or any other Credit Document
or the use of any Letter of Credit or the proceeds of any Loans hereunder or the
consummation of any transactions contemplated herein (including, without
limitation, the Transaction) or in any other Credit Document or the exercise of
any of their rights or remedies provided herein or in the other Credit
Documents; (b) any non-compliance of any Environmental Law relating to any Real
Property at any time owned or operated by Holdings or any of its Subsidiaries;
(c) the actual or alleged generation, presence or Release of Hazardous Materials
on or from, or the transportation of Hazardous Materials to or from, any Real
Property owned or at any time operated by Holdings or any of its Subsidiaries
or; (d) any Environmental Claim relating to Holdings or any of its Subsidiaries
or any Real Property owned or at any time operated by Holdings or any of its
Subsidiaries or; (e) the exercise of the rights of the Administrative Agent and
of any Bank under any of the provisions of this Agreement or any other Credit
Document or any Letter of Credit or any Loans hereunder; or (f)the consummation
of any transaction contemplated herein (including, without limitation, the
Transaction) or in any other Credit Document (the "Indemnified Matters")
regardless of when such Indemnified Matter arises; but excluding any such
Indemnified Matter to the extent based on the gross negligence or willful
misconduct of any Indemnitee.
13.02 Right of Setoff. (a) In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
an Event of Default, each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to any
Credit Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of each Credit Party against and on
account of the Obligations and liabilities of such Credit Party to such Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations purchased by such Bank pursuant
to Section 13.06(b), and all other claims of any nature or description arising
out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not such Bank shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
(b) Notwithstanding the foregoing subsection (a), at any time that
the Loans or any other Obligation shall be secured by real property located in
California, no Bank or the Administrative Agent shall exercise a right of
setoff, lien or counterclaim or take any court or administrative action or
institute any proceeding to enforce any provision of this Agreement or any Note
unless it is taken with the consent of the Required Banks or, to the extent
required by Section 13.12 of this Agreement, all of the Banks, or approved in
writing by the Administrative Agent, if such setoff or action or proceeding
would or might (pursuant to California Code of Civil Procedure Sections 580a,
580b, 580d and 726 of the California Code of Civil Procedure or Section 2924 of
the California Civil Code, if applicable, or otherwise) affect or impair the
validity, priority, or enforceability of the Liens granted to the Collateral
Agent pursuant to the Security Documents or the enforceability of the Notes and
other obligations hereunder, and any attempted exercise by any Bank or the
Administrative Agent of any such right without obtaining such consent of the
Required Banks or the Administrative Agent shall be null and void. This
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subsection (b) shall be solely for the benefit of each of the Banks and the
Administrative Agent hereunder.
13.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to Holdings or the
Borrower, at its address specified opposite its signature below; if to any Bank,
at its address specified on Schedule II; and if to the Administrative Agent, at
its Notice Office; or, as to any Credit Party or the Administrative Agent, at
such other address as shall be designated by such party in a written notice to
the other parties hereto and, as to each Bank, at such other address as shall be
designated by such Bank in a written notice to each Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telexed, facsimiled, or cabled or sent by overnight courier, be
effective three Business Days after deposited in the mails, certified, return
receipt requested, when delivered to the telegraph company, cable company or one
day following delivery to an overnight courier, as the case may be, or when sent
by telex or facsimile device, except that notices and communications to the
Administrative Agent shall not be effective until received by the Administrative
Agent.
13.04 Benefit of Agreement. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, no Credit Party may assign or
transfer any of its rights, obligations or interest hereunder or under any other
Credit Document without the prior written consent of all of the Banks; and
provided further, that although any Bank may grant participations in its rights
hereunder, such Bank shall remain a "Bank" for all purposes hereunder (and may
not transfer or assign all or any portion of its Commitments or Loans hereunder
except as provided in Section 13.04(b)) and the participant shall not constitute
a "Bank" hereunder; and provided further, that no Bank shall transfer or grant
any participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Revolving Loan Maturity Date) in which such participant
is participating, or reduce the rate or extend the time of payment of interest
or Fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount thereof,
or increase the Commitments in which such participant is participating over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Total Commitment shall
not constitute a change in the terms of any Commitment, and that an increase in
any Commitment shall be permitted without the consent of any participant if the
participant's participation is not increased as a result thereof), (ii) consent
to the assignment or transfer by any Credit Party of any of its rights and
obligations under this Agreement or (iii) release all or substantially all of
the Collateral under all of the Security Documents (in each case except as
expressly provided in the Credit Documents), or any Guarantor or Guaranty (in
each case except as expressly provided in the relevant Credit Documents)
supporting the Loans hereunder in which such participant is participating. In
the case of any such participation, the participant shall not have any rights
under this Agreement or any of the other Credit Documents (the participant's
rights against such Bank in respect of such participation to be those set forth
in
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the agreement executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder shall be determined
as if such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its Revolving
Loan Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans to (i) its parent company and/or any Lending Affiliate of
such Bank or to one or more Banks or (ii) in the case of any Bank that is a fund
that invests in bank loans, any other fund that invests in bank loans and is
managed by the same investment advisor of such Bank or by a Lending Affiliate of
such investment advisor or (y) assign all, or if less than all, a portion equal
to at least $5,000,000 in the aggregate for the assigning Bank or assigning
Banks, of such Revolving Loan Commitments (and related outstanding Obligations
hereunder) and/or outstanding principal amount of Term Loans to one or more
Eligible Transferees (treating (x) any fund that invests in bank loans and (y)
any other fund that invests in bank loans and is managed by the same investment
advisor as such fund or by a Lending Affiliate of such investment advisor, as a
single Eligible Transferee), each of which assignees shall become a party to
this Agreement as a Bank by execution of an Assignment and Assumption Agreement
substantially in the form of Exhibit M, provided that (i) at such time Schedule
I shall be deemed modified to reflect the Revolving Loan Commitments and/or
outstanding Term Loans, as the case may be, of such new Bank and of the existing
Banks, (ii) if requested by the assigning Bank or the assignee Bank, upon
surrender of the old Notes (with the Old Notes of the assigning Bank to be
marked "Cancelled") (or the furnishing of a standard indemnity letter from the
respective assigning Bank in respect of any lost Notes reasonably acceptable to
the Borrower), new Notes will be issued, at the Borrower's expense, to such new
Bank and to the assigning Bank, such new Notes to be in conformity with the
requirements of Section 1.05 (with appropriate modifications) to the extent
needed to reflect the revised Revolving Loan Commitments and/or outstanding Term
Loans, as the case may be, (iii) the consent of the Administrative Agent and, so
long as no Event of Default exists, the Borrower shall be required in connection
with any assignment to an Eligible Transferee pursuant to clause (y) of this
Section 13.04(b) (which consent, in each case, shall not be unreasonably
withheld or delayed), (iv) the consent of each Issuing Bank shall be required in
connection with any assignment of Revolving Loan Commitments pursuant to clause
(y) of this Section 13.04(b) (which consent shall not be unreasonably withheld
or delayed) and (v) the Administrative Agent shall receive at the time of each
assignment, from the assigning or assignee Bank, the payment of a non-refundable
assignment fee of $3,500 and, provided further, that such transfer or assignment
will not be effective until recorded by the Administrative Agent on the Register
pursuant to Section 13.14. To the extent of any assignment pursuant to this
Section 13.04(b), the assigning Bank shall be relieved of its obligations
hereunder with respect to its assigned Revolving Loan Commitments and/or
outstanding Term Loans. At the time of each assignment pursuant to this Section
13.04(b) to a Person which is not already a Bank hereunder and which is not a
United States person (as such term is defined in Section 7701(a)(30) of the
Code) for U.S. Federal income tax purposes, the respective assignee Bank shall
provide to the Borrower and the Administrative Agent the appropriate Internal
Revenue Service Forms (and, if applicable, a Section 4.04(b)(ii) Certificate)
described in Section 4.04(b). To the extent that an assignment of all or any
portion of a Bank's Revolving Loan Commitment and outstanding Obligations
pursuant to Section 1.13 or this Section 13.04(b) would, due to circumstances
existing at the time
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of such assignment, result in increased costs under Section 1.10, 1.11, 2.05 or
4.04 from those being charged by the respective assigning Bank prior to such
assignment, then the Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to pay any other increased costs of
the type described above resulting from changes after the date of the respective
assignment). Notwithstanding anything to the contrary contained above, at any
time after the termination of the Total Revolving Loan Commitment, if any
Revolving Loans or Letters of Credit remain outstanding, assignments may be made
as provided above, except that the respective assignment shall be of a portion
of the outstanding Revolving Loans of the respective RC Bank and its
participation in Letters of Credit and its obligation to make Mandatory
Borrowings, although any such assignment effected after the termination of the
Total Revolving Loan Commitment shall not release the assigning RC Bank from its
obligations as a Participant with respect to outstanding Letters of Credit or to
fund its share of any Mandatory Borrowing (although the respective assignee may
agree, as between itself and the respective assigning RC Bank, that it shall be
responsible for such amounts).
(c) Nothing in this Agreement shall prevent or prohibit any Bank or
BTCo from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank and, with
the consent of the Administrative Agent, any Bank which is a fund may pledge all
or any portion of its Notes or Loans to its trustee in support of its
obligations to its trustee. No pledge pursuant to this clause (c) shall release
the transferor Bank from any of its obligations hereunder.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Administrative Agent or any Bank or any holder of any Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between Holdings or the Borrower or any other
Credit Party and the Administrative Agent or any Bank or the holder of any Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Credit Document expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the
Administrative Agent or any Bank or the holder of any Note would otherwise have.
No notice to or demand on any Credit Party in any case shall entitle any Credit
Party to any other or further notice or demand in similar or other circumstances
or constitute a waiver of the rights of the Administrative Agent or any Bank or
the holder of any Note to any other or further action in any circumstances
without notice or demand.
13.06 Payments Pro Rata. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of either Borrower
in respect of any Obligations hereunder, it shall distribute such payment to the
Banks pro rata based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or
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interest on, the Loans, Unpaid Drawings, Commitment Fees or other Fees, of a sum
which with respect to the related sum or sums received by other Banks is in a
greater proportion than the total of such Obligation then owed and due to such
Bank bears to the total of such Obligation then owed and due to all of the Banks
immediately prior to such receipt, then such Bank receiving such excess payment
shall purchase for cash without recourse or warranty from the other Banks an
interest in the Obligations of the respective Credit Party to such Banks in such
amount as shall result in a proportional participation by all the Banks in such
amount; provided that if all or any portion of such excess amount is thereafter
recovered from such Bank, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
13.07 Calculations; Computations. (a) The financial statements to be
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with generally accepted accounting principles in the United States consistently
applied throughout the periods involved (except as set forth in the notes
thereto or as otherwise disclosed in writing by Holdings or the Borrower to the
Banks; it being understood and agreed that notes may be absent in the interim
financial statements). In addition, except as otherwise specifically provided
herein, all computations determining compliance with Sections 4.02 and 8,
including definitions used therein, shall utilize accounting principles and
policies in effect from time to time; provided that if any such accounting
principle or policy shall change after the Effective Date, the Borrower shall
give prompt notice thereof to the Administrative Agent and each of the Banks and
if within 90 days following such notice the Borrower, the Administrative Agent
or the Required Banks shall elect by giving written notice of such election to
the other parties hereto, such computations shall not give effect to such change
unless and until this Agreement shall be amended pursuant to Section 13.12 to
give effect to such change. Notwithstanding the foregoing, (i) to the extent
expressly required pursuant to the provisions of this Agreement, certain
calculations shall be made on a Pro Forma Basis, and (ii) in the case of any
determinations of Consolidated Cash Interest Expense, Consolidated EBITDA and
Consolidated Fixed Charges for any portion of any Test Period which ends prior
to June 30, 2000, all computations determining compliance with Sections 8.08,
8.09 or 8.10 and all determinations of the Leverage Ratio, the Senior Leverage
Ratio, the Interest Coverage Ratio and the Fixed Charge Coverage Ratio shall be
calculated in accordance with the definition of Test Period contained herein.
(b) All computations of interest and Fees hereunder shall be made on
the basis of a year of 360 days (365-366 days in the case of interest on Base
Rate Loans maintained at the Prime Lending Rate) for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest or Fees are payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE
PROVIDED IN THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to
this agreement or any other credit document may be brought in the Courts of the
State of New York or of the United States for the Southern District of New York,
and, by execution and delivery of
122
<PAGE>
this agreement, each of Holdings and the Borrower hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid Courts. Each Credit Party hereby further
irrevocably waives any claim that such courts lack jurisdiction over such Credit
Party, and agrees not to plead or claim, in any legal action or proceeding with
respect to this Agreement or any other Credit Document brought in any of the
aforesaid courts, that any such court lacks jurisdiction over such Credit Party.
Each of Holdings and the Borrower irrevocably consent to the service of process
out of any of the aforementioned Courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
Holdings or the Borrower at its address set forth opposite its signatures below,
such service to become effective 30 days after such mailing. Nothing herein
shall affect the right of the Administrative Agent under this Agreement, any
bank or the holder of any note to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against any Credit
Party in any other jurisdiction.
(b) Each of Holdings and the Borrower hereby irrevocably waive any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other credit document brought in the Courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such Court that any such action or proceeding brought in any
such Court has been brought in an inconvenient forum.
(c) Each of the parties to this Agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this Agreement, the other credit documents or the
transactions contemplated hereby or thereby.
13.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on the
date (the "Effective Date") on which Holdings, the Borrower and each of the
Banks shall have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent at its Notice Office
or, in the case of the Banks, shall have given to the Administrative Agent
telephonic (confirmed in writing), written or facsimile transmission notice
(actually received) in accordance with Section 13.03 at such office that the
same has been signed and mailed to it.
13.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
13.12 Amendment or Waiver. (a) Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit
123
<PAGE>
Parties party thereto and the Required Banks; provided that no such change,
waiver, discharge or termination shall, without the consent of each Bank with
Obligations of the respective types being directly affected thereby: (i) extend
the final scheduled maturity of any Loan or Note or extend the stated maturity
of any Letter of Credit or Unpaid Drawing beyond the Revolving Loan Maturity
Date, or reduce the rate or extend the time of payment of interest or Fees
thereon (except in connection with a waiver of applicability of any post-default
increase in interest rates), or reduce the principal amount thereof; (ii)
release all or any substantial part of the Collateral (except as expressly
provided in the relevant Credit Documents) or any Guarantor or Guaranty (in each
case except as expressly provided in the relevant Credit Documents); (iii)
amend, modify or waive any provision of Section 13.06 or this Section 13.12;
(iv) reduce the percentage specified in, or otherwise modify, the definition of
Required Banks (it being understood that, with the consent of the Required
Banks, extensions of credit pursuant to this Agreement in addition to those set
forth in or contemplated by this Agreement on the Effective Date may be included
in the determination of the Required Banks on substantially the same basis as
the extensions of Term Loans and Revolving Loan Commitments are included on the
Effective Date); or (v) consent to the assignment or transfer by Holdings or the
Borrower of any of its rights and obligations under this Agreement; provided
further, that no such change, waiver, discharge or termination shall: (t)
increase the Commitments of any Bank over the amount thereof then in effect (it
being understood that a waiver of any conditions precedent, covenants, Defaults
or Events of Default or of a mandatory reduction in the Total Commitment or of a
mandatory prepayment shall not constitute an increase of the Commitment of any
Bank, and that an increase in the available portion of any Commitment of any
Bank shall not constitute an increase in the Commitment of such Bank) without
the consent of such Bank; (u)without the consent of the Issuing Bank, amend,
modify or waive any provision of Section 2 or alter its rights or obligations
with respect to Letters of Credit; (v)without the consent of each Agent, amend,
modify or waive any provision of Section 11 or any other provision relating to
the rights or obligations of the Administrative Agent; (w) without the consent
of the Collateral Agent, amend, modify or waive any provision of Section 11 or
any other provision relating to the rights or obligations of the Collateral
Agent; (x) without the consent of the Majority Banks of each Tranche which is
being allocated a lesser prepayment, repayment or commitment reduction as a
result of the actions described below (or without the consent of the Majority
Banks of each Tranche in the case of an amendment to the definition of Majority
Banks), amend the definition of Majority Banks or alter the required application
of any prepayments or repayments (or commitment reductions), as between the
various Tranches, pursuant to Section 4.01 or 4.02 (excluding Sections 4.02(b),
(c) and (d)) (although the Required Banks may waive, in whole or in part, any
such prepayment, repayment or commitment reduction, so long as the application,
as amongst the various Tranches, of any such prepayment, repayment or commitment
reduction which is still required to be made is not altered) or (y) without the
consent of the Majority Banks of the respective Tranche, amend, modify or waive
any Scheduled Repayment of such Tranche.
(b) If, in connection with any proposed change, waiver, discharge or
termination with respect to any of the provisions of this Agreement as
contemplated by clauses (i) through (vi), inclusive, of the first proviso to
Section 13.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the Company shall have the right, to replace each such non-consenting Bank
or Banks (so long as all non-consenting Banks are so replaced) with one or more
Replacement
124
<PAGE>
Banks pursuant to Section 1.13 so long as at the time of such replacement, each
Replacement Bank consents to the proposed change, waiver, discharge or
termination, provided that the Company shall not have the right to replace a
Bank solely as a result of the exercise of such Bank's rights (and the
withholding of any required consent by such Bank) pursuant to the second proviso
to Section 13.12(a).
(c) Notwithstanding anything to the contrary contained above in this
Section 13.12, the Collateral Agent may (i) enter into amendments to the
Subsidiary Guaranty and the Security Documents for the purpose of adding
additional Subsidiaries of Holdings (or other Credit Parties) as parties thereto
and (ii) enter into security documents to satisfy the requirements of Sections
7.11 and 7.14, in each case without the consent of the Required Banks.
13.13 Confidentiality. (a) Subject to the provisions of clause (b)
of this Section 13.13, each Bank agrees that it will use its reasonable efforts
not to disclose without the prior consent of the Company (other than to its
employees, auditors, advisors or counsel or to another Bank if the Bank or such
Bank's holding or parent company in its sole discretion determines that any such
party should have access to such information, provided such Persons shall be
subject to the provisions of this Section 13.13 to the same extent as such Bank)
any information with respect to Holdings or any of its Subsidiaries which is now
or in the future furnished pursuant to this Agreement or any other Credit
Document and which is designated by the Company to the Banks in writing as
confidential or would customarily be treated as confidential in banking
practice, provided that any Bank may disclose any such information (a) as has
become generally available to the public, (b) as may be required or appropriate
in any report, statement or testimony submitted to any municipal, state or
Federal regulatory body having or claiming to have jurisdiction over such Bank
or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors, (c) as may be required or appropriate in respect to any summons or
subpoena or in connection with any litigation, (d) in order to comply with any
law, order, regulation or ruling applicable to such Bank, (e) to the
Administrative Agent or the Collateral Agent and (f) to any prospective or
actual transferee or participant (or its investment advisor) in connection with
any contemplated transfer or participation of any of the Notes or Commitments or
any interest therein by such Bank, provided that such prospective transferee
agrees to maintain the confidentiality contained in this Section.
(b) Each of Holdings and the Borrower hereby acknowledges and agrees
that each Bank may share with any of its Lending Affiliates any information
related to Holdings or any of its Subsidiaries (including, without limitation,
any nonpublic customer information regarding the creditworthiness of Holdings,
the Borrower and their Subsidiaries, provided such Persons shall be subject to
the provisions of this Section 13.13 to the same extent as such Bank).
13.14 Register. The Borrower hereby designates the Administrative
Agent to serve as such Borrower's agent, solely for purposes of this Section
13.14, to maintain a register (the "Register") on which it will record the
Commitments from time to time of each of the Banks, the Loans made by each of
the Banks and each repayment in respect of the principal amount of the Loans of
each Bank. Failure to make any such recordation, or any error in such
recordation, shall not affect the respective Borrower's obligations in respect
of such Loans. With
125
<PAGE>
respect to any Bank, the transfer of the Commitments of such Bank and the rights
to the principal of, and interest on, any Loan made pursuant to such Commitments
shall not be effective until such transfer is recorded on the Register
maintained by the Administrative Agent with respect to ownership of such
Commitments and Loans and prior to such recordation all amounts owing to the
transferor with respect to such Commitments and Loans shall remain owing to the
transferor. The registration of the assignment or transfer of all or part of any
Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
13.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of the
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower jointly and severally agrees to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this Section
13.14 other than those resulting from the Administrative Agent's willful
misconduct or gross negligence.
* * *
126
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
ADDRESS: CONSOLIDATED CONTAINER HOLDINGS
LLC
2515 McKinney Avenue
Suite 850
Lock Box 14 By: /s/ Steven M. Silver
Dallas, Texas 75201 ------------------------------------
Telephone No.: (214) 303-3400 Name: Steven M. Silver
Telecopy No.: (214) 303-3499 Title: Vice President
Attention: Timothy Brasher
with a copy to:
Vestar Packaging LLC
c/o Vestar Capital Partners III, L.P.
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202
Telephone No. (303) 292-6300
Telecopy No. (303) 292-6639
Attention: John R. Woodard
and to:
Reid Plastics Holdings Inc.
c/o Vestar Capital Partners III, L.P.
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202
Telephone No. (303) 292-6300
Telecopy No. (303) 292-6639
Attention: John R. Woodard
127
<PAGE>
ADDRESS: CONSOLIDATED CONTAINER COMPANY
LLC
2515 McKinney Avenue
Suite 850 By: Consolidated Container Holdings LLC,
Lock Box 14 as its Sole Member and Manager
Dallas, Texas 75201
Telephone No.: (214) 303-3400
Telecopy No.: (214) 303-3499 By: /s/ Steven M. Silver
Attention: Timothy Brasher ------------------------------------
Name: Steven M. Silver
Title: Vice President
with a copy to:
Vestar Capital Partners III, L.P.
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202
Telephone No. (303) 292-6300
Telecopy No. (303) 292-6639
Attn: John R. Woodard
and to:
Reid Plastics Holdings Inc.
c/o Vestar Capital Partners III, L.P.
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202
Telephone No. (303) 292-6300
Telecopy No. (303) 292-6639
Attn: John R. Woodard
128
<PAGE>
BANKERS TRUST COMPANY,
Individually and as
Administrative Agent
By: /s/ Patricia Hogan
------------------------------------
Name: Patricia Hogan
Title: Principal
129
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
Individually and as
Documentation Agent
By: /s/ Charles C. O'Brien
------------------------------------
Name: Charles C. O'Brien
Title: Managing Director
130
<PAGE>
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
Individually and as Syndication Agent
By: /s/ James L. Paradise
------------------------------------
Name: James L. Paradise
Title: Senior Vice President
131
<PAGE>
BANCO POPULAR DE PUERTO RICO
By: /s/ Maria Fuentes
------------------------------------
Name: Maria Fuentes
Title: Senior Vice President
By: /s/ John Incandelo
------------------------------------
Name: John Incandelo
Title: Senior Vice President
132
<PAGE>
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By: /s/ Gary Andresen
------------------------------------
Name: Gary Andresen
Title: Associate
By: /s/ Robert M. Biringer
------------------------------------
Name: Robert M. Biringer
Title: Executive Vice President
133
<PAGE>
BANK OF MONTREAL
By: /s/ Monica M. Bonar
------------------------------------
Name: Monica M. Bonar
Title: Director
134
<PAGE>
THE BANK OF NEW YORK
By: /s/ Robert F. Santoriello, Jr.
------------------------------------
Name: Robert F. Santoriello, Jr.
Title: Assistant Vice President
135
<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
------------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan
Operations
136
<PAGE>
BANKBOSTON, N.A.
By: /s/ Esteban A. Arrondo
------------------------------------
Name: Esteban A. Arrondo
Title: Vice President
137
<PAGE>
DG BANK
DEUTSCHE GENOSSENSCHAFTSBANK
AG
By: /s/ Norah McCann
------------------------------------
Name: Norah McCann
Title: Senior Vice President
By: /s/ Lynne McCarthy
------------------------------------
Name: Lynne McCarthy
Title: Assistant Vice President
138
<PAGE>
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN
By: /s/ Anca Trifan
------------------------------------
Name: Anca Trifan
Title: Vice President
By: /s/ John S. Runnion
------------------------------------
Name: John S. Runnion
Title: First Vice President
139
<PAGE>
FLEET NATIONAL BANK
By: /s/ Steve Kalin
------------------------------------
Name: Steve Kalin
Title: Vice President
140
<PAGE>
FIRSTRUST BANK
By: /s/ Kent Nelson
------------------------------------
Name: Kent Nelson
Title: Vice President
141
<PAGE>
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Janet K. Williams
------------------------------------
Name: Janet K. Williams
Title: Duly Authorized Signatory
142
<PAGE>
BAYERESCHE HYPO-UND
VEREINSBANK AG, NEW YORK BRANCH
By: /s/ Erich Ebner v. Eschenbach
------------------------------------
Name: Erich Ebner v. Eschenbach
Title: Managing Director
By: /s/ Steven Simons
------------------------------------
Name: Steven Simons
Title: Associate Director
143
<PAGE>
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: /s/ J. Kenneth Biegen
------------------------------------
Name: J. Kenneth Biegen
Title: Senior Vice President
144
<PAGE>
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By: /s/ Beatrice E. Kossodo
------------------------------------
Name: Beatrice E. Kossodo
Title: Senior Vice President
145
<PAGE>
NATIONAL CITY BANK
By: /s/ Joseph D. Robison
------------------------------------
Name: Joseph D. Robison
Title: Vice President
146
<PAGE>
WEBSTER BANK
By: /s/ Stephen E. Lafex
------------------------------------
Name: Stephen E. Lafex
Title: Assistant Vice President
147
<PAGE>
OAK BROOK BANK
By: /s/ Jeffrey W. Brown
------------------------------------
Name: Jeffrey W. Brown
Title: Vice President
148
<PAGE>
THE GOVERNOR AND COMPANY OF
THE BANK OF IRELAND
By: /s/ Martina Maher
------------------------------------
Name: Martina Maher
Title: Manager
By: /s/ David Ryan
------------------------------------
Name: David Ryan
Title: Manager
149
<PAGE>
THE DAI-ICHI KANGYO BANK, LIMITED
By: /s/ Christopher Fahey
------------------------------------
Name: Christopher Fahey
Title: Vice President
150
<PAGE>
SCHEDULE I
COMMITMENTS
<TABLE>
<CAPTION>
A B C Revolving
Term Loan Term Loan Term Loan Loan
Bank Commitment Commitment Commitment Commitment Total
---- ----------- ---------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C>
Bankers Trust 16,875,000 38,000,000 0 10,125,000 65,000,000
Company
Morgan Guaranty 7,500,000 27,750,000 0 4,500,000 39,750,000
Trust Company of
New York
Donaldson, Lufkin & 7,500,000 27,750,000 0 4,500,000 39,750,000
Jenrette Securities
Corporation
Bank of Montreal 4,687,500 7,500,000 0 2,812,500 15,000,000
Banco Popular de 4,687,500 7,500,000 0 2,812,500 15,000,000
Puerto Rico
Bank Austria 6,250,000 15,000,000 0 3,750,000 25,000,000
Creditanstalt
National City Bank 6,875,000 4,000,000 0 4,125,000 15,000,000
Mitsubishi Trust and 7,812,500 12,500,000 0 4,687,500 25,000,000
Banking
IBJ, Ltd. 7,812,500 12,500,000 0 4,687,500 25,000,000
Webster 6,250,000 0 0 3,750,000 10,000,000
Hypoverinsbank 5,468,750 16,250,000 0 3,281,250 25,000,000
DG Bank 4,687,500 7,500,000 0 2,812,500 15,000,000
Bank of Nova Scotia 7,812,500 12,500,000 0 4,687,500 25,000,000
Bank of New York 4,687,500 7,500,000 0 2,812,500 15,000,000
GECC 2,343,750 11,250,000 0 1,406,250 15,000,000
First Trust 6,250,000 0 0 3,750,000 10,000,000
Erste Bank 6,250,000 5,000,000 0 3,750,000 15,000,000
DKB 4,687,500 7,500,000 0 2,812,500 15,000,000
</TABLE>
<TABLE>
<CAPTION>
A B C Revolving
Term Loan Term Loan Term Loan Loan
Bank Commitment Commitment Commitment Commitment Total
---- ---------- ---------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
2
<TABLE>
<S> <C> <C> <C> <C> <C>
Fleet Bank, N.A 9,375,000 0 0 5,625,000 15,000,000
Bank Boston 8,125,000 15,000,000 0 4,875,000 28,000,000
Bank of Ireland 9,375,000 0 0 5,625,000 15,000,000
Oak Brook Bank 4,687,500 0 0 2,812,500 7,500,000
Total $150,000,000 $235,000,000 $ 0 $ 90,000,000 $475,000,000
</TABLE>
<PAGE>
3
SCHEDULE II
BANK ADDRESSES
Banco Popular de Puerta Rico
209 Munoz Rivera Avenue
Hato Rey, PR 00918
Attn: Hector Vina 787-759-8119
Fax 787-756-3909
Bank Austria Creditanstalt
Two Ravinia Drive
Suite 1680
Atlanta, GA 30346
Attn: Gary Andresen 770-390-1850
Robert Biringer 770-390-1850
Fax 770-390-1851
Bank of Ireland
La Touche House
International Fin'l Services Centre
Custom House Docks,
Dublin 1
Attn: Martina Maher 353-1-670-1400
Fax 353-1-829-0129
Bank of Montreal
430 Park Avenue
New York, NY 10022
Attn: Richard McClarey 212-605-1444
Fax 212-605-1455
Bank of New York
One Wall Street
18th Floor
New York, NY 10286
Attn: Ron Reedy 212-635-6724
Fax 212-635-6434
Bank of Nova Scotia
1100 Louisiana Street
Suite 3000
Houston, TX 77002
Attn: Greg George 713-752 3430
<PAGE>
4
Fax 713-752-2425
BankBoston
100 Federal Street
Boston, MA 02110
Attn: Esteban Orrando 617-434-8976
Fax 617-434-1574
Bankers Trust Company
130 Libert
130 Liberty Street
New York, New York 10006
Attn: Patsy Hogan 212-250-5175
Fax 212-250-7218
DG Bank
609 Fifth Avenue
New York, NY 10017
Attn: Sabine Wendt 212-745-1559
Fax 212-745-1556
DKB
One World Trade Center
Suite 4911
New York, NY 10048
Attn: Christopher Fahey 212-432-6648
Fax 212-488-8955
Donaldson, Lufkin & Jenrette
277 Park Avenue
New York, NY 10172
Attn: James L. Paradise 212-892-3000
Fax 212-892-7272
Erste Bank
280 Park Ave.
New York, NY 10017
Attn: Anca Trifan 212-984-5631
Fax 212-984-5627
<PAGE>
5
Fleet National Bank, NA
Large Corporate Group
One Federal Street, 7th Floor
Boston, MA 02110
Attn: Steve Kalin 617-346-0877
Fax 617-346-0145
First National Bank of Maryland
25 South Charles Street
Mail Code: 101-501
Baltimore, MD 21201
Attn: Thomas P. McLoughlin 410-244-4906
Fax 410-244-4295
GE Capital Corp.
201 High Ridge Road
Stamford, CT 06927
Attn: Account Manager - Consolidated 203-708-1090
Consolidated Container fax 203-316-7978
Hypoverinsbank
150 East 42nd Street
39th Floor
New York, NY 10017
Attn: Erich Eibner 212-672-5778
Fax 212-672-5528
IBJ, Ltd.
1251 Avenue of The Americas
New York, NY 10020-1104
Attn: Ken Takehisa 212-282-3321
Fax 212-282-4490
Mitsubishi Trust and Banking
520 Madison Avenue
26th Floor
New York, NY 10022
Attn: Beatrice Kossodo 212-891-8363
Fax 212-644-6825
Morgan Guaranty Trust Co.
60 Wall Street
New York, NY 10260
Attn: Tim Broadbent 212-648-0883
Fax 212-648-5016
<PAGE>
6
National City Bank
1900 East Ninth Street
Cleveland, OH 44114
Attn: Joe Robison 216-575-9254
Fax 216-575-9396
Oak Brook Bank
1400 16th Street
Oak Brook, IL 60523
Attn: Henry Wessel 630-571-01050 x224
Fax 630-571-0256
Webster Bank
CitiPlace II
185 Asylum Street
3rd Floor
Hartford, CT 06103-3494
Attn: Steve Lefex
Fax 860-692-1455
<PAGE>
7
SCHEDULE III
CONSOLIDATED CONTAINER COMPANY LLC
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL PROJECTED
POST-CLOSING POST-CLOSING POST-CLOSING POST-CLOSING
LINE OF COVERAGE PREMIUM EXPOSURE LIMIT RETENTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WORKERS' Payment Part I - Workers' Compensation o Nil
COMPENSATION ------- ------------------------------
6/30/99 - 3/1/00 Statutory
o 111,202,684
o 8,311,982 Memo. Part II - Employers' Liability
------------ ------------------------------
Premium (All States except 2,451,097 o 20,064,596 o 8,000,000 per __________
Maine) 86,002 o 1,000,000 policy limit
Est. Taxes and Assessments 41,629 Maine disease
Maine ----- o 1,000,000 an employee
o 991,968 disease
o 121,006,564 Total
- ----------------------------------------------
Est. Annual Premium 2,580,328
- -----------------------------------------------------------------------------------------------------------------------------------
EXCESS WORKERS' Payroll
COMPENSATION -------
MONOPOLISTIC FUND TBD o 9,928,620 WA & CH TBD TBD
- ----------------------------------------------
Est. Annual Premium 0
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
ANNUAL
POST-CLOSING
LINE OF COVERAGE PREMIUM COMMENTS CARRIER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WORKERS' o AIG is non licenses to write AIG
COMPENSATION workers compensation in Maine
6/30/99 - 3/1/00 Program contemplates separate
Maine placement
o Post-closing taxes and
Premium (All States except 2,451,097 assessments are estimated
Maine) 86,002 amounts
Est. Taxes and Assessments 41,629
Maine
- ----------------------------------------------
Est. Annual Premium 2,580,328
- ------------------------------------------------------------------------------------------------------------
EXCESS WORKERS'
COMPENSATION
MONOPOLISTIC FUND TBD o Coverage placed directly by WA State
Reid Fund
In the same fund for WA TBD
o ___ and WV placed directly
with state funds
- ----------------------------------------------
Est. Annual Premium 0
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
8
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL PROJECTED
POST-CLOSING POST-CLOSING POST-CLOSING POST-CLOSING
LINE OF COVERAGE PREMIUM EXPOSURE LIMIT RETENTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GENERAL/PRODUCTS Gross Domestic Sales
LIABILITY --------------------
6/30/99 - 3/1/00 111,696 o 716,000,000 o 3,000,000 Gen. Agg o Nil
o 2,000,000 Prod/Ops Agg
o 3,000,000 Pa. Occ o 1,000 BBL
o 1,000,000 PI/Adv
o 1,000,000 Fire Dam. Legal
o 10,000 Med Pay
o 1,000,000 EBL (Claims
Made)
o 1,000,000 Stop Gap
- ----------------------------------------------
Est. Annual Premium 111,696
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
ANNUAL
POST-CLOSING
LINE OF COVERAGE PREMIUM COMMENTS CARRIER
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GENERAL/PRODUCTS AIG
LIABILITY
6/30/99 - 3/1/00 111,696 o Includes Canada and Puerto
Rico
o 6/30/99 binding date
- ----------------------------------------------
Est. Annual Premium 111,696
- -------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
9
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL PROJECTED
POST-CLOSING POST-CLOSING POST-CLOSING POST-CLOSING
LINE OF COVERAGE PREMIUM EXPOSURE LIMIT RETENTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUTOMOBILE Power Units Liability
LIABILITY/PHYSICAL ----------- ---------
DAMAGE 100,602 o 41 PP o 1,000,000 CSL o Nil
6/30/99 - 3/1/00 o 40 Traction o 1,000,000 UM/UBM
----------- o 10,000 Med Pay Physical Damage
o 81 Total ---------------
o 500 Comp
o 500 Coll
o 391 Trailers
- ----------------------------------------------
Est. Annual Premium 100,602
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CASUALTY 2,792,626
- -----------------------------------------------------------------------------------------------------------------------------------
UMBRELLA LIABILITY Gross Sales
6/30/99 - 3/1/00 -----------
45,000 o 716,000,000 o 50,000,000 occ/agg o 10,000 SIR
- ----------------------------------------------
Est. Annual Premium 45,000
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
ANNUAL
POST-CLOSING
LINE OF COVERAGE PREMIUM COMMENTS CARRIER
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUTOMOBILE AIG
LIABILITY/PHYSICAL
DAMAGE 100,602 o 6/30/99 binding date
6/30/99 - 3/1/00
- ----------------------------------------------
Est. Annual Premium 100,602
- --------------------------------------------------------------------------------------------------------------
TOTAL CASUALTY 2,792,626
- --------------------------------------------------------------------------------------------------------------
UMBRELLA LIABILITY
6/30/99 - 3/1/00
45,000 o Coverage Excess of Primary AIG
______ (EL, GL, Auto Liab,
Foreign DIC & Foreign Vol.
EL)
o Optional Limits
---------------
$25 mm = $18,750 AP
o $45,000 minimum for
combined entities
- ----------------------------------------------
Est. Annual Premium 45,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
10
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL PROJECTED
POST-CLOSING POST-CLOSING POST-CLOSING POST-CLOSING
LINE OF COVERAGE PREMIUM EXPOSURE LIMIT RETENTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PROPERTY o 129,902,394 Bldg. All Risk incl BI/EL All Risk incl BI/BE
7/1/99 - 3/1/00 387,813 o 226,159,534 Stock ------------------- -------------------
o 175,761,152 BI/BE o 1,000,000,000 per o 5,000
o 72,565,888 M&E occurrence Flood/EQ
--------
o 25,000
Cal EQ
------
o 5% TIV per location
---------------- Major Sublimits o 25,000 min.
o 604,388,968 TIV --------------- o 2,500,000 max.
o 300,000,000 Flood Ann Agg Windstorm - FL
o 100,000,000 EQ Ann Agg --------------
o 10,000,000 CA EQ Ann/Agg o 2% of TIV
o 133,856,060 CATIV o 100,000,000 Cont. BI/BE o 50,000 min
Domestic
o 50,000,000 Cont. BI/BE Tran/EDP
Foreign ----------
o 250,000 Pollution/ Contam. o 2,500
Cleanup Ann Agg
Service Interruption
--------------------
o 12 Hours
- ----------------------------------------------
Est. Annual Premium 387,813
- -----------------------------------------------------------------------------------------------------------------------------------
BOILER & MACHINERY 100,000,000 Domestic
7/1/99 - 3/1/00 o Included in Property 25,000,000 Foreign o 10,000 Property
Sublimits Damage
---------
Included 1,000,000 EP
1,000,000 Haz Sub o 24 Hrs Time Elem.
1,000,000 Water Damage o 24 Hrs. Service
1,000,000 Ammonia Int
- ----------------------------------------------
Est. Annual Premium 0
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTY 387,813
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
ANNUAL
POST-CLOSING
LINE OF COVERAGE PREMIUM COMMENTS CARRIER
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PROPERTY Lexington
7/1/99 - 3/1/00 387,813 and Others
o CA EQ Limit Options:
$40 mm: $30,000 add'l
premium
$60 ma: $60,000 add'l premium
$80 mm: $90,000 add'l premium
o Y2K Exclusion
o Premium quoted subject to:
- receipt of favorable loss
history
- COPE information
_________: ________-up
concrete, built 1975, 2 stories
and light industrial
- ----------------------------------------------
Est. Annual Premium 387,813
- ---------------------------------------------------------------------------------------------------
BOILER & MACHINERY Travelers
7/1/99 - 3/1/00 o Y2K Exclusion
o Pollution & Asbestos _____
Included
- ----------------------------------------------
Est. Annual Premium 0
- --------------------------------------------------------------------------------------------------------------
TOTAL PROPERTY 387,813
- --------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
11
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL PROJECTED
POST-CLOSING POST-CLOSING POST-CLOSING POST-CLOSING
LINE OF COVERAGE PREMIUM EXPOSURE LIMIT RETENTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN LOCAL
(3/1/99 - 3/1/00) 5,104 o 4,004,105 TIV o 360,000 Bldg. All Risk
o 2,039,105 Contents --------
o 1,605,000 BI o 5,000
BI
--
o 3 Days
- ----------------------------------------------
Est. Annual Premium 5,104
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN EXCESS/DIC Property Property
(3/1/99 - 3/1/00) -------- --------
o 4,004,305 TIV o 4,010,000 Blanket o 25,000
11,493 Major Sub
---------------
Sales o 1,000,000 EQ/Flood
----- o 250,000 Transit
o 1,862,060 o 100,000 MUL
General Liability
-----------------
o 5,000,000 Gen Agg
o 1,000,000 Prod/Ops Agg
o 1,000,000 Bs. Occ
o 1,000,000 PI/Adv
o 1,000,000 Fire Dam. Legal
o 10,000 Med Pay/Person
o 20,000 Med Pay/Accident
Anin Liability
--------------
o 1,000,000 CSL
o 10,000 Med Pay
WC & EL
-------
o Statutory Coverage A
o 1,000,000 EL
o 1,000,000 EBL
o 250,000 Repatriation
- ----------------------------------------------
Est. Annual Premium 11,493
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
ANNUAL
POST-CLOSING
LINE OF COVERAGE PREMIUM COMMENTS CARRIER
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOREIGN LOCAL Segaros
(3/1/99 - 3/1/00) 5,104 o No change - Suiza has no assets
in Mexico
- ----------------------------------------------
Est. Annual Premium 5,104
- --------------------------------------------------------------------------------------------------------------
FOREIGN EXCESS/DIC CNA
(3/1/99 - 3/1/00)
o No change - Suiza has no
11,493 operations outside U.S., Canada
and Puerto Rico
- ----------------------------------------------
Est. Annual Premium 11,493
- --------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
12
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL PROJECTED
POST-CLOSING POST-CLOSING POST-CLOSING POST-CLOSING
LINE OF COVERAGE PREMIUM EXPOSURE LIMIT RETENTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DIRECTORS & OFFICERS Corporate Assets Coverage A
LIABILITY 2 Year Premium ---------------- ----------
7/1/99 - 3/1/01 -------------- o 832,000,000 o 10,000,000 Es/Agg o 0 Ind. D&O
165,000
Annual Premium
-------------- o As part of Vestar Portfolio
82,500 CCC may have access to Coverage B
additional limits at ----------
expiration of term. o 150,000 Corp.
Indem
o 150,000 SEC Claims
- ----------------------------------------------
Est. Annual Premium 82,500
- -----------------------------------------------------------------------------------------------------------------------------------
EMPLOYMENT PRACTICES No. of Employees
LIABILITY ----------------
3/1/99 - 3/1/00 3 Year Premium 4,800 o 5,000,000 Be/Agg o 200,000 - Wrongful
-------------- Act
220,550
Annual Premium
--------------
73,587
- ----------------------------------------------
Est. Annual Premium 73,587
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
ANNUAL
POST-CLOSING
LINE OF COVERAGE PREMIUM COMMENTS CARRIER
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DIRECTORS & OFFICERS AIG
LIABILITY 2 Year Premium o Expires 3/1/2001 with Vestar Gulf
7/1/99 - 3/1/01 -------------- Portfolio Reliance
165,000 St. Paul
Annual Premium CNA
-------------- o EPLI Excluded
82,500 o Claims Made Form
- ----------------------------------------------
Est. Annual Premium 82,500
- -------------------------------------------------------------------------------------------------------------
EMPLOYMENT PRACTICES AIG
LIABILITY
3/1/99 - 3/1/00 3 Year Premium o No prior acts coverage for Suiza
-------------- EPL1 claims. Can purchase run-
220,550 off for this exposure
Annual Premium o Effective 7/1/99 - increased
-------------- limit to $5M for AP of
73,587 $123,150 ($110,000 pro-rata)
o Claims Made Form
- ----------------------------------------------
Est. Annual Premium 73,587
- -------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
13
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL PROJECTED
POST-CLOSING POST-CLOSING POST-CLOSING POST-CLOSING
LINE OF COVERAGE PREMIUM EXPOSURE LIMIT RETENTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIDUCIARY Plan Assets
3/10/99 - 3/10/00 14,350 -----------
TBD o 1,000,000 Ann/Agg o 10,000 Es claim
- ----------------------------------------------
Est. Annual Premium 14,350
- -----------------------------------------------------------------------------------------------------------------------------------
CRIME No. of Employees
3/10/99 - 3/10/00 ----------------
14,734 4,800 o 1,000,000 Employee o 5,000 Per Claim
Dishonesty
o 1,000,000 Loss Inside Prem.
o 1,000,000 Loss Outside
Prem.
o 1,000,000 Money Orders/
Counterfeit Currency
o 1,000,000 Depositors
Forgery
o 1,000,000 Computer Fraud
o 1,000,000 Credit Card
- ----------------------------------------------
Est. Annual Premium 14,734
- -----------------------------------------------------------------------------------------------------------------------------------
NON-OWNED AVIATION No. of Aircraft
7/1/99 - 7/1/00 ---------------
4,000 o N/A o 5,000,000 o NIL
- ----------------------------------------------
Est. Annual Premium 4,000
- -----------------------------------------------------------------------------------------------------------------------------------
SERVICE FEE
SuIza Packaging 50,000
- ----------------------------------------------
Est. Annual Premium 50,000
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
ANNUAL
POST-CLOSING
LINE OF COVERAGE PREMIUM COMMENTS CARRIER
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIDUCIARY AIG
3/10/99 - 3/10/00 14,350
- ----------------------------------------------
Est. Annual Premium 14,350
- -------------------------------------------------------------------------------------------------------------
CRIME Zurich
3/10/99 - 3/10/00
14,734
- ----------------------------------------------
Est. Annual Premium 14,734
- -------------------------------------------------------------------------------------------------------------
NON-OWNED AVIATION CIGNA
7/1/99 - 7/1/00
4,000 o CCC will not have any aircraft
- ----------------------------------------------
Est. Annual Premium 4,000
- -------------------------------------------------------------------------------------------------------------
SERVICE FEE
SuIza Packaging 50,000
- ----------------------------------------------
Est. Annual Premium 50,000
- -------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
14
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL PROJECTED
POST-CLOSING POST-CLOSING POST-CLOSING POST-CLOSING
LINE OF COVERAGE PREMIUM EXPOSURE LIMIT RETENTION
- -----------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------------------------------
GRANT TOTAL 3,481,137
- -----------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
ANNUAL
POST-CLOSING
LINE OF COVERAGE PREMIUM COMMENTS CARRIER
- -----------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------
GRANT TOTAL 3,481,137
- ----------------------------------------------
</TABLE>
14
<PAGE>
15
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL PROJECTED
POST-CLOSING POST-CLOSING POST-CLOSING POST-CLOSING
LINE OF COVERAGE PREMIUM EXPOSURE LIMIT RETENTION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADDITIONAL COVERAGE OPTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
DIRECTORS AND OFFICERS o N/A o $10,000,000 Occ/Agg Coverage A
LIABILITY RUN-OFF (6 year terms) ----------
Six-Years o $0 Ind. D&O
---------
65,000
Coverage B
----------
o $150,000 Corp
Indem
$150,000 SEC
Claims
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Premium 65,000
- ----------------------------------------------
TOTAL ADDITIONAL
COVERAGE 65,000
- ----------------------------------------------
GRAND TOTAL 3,546,137
- ----------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
ANNUAL
POST-CLOSING
LINE OF COVERAGE PREMIUM COMMENTS CARRIER
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ADDITIONAL COVERAGE OPTIONS
- --------------------------------------------------------------------------------------------------------------
DIRECTORS AND OFFICERS o Covers Reid Plastics Holdings AIG
LIABILITY RUN-OFF only
Six-Years
---------
65,000
- -------------------------------------------------------------------------------------
Annual Premium 65,000
- ----------------------------------------------
TOTAL ADDITIONAL
COVERAGE 65,000
- ----------------------------------------------
GRAND TOTAL 3,546,137
- ----------------------------------------------
</TABLE>
15
<PAGE>
16
SCHEDULE IV
REID PLASTICS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
(dollars in thousands)
<TABLE>
<CAPTION>
1997 1998
(Successor) (Successor
----------- -----------
<S> <C> <C>
ASSETS (Note 10)
CURRENT ASSETS:
Cash and cash equivalents (Note 2) ........................................ $ 4,437 $ 5,408
Accounts receivable, net of allowance for doubtful accounts of $1,366 and
$1,689 (Note 2) ......................................................... 20,531 17,143
Inventories (Notes 2 and 5) ............................................... 12,891 10,001
Prepaid expenses .......................................................... 903 2,364
Other receivables ......................................................... 971 2,924
Income taxes receivable (Notes 2 and 12) .................................. 2,660 1,135
Deferred income taxes (Notes 2 and 12) .................................... 7,822 7,810
--------- ---------
Total current assets .................................................... 50,215 46,785
PROPERTY AND EQUIPMENT--Net (Notes 2 and 6) ................................. 57,340 55,416
GOODWILL--Net of accumulated amortization of $3,517 and $653 (Notes 1
and 2) ...................................................................... 118,388 112,665
FINANCING COSTS AND OTHER INTANGIBLE ASSETS--Net of
accumulated amortization of $941 and $393 (Notes 1, 2 and 10) ............. 7,638 4,164
OTHER ASSETS (Note 7) ....................................................... 1,783 846
--------- ---------
TOTAL ....................................................................... $ 235,364 $ 219,876
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .......................................................... $ 16,665 $ 11,284
Accrued liabilities (Note 8) .............................................. 10,320 12,411
Current portion of long-term debt (Note 10) ............................... 2,633 9,046
--------- ---------
Total current liabilities ............................................... 29,618 32,741
DEFERRED INCOME TAXES (Notes 2 and 12) ...................................... 7,822 7,810
REVOLVING LINE OF CREDIT (Note 10) .......................................... 23,500 23,500
LONG-TERM DEBT (Note 10) .................................................... 97,800 88,954
OTHER LIABILITIES (Note 9) .................................................. 21,493 14,948
MINORITY INTEREST (Note 2) .................................................. 623 677
COMMITMENTS (Note 11)
SHAREHOLDERS' EQUITY:
Preferred stock, no par value; 100,000 shares authorized; no shares issued or
outstanding
Common stock, Class A, no par value; 500,000 shares authorized; 14,500
shares issued and outstanding ........................................... 58,293 55,293
Common stock, Class B, no par value; 500,000 shares authorized; no shares
issued or outstanding
Accumulated deficit ......................................................... (3,873) (3,507)
Foreign currency translation adjustment (Note 2) ............................ 88 (540)
--------- ---------
Total shareholders' equity .............................................. 54,508 51,246
--------- ---------
TOTAL ....................................................................... $ 235,364 $ 219,876
========= =========
</TABLE>
16
<PAGE>
17
See notes to consolidated financial statements.
17
<PAGE>
18
REID PLASTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(dollars in thousands)
<TABLE>
<CAPTION>
Period From Period From
January 1, October 15,
1997 1997
Year Ended Through Through Year Ended
December 31, October 14, December 31, December 31,
1996 1997 1997 1998
(Predecessor) (Predecessor) (Successor) (Successor)
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES ...................................... $ 136,573 $ 164,750 $ 33,236 $ 175,134
COST OF SALES .................................. 116,328 144,520 31,832 144,712
--------- --------- --------- ---------
GROSS PROFIT ................................... 20,245 20,230 1,404 30,422
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ...................... (13,261) (14,072) (3,439) (18,016)
NONRECURRING CHARGES (Notes 8 and
9) (9,162)
INTEREST EXPENSE--Net .......................... (4,849) (6,337) (1,909) (10,497)
OTHER INCOME ................................... 628 624 27 1,347
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES .............. 2,763 (8,717) (3,917) 3,256
INCOME TAX (EXPENSE) BENEFIT (Notes
2 and 12) .................................... (2,245) 1,199 105 (2,836)
MINORITY INTEREST IN NET INCOME OF
SUBSIDIARIES ................................. (124) (285) (61) (54)
--------- --------- --------- ---------
NET INCOME (LOSS) .............................. 394 (7,803) (3,873) 366
OTHER COMPREHENSIVE (LOSS)
INCOME--Foreign currency translation
adjustment ................................... (94) (7) 88 (628)
--------- --------- --------- ---------
COMPREHENSIVE (LOSS) INCOME .................... $ 300 $ (7,810) $ (3,785) $ (262)
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
18
<PAGE>
19
REID PLASTICS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands)
<TABLE>
<CAPTION>
Foreign
Currency
Common Accumulated Translation
Stock Deficit Adjustment Total
--------------- ------------------ --------------------- -----------
<S> <C> <C> <C> <C>
PERIOD FROM JANUARY 1, 1996 THROUGH
OCTOBER 14, 1997 (Predecessor)
BALANCE, JANUARY 1, 1996 ............................. $ 20,132 $ (231) $ (2) $ 19,899
Net income ......................................... 394 394
Dividends paid ..................................... (353) (353)
Foreign currency translation adjustment ............ (94) (94)
----------- -------- -------- --------
BALANCE, DECEMBER 31, 1996 ........................... 20,132 (190) (96) 19,846
Net loss ........................................... (7,803) (7,803)
Dividends paid ..................................... (257) (257)
Foreign currency translation adjustment ............ (7) (7)
----------- -------- -------- --------
BALANCE, OCTOBER 14, 1997 ............................ $ 20,132 $ (8,250) $ (103) $ 11,779
=========== ======== ======== ========
PERIOD FROM OCTOBER 15, 1997 THROUGH
DECEMBER 31, 1998 (Successor)
NEW CAPITALIZATION, OCTOBER 15, 1997 ............... $ 58,293 $ -- $ -- $ 58,293
Net loss ........................................... (3,873) (3,873)
Foreign currency translation adjustment ............ 88 88
----------- -------- -------- --------
BALANCE, DECEMBER 31, 1997 ......................... 58,293 (3,873) 88 54,508
Net income ......................................... 366
Escrow payments returned to shareholders (Note 1) .. (3,000) 366 (3,000)
Foreign currency translation adjustment ............ (628) (628)
----------- -------- -------- --------
BALANCE, DECEMBER 31, 1998 ......................... $ 55,293 $ (3,507) $ (540) $ 51,246
=========== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
19
<PAGE>
20
REID PLASTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Period From Period From
January 1, October 15,
1997 1997
Year Ended Through Through Year Ended
December 31, October 14, December 31, December 31,
1996 1997 1997 1998
(Predecessor) (Predecessor) (Successor) (Successor)
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................... $ 394 $(7,803) $(3,873) $ 366
Adjustment to reconcile net income (loss) to net cash
provided by operating activities:
Minority interest .................................... 124
Depreciation and amortization ........................ 7,673 12,620 4,121 15,918
Provision for bad debts .............................. 462
Loss on disposal of assets ........................... 6
Deferred income taxes ................................ 517
Changes in operating assets and liabilities:
Accounts receivable ................................ 757 (4,002) 1,859 3,040
Inventories ........................................ (6,496) 8,338 (1,044) 2,506
Prepaid expenses ................................... 75 (531) 637 (2,218)
Other receivables .................................. (2,720) 2,712 1,193 (2,253)
Other assets and management contracts .............. (1,518) 674 (58)
Accounts payable ................................... 10,251 (8,987) (1,339) (5,381)
Accrued liabilities ................................ (225) 869 (4,182) (591)
Other liabilities .................................. 5,864 811 319
Income taxes and other ............................. (2,069) 2,824 (297)
-------- -------- -------- --------
Net cash provided by operating activities ........ 10,818 5,493 1,681 11,351
-------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................. (5,864) (9,313) (4,785) (12,708)
Proceeds from disposal of property and equipment ..... 93 801 280 1,651
Cash paid for acquisitions ........................... (37,680)
Translation adjustment ............................... (94)
Other assets ......................................... 298
-------- -------- -------- --------
Net cash used in investing activities ............ (43,247) (8,512) (4,505) (11,057)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from revolving line of credit ........... 3,856 2,500 7,000 --
Borrowing under notes payable to banks ............... 36,143 27,000
Principal payments on notes payable to banks ......... (3,612) (10,608) (647)
Payments on other notes payable and capital leases ... (442) (1,570) (4,662) (1,709)
Payment of deferred financing costs and other
acquisition costs .................................. (3,768) (8,328) (867)
Issuance of new common stock ......................... 60,000
Repurchase of old common stock ....................... (35,139)
Escrow deposits ...................................... (7,000) 4,000
Redemption of senior preferred stock ................. (18,421)
Redemption of Series A preferred stock ............... (1,769)
Dividends paid ....................................... (353) (257)
Payments on noncompete agreements .................... (1,516) (100)
Other liabilities .................................... (89)
-------- -------- -------- --------
Net cash provided by (used in) financing activities 35,347 (2,939) 6,557 677
-------- -------- -------- --------
</TABLE>
20
<PAGE>
21
<TABLE>
<CAPTION>
Period From Period From
January 1, October 15,
1997 1997
Year Ended Through Through Year Ended
December 31, October 14, December 31, December 31,
1996 1997 1997 1998
(Predecessor) (Predecessor) (Successor) (Successor)
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ..................................... 2,918 (5,958) 3,733 971
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD .......................................... 3,744 6,662 704 4,437
------- ------- ------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD .......... $ 6,662 $ 704 $ 4,437 $ 5,408
======= ======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for interest .................. $ 5,770 $ 6,299 $ 1,763 $10,664
======= ======= ======= =======
Net cash (received) paid during the year for income
taxes ................................................... $ 1,866 $ 1,420 $ 215 (41)
======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
21
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
1. ACQUISITION
On October 15, 1997, an investment group led by Vestar Reid LLC ("Vestar")
acquired 12,000 newly issued shares, representing 83% of the new common stock of
Reid Plastics Holdings, Inc. ("Holdings"), the parent company of Reid
Intermediate Holdings, Inc. ("RIH") and its wholly owned subsidiary, Reid
Plastics, Inc. ("Reid" or the "Company") for $60,000,000. Continuing
shareholders exchanged old Holdings common stock for new Holdings common stock,
thereby retaining 2,500 shares, or 17%, of Holdings.
Holdings utilized the $60,000,000 invested cash plus a $27,000,000 new
loan facility (Tranche C, see Note 10) to repurchase and retire 100% of its
existing (old) Class A common stock, as well as to repay a portion ($10,608,000)
of an existing loan facility (Tranche A).
The acquisition also resulted in the following redemptions:
o 1,842.15 shares of senior preferred stock (RIH) were redeemed, and
outstanding dividends were paid totaling $18,421,000.
o 1,725.095 shares of Series A preferred stock (Holdings) were
redeemed, and outstanding dividends were paid totaling $1,769,000.
o 1 share of special voting preferred stock (Holdings) was redeemed.
o 10,466.2 shares of Class A common stock (Holdings) were repurchased
for $18,165,000 (including escrow deposits).
o Stock purchase warrants were exercised for 7,636.3636 and 545.4545
shares of Holdings Class A common stock and immediately repurchased
for $23,974,000 (including escrow deposits).
o A warrant to purchase 3.098 shares of RIH common stock was canceled.
o Holdings' and Reid's notes payable to shareholders (including
accrued interest) were repaid for $3,271,000 and $564,000,
respectively.
Additionally, Holdings entered into a five-year noncompete agreement with
a management shareholder, which resulted in a payment of $1,516,000 at October
15, 1997, and subsequent payments totaling $6,394,000 not to exceed $2,000,000
in any fiscal year. These payments included imputed interest calculated at
11.15%, and the present value of such payments ($6,516,000) was included in
other intangible assets in the accompanying balance sheet at December 31, 1997.
During 1998, the noncompete agreement was revised to guarantee payments totaling
$400,000 per year for five years. Accordingly, the liability recorded in 1997 of
$5,000,000 was reduced during 1998 to $2,000,000 (see Note 9), with a
corresponding reduction in the related intangible asset. In addition, a
nonguaranteed portion of up to $4,760,000 will be paid based on the valuation of
Holdings during future ownership changes. No amount has been accrued for
potential nonguaranteed payments.
In October 1997, $7,000,000 of the $60,000,000 Vestar investment was
placed into escrow accounts for the benefit of the selling shareholders. In
accordance with the finalization of the purchase price, $4,000,000 was released
to Holdings during 1998, and the balance of $3,000,000 was returned to Vestar.
Immediately after the acquisition, Reid was merged into RIH, and RIH was
renamed Reid Plastics, Inc.
22
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Inasmuch as a significant majority of Holdings' common stock was acquired
by a new controlling shareholder (Vestar), and Holdings has no operations other
than its investment in Reid, management has elected to "push down" the new basis
of accounting in the accompanying financial statements. Accordingly, Holdings'
shareholders' equity (as of December 31, 1998) comprises Vestar's $57,000,000
net investment less the carryover 17% interest in the historical shareholders'
capital deficiency as of October 14, 1997 (or $1,707,000).
The acquisition was accounted for using the purchase method. The 1997
financial statements reflect the preliminary allocation of purchase price based
on the completion of certain appraisals. During 1998, the Company finalized the
purchase price allocation and reduced goodwill by $2,859,000. The excess of
purchase price over the fair value of the net assets was $116,182,000, which has
been recorded as goodwill and is being amortized on a straight-line basis over
40 years.
On October 14, 1997, the Company recorded a nonrecurring charge of
$9,162,000 representing a provision for loss on closed facilities subject to
operating leases. This loss related to the closure of a manufacturing facility,
a warehouse and an administrative facility in Southern California and a
warehouse in Northern California. These facilities were consolidated in order to
make more efficient use of leased facilities. As a result of these
consolidations, approximately 148,000 square feet of leased facilities were
closed and consolidated into neighboring facilities.
In connection with the October 1997 acquisition, the Company began
formulating a restructuring plan to improve its competitive position through
expense reduction by streamlining operations. The Company accrued the estimated
cost associated with this restructuring plan in connection with the recording of
the acquisition under the purchase method. The components of the restructuring
charges were primarily closed facilities subject to operating leases;
severances; unfavorable leases and contracts; legal, underwriting and other
direct transaction costs. During 1998, the Company finalized its plan and
purchase accounting entries.
The provision for closed facilities subject to operating leases reflected
in the allocation of purchase price included the closure of manufacturing
facilities in Northern California, New Jersey and Canada. As a result of these
consolidations, approximately 90,000 square feet of additional leased facilities
were closed and consolidated into neighboring facilities.
The Company expected staff reductions related to the restructuring plan of
approximately 73 employees. During 1998, all but four of the employee
separations had occurred under this plan. The four remaining employee
separations are planned to be completed during the first half of 1999.
Reconciliations of the restructuring and transaction-related expenses and
accrual activity during 1997 and 1998 were as follows:
<TABLE>
<CAPTION>
1997 1997 1997 1997 December 31,
Nonrecurring Purchase Total Charged 1997,
Expense Accrual Accrual to Accrual Balance
-------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
(Dollars in Thousands)
Closed facilities subject to operating
leases ............................... $ 9,162 $ 300 $ 9,462 $ (766) $ 8,696
Severances ........................... 2,299 2,299 2,299
Unfavorable leases and contracts ..... 5,000 5,000 5,000
Legal, underwriting and other direct
transaction costs .................... 859 859 859
Other ................................ 1,923 1,923 (1,809) 114
-------- -------- -------- -------- --------
</TABLE>
23
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
<TABLE>
<S> <C> <C> <C> <C> <C>
$ 9,162 $ 10,381 $ 19,543 $ (2,575) $ 16,968
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998 1998 1998 December 31,
1997, Increase in Reduction in Charged 1998,
Balance Accrual Accrual to Accrual Balance
--------------- ---------------- ---------------- -------------- -----------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Closed facilities subject to operating
leases ............................. $ 8,696 $ 2,523 $ $ (1,329) $ 9,890
Severances ......................... 2,299 571 (1,330) 1,540
Unfavorable leases and contracts ... 5,000 (2,847) (1,129) 1,024
Legal, underwriting and other direct
transaction costs .............. 859 869 (1,489) 239
Other .............................. 114 475 (109) 480
-------- -------- -------- -------- --------
$ 16,968 $ 4,438 $ (2,847) $ (5,386) $ 13,173
======== ======== -------- ======== ========
</TABLE>
2. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reid manufactures plastic containers for major water, dairy and juice
bottling companies and other container-related products.
Consolidated and Foreign Operations--Reid maintains several wholly owned
subsidiaries in the United States and Canada. In addition, Reid owns 51% of Reid
Mexico S.A. de C.V., which operates exclusively in Mexico. Reid formerly owned
74% of Reid Plastics (Israel) Limited ("Reid Israel"). The common stock of Reid
Israel was sold to the management of that former subsidiary in November 1997. No
significant gain or loss was recognized on the sale.
Condensed combined financial information of the Company's operations
before the elimination of intercompany balances and profits were total assets of
$10,380,000, net sales of $16,881,000 and net income of $536,000 as of and for
the year ended December 31, 1996. The Company's foreign operations were not
significant for 1997 and 1998.
All significant intercompany accounts and transactions have been
eliminated in consolidation.
Translation of Foreign Currencies--Reid considers the functional currency
under Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign
Currency Translation," to be the local currency for its Canadian subsidiaries
and the U.S. dollar for its Mexican subsidiary.
Assets and liabilities of Reid's Canadian subsidiaries are converted into
U.S. dollars using the current exchange rate at period-end, and revenues and
expenses of these subsidiaries are translated at the average exchange rate
during the period, with the resulting translation adjustment made to a separate
component of shareholders' equity.
Realized and unrealized transaction gains and losses resulting from
transactions denominated in a currency other than the functional currency are
included in net income in the period in which they occur.
24
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Reid is subject to financial risk from the future changes in exchange
rates of currencies other than the functional currencies of its subsidiaries.
These changes in exchange rates create exchange gains and losses that are
reflected in the consolidated financial statements. In addition, Mexico was
considered a hyper-inflationary economy under SFAS No. 52 through December 31,
1998.
Cash Equivalents--Cash in excess of daily requirements is invested in
marketable securities consisting of money market funds and certificates of
deposit with original maturities of three months or less.
Inventories--Inventories are stated at the lower of cost or market. Reid
uses the first-in, first-out method for determining cost. The cost components of
inventories are raw materials, labor and factory overhead.
Property and Equipment--Property and equipment are carried at cost and are
depreciated or amortized using the straight-line method over the estimated
useful lives of the related assets or the terms of the related leases as
follows:
Leasehold improvements.................................. Lease term
Machinery and equipment................................. 3 to 7 years
Transportation equipment................................ 3 to 5 years
Office furniture and equipment.......................... 3 to 7 years
Major additions and improvements are capitalized while maintenance and
repairs are charged to expense.
Equipment in acquisition (see Note 6) includes certain deposits on fixed
assets currently being constructed. No depreciation is recorded until the fixed
assets are placed in service.
Intangible Assets--Financing costs are amortized over the term of the
related debt using the effective interest method. Payments relating to
multiple-year management contracts are amortized over the term of the applicable
management contract.
Impairment of Long-Lived Assets--Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The recoverability test is
performed based upon projected, undiscounted net cash flows.
Income Taxes--Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and income tax bases of
assets and liabilities. Such deferred income tax asset and liability
computations are based on enacted tax laws and rates applicable to periods in
which the differences are expected to reverse. A valuation allowance is
established, when necessary, to reduce deferred income tax assets to the amount
expected to be realized.
Derivative Financial Investments--Reid has entered into interest-rate
floor and cap agreements to reduce the impact of fluctuations in interest rates
on its floating-rate long-term debt. At December 31, 1997 and 1998, Reid had two
interest-rate cap agreements and an interest-rate collar agreement outstanding.
The interest-rate collar agreement expires on December 10, 1999, and effectively
provides for Reid to pay to or receive from a bank the amount, if any, by which
Reid's interest payments on $50,000,000 of its floating-rate notes fall below
5.0853% or exceed 7.5%, respectively.
The two interest-rate cap agreements expire on April 19, 2001 and 2002,
and entitle Reid to receive from a bank the amount, if any, by which Reid's
interest payments on $8,400,000 and $6,000,000, respectively (subject to
25
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
future reductions as specified in the agreement), of its floating-rate notes
exceed 10% and 9.5%, respectively. The fair value of these agreements at
December 31, 1997 and 1998, respectively, was not material.
Concentration of Credit Risk--Financial instruments that subject the
Company to credit risk consist primarily of temporary cash investments and
accounts receivable. The Company places its temporary cash investments with
high-credit qualified financial institutions and, by policy, limits the amount
of investment exposure to any one financial institution. Accounts receivable are
generally diversified due to the large number of entities comprising the
Company's customer base and their geographic dispersion. The Company performs
ongoing credit evaluations of its customers and maintains an allowance for
potential credit losses. Credit losses have been within management's
expectations.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments--The carrying amounts of cash and cash
equivalents, accounts receivable and accounts payable approximate fair value
because of the short maturities of these instruments. The carrying amounts of
the debt notes approximate their respective estimated fair values since floating
rates, which approximate current market rates, are charged on most of the notes
payable.
Reclassifications--Certain reclassifications have been made to the prior
years' financial statements in order for them to conform to the current
presentation.
New Pronouncements--In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivatives and Hedging Activities." SFAS No. 133 is effective
for all fiscal quarters of all fiscal years beginning after June 15, 1999, and
it requires companies to recognize all derivative instruments on their balance
sheet as either assets or liabilities measured at fair value. SFAS No. 133 also
specifies a new method of accounting for hedging transactions, prescribes the
type of items and transactions that may be hedged, and specifies detailed
criteria to be met to qualify for hedge accounting. The Company has not
completed its evaluation of the impact that the adoption of SFAS No. 133 will
have on its financial statements. The Company will adopt SFAS No. 133 in fiscal
year 2001.
3. BUSINESS ORGANIZATION AND RESTRUCTURING
On February 16, 1995, Holdings and RIH were formed in connection with the
100% acquisition of Propak California Corp. ("Propak"). In connection therewith,
the shareholders of Reid transferred their ownership interest in Reid and
approximately $3,600,000 of their outstanding notes to Holdings. Holdings in
turn contributed the $3,600,000 downstream through RIH to Reid as common equity.
On February 17, 1995, RIH received an additional $15,000,000 of equity
capital from an investor through a series of related transactions. In exchange
for the investment, the investor received 1,500 shares of senior preferred stock
of RIH, one share of special voting preferred stock of Holdings and warrants to
purchase 7,636 shares of Class A common stock of Holdings. RIH in turn
contributed the $15,000,000 as equity to Reid. Reid and RIH redeemed the senior
preferred stock and warrants of RIH in connection with the acquisition. The
redemption price of the preferred stock in the face amount was $15,000,000 and
unpaid cumulative dividends at a compound rate of 7.9215% per year totaled
$3,421,000 at October 14, 1997.
26
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
On February 17, 1995, Reid entered into a loan agreement with a bank. In
connection with this agreement, the bank received a warrant to purchase (a)
545.4545 shares of Class A or, at the option of the bank, Class B common stock
from Holdings at $.01 per share, or (b) 3.098 shares of common stock of RIH at
$.01 per share (see Note 1).
4. MERGERS AND ACQUISITIONS
In March 1995, Reid purchased all of the outstanding shares of Propak. The
acquisition was accounted for under the purchase method of accounting. The
purchase price and related acquisition costs amounting to $27,323,000 were
allocated to the estimated fair market value of the underlying assets acquired
and liabilities assumed, resulting in approximately $24,395,000 of goodwill.
In May 1995, Reid purchased the assets and assumed the outstanding debt of
Crystal Clear Container Corp. and Crystal Clear, Inc. Both operate as divisions
of Reid. The acquisition was accounted for under the purchase method of
accounting. The purchase price and related acquisition costs amounting to
$4,222,000 were allocated to the estimated fair market value of the underlying
assets acquired and liabilities assumed, resulting in approximately $534,000 of
goodwill.
In November 1996, Reid purchased all of the outstanding shares of
Stewart/Walker Co. ("SWC"). The acquisition was accounted for under the purchase
method of accounting. The purchase price and related acquisition costs amounting
to $51,064,000, including the payment of $18,789,000 of certain debt of SWC at
the acquisition date, were allocated to the estimated fair market value of the
underlying assets acquired and liabilities assumed, resulting in approximately
$29,974,000 of goodwill.
In November 1996, Reid purchased all of the outstanding shares of Plastic
Containers, Inc. The acquisition was accounted for under the purchase method of
accounting. The purchase price and related acquisition costs amounting to
$8,437,000 were allocated to the estimated fair market value of the underlying
assets acquired and liabilities assumed, resulting in approximately $1,182,000
of goodwill.
In connection with Vestar's acquisition, the goodwill associated with the
prior acquisitions discussed above was eliminated as of October 15, 1997 (see
Note 1).
5. INVENTORIES
Inventories consist of the following at December 31, 1997 and 1998:
1997 1998
------- -------
(Dollars in Thousands)
Raw materials .......................... $ 8,245 $ 6,037
Work in process ........................ 17 36
Finished goods ......................... 4,629 3,928
------- -------
$12,891 $10,001
======= =======
6. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1997 and
1998:
1997 1998
------- -------
(Dollars in Thousands)
Land ............................................... $ 3,579 $ 3,573
27
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Buildings .......................................... 5,543 5,911
Leasehold improvements ............................. 3,016 4,479
Machinery and equipment ............................ 35,088 36,593
Equipment under capital leases ..................... 6,766 6,766
Furniture and equipment ............................ 539 2,470
------- -------
54,531 59,792
Accumulated depreciation and amortization .......... 3,075 12,674
------- -------
51,456 47,118
Equipment in acquisition ........................... 5,884 8,298
------- -------
$57,340 $55,416
======= =======
7. OTHER ASSETS
Other assets consist of the following at December 31, 1997 and 1998:
1997 1998
------- -------
(Dollars in Thousands)
Deposits ................................. $ 978 $ 565
Other receivables ........................ 805 281
------ ------
$1,783 $ 846
====== ======
8. ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31, 1997 and
1998:
1997 1998
------- -------
(Dollars in Thousands)
Provision for severances ................................... $ 2,299 $ 1,288
Provision for unfavorable leases and contracts ............. 1,024
Provision for loss on closed facilities subject to operating
leases ................................................... 1,547 1,443
Provision for other transaction related costs .............. 859 239
Salaries and wages ......................................... 2,616 2,640
Vacation ................................................... 1,234 1,287
Accrued 401(k) contributions ............................... 195 225
Accrued commissions ........................................ 232 582
Interest ................................................... 326
Other ...................................................... 1,012 3,683
------- -------
$10,320 $12,411
======= =======
9. OTHER LIABILITIES
Other liabilities consist of the following at December 31, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
------- -------
(Dollars in Thousands)
<S> <C> <C>
Provision for loss on closed facilities subject to operating leases $ 7,149 $ 8,447
Provision for unfavorable leases and contracts .................... 5,000
Advance from vendor ............................................... 1,300 2,500
Obligation under noncompete agreement ............................. 5,000 1,500
</TABLE>
28
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
<TABLE>
<S> <C> <C>
Defined contribution employee benefit plan obligation ............. 1,277 1,345
Other ............................................................. 1,767 1,156
------- -------
$21,493 $14,948
======= =======
</TABLE>
10. DEBT
On October 15, 1997, Reid amended its loan agreement with a bank (the
"Restated Loan Agreement"). The Restated Loan Agreement provides four senior
bank facilities and was created in conjunction with the acquisition.
J.P. Morgan Securities arranged a $27,000,000 Term Loan C (Tranche C),
(the "New Facility"), maturing on December 31, 2004, to be added to Reid's
current facilities. The current facilities comprise a $40,000,000 revolver and a
$45,600,000 Term Loan A (Tranche A) (which was paid down to approximately
$34,900,000 at closing on October 15, 1997), both maturing on November 12, 2002,
and a $32,000,000 Term Loan B (Tranche B), maturing on November 12, 2003.
The four senior bank facilities are collateralized by substantially all
assets of Reid. The New Facility is secured by liens on substantially all
domestic assets as well as the stock of the Canadian and Mexican subsidiaries.
At December 31, 1997 and 1998, $23,500,000 was outstanding under the revolver,
which has been classified as a long-term obligation because management intends
to maintain at least those amounts outstanding under the line of credit
agreement for uninterrupted periods of more than one year after the balance
sheet date. Reid is the sole borrower under the Restated Loan Agreement. All
four senior bank facilities are guaranteed by Holdings and all domestic
subsidiaries of Reid.
The Restated Loan Agreement was amended as of April 15, 1998. The
agreement provides the Company with an option to pay interest at a bank-based
rate (7.75% at December 31, 1998) or a LIBOR (London Interbank Offered Rate)
- -based rate (5.31% at December 31, 1998) plus the margins identified below. The
margin rate varies quarterly based on a covenant ratio.
Bank-Based LIBOR-Based
Rate Margin Rate Margin
----------- -----------
Tranche A and Revolver.......... 0.00%--1.50% 1.00%--2.50%
Tranche B....................... 1.25%--1.75% 2.25%--2.75%
Tranche C....................... 1.50%--2.00% 2.50%--3.00%
The Restated Loan Agreement limits the amount of dividends that may be
paid and contains certain financial covenants. At December 31, 1998, Reid was in
compliance with such covenants.
Reid's long-term debt consists of the following at December 31, 1997 and
1998:
1997 1998
-------- --------
(Dollars in Thousands)
Note payable to a bank (Tranche A),
interest payable quarterly at LIBOR
plus 2%, principal due in quarterly
installments through November 2002 ................. $ 34,945 $ 34,945
Note payable to a bank (Tranche B),
interest payable quarterly at LIBOR
plus 2.25%, principal due in quarterly
installments through November 2003 ................. 32,058 31,681
Note payable to a bank (Tranche C), interest
payable quarterly at LIBOR plus 2.5%,
principal due in quarterly installments
through December 2004 .............................. 27,000 26,730
29
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Capital lease obligations, various interest
rates (ranging from 7.6% to 9.43%),
payable in equal monthly installments
through various dates .............................. 6,430 4,644
-------- --------
100,433 98,000
Less current portion ................................. 2,633 9,046
-------- --------
$ 97,800 $ 88,954
======== ========
Maturities of long-term debt for the years ending December 31 are as
follows (dollars in thousands):
1999 .................................................. $ 9,046
2000 .................................................. 10,403
2001 .................................................. 11,731
2002 .................................................. 10,725
2003 .................................................. 30,592
Thereafter ............................................ 25,503
-------
$98,000
=======
In connection with the 1997 refinancing and 1998 amendment, Reid incurred
approximately $2,604,000 in costs, which have been capitalized and are being
amortized over the life of the debt.
Deferred financing costs consists of the following at December 31, 1997
and 1998:
1997 1998
------- -------
(Dollars in Thousands)
Deferred financing costs ..................... $ 1,515 $ 2,604
Less accumulated amortization ................ (58) (450)
------- -------
$ 1,457 $ 2,154
======= =======
11. COMMITMENTS
Lease Commitments--Reid leases its manufacturing facilities at most
locations and certain manufacturing equipment; the leases are accounted for as
operating leases. These lease agreements contain renewal options and/or purchase
options.
Future minimum rental commitments under leases for the years ended
December 31 are as follows (dollars in thousands):
Capital Operating
Leases Leases
---------- -----------
1999 ............................................... $ 2,034 $ 4,700
2000 ............................................... 1,724 3,959
2001 ............................................... 1,200 2,531
2002 ............................................... 127 1,996
2003 ............................................... 107 1,709
Thereafter ......................................... 128 6,904
------- -------
$ 5,320 $21,799
=======
Less amount representing interest at various rates
(ranging from 7.6% to 9.43%) ..................... 676
-------
30
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Present value of minimum lease payments (including $ 4,644
current portion of $1,717) ....................... =======
Rent expense under operating leases was approximately $2,981,000 for the
year ended December 31, 1996, $6,694,000 for the period from January 1, 1997
through October 14, 1997, $774,000 for the period from October 15, 1997 through
December 31, 1997, and $5,283,000 for the year ended December 31, 1998.
Sales Commitments--Reid entered into certain fixed price/quantity sales
contracts for its products for up to three years. Certain of these contracts
contain minimum quantity requirements and prices are firm, subject to certain
escalation clauses, as a result of increased raw material costs. Management does
not anticipate any loss from these commitments.
Purchase Commitments--Reid entered into certain fixed price/quantity
purchase contracts for its raw materials for up to three years. Certain of these
contracts contain minimum quantity requirements, and prices are firm, subject to
certain escalation clauses. In the event of an increase in prices, Reid has the
right to obtain any or all of its raw material requirements from another
supplier. Management does not anticipate any loss from these commitments.
12. INCOME TAXES
Significant components of Reid's deferred income taxes are as follows:
December 31, 1997 December 31, 1998
----------------- -----------------
Federal State Federal State
------- ----- ------- -----
(Dollars in Thousands)
Deferred income tax assets:
AMT credit ....................... $ 255 $ 11 $ 359 $ 185
Accrued compensation ............. 518 267 306 157
Allowance for doubtful accounts .. 324 167 245 126
Accrued liabilities .............. 5,046 2,599 6,171 3,179
NOL carryforward ................. 1,140 587 265 137
Other ............................ 940 442 707 365
------- ------- ------- -------
Total deferred income tax assets ... 8,223 4,073 8,053 4,149
Less valuation allowance ........... (3,060) (1,414) (2,898) (1,494)
------- ------- ------- -------
Net deferred income tax assets ..... $ 5,163 $ 2,659 $ 5,155 $ 2,655
======= ======= ======= =======
Deferred income tax liabilities--
Property and equipment ......... $(5,163) $(2,659) $(5,155) $(2,655)
======= ======= ======= =======
The provision for income taxes consists of the following (dollars in
thousands):
<TABLE>
<CAPTION>
Period From Period From
January 1, October 15,
1997 1997
Year Ended Through Through Year Ended
December 31, October 14, December 31, December 31,
1996 1997 1997 1998
(Predecessor) (Predecessor) (Successor) (Successor)
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Current .................................... $(1,035) $(1,578) $ 105 $ (276)
Deferred ................................... (517) 2,777 (2,025)
Foreign .................................... (693) (535)
------- ------- ------- -------
Income tax (expense) benefit ............... $(2,245) $ 1,199 $ 105 $(2,836)
======= ======= ======= =======
</TABLE>
31
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Provision has not been made for U.S. taxes on $5,243,000 of cumulative
undistributed earnings of foreign subsidiaries since those earnings are intended
to be permanently reinvested.
The tax expense (benefit) was different from the amount computed by
applying the federal statutory rate as follows (dollars in thousands):
<TABLE>
<CAPTION>
Period From Period From
Year Ended January 1, 1997 October 15, 1997 Year Ended
December Through Through December 31,
31, October 14, 1997 December 31, 1997 1998
1996 ---------------------- ----------------------------- -------------------------
% Amount % Amount % Amount %
------------- ---------- ----------- ---------------- ------------ -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Tax at federal statutory rate .... 34% $(3,051) (34)% $(1,332) (34)% $ 1,107 34%
Amortization of goodwill and other 25 1,373 15 336 8 1,398 43
State taxes ...................... 11 265 8
Valuation allowance .............. 394 5 869 22 (82) (3)
Other ............................ 11 85 1 22 1 148 5
------- ------- ------- ------- ------- ------- -------
Effective tax rate ............... 81% $(1,199) (13)% $ (105) (3)% $ 2,836 87%
======= ======= ======= ======= ======= ======= =======
</TABLE>
The Company has been notified that the California Franchise Tax Board will
be examining its corporate income tax returns for the years ended December 31,
1995 and 1996. At December 31, 1998, the Company has a net operating loss
carryforward of $779,000 expiring in the tax year ending December 31, 2012. The
Company also has federal alternative minimum tax credits available of
approximately $544,000.
13. EMPLOYEE BENEFIT PLAN
Reid has a 401(k) defined contribution plan for the benefit of all
employees who are age 21 or older and who have completed at least 1,000 hours of
service. Reid will match every dollar of deferral to the plan by participants to
a maximum matching contribution of 3% of a participant's qualifying income per
plan year. For participants who earn less than $15,000 per year and make
contributions to the plan, Reid will also make an annual contribution of 2% of
the participant's compensation to the plan.
Reid may, at the discretion of the Board of Directors, make a profit
sharing contribution to be shared by all eligible participants and a
discretionary matching contribution to the plan for participants who make
deferrals of more than $2,000 a year. The amounts of Reid's profit sharing and
matching contributions are discretionary in each plan year, and Reid is not
required to make a profit sharing or discretionary matching contribution to the
plan in any plan year.
The expense associated with contributions to the plan made by Reid were
$144,000 for the year ended December 31, 1996, $154,000 for the period from
January 1, 1997 through October 14, 1997, $41,000 for the period from October
15, 1997 through December 31, 1997, and $225,000 for the year ended December 31,
1998.
14. STOCK OPTION PLAN
32
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
On December 31, 1997, the Company's Board of Directors adopted the 1997
Stock Option Plan (the "Plan") under which stock options are granted to key
employees of the Company. Under the terms of the Plan 1,000 shares of common
stock are authorized for issuance upon exercise of options. Stock options have
been granted with an exercise price equal to $5,000 per share, which is deemed
to be the fair market value at the date of grant. These options vest over 60
months and expire 10 years after the grant date. The Board has granted options
for 600 shares. The Company elected to account for stock-based compensation in
accordance with the provisions of Accounting Principles Board (APB) Opinion No.
25. "Accounting for Stock Issued to Employees." Accordingly, no compensation
cost has been recognized because the option price equals the market price on the
date of grant.
If the Company had elected to follow the measurement provisions of SFAS
No. 123, "Accounting for Stock-Based Compensation," in accounting for its stock
options compensation expense would be recognized based on the fair value of the
options at the date of grant. To estimate compensation expense that would be
recognized under SFAS No. 123, the Company used the modified Black-Scholes
option-pricing model with the following weighted average assumptions for options
granted in 1998: risk-free interest rate ranging from 5.6% to 5.83%; no expected
dividend yield; no volatility; and expected life of five years.
If SFAS No. 123 were used to account for the Company's stock based
compensation program, the pro forma net earnings would be as follows:
<TABLE>
<CAPTION>
Period From Period From
January 1, 1997 October 15, 1997
Through Through Year Ended
October 14, 1997 December 31, 1997 December 31, 1998
(Predecessor) (Successor) (Successor)
--------------------- --------------------------- -----------------
(Dollars in Thousands)
<S> <C> <C> <C>
Net income (loss) - as reported .......................... $(7,803) $(3,873) $ 366
Net income (loss) - pro forma ............................ $(7,803) (3,878) 273
</TABLE>
The pro forma effects of applying No. 123 may not be representative of the
effects on reported net income for future years since options vest over several
years and additional awards could be each year.
Stock options activity for the Plan was as follows:
<TABLE>
<CAPTION>
Weighted-Average
Shares Exercise Price
------------------- ------------------------
<S> <C> <C>
Outstanding January 1, 1997 ............................ --
Granted ................................................ 330 $5,000
Exercised ..............................................
Canceled ...............................................
------ ------
Outstanding December 31, 1997 .......................... 330 5,000
Granted ................................................ 270 5,000
Exercised ..............................................
Canceled ...............................................
------ ------
Outstanding December 31, 1998 ................................ 600 $5,000
====== ======
Weighted-average fair value of options granted during the
year--1997 ................................................ $1,249 per share
Weighted-average fair value of options granted during the
year--1998 ................................................ $1,221 per share
</TABLE>
33
<PAGE>
REID PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
The following table summarizes the information about stock options
outstanding at December 31, 1998:
Options Outstanding
------------------------------------------------------
Weighted-Average
Remaining
Range of Exercise Commercial Life Weighted-Average
Prices Shares (years) Exercise Price
--------------- ------------------ -----------------
$5,000................ 600 9 $5,000
Options Exercisable
------------------------------------------------------
Range of Exercise
Prices Shares Weighted-Average
--------------- -----------------
$5,000................ 120 $5,000
15. SUBSEQUENT EVENT
On April 29, 1999, Vestar and certain affiliates entered into an agreement
to merge the Company into Consolidated Container Holdings LLC ("Newco"), and in
connection with this and other transactions Vestar and certain affiliates will
receive a 51% ownership interest in Newco. Pursuant to this agreement, Newco has
agreed to refinance the existing notes payable and revolving credit agreement.
34
<PAGE>
REID PLASTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(dollars in thousands)
March 31, 1999
--------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ............................... $ 2,310
Accounts receivable, net of allowance of $1,477 ......... 22,114
Inventories ............................................. 11,239
Deferred income taxes ................................... 7,813
Other current assets .................................... 6,736
---------
Total current assets ................................ 50,212
PROPERTY AND EQUIPMENT--Net ............................... 55,241
GOODWILL AND OTHER INTANGIBLES--Net ....................... 115,826
OTHER ASSETS .............................................. 948
---------
TOTAL ..................................................... $ 222,227
=========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities ................ $ 23,901
Current portion of long-term debt ....................... 9,058
---------
Total current liabilities ............................. 32,959
LONG-TERM DEBT ............................................ 115,446
DEFERRED INCOME TAXES ..................................... 7,813
OTHER LIABILITIES ......................................... 14,353
MINORITY INTEREST ......................................... 528
COMMITMENTS
SHAREHOLDER'S EQUITY:
Common stock ............................................ 55,293
Accumulated deficit ..................................... (3,681)
Foreign currency translation adjustment ................. (484)
---------
Total shareholder's equity ............................ 51,128
---------
TOTAL ..................................................... $ 222,227
=========
See notes to condensed consolidated financial statements.
35
<PAGE>
REID PLASTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
THREE-MONTH PERIOD ENDED MARCH 31, 1998 AND 1999
(dollars in thousands)
<TABLE>
<CAPTION>
Three-Month Period
Ended March 31,
-------------------------
1998 1999
--------- --------
(Unaudited)
<S> <C> <C>
NET SALES .............................................. $ 43,550 $ 38,405
COST OF SALES .......................................... 37,080 31,715
-------- --------
GROSS PROFIT ........................................... 6,470 6,690
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ........... 4,308 4,516
INTEREST INCOME ........................................ 2,295 2,219
OTHER INCOME ........................................... 143 275
-------- --------
INCOME BEFORE INCOME TAXES ............................. 10 230
INCOME TAX EXPENSE ..................................... 509 553
`MINORITY INTEREST IN NET INCOME (LOSS) OF
SUBSIDIARIES ........................................... 53 (149)
-------- --------
NET LOSS ............................................... (552) (174)
OTHER COMPREHENSIVE INCOME--Foreign currency translation
adjustment ........................................... 144
--------
COMPREHENSIVE LOSS ..................................... $ (552) $ (30)
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
36
<PAGE>
REID PLASTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE-MONTH PERIOD ENDED MARCH 31, 1998 AND 1999
(dollars in thousands)
Three-Month Period
Ended March 31,
-----------------------
1998 1999
------- -------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................. $ (552) $ (174)
Depreciation and amortization ............ 3,877 3,604
Other .................................... (53) (779)
Change in working capital ................ (5,952) (6,319)
------- -------
Net cash used in operating activities .. (2,680) (3,668)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ..................... (4,169) (2,426)
Deposits ................................. 41 (8)
Other .................................... 319
------- -------
Net cash used in investing activities .. (3,809) (2,434)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from revolving line of credit 7,500 3,500
Principal payment to banks ............... (91) (91)
Principal payments to others ............. (467) (405)
Other .................................... (87)
------- -------
Net cash provided by financing
activities ........................... 6,855 3,004
------- -------
NET CHANGE IN CASH ....................... $ 366 $(3,098)
======= =======
CHANGE IN WORKING CAPITAL:
Accounts receivable ...................... $ (190) $(4,971)
Inventories .............................. (322) (1,238)
Prepaid expenses ......................... 91 485
Other receivables ........................ (714) (801)
Accounts payable ......................... (3,941) (2,116)
Accrued liabilities ...................... (876) (1,910)
------- -------
$(5,952) $(6,319)
======= =======
See notes to condensed consolidated financial statements.
37
<PAGE>
REID PLASTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements contained in this report
are unaudited. In our opinion, we have made all necessary adjustments (which
include only normal recurring adjustments) in order to present fairly, in all
material respects, our consolidated financial position as of March 31,1999 and
the results of operations and cash flows for the three-month periods ended March
31,1999 and 1998. Certain information and footnote disclosures included in the
annual financial statements have been omitted. The financial statements should
be read in conjunction with our 1998 consolidated financial statements.
2. INVENTORIES
March 31, 1999
--------------
Raw materials and supplies ................................ $ 5,759
Furnished goods ........................................... 5,480
-------
Total ........................................ $11,239
=======
3. SUBSEQUENT EVENT
On April 29, 1999, Vestar and certain affiliates entered into an agreement
to merge the Company into Consolidated Container Holdings LLC, ("Newco"), and in
connection with this and other transactions Vestar and certain affiliates will
receive a 51% ownership interest in Newco. Pursuant to this agreement, Newco has
agreed to refinance the existing notes payable and revolving credit agreement.
38
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Suiza Foods Corporation
Dallas, Texas
We have audited the accompanying combined balance sheets of Franklin
Plastics, Inc. and subsidiaries ("Franklin") and Plastic Containers, Inc. and
subsidiaries ("PCI"), collectively "Suiza Packaging" or the "Company," as of
December 31, 1997 and 1998, and the related combined statements of operations,
stockholders' equity and cash flows for the five-month period from the date of
acquisition of Franklin (July 31, 1997) to December 31, 1997 and the year ended
December 31, 1998. The combined financial statements include the accounts of
Franklin from its date of acquisition on July 31, 1997, and PCI from its date of
acquisition on May 29, 1998, both of which are majority-owned subsidiaries of
Suiza Foods Corporation. We have also audited the combined statements of
operations, stockholders' equity and cash flows of the predecessor of Franklin,
Plastics Management Group, for the four-month pre-acquisition period from April
1, 1997 to July 30, 1997. These combined financial statements are the
responsibility of the companies' management. Our responsibility is to express an
opinion on these combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such combined financial statements present fairly, in all
material respects, the combined financial position of Suiza Packaging at
December 31, 1997 and 1998, and their combined results of operations and cash
flows for the five-month period ended December 31, 1997 and the year ended
December 31, 1998, in conformity with generally accepted accounting principles.
In addition, in our opinion, the combined predecessor financial statements
present fairly, in all material respects, the results of operations and cash
flows of Plastic Management Group for the four-month period ended July 30, 1997,
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Dallas, Texas
February 9, 1999
(April 30, 1999, as to Note 17)
39
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
Plastics Management Group:
We have audited the accompanying combined statements of operations,
stockholders' equity and cash flows of Plastics Management Group for the six
month period ended March 31, 1997 and the year ended September 30, 1996. These
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, Plastics Management Group's results of
operations and cash flows for the six month period ended March 31, 1997 and the
year ended September 30, 1996 in conformity with generally accepted accounting
principles.
PricewaterhouseCoopers LLP
Boston, Massachusetts
July 1, 1997
40
<PAGE>
SUIZA PACKAGING
COMBINED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
(dollars in thousands)
<TABLE>
<CAPTION>
December 31,
----------------------
1997 1998
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................................... $ 265 $ 1,681
Temporary investments ........................................................ 9,216
Accounts receivable, net of allowance for doubtful accounts of $118 and
$2,078 ....................................................................... 10,887 44,714
Inventories .................................................................. 2,140 23,365
Prepaid expenses and other current assets .................................... 256 676
Deferred income taxes ........................................................ 2,187 2,395
--------- ---------
Total current assets ..................................................... 15,735 82,047
PROPERTY, PLANT AND EQUIPMENT .................................................. 52,476 218,644
DEFERRED INCOME TAXES .......................................................... 23,937
INTANGIBLE AND OTHER ASSETS .................................................... 90,706 267,277
--------- ---------
TOTAL ASSETS ................................................................... $ 158,917 $ 591,905
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses ........................................ $ 20,007 $ 63,926
Dividends payable ............................................................ 1,417 7,906
Revolving credit facility .................................................... 26,370
Current portion of long-term debt ............................................ 6,032
--------- ---------
Total current liabilities ................................................ 21,424 104,234
LONG-TERM DEBT ................................................................. 108,822 372,339
DEFERRED INCOME TAXES .......................................................... 2,980 7,098
OTHER LONG-TERM LIABILITIES .................................................... 22,359
COMMITMENTS AND CONTINGENCIES (Note 14)
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, $1,000 stated value--1,000,000 shares
authorized; 22,671 and 72,594 shares, respectively, issued and outstanding 22,671 72,594
Common stock, $.001 par value, 5,000,000 shares authorized, 453,425 and
1,451,877 shares, respectively, issued and outstanding ................... 1
Additional paid-in capital ................................................... 4,918 14,899
Retained deficit ............................................................. (1,898) (1,619)
--------- ---------
Total stockholders' equity ............................................... 25,691 85,875
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..................................... $ 158,917 $ 591,905
========= =========
</TABLE>
See notes to combined financial statements.
41
<PAGE>
SUIZA PACKAGING
COMBINED STATEMENTS OF OPERATIONS
(dollars in thousands)
<TABLE>
<CAPTION>
Predecessor
------------------------------------
Six-Month Five-Month
Period Four-Month Period
Year Ended Ended Period Ended Year Ended
September 30, March 31, Ended July 31, December 31, December 31,
1996 1997 1997 1997 1998
--------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET SALES ........................... $ 80,057 $ 48,781 $ 40,847 $ 49,699 $ 367,903
COST OF SALES ....................... 67,567 43,292 36,447 38,995 283,122
--------- --------- --------- --------- ---------
Gross profit ...................... 12,490 5,489 4,400 10,704 84,781
OPERATING EXPENSES:
Selling, general and administrative 2,442 1,115 706 5,347 33,075
Amortization of intangibles ....... 71 48 32 947 5,126
--------- --------- --------- --------- ---------
Total operating expenses ...... 2,513 1,163 738 6,294 38,201
--------- --------- --------- --------- ---------
INCOME FROM OPERATIONS .............. 9,977 4,326 3,662 4,410 46,580
OTHER INCOME (EXPENSE):
Interest expense, net ............. (1,079) (932) (618) (4,663) (26,847)
Other expense, net ................ (456) (176) (62)
--------- --------- --------- --------- ---------
Total other income (expense) .. (1,535) (1,108) (618) (4,663) (26,909)
--------- --------- --------- --------- ---------
INCOME (LOSS) BEFORE
INCOME TAXES ....................... 8,442 3,218 3,044 (253) 19,671
INCOME TAX EXPENSE .................. 280 218 190 228 9,486
--------- --------- --------- --------- ---------
NET INCOME (LOSS) ................... $ 8,162 $ 3,000 $ 2,854 $ (481) $ 10,185
========= ========= ========= ========= =========
</TABLE>
See notes to combined financial statements
42
<PAGE>
SUIZA PACKAGING
COMBINED STATEMENTS OF OPERATIONS
(dollars in thousands)
<TABLE>
<CAPTION>
Predecessor
---------------------------------------------------
Six-Month Five-Month
Period Four-Month Period
Year Ended Ended Period Ended Year Ended
September 30, March 31, Ended December 31, December 31,
1996 1997 July 31, 1997 1997 1998
------------ --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET SALES................................. $80,057 $48,781 $40,847 $49,699 $367,903
COST OF SALES............................. 67,567 43,292 36,447 38,995 283,122
------- ------- ------- ------- --------
Gross profit.......................... 12,490 5,489 4,400 10,704 84,781
OPERATING EXPENSES:
Selling, general and administrative...... 2,442 1,115 706 5,347 33,075
Amortization of intangibles.............. 71 48 32 947 5,126
------- ------- ------- ------- --------
Total operating expenses............... 2,513 1,163 738 6,294 38,201
------- ------- ------- ------- --------
INCOME FROM OPERATIONS..................... 9,977 4,326 3,662 4,410 46,580
OTHER INCOME (EXPENSE):
Interest expense, net.................... (1,079) (932) (618) (4,663) (26,847)
Other expense, net....................... (456) (176) (62)
------- ------- ------- ------- --------
Total other income (expense)........... (1,535) (1,108) (618) (4,663) (26,909)
------- ------- ------- ------- --------
INCOME (LOSS) BEFORE INCOME TAXES.......... 8,442 3,218 3,044 (253) 19,671
INCOME TAX EXPENSE......................... 280 218 190 228 9,486
------- ------- ------- ------- --------
NET INCOME (LOSS).......................... $ 8,162 $ 3,000 $ 2,854 $ (481) $ 10,185
======= ======= ======= ======== ========
</TABLE>
See notes to combined financial statements
43
<PAGE>
SUIZA PACKAGING
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional Retained Total
----------------- -------------------- Paid-In Earning Stockholder's
Shares Amount Capital (Deficit) Equity
----------------- -------------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR
BALANCE, OCTOBER 1, 1995 ... -- $ -- 960 $ 59 $ 1,548 $ 2,257 $ 3,864
Issuance of common stock ... 700 84 84
Stockholders' distribution . (4,630) (4,630)
Net income ................. 8,162 8,162
------ -------- -------- -------- -------- -------- --------
BALANCE, SEPTEMBER 30, 1996 -- -- 1,660 143 1,548 5,789 7,480
Repurchase of common stock . (200) (21) (21)
Stockholders' distribution . (751) (751)
Net income ................. 3,000 3,000
------ -------- -------- -------- -------- -------- --------
BALANCE, MARCH 31, 1997 .... -- -- 1,460 122 1,548 8,038 9,708
Stockholders' distribution . (3,380) (3,380)
Net income ................. 2,854 2,854
------ -------- -------- -------- -------- -------- --------
BALANCE, JULY 31, 1997 ..... -- $ -- 1,460 $ 122 $ 1,548 7,512 $ 9,182
====== ======== ======== ======== ======== ======== ========
SUIZA PACKAGING
Common stock issued ........ -- $ -- 453,425 $ -- $ 4,535 $ -- $ 4,535
Preferred stock issued ..... 22,671 22,671 22,671
Issuance of warrants ....... 383 383
Preferred dividends declared (1,417) (1,417)
Net loss ................... (481) (481)
------ -------- -------- -------- -------- -------- --------
</TABLE>
44
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 . 22,671 22,671 453,425 -- 4,918 (1,898) 25,691
Common stock issued ........ 998,452 1 9,981 9,982
Preferred stock issued ..... 49,923 49,923 49,923
Stockholder distribution ... (2,000) (2,000)
Preferred dividends declared (7,906) (7,906)
Net income ................. 10,185 10,185
-------- -------- --------- -------- -------- -------- --------
BALANCE, DECEMBER 31, 1998 . 72,594 $ 72,594 1,451,877 $ 1 $ 14,899 ($ 1,619) $ 85,875
======== ======== ========= ======== ======== ======== ========
</TABLE>
See notes to combined financial statements.
45
<PAGE>
SUIZA PACKAGING
COMBINED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Predecessor
------------------------------------
Six-Month Five-Month
Period Four-Month Period
Year Ended Ended Period Ended Year Ended
September March 31, Ended July December December 31,
30, 1996 1997 31, 1997 31, 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ....................................... $ 8,162 $ 3,000 $ 2,854 $ (481) $ 10,185
Adjustments to net income (loss):
Depreciation and amortization ......................... 4,136 2,820 2,149 2,233 17,333
Loss on disposal of assets ............................ 79 62
Deferred income taxes ................................. 228 10,194
Changes in assets and liabilities, net of
acquisitions:
Receivables ....................................... (1,869) 1,063 (3,333) (727) (4,113)
Inventories ....................................... (672) (123) (120) (154) 2,154
Prepaid expenses and other assets ................. (118) (477) 269 142 111
Accounts payable and accrued expenses ............. 3,376 800 89 7,983 (9,160)
--------- --------- --------- --------- ---------
Net cash provided by (used in)
operating activities ............................. 13,094 7,083 1,908 9,224 26,766
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of temporary investments ....... 26,740
Purchase of temporary investments ..................... (13,790)
Additions to property, plant and equipment ............ (29,329) (7,335) (7,402) (9,343) (63,721)
Cash paid for acquisitions, net of cash acquired ...... (202) (45) (136,027) (91,700)
--------- --------- --------- --------- ---------
Net cash used in investing activities ............. (29,531) (7,380) (7,402) (145,370) (142,471)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid and stockholders' distributions, net ... (2,746) (2,571) (3,380) (3,417)
Net borrowings from parent company .................... 8,874 108,822 100,097
Issuance of common and preferred stocks ............... 27,206 25,343
Issuance of warrants .................................. 383
Repayment of long-term debt ........................... (919) (48) (4,902)
</TABLE>
46
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Borrowings on debt, net ............................... 20,763 2,077
--------- --------- --------- --------- ---------
Net cash provided by (used in) financing activities 17,098 (542) 5,494 136,411 117,121
--------- --------- --------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ........................................... 661 (839) 265 1,416
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD ................................................ 178 839 265
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ................ $ 839 $ -- $ -- $ 265 $ 1,681
========= ========= ========= ========= =========
</TABLE>
See notes to combined financial statements.
47
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR 1996, 1997 AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business--Suiza Packaging (the "Company") includes the operations of
Franklin Plastics, Inc. and subsidiaries ("Franklin"), a majority-owned
subsidiary of Suiza Foods Corporation ("Suiza" or the "Parent") and its
predecessor, Plastic Management Group, and Plastics Containers, Inc. and
subsidiaries ("PCI"), an indirect majority-owned subsidiary of Suiza. On July
31, 1997, Franklin was acquired by Suiza and on May 29, 1998, PCI and its
immediate parent company, Continental Can Company, Inc. ("Continental Can"), was
acquired by Suiza. Both of these acquisitions have been accounted for using the
purchase method of accounting, and the related accounting adjustments, including
goodwill, have been pushed down and are reflected in the combined financial
statements of the Company as of their respective acquisition dates. The combined
financial statements of the Company for the periods before July 31, 1997, were
prepared using the predecessor's historical basis of accounting. Because of the
application of the purchase method of accounting, as of the respective
acquisition dates of Franklin and PCI, the operating results of Suiza Packaging
and its predecessor, Plastics Management Group, are presented using different
bases of accounting that affect the comparability of their operating results.
The Company develops, manufactures and distributes a wide range of custom
extrusion blow-mold plastic containers used primarily in the milk, juice and
water industries. Based on the nature of the product, the production process,
types of customers, and methods used to distribute products, the Company
operates in one reportable segment.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
revenues and expenses during the reporting period. Actual results could differ
from these estimates.
Principles of Combination--The accompanying combined financial statements
include the accounts of Franklin and PCI and their wholly owned subsidiaries.
All significant intercompany balances and transactions are eliminated in
combination.
Cash and Cash Equivalents--Included in cash and cash equivalents are
highly liquid cash investments with remaining maturities at date of purchase of
three months or less.
Temporary Investments--Temporary investments consist of available-for-sale
U.S. government obligations, certificates of deposit, Eurodollar deposits and
highly rated commercial paper, all of which are due within one year. These
temporary investments are stated at amortized cost, which approximates market
value.
Inventories--Inventories consist of raw materials, spare parts and
supplies, and finished goods inventories and are stated at the lower of cost,
using the first-in, first-out ("FIFO") method, or market. Finished goods
inventories include raw materials, direct labor costs and indirect labor and
overhead costs.
Property, Plant and Equipment--Property, plant and equipment are stated at
cost. Depreciation and amortization are provided using the straight-line method
over the estimated useful lives of the assets, which range from three to forty
years. Plant and equipment held under capital leases and leasehold improvements
are amortized over the shorter of the lease term or the estimated useful life of
the asset. Expenditures for repairs and maintenance that do not improve or
extend the life of the assets are expensed as incurred.
Intangible Assets--Intangible assets include primarily goodwill and are
stated at cost and are amortized using the straight-line method over 40 years.
48
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
Insurance--The Company purchases commercial insurance policies to cover
its insurance risks; however, certain of its subsidiaries are self-insured in
certain states for worker's compensation, general liability and property and
casualty coverages in excess of varying deductible amounts. Self-insurance
liabilities are accrued based on claims filed and estimates for claims incurred
but not reported.
Research, Development and Engineering--Expenditures for research,
development and engineering are expensed as incurred. Costs charged to
operations for research, development and engineering for the year ended December
31, 1998, were $5.1 million. There were no similar costs incurred prior to 1998.
Revenue--Revenue is recognized when the product is shipped to the
customer. The Company provides credit terms to customers generally ranging up to
30 days, performs ongoing credit evaluations of its customers and maintains
allowances for probable credit losses based on historical experience.
Income Taxes--Deferred income taxes are provided for temporary differences
in the financial statement and tax bases of assets and liabilities using current
tax rates. Deferred tax assets, including the benefit of net operating loss
carryforwards, are evaluated based on the guidelines for realization and may be
reduced by a valuation allowance if deemed necessary. Beginning with the
acquisition by Suiza on July 31, 1997, the Company has been included in the
consolidated federal income tax return of Suiza; however, income taxes in the
combined financial statements have been provided as if the Company filed a
separate income tax return. Prior to July 31, 1997, the predecessor was
organized as a group of affiliated companies under Subchapter S of the Internal
Revenue Code, and was not subject to corporate-level federal income taxes.
Accordingly, income generated by the predecessor was taxed to the stockholders
individually, and no federal income tax expense was recorded in the predecessor
financial statements.
Asset Impairment--In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-lived Assets
to Be Disposed Of," the Company evaluates the impairment of long-lived assets if
circumstances indicate that the carrying value of those assets may not be
recoverable. Recoverability of the assets to be held and used is measured by a
comparison of the carrying amount of the asset to future undiscounted cash flows
expected to be generated by the asset.
Recently Issued Accounting Pronouncements--SFAS No. 133, "Accounting for
Derivative Financial Instruments and Hedging Activities," was issued in June
1998, and establishes standards for accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective for the year
ending December 31, 2001. The Company is currently analyzing the effect of this
standard and does not expect it to have a material effect on the combined
financial position, results of operations or cash flows.
2. ACQUISITIONS
On July 31, 1997, Suiza formed Suiza Packaging and purchased the net
assets of Plastics Management Group for approximately $136 million in cash,
which was funded primarily by borrowings under Suiza's senior credit facilities.
In connection with this acquisition, Suiza Packaging sold warrants to the former
stockholders of Plastics Management Group to acquire 91,880 shares of common
stock of Suiza Packaging (equal to 17.5% of the outstanding common stock) at an
exercise price of $10 per share in consideration for a cash payment of $383,000,
which approximated the fair market value of such warrants. Pursuant to a
stockholders' agreement, the purchase price of Plastics Management Group was
pushed down to Suiza Packaging with the following capital structure:
o 55% of the purchase price in the form of senior notes payable to Suiza
49
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
o 25% of the purchase price in the form of mezzanine notes payable to
Suiza
o 16 2/3% of the purchase price in the form of preferred stock issued
to Suiza
o 3 1/3% of the purchase price in the form of common stock issued to
Suiza
In addition to the push-down of the original purchase price of Plastics
Management Group, the stockholders' agreement also required any future
acquisitions of plastic packaging businesses by Suiza to be made on behalf of
Suiza Packaging, with the related purchase prices pushed down to Suiza Packaging
using the above-described capital structure. In addition, for future Suiza
Packaging acquisitions, the warrant holders were entitled to protective
participation rights whereby they could elect to purchase 17.5% of both the
preferred and common stock issued by Suiza Packaging in connection with these
future acquisitions.
On May 29, 1998, Suiza issued approximately 2.5 million shares of its
common stock or replacement stock options to the shareholders of Continental Can
in exchange for substantially all of the issued and outstanding shares of common
stock and stock options of Continental Can. The total purchase price for this
acquisition, including assumed debt, was approximately $354.4 million, of which
approximately $207.4 million of the purchase price was allocated to PCI based on
PCI's relative contribution to Continental Can's operations.
During 1998, in addition to the PCI acquisition, the Company completed the
acquisition of eleven other plastic packaging businesses. The aggregate purchase
price for the other acquisitions, none of which were individually significant,
was $89.3 million. All of the acquisitions were funded primarily with borrowings
under Suiza's senior credit facilities.
These acquisitions were all accounted for using the purchase method of
accounting as of their respective acquisition dates. Accordingly, only the
results of operations of the acquired companies subsequent to their respective
acquisition dates are included in the combined financial statements. At the
acquisition date, the purchase prices, which were pushed down to Suiza Packaging
based on the capital structure discussed above, were allocated to assets
acquired, including identifiable intangibles and liabilities assumed based on
their fair market values. The excess of the total purchase prices over the fair
values of the net assets acquired represented goodwill. In connection with the
1997 and 1998 acquisitions, assets were acquired and liabilities were assumed as
follows:
Years Ended December 31,
------------------------
1997 1998
---------- -----------
(In Thousands)
Total purchase prices, net of cash acquired $136,027 $292,161
Fair value of net assets acquired:
Fair value of assets acquired ........... 57,654 216,868
Fair value of liabilities assumed ....... 12,588 106,561
-------- --------
Total net assets acquired ............... 45,066 110,307
-------- --------
Goodwill .................................. $ 90,961 $181,854
======== ========
50
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
The following table presents the unaudited combined pro forma results of
operations of Suiza Packaging as if these acquisitions had occurred at the
beginning of each of the periods presented:
Years Ended December 31,
------------------------
1997 1998
---------- ----------
(In Thousands)
Net Sales ................................. $ 484,755 $ 512,151
========= =========
Income (loss) before taxes ................ $ (75) $ 18,858
========= =========
Net income (loss) ......................... $ (56) $ 11,053
========= =========
The unaudited combined pro forma results of operations are not necessarily
indicative of what the actual results of operations would have been had the
acquisitions occurred at the beginning of 1997, nor do they purport to be
indicative of the future results of operations of Suiza Packaging.
In connection with the acquisition of PCI, a liability of $2.2 million was
recognized relative to a plan to close PCI's Lima, Ohio, facility. This
liability included approximately $.8 million for employee severance costs
related to approximately 100 employees, including production, supervisory and
administrative personnel located at the facility, and approximately $1.4 million
for noncancelable lease obligations and related facility closing costs. The
liability at December 31, 1998 of $2.2 million is included in accounts payable
and accrued expenses. The Company remains obligated under the facility lease
through December 2000. In addition, the allocation of purchase price to flexed
assets included a reduction of approximately $5.7 million of carrying costs of
the Lima facility to reduce such costs to their estimated fair values. This
facility is expected to close by the end of the second quarter of 1999.
3. INVENTORIES
December 31,
-----------------------
1997 1998
------- -------
(In Thousands)
Raw materials ...................... $ 1,151 $ 9,586
Parts and supplies ................. 599 3,045
Finished goods ..................... 390 10,734
------- -------
Total ......................... $ 2,140 $23,365
======= =======
51
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
4. PROPERTY, PLANT AND EQUIPMENT
December 31,
------------------------
1997 1998
--------- ---------
(In Thousands)
Land ................................. $ 350 $ 7,350
Buildings and improvements ........... 4,912 24,586
Machinery and equipment .............. 48,203 189,587
Furniture and fixtures ............... 297 808
Construction in progress ............. 9,913
--------- ---------
53,762 232,244
Less accumulated depreciation ........ (1,286) (13,600)
--------- ---------
Total ....................... 52,476 $ 218,644
========= =========
5. INTANGIBLE AND OTHER ASSETS
December 31,
------------------------
1997 1998
--------- ---------
(In Thousands)
Goodwill ............................. $ 90,961 $ 272,815
Deposits and other ................... 692 535
--------- ---------
91,653 273,350
Less accumulated amortization ........ (947) (6,073)
--------- ---------
Total ........................... $ 90,706 $ 267,277
========= =========
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
December 31,
------------------------
1997 1998
--------- ---------
(In Thousands)
Accounts payable ..................... $13,219 $27,980
Accrued interest payable to Suiza .... 2,775 9,499
Employee compensation and benefits ... 619 8,629
Accrual for plant closings ........... 3,585
Accrued rebates ...................... 1,570 1,757
Other ................................ 1,824 12,476
------- -------
Total ........................... $20,007 $63,926
======= =======
52
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
7. DEBT
December 31,
----------------------
1997 1998
--------- ---------
(In Thousands)
Revolving credit facility with Suiza .... $ $ 26,370
========= =========
Long-term debt:
Notes payable to Suiza:
Senior notes payable .................. $ 74,815 $ 125,502
Mezzanine notes payable ............... 34,007 118,749
Senior secured notes payable ............ 113,114
Capital lease obligations ............... 3,006
--------- ---------
$ 108,822 378,371
Less current portion .................. (6,032)
--------- ---------
Total ............................. $ 108,822 372,339
========= =========
Notes Payable to Suiza--The Company has entered into various credit
arrangements with Suiza, which include a non-interest-bearing revolving credit
facility, payable on demand, to fund the Company's working capital and capital
expenditure requirements and senior and mezzanine notes payable to fund a
portion of the purchase prices for acquired businesses pursuant to the capital
structure required by the stockholders' agreement, as discussed in Note 2.
The senior notes payable that are unsecured notes, were issued in
connection with the Company's acquisitions, at various dates in 1997 and 1998,
and require quarterly principal installments of 2% of the initial principal
balance beginning September 30,1999, and ending on their maturity date, June 30,
2004. Amounts outstanding under the senior note bear interest, payable
quarterly, at a floating rate based on the London Interbank Offering Rate plus
300 basis points. The interest rate in effect, including the applicable interest
rate margin, was 8.78% and 8.63% at December 31, 1998 and 1997, respectively.
The mezzanine notes payable that are unsecured notes, were issued in
connection with the Company's acquisitions, at various dates in 1997 and 1998,
and are due in full on their maturity date, June 30, 2007. Of the amounts
outstanding at December 31, 1998, approximately $57 million bear interest at
12.5%, while the remaining $61.7 million bear interest at 13.9%. Interest on
these notes are payable quarterly.
Senior Secured Notes--The senior secured notes were issued in December
1996 and have an original par value of $125 million. These notes, which are due
in 2006, bear interest at a fixed interest rate of 10%, payable semiannually in
July and December of each year, and are secured by substantially all assets
other than inventory, receivables and certain equipment of PCI, along with the
stock of certain of PCI's subsidiaries. In connection with the acquisition of
PCI in 1998, these notes were revalued to fair value using a market yield of
8.6% resulting in a premium of $10.4 million at the acquisition date. This
premium is being amortized as an adjustment to interest expense over the life of
the notes. These notes are redeemable, in whole or in part, at the option of PCI
beginning on December 16, 2001, at an initial price of 105% of par value,
declining ratably each year to par value on December 15, 2004. In addition, the
indenture requires PCI to offer to redeem the notes at a redemption price of
101% of par value upon the occurrence of certain other events. The tender offer
to redeem these notes in connection with the acquisition of PCI resulted in the
redemption of $3.8 million of these notes. The indenture places certain
restrictions on the payment of dividends, additional liens, disposition of the
proceeds of asset sales, sale and leaseback transactions and additional
borrowings.
Capital Lease Obligations--The Company is obligated under capital leases
for a manufacturing facility, which expires in December 2000, and certain
machinery and equipment, which expires in April 2002. The
53
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
equipment lease arrangement commenced on April 1, 1996, in connection with the
issuance of tax-exempt industrial development revenue bonds. Included in the
combined balance sheet are capital lease assets of $4.5 million and accumulated
amortization of $.3 million at December 31, 1998.
Future minimum lease payments under these capital leases are as follows
(in thousands):
Year ending December 31:
1999............................................ $1,172
2000............................................ 919
2001............................................ 871
2002............................................ 349
------
Total future minimum lease payments................... 3,311
Less portion representing interest.................... (305)
-------
Net minimum lease payments...................... $3,006
======
Scheduled Maturities--The scheduled annual maturities of long-term debt at
December 31, 1998, were as follows (in thousands):
Suiza Notes Other Debt Total
----------- ---------- --------
1999 .................. $ 5,020 $ 1,012 $ 6,032
2000 .................. 10,040 848 10,888
2001 .................. 10,040 784 10,824
2002 .................. 10,040 362 10,402
2003 .................. 10,040 10,040
Thereafter ............ 199,071 131,114 330,185
-------- -------- --------
$244,251 $134,120 $378,371
======== ======== ========
8. OPERATING LEASES
The Company leases certain property, plant and equipment used in its
operations under noncancelable operating lease agreements. Such leases, which
are primarily for facilities, machinery and equipment and vehicles, have lease
terms ranging from two to nine years. Certain of the operating lease agreements
require the payment of additional rentals for maintenance, along with additional
rentals, based on miles driven or units produced. Lease expense, including
additional rent, was $11.6 million for the year ended December 31, 1998, $1.3
million for the five-month period ended December 31, 1997, $0.7 million for the
four-month period ended July 31, 1997, $2.1 million for the six-month period
ended March 31, 1997, and $4.3 million for the year ended September 30, 1996.
Future minimum lease payments at December 31, 1998, under noncancelable
operating leases with terms in excess of one year are summarized below (in
thousands):
1999................................................. $16,833
2000................................................. 15,996
2001................................................. 15,473
2002................................................. 13,159
2003................................................. 11,211
Thereafter........................................... 12,283
-------
Total............................ $84,955
=======
54
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
9. INCOME TAXES
The following table presents the provision for income taxes of Suiza
Packaging for the periods presented (in thousands):
Predecessor
-------------------------------
Five-
Six-Month Four- Month
Year Period Month Period Year
Ended Ended Period Ended Ended
September March 31, Ended July December December
30, 1996 1997 31, 1997 31, 1997 31, 1998
--------- --------- ---------- -------- --------
Current taxes payable
Federal ........... $ -- $ -- $ -- $ (869) $ (2,394)
State ............. 280 218 190 304 1,114
Deferred income taxes 793 10,766
-------- -------- -------- -------- --------
Total .......... $ 280 $ 218 $ 190 $ 228 $ 9,486
======== ======== ======== ======== ========
For the periods ended prior to July 31, 1997, the Company had elected to
be taxed as a Subchapter S Corporation whereby all of its income or losses
passed through to its stockholders. Accordingly, no provision for federal income
taxes is included in the combined financial statements for these periods. The
following is a reconciliation of income taxes reported in the combined
statements of operations (in thousands):
<TABLE>
<CAPTION>
Predecessor
-------------------------------
Five-
Six-Month Four- Month
Year Period Month Period Year
Ended Ended Period Ended Ended
September March 31, Ended July December December
30, 1996 1997 31, 1997 31, 1997 31, 1998
--------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Tax expense at statutory rates ....... $ -- $ -- $ -- $ (89) $6,885
State income taxes, net of federal tax
effect ............................... 280 218 190 275 1,740
Tax effect of non-deductible goodwill 653
Other ................................ 42 208
------ ------ ------ ------ ------
Total .......................... $ 280 $ 218 $ 190 $ 228 $9,486
====== ====== ====== ====== ======
</TABLE>
The tax effects of temporary differences giving rise to deferred income
tax assets and liabilities were:
<TABLE>
<CAPTION>
December 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Deferred income tax assets:
Net operating loss carry forwards ........................... $ 1996 $ 18,022
Vacation reserves ........................................... 46 1,031
Self-insurance reserves ..................................... 3,890
Plan rationalization reserve ................................ 1,736
Postretirement benefit reserves ............................. 3,373
Premium on senior secured notes ............................. 3,748
Deferred financing costs .................................... 1,826
Allowance ................................................... 48 1,034
</TABLE>
55
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
<TABLE>
<CAPTION>
December 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Other ....................................................... 97 2,426
-------- --------
2,187 37,086
Deferred income tax liabilities - depreciation and amortization (2,980) (17,852)
-------- --------
Net deferred income tax assets (liabilities) .............. $ (793) $ 19,234
======== ========
</TABLE>
These net deferred income tax assets (liabilities) are classified in the
combined balance sheets as follows:
December 31,
---------------------------
1997 1998
-------- --------
Current assets ........................... $ 2,187 $ 2,395
Noncurrent assets ........................ 23,937
Noncurrent liabilities ................... (2,980) (7,098)
-------- --------
Total ............................... $ (793) $ 19,234
======== ========
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers projected future taxable income, the scheduled reversal of deferred
tax liabilities and tax-planning strategies in making this assessment. Based
upon this assessment, management believes it is more likely than not the Company
will realize the benefits of these temporary differences at December 31, 1998.
At December 31, 1998, the Company has operating loss carryforwards for
federal income tax purposes of approximately $50 million, which are available to
offset future federal taxable income. The carryforward periods extend from 2007
through 2010. In addition, the Company has alternative minimum tax credit
carryforwards of approximately $132,000 that are available to reduce future
federal regular income taxes over an indefinite period, and research and
development credits of approximately $480,000 available to reduce future federal
income taxes through 2010.
10. STOCKHOLDERS' EQUITY
Capital Shares--Authorized capital shares of the Company include 1,000,000
shares of preferred stock with a par value and stated value of $.001 and $1,000
per share, respectively, and 5,000,000 shares of common stock with a par value
of $.001 per share. The rights and preferences of preferred stock are
established by the Company's board of directors upon issuance.
The shares of preferred stock outstanding include 22,671 and 72,594 shares
at December 31, 1997 and 1998, respectively. These preferred shares have a
cumulative dividend rate of 15% of their stated and have a liquidation
preference equal to $1,000 per shares plus accumulated unpaid dividends.
Warrants--In conjunction with the acquisition of the Plastics Management
Group on July 31, 1997, 91,880 warrants were sold for $383,000, which
approximated their fair value, to former stockholders of Plastics Management
Group, giving such holders the right to purchase equity interests in the Company
equal to 17.5% of the outstanding common stock at that date for $10 per share.
These warrants are exercisable, in whole or in part, at various dates through
July 31, 2007.
56
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
Stock Options--Pursuant to the stockholders' agreement, Suiza Packaging
was authorized to grant stock options to key employees. During 1998, the Company
adopted the Franklin Plastics, Inc. 1998 Stock Option Plan, which reserved
187,089 shares of common stock for grants under the plan, and granted stock
options to certain key employees at exercise prices that approximated the fair
market value of such shares at the date of grant. Stock options granted under
this plan are exercisable over a three-year period from date of grant and may
become exercisable upon the termination of an individual's employment following
a change in control. At December 31, 1998, options for 89,836 shares had been
granted and were outstanding at an exercise price of $10 per share, none of
which were exercisable at that date. In addition, on February 1, 1999, the
Company granted stock options for 28,358 shares of common stock to certain key
employees at an exercise price of $30 per share, which approximated the fair
market value of such shares at that date.
11. EMPLOYEE BENEFITS
Suiza Packaging sponsors both defined benefit and defined contribution
retirement plans on behalf of certain of its subsidiaries, and contributes to
various multiemployer union pension plans. The following is a summary of amounts
expensed under these plans (in thousands):
<TABLE>
<CAPTION>
Predecessor
-------------------------------------------
Five-
Six-Month Four- Month
Year Period Month Period Year
Ended Ended Period Ended Ended
September 30, March 31, Ended July 31, December 31, December 31,
------------- ---------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Defined benefit plans ............. $ -- $ -- $ -- $ -- $ 194
Defined contributions plans ....... 141 118 147 935
Multiemployer plans ............... -- -- -- 573
------ ------ ------ ------ ------
$ 141 $ 118 $ -- $ 147 $1,702
====== ====== ====== ====== ======
</TABLE>
Defined Benefit Plans--As of May 29, 1998, the Company succeeded to a
defined benefit pension plan for substantially all salaried employees of PCI
hired prior to August 1, 1997. Plan benefits are based on all years of
continuous service and the employee's compensation during the highest five
continuous years of the last ten years of employment, minus a profit sharing
annuity. The profit sharing annuity is based on the amount of profit sharing
contributions received for 1988 through 1992.
Any employee who terminated employment prior to August 31, 1993, is
governed by the terms of the plan in effect at the time the termination
occurred. In addition, the Company maintains a benefit equalization plan for
salaried employees hired prior to August 1, 1997, whose compensation level
exceeds the limits within the defined benefit pension plan.
The Company also succeeded to a noncontributory defined benefit pension
plan for substantially all hourly employees of PCI hired prior to August 1,
1997, who have attained 21 years of age. Plan benefits vary by location and by
union contract, but are based primarily on years of service and the employee's
highest wage classification for 12 consecutive months in the five-year period
prior to retirement. Normal retirement is at age 65, with at least a five-year
period of continuous service. However, employees may retire as early as age 55
and receive reduced benefits.
Subject to the limitation on deductibility imposed by federal income tax
laws, the Company's policy has been to contribute funds to the plans annually in
amounts required to maintain sufficient plan assets to provide for accrued
benefits. Plan assets are held in a master trust and are composed primarily of
common stock, corporate bonds and U.S. government and government agency
obligations.
57
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
Postretirement Benefits Other Than Pensions--The Company provides certain
health care and life insurance benefits for retired PCI employees. Certain of
PCI's hourly and salaried employees became eligible for these benefits when they
became eligible for an immediate pension under a formal company pension plan. In
1993, the plan was amended to eliminate health care benefits for employees hired
after January 1, 1993. The Company's policy is to fund the cost of medical
benefits as claims are incurred.
At May 29, 1998, as part of the purchase accounting adjustments in
connection with the PCI acquisition, the accrued pension liability and accrued
postretirement benefit liability were adjusted to fair value, and all previously
unrecognized gains and losses were recognized as part of the purchase
allocation.
The following table sets forth the funded status of the these plans and
the amounts recognized in the balance sheets at December 31, 1998 (in
thousands):
<TABLE>
<CAPTION>
Other Post-
Pension Benefits Retirement Benefits
---------------- -------------------
<S> <C> <C>
Change in benefit obligation:
Benefit obligations at acquisition date ............ $ 71,500 $ 5,900
Service cost ....................................... 865 49
Interest cost ...................................... 2,741 215
Actuarial loss ..................................... 2,329 (63)
Curtailment ........................................ (142)
Benefit Paid ....................................... (2,423) (184)
-------- --------
Benefit obligations at end of year ................... 74,870 5,917
Change in plan assets:
Fair value of plan assets at acquisition date ...... 67,907
Actual return on plan assets ....................... 1,989
Employer contribution .............................. 1,165 184
Participant contributions .......................... 104
Benefits paid ...................................... (2,423) (288)
-------- --------
Fair value of plan assets at end of year ............. 68,638 --
-------- --------
Funded status ........................................ (6,232) (5,917)
Unrecognized actuarial gains ......................... 3,752 (63)
-------- --------
Accrued benefits liability ....................... $ (2,480) $ (5,980)
======== ========
Weighted average assumptions as of December 31, 1998
Discount rate ...................................... 6.5% 6.5%
Expected asset return .............................. 9.0
Rate of compensation increase ...................... 5.0
</TABLE>
The components of net periodic benefit cost and net periodic
postretirement benefit cost for the period from the date of acquisition (May 29,
1998) through December 31, 1998, were as follows (in thousands):
Other Post-
Retirement
Pension Benefits Benefits
---------------- ----------
Service costs ................................. $ 865 $ 49
Interest cost ................................. 2,741 215
Expected return on plan assets ................ (3,412) --
------- -------
Net period benefit cost ................. $ 194 $ 264
======= =======
58
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in
assumed health care cost trend rates would change the amount of the service and
interest components and the postretirement benefit obligation by $37,000 and
$535,000, respectively.
Defined Contribution Plan--Employees of certain of the Company's
subsidiaries are eligible to participate in a 401(k) employees savings plan
sponsored by Suiza and, prior to 1998, similar plans sponsored by individual
subsidiaries. Employees who have completed one or more years of service and have
met other requirements pursuant to the plans are eligible to participate in the
plan. The employees participating in the plan can generally make contributions
up to 15% of their annual compensation, and the Company can elect to match such
employee contributions up to a maximum of 25% of the employee's contribution.
The matching contributions vest 100% after five years.
The Company succeeded to a defined contribution plan that covers
substantially all PCI's hourly employees who meet certain eligibility
requirements. Provisions regarding employee and employer contributions and the
benefits provided under the plan vary between PCI's manufacturing facilities.
The Company also succeeded to a contributory defined contribution 401(k)
savings plan that covers substantially all PCI's nonorganized salaried
employees. Employees may contribute up to 12% and 8% of compensation on a pretax
and after-tax basis, respectively. However, the total employee contribution rate
may not exceed 15% of compensation. The Company matches up to 3% of employees'
pretax contributions. Employees vest in the Company's contributions at 25% per
year, becoming fully vested after four years of employment. Employees may make
withdrawals from the plan prior to attaining age 59 1/2, subject to certain
penalties.
Multiemployer Plans--The Company's PCI subsidiary contributes to various
multiemployer union pension plans pursuant to its labor agreements. Union
benefit plan expense during 1998 was $0.6 million for the period subsequent to
the acquisition date.
12. MAJOR CUSTOMERS
Sales to three customers comprised the following percentages of net sales
for each of the two years ended December 31, 1998:
1997 1998
---- ----
Customer A ....................... -- 12.0%
Customer B ....................... 15.4% 4.6
Customer C ....................... 14.0 4.6
For the six months ended March 31, 1997, two customers represented
approximately 22% and 13% of the combined sales. There were nine companies that
had customers whose sales were greater than 10% of their respective sales for
the year ended September 30, 1996. Concentration of credit risk with respect to
accounts receivable is limited due to the large number of customers and billing
and payment patterns.
In addition to the above major sales to third-party customers, the Company
sells finished products and raw materials to other Suiza subsidiaries. Sales to
these affiliates approximated 4.7% and 11.2% of the Company's net sales for the
years ended December 31, 1997 and 1998, respectively.
59
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
13. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Predecessor
-------------------------------
Five-
Six-Month Four- Month
Year Period Month Period Year
Ended Ended Period Ended Ended
September March 31, Ended July December December
30, 1996 1997 31, 1997 31, 1997 31, 1998
--------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Cash paid for interest ............... $ 1,085 $ 933 $ 618 $ 1,807 $22,464
Cash paid for taxes .................. 118 301 4,314
Preferred dividends declared, but not
paid ............................... 7,906
Issuance of preferred stock (non-cash) 34,561
</TABLE>
14. COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are parties, in the ordinary course of
business, to certain claims and litigation. In management's opinion, the
settlement of such matters is not expected to have a material impact on the
combined financial statements.
In addition, the Company is a party to employment agreements with certain
officers which provided for minimum compensation levels and incentive bonuses
along with provisions for termination of benefits in certain circumstances.
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
Pursuant to SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments," the Company is required to disclose an estimate of the fair value
of financial instruments as of December 31, 1998 and 1997. Differences between
the historical carrying values and estimated fair values of financial
instruments can occur for many reasons, including taxes, commissions, prepayment
penalties, make-whole provisions and other restrictions, as well as the inherent
limitations in any estimation techniques.
Due to their near-term maturities, the carrying amounts of accounts
receivable, temporary investments, accounts payable and the revolving credit
facility loans approximate their fair values. The Company's borrowings under the
senior notes payable to Suiza are at variable interest rates, and their fair
values approximate their carrying values. The Company's subordinated notes
payable to Suiza and the senior secured notes of PCI bear interest at fixed
interest rates. The subordinated notes payable to Suiza have a carrying value of
$118.7 million and $34.0 million at December 31, 1998 and 1997, respectively,
and the senior secured notes of PCI have a carrying value of $131.1 million at
December 31, 1998. The following table summarizes the estimated fair values of
these fixed rate notes:
60
<PAGE>
SUIZA PACKAGING
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
FOR 1996, 1997 AND 1998
December 31,
---------------------
1997 1998
-------- --------
(In Thousands)
Subordinated notes payable to Suiza ...... $ 34,595 $124,688
Senior Secured Notes of PCI .............. -- 127,470
16. SUBSEQUENT EVENT
On April 29, 1999, Suiza entered into an agreement to merge the Company
into Consolidated Container Holdings LLC, ("Newco"), and in connection with this
and other transactions Suiza's controlled subsidiary, Franklin Plastics, Inc.,
will receive a 49% ownership interest in Newco. Pursuant to this agreement,
Newco has agreed to refinance the existing notes payable to Suiza and to repay
these notes along with the related accrued interest, and to redeem the
outstanding shares of preferred stock, along with certain accrued but unpaid
preferred dividends.
61
<PAGE>
SUIZA PACKAGING
CONDENSED COMBINED BALANCE SHEET
March 31, 1999
(dollars in thousands)
March 31,
1999
---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 2,706
Temporary investments ....................................... 8,112
Accounts receivable, net of allowance
for doubtful accounts of $2,084 ........................... 51,840
Inventories ................................................. 24,306
Prepaid expenses and other current assets ................... 2,729
Deferred income taxes ....................................... 2,395
---------
Total current assets .................................... 92,088
PROPERTY, PLANT AND EQUIPMENT ................................. 222,426
DEFERRED INCOME TAXES ......................................... 22,288
INTANGIBLE AND OTHER ASSETS ................................... 265,474
---------
TOTAL ASSETS .................................................. $ 602,276
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Account payable and accrued expenses ........................ $ 67,311
Dividends payable ........................................... 10,639
Revolving credit facility ................................... 29,459
Current portion of long-term debt ........................... 6,032
---------
Total current liabilities ............................... 113,441
LONG-TERM DEBT ................................................ 372,133
DEFERRED INCOME TAXES ......................................... 7,098
OTHER LONG-TERM LIABILITIES ................................... 22,598
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, $1,000 stated
value--1,000,000 shares authorized;
72,594 shares issued and outstanding ...................... 72,594
Common stock, $.001 par value--5,000,000 shares
authorized, 1,451,877 shares
issued and outstanding .................................... 1
Additional paid-in capital .................................. 14,899
Retained deficit ............................................ (488)
---------
Total stockholders' equity .............................. 87,006
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................... $ 602,276
=========
See notes to condensed combined financial statements.
62
<PAGE>
SUIZA PACKAGING
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
THREE-MONTH PERIOD ENDED MARCH 31, 1998 AND 1999
(dollars in thousands)
Three-Month
Period Ended
March 31,
--------------------------
1998 1999
--------- ---------
(Unaudited)
NET SALES ...................................... $ 42,299 $ 128,702
COST OF SALES .................................. 33,266 97,382
--------- ---------
Gross profit ................................. 9,033 31,320
OPERATING EXPENSES:
Selling, general and administrative .......... 4,762 12,972
Amortization of intangibles .................. 1,672
--------- ---------
Total operating expenses ................. 4,762 14,644
--------- ---------
INCOME FROM OPERATIONS ......................... 4,271 16,676
OTHER INCOME (EXPENSE):
Interest, expense, net ....................... (3,434) (9,363)
Other expense, net ........................... 118
--------- ---------
Total other income (expense) ............. (3,434) (9,245)
--------- ---------
INCOME BEFORE INCOME TAXES ..................... 837 7,431
INCOME TAX EXPENSE ............................. 335 3,567
--------- ---------
NET INCOME ..................................... $ 502 $ 3,864
========= =========
See notes to condensed combined financial statements.
63
<PAGE>
SUIZA PACKAGING
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
THREE-MONTH PERIOD ENDED MARCH 31, 1998 AND 1999
(dollars in thousands)
Three-Month
Period Ended
March 31,
--------------------
1998 1999
-------- --------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................. $ 502 $ 3,864
Adjustments to net income:
Depreciation and amortization ......................... 1,749 7,321
Deferred income taxes ................................. 1,649
Changes in assets and liabilities, net of acquisitions:
Receivables .......................................... (10,084) (7,127)
Inventories .......................................... (1,516) (941)
Prepaid expenses and other assets .................... (3,531) (1,959)
Accounts payable and accrued expenses ................ 1,585 3,624
-------- --------
Net cash provided by (used in) operating activities . (11,295) 6,431
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of temporary investments ........ 1,104
Additions to property, plant and equipment ............. (12,415) (9,393)
Cash paid for acquisitions, net of cash acquired ....... (28,129)
-------- --------
Net cash used in investing activities ................. (40,544) (8,289)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from parent company ..................... (1,417) 3,089
Issuance of common and preferred stock ................. 44,891
Issuance of warrants ................................... 8,322
Repayment of long-term debt ............................ (206)
-------- --------
Net cash provided by financing activities ............. 51,796 2,883
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........ (43) 1,025
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .......... 265 1,681
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD ................ $ 222 $ 2,706
======== ========
See notes to condensed combined financial statements.
64
<PAGE>
SUIZA PACKAGING
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
MARCH 31, 1999
1. CONDENSED COMBINED FINANCIAL STATEMENTS
The condensed combined financial statements contained in this report are
unaudited. In our opinion, we have made all necessary adjustments (which include
only normal recurring adjustments) in order to present fairly, in all material
respects, our combined financial position, as of March 31, 1999, and results of
operations and cash flows for the three-month periods ended March 31, 1999 and
1998. Certain information and footnote disclosures normally included in the
annual financial statements have been omitted. Our results of operations for the
period ended March 31, 1999, may not be indicative of our operating results for
the full year. The financial statements should be read in conjunction with our
1998 combined financial statements.
2. INVENTORIES
Inventories consist of the following:
March 31,
1998
---------
Raw materials .................................... $11,266
Finished goods ................................... 11,194
Caribbean ........................................ 519
Repair parts and supplies ........................ 1,327
-------
Total .......................................... 24,306
=======
3. SUBSEQUENT EVENT
On April 29, 1999, Suiza entered into an agreement to merge the Company
into Consolidated Container Holdings LLC ("Newco"), and in connection with this
and other transactions Suiza's controlled subsidiary, Franklin Plastics, Inc.,
will receive a 49% ownership interest in Newco. Pursuant to this agreement,
Newco has agreed to refinance the existing notes payable to Suiza and to repay
these notes along with the related accrued interest, and to redeem the
outstanding shares of preferred stock, along with certain accrued but unpaid
preferred dividends.
65
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Plastic Containers LLC:
We have audited the accompanying consolidated balance sheet of Plastic
Containers LLC and subsidiaries as of May 29, 1998, and the related
consolidated statements of operations, stockholders' equity and cash flows
for the period from January 1, 1998 through May 29, 1998. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit. The consolidated financial statements of the
Company for the years ended December 31, 1996 and 1997 were audited by other
auditors whose report, dated February 6, 1998, expressed an unqualified
opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such 1998 consolidated financial statements present fairly,
in all material respects, the financial position of Plastic Containers LLC
and subsidiaries as of May 29, 1998, and the results of their operations and
their cash flows for the period from January 1, 1998 through May 29, 1998, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Omaha, Nebraska
May 21, 1999
66
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Plastic Containers LLC:
We have audited the accompanying consolidated balance sheet of Plastic
Containers LLC and subsidiaries as of December 31, 1997, and the related
consolidated statements of operations, stockholders' equity and cash flows
for each of the years in the two-year period ended December 31, 1997. We also
have audited the consolidated financial statement Schedule for the two-year
period ended December 31, 1997. These consolidated financial statements and
the financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly in all material respects, the financial position of Plastic
Containers LLC and subsidiaries as of December 31, 1997 and the results of
their operations and their cash flows for each of the years in the two-year
period ended December 31, 1997, in conformity with generally accepted
accounting principles. Also, in our opinion, the related consolidated
financial statement schedule, when consolidated in relation to the
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Omaha, Nebraska
February 6, 1998
67
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)
<TABLE>
<CAPTION>
December 31, May 29,
1997 1998
------------ ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................... $ 2,479 $ 2,297
Investment securities ........................................ 20,385 22,166
Accounts receivable:
Trade ........................................................ 21,483 22,871
Other ........................................................ 205 13
--------- ---------
21,688 22,884
Less allowance for doubtful accounts and accrued rebates ..... 1,430 1,917
--------- ---------
Net accounts receivable ..................................... 20,258 20,967
Inventories .................................................. 19,955 18,585
Deferred income taxes ........................................ 2,260 2,260
Prepaid expenses ............................................. 590 733
--------- ---------
Total current assets ........................................ 65,927 67,008
--------- ---------
Property, plant and equipment:
Land, building and building improvements .................... 22,828 22,828
Manufacturing machinery and equipment ....................... 142,687 142,634
Construction in progress .................................... 6,857 12,563
--------- ---------
172,372 178,025
Less accumulated depreciation and amortization .............. 72,281 77,276
--------- ---------
Net property, plant and equipment .......................... 100,091 100,749
--------- ---------
Goodwill and other intangible assets ......................... 25,591 24,819
Other assets ................................................. 13,303 14,710
--------- ---------
$ 204,912 $ 207,286
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable--trade ...................................... $ 18,285 $ 20,346
Current portion of long-term obligations ..................... 996 996
Other current liabilities .................................... 16,741 22,306
--------- ---------
Total current liabilities ................................... 36,022 43,648
Long-term obligations, excluding current portion .............. 128,007 127,663
Other liabilities ............................................. 20,764 19,479
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Common stock, $1 par value. Authorized 1,000 shares; 100 shares
issued and outstanding
Additional paid-in capital ................................... 79,833 80,758
Accumulated deficit .......................................... (27,529) (25,852)
--------- ---------
52,304 54,906
Less note receivables from stockholders ....................... 32,185 38,410
--------- ---------
Total stockholders' equity .................................. 20,119 16,496
--------- ---------
$ 204,912 $ 207,286
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
68
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMETN OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Year ended
December 31, Period from
---------------------- January 1, 1998
through
1996 1997 May 29, 1998
--------- --------- ---------------
<S> <C> <C> <C>
Net sales ......................................... $ 267,793 $ 279,565 $ 108,924
Cost of goods sold ................................ 224,789 234,210 92,159
--------- --------- ---------
Gross profit .................................... 43,004 45,355 16,765
Selling, general and administrative expenses ...... 28,829 27,772 11,617
Plant rationalization and realignment ............. 6,500 -- --
--------- --------- ---------
Operating income .................................. 7,675 17,583 5,148
--------- --------- ---------
Other income (expenses):
Interest income ................................. 102 1,451 604
Interest expense ................................ (12,886) (13,535) (5,643)
Loss of disposal of assets ...................... (366) (555) (22)
--------- ---------
(13,150) (12,639) (5,061)
--------- --------- ---------
Income (loss) before income taxes and
extraordinary item............................... (5,475) 4,944 87
Income tax expense (benefit) ...................... (1,876) (961) (1,590)
--------- --------- ---------
Income (loss) before extraordinary item ........... (3,599) 5,905 1,677
Extraordinary item--loss on early extinguishment of
of debt.......................................... (7,305) -- --
--------- --------- ---------
Net income (loss) ................................. $ (10,904) $ 5,905 $ 1,677
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
69
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
AND THE PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
<TABLE>
<CAPTION>
Plastic Note
Containers, Additional Retained Receivable Total
LLC Paid-in- Earnings from Stockholders'
Common Stock Capital (Deficit) Stockholder Equity
------------ ---------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1995 ..... $ -- $ 60,000 $(22,530) $ -- $ 37,470
Push -down accounting adjustment .. -- 17,648 -- -- 17,648
Loan to stockholder ............... -- -- -- (30,000) (30,000)
Accrued interest on note receivable
from stockholder ................ -- 74 -- (74) --
Net loss .......................... -- -- (10,904) -- (10,904)
------- -------- -------- -------- --------
Balances at December 31, 1996 ..... -- 77,722 (33,434) (30,074) 14,214
Accrued interest on note receivable
from stockholder ................ -- 2,111 -- (2,111) --
Net income ...................... -- -- 5,905 -- 5,905
------- -------- -------- -------- --------
Balances at December 31, 1997 ... -- 79,833 (27,529) (32,185) 20,119
Loan to stockholder ............. -- -- -- (5,300) (5,300)
Accrued interest on note receivable
from stockholder ................ -- 925 -- (925) --
Net income ...................... -- -- 1,677 -- 1,677
------- -------- -------- -------- --------
Balances at May 29, 1998 ........ $ -- $ 80,758 $(25,852) $(38,410) $ 16,496
======= ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
70
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Period from
January 1, 1998
Year ended through
December 31, May 29,
------------------------ ---------------
1996 1997 1998
--------- --------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) .................................... $ (10,904) $ 5,905 $ 1,677
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization ....................... 21,309 12,946 5,589
Loss on disposal of assets .......................... 366 555 22
Deferred income taxes ............................... (1,896) (1,000) (1,600)
Extraordinary loss on debt extinguishment ........... 7,305 -- --
Changes in assets and liabilities:
Amounts, receivables, net .......................... 5,366 7,444 (709)
Inventories ........................................ 585 (553) 1,370
Prepaid expenses ................................... 258 (44) (143)
Accounts payable ................................... (3,725) (1,522) 2,061
Other current liabilities .......................... 3,581 (2,263) 5,565
Other asset and liabilities ........................ 2,301 (126) 195
--------- --------- ---------
Net cash provided by operating activities ........ 24,546 21,342 14,027
--------- --------- ---------
Cash flows from investing activities:
Proceeds from maturity of investment securities ...... 75 25,834 20,767
Purchase of investment securities ................... (1,000) (45,009) (22,548)
Proceeds from disposal of assets .................... 41,654 565 3
Purchases of property, plant and equipment .......... (21,240) (11,085) (6,787)
Loan to stockholder ................................. (30,000) -- (5,300)
--------- --------- ---------
Net cash used in investing activities ............. (10,511) (29,695) (13,865)
--------- --------- ---------
Cash flows from financing activities:
Net repayments on notes payable to bank .............. (17,018) -- --
Proceeds from long-term obligations .................. 130,100 -- --
Repayment of long-term obligations ................... (105,471) (979) (344)
Premium on repurchase of bonds ....................... (5,382) -- --
Finance fees paid .................................... (5,514) (367) --
--------- --------- ---------
Net cash used in financing activities .............. (3,285) (1,346) (344)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents .. 10,750 (9,699) (182)
Cash and cash equivalents--beginning .................. 1,428 12,178 2,479
--------- --------- ---------
Cash and cash equivalents--ending ..................... $ 12,178 $ 2,479 $22,97
--------- --------- ---------
Supplemental disclosures of cash flow information:
Interest paid ........................................ $ 15,240 $ 12,541 $ 171
========= ========= =========
Interest taxes paid .................................. $ 20 $ 523 $ 42
========= ========= =========
</TABLE>
71
<PAGE>
See accompanying notes to consolidated financial statements.
72
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1997
AND FOR THE PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation--The accompanying financial
statements include Plastic Containers LLC and its wholly-owned subsidiaries
("PCI" or "the Company"), Continental Plastic Containers LLC ("CPC") and
Continental Caribbean Containers, Inc. ("Caribbean"). All significant
intercompany transactions have been eliminated in consolidation.
PCI develops, manufactures and markets a wide range of custom extrusion
blow-molded plastic containers for food and juice, automotive products and motor
oil, household chemicals, industrial and agricultural chemicals and hair care
products. Based on the nature of the product, the production processes, types of
customers, and methods used to distribute products, the Company operates in one
reportable segment.
PCI is a subsidiary of Continental Can Company, Inc. ("Continental Can").
On May 29, 1998, Continental Can was acquired by Suiza Foods Corporation
("Suiza") in a transaction accounted for as a purchase. The consolidated
financial statements of PCI as of and for the periods ended before May 29, 1998
were prepared using PCI's historical basis of accounting.
CPC and Caribbean constitute all of PCI's direct and indirect subsidiaries
and have fully and unconditionally guaranteed the Company's senior secured notes
on a joint and several basis. PCI is a holding company with no assets,
operations or cash flow separate from its investments in CPC and Caribbean.
Cash Equivalents--Marketable securities that are highly liquid and have
maturities of three months or less at date of purchase are classified as cash
equivalents.
Investment Securities--Investment securities at December 31, 1997 and May
29, 1998 consist of available- for-sale U.S. government obligations,
certificates of deposit, Eurodollar deposits, and highly rated commercial paper,
all of which are due within one year. The fair value of investment securities
approximates their amortized cost.
Inventories--CPC's manufacturing inventories are stated at cost using the
last-in, first-out (LIFO) method, which is not in excess of market. All repair
parts, supplies inventories and Caribbean's inventories are stated at the lower
of cost, applied on the first-in, first-out (FIFO) method, or market.
Property, Plant and Equipment--Property, plant and equipment are stated at
cost. Depreciation is computed principally on a straight-line basis over
estimated useful lives of the assets, which range from three to thirty-five
years. Plant and equipment held under capital leases and leasehold improvements
are amortized straight-line over the shorter of the lease term or estimated
useful life of the asset.
Effective January 1, 1997, the Company revised its estimates of the useful
lives of certain machinery and equipment. These changes were made to better
reflect the estimated periods during which these assets remain in service. For
the year ended December 31, 1997, the change had the effect of decreasing
depreciation expense by $1696, and after adjusting for an assumed tax rate of
38%, increasing net income by $1,052.
73
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
Insurance--PCI purchases commercial insurance policies, but remains
self-insured in certain states for the purposes of providing workers'
compensation, general liability and property and casualty insurance coverages up
to varying deductible amounts. Self-insurance liabilities are based on claims
filed and estimates for claims incurred but not reported and are included in
other liabilities on the consolidated balance sheets. Costs charged to
operations for self-insurance for the years ended December 31, 1996 and 1997 and
the period from January 1, 1998 through May 29, 1998, were $2,629, $1,784 and
$214, respectively.
Research, Development and Engineering--Expenditures for research,
development and engineering are expensed as incurred. Costs charged to
operations for research, development and engineering for the years ended
December 31, 1996 and 1997 and for the period from January 1, 1998 through May
29, 1998, were $8,318, $8,825 and $3,876, respectively.
Goodwill and Other Identifiable Intangible Assets--Goodwill and other
identifiable intangible assets are stated on the basis of cost. Goodwill is
being amortized on a straight-line basis over 40 years. Customer contracts are
being amortized on a straight-line basis over 10 years and finance costs are
being amortized using the effective interest method over periods ranging from 6
to 10 years.
Impairment of Long-Lived Assets, Goodwill and Certain Identifiable
Intangible Assets --Long-lived assets, including goodwill and certain
identifiable intangible assets, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.
Income Tax--Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Beginning in 1997 the Company filed a consolidated Federal income tax
return with Continental Can. Income taxes have been provided as if the Company
files a separate return.
Use of Estimates--The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amount reported in the
consolidated financial statements and accompanying notes. Although these
estimates are based on management's knowledge of current events and actions it
may undertake in the future, actual results could differ from the estimates.
74
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
Reclassifications--Certain amounts have been reclassified to conform to
the current year's presentation.
2. INVENTORIES
Major classes of inventories consist of the following:
December 31, May 29,
1997 1998
------------ --------
Raw materials .................................. $ 9,566 $ 8,056
Finished goods ................................. 11,835 12,020
-------- --------
21,401 20,076
LIFO reserve ................................... (3,578) (3,578)
-------- --------
17,823 16,498
Continentals Caribbean Containers, Inc. ........ 554 467
Repair parts and supplies ...................... 1,578 1,620
-------- --------
Total ........................................ $ 19,955 $ 18,585
======== ========
3. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets consist of the following:
December 31, May 29,
1997 1998
------------ --------
Goodwill ............................... $17,648 $17,648
Customer contracts ..................... 7,630 7,630
6,228 6,228
------- -------
Less accumulated amortization .......... 31,506 31,506
5,915 6,687
------- -------
Total ......................... $25,591 $24,819
======= =======
75
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
4. OTHER ASSETS
Other assets consist of the following:
December 31, May 29,
1997 1998
------------ --------
Deferred income taxes ................ $ 7,614 $ 9,214
Preferred pension asset .............. 5,028 4,881
Other ................................ 661 615
------- -------
Total ....................... $13,303 $14,710
======= =======
5. NOTES PAYABLE TO BANK
PCI has a $50,000 revolving credit facility with commercial bank with
interest on individual borrowings based on the bank's prime rate or LIBOR, at
the Company's option. Borrowings are secured by accounts receivable and
inventories. At May 29, 1998, there were no borrowings outstanding under this
facility. The Company is required to pay an annual commitment fee of 1/4% on the
unused facility up to $25,000 and 1/2% on the unused amount in excess of
$25,000. Commitment fees for the years ending December 31, 1996 and 1997 and for
the period January 1, 1998 through May 29, 1998 were $104, $167 and $70
respectively.
The facility contains certain restrictive covenants, including the
maintenance of minimum levels of net worth, fixed charge coverage and interest
coverage, limitations on capital expenditures and additional indebtedness, and
restrictions on the payment of dividends. At May 29, 1998, the Company was in
compliance with these covenants.
The facility also provides for the issuance of letters of credit by the
bank on the Company's behalf. At May 29, 1998, letters of credit amounting to
$4,610 had been issued to guarantee obligations carried on the consolidated
balance sheet.
76
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
6. OTHER CURRENT LIABILITIES
Other current liabilities consist of the following:
December 31, May 29,
1997 1998
------------ --------
Accrual for open credits ...................... $ 1,658 $ 1,277
Employee compensation and benefits ............ 6,994 6,831
Accrued real estate and personal property taxes 1,493 1,545
Plant rationalization reserve ................. 1,290 1,037
Accrued Interest .............................. 587 5,821
Other ......................................... 4,719 5,795
------- -------
Total ....................................... $16,741 $22,306
======= =======
7. LONG-TERM OBLIGATIONS
Long-term obligations consist of the following:
December 31, May 29,
1997 1998
------------ --------
Senior Secured Notes, due 2006, stated interest at 10%,
effective interest at 8.574%, payable semiannually on
June 15 and December 15 ............................. $125,000 $125,000
Capital lease obligations ............................. 4,003 3,659
-------- --------
Total long-term obligations ........................... 129,003 128,659
Less current portion .................................. 996 996
-------- --------
Long-term obligations, excluding current portion ...... $128,007 $127,663
======== ========
The Senior Secured Notes are redeemable, in whole or in part, at the
option of PCI, beginning December 16, 2001, at an initial price of 105% of par
value, declining ratably each year to par value on December 15, 2004. In
addition, the indenture requires PCI to offer to redeem the notes at a
redemption price of 101% of par value in the event of a change in control, and
at 100% of par value upon the occurrence of certain other events.
The Senior Secured Notes are collateralized by all the issued and
outstanding stock of CPC and Caribbean and substantially all of the assets and
properties owned by PCI other than inventories, accounts receivable and certain
equipment securing capital lease obligations. The indenture also places certain
restrictions on payment of dividends, additional liens, disposition of the
proceeds from asset sales, sale-leaseback transactions and additional
borrowings. At May 29, 1998, PCI was in compliance with these restrictions.
The Company is obligated under capital leases for a manufacturing facility
and certain machinery and equipment. The manufacturing facility has a cost of
$1,152, and accumulated amortization of $782 and $833 at December 31, 1997 and
May 29, 1998, respectively. The facility lease agreement expires on December 31,
2000 and has an interest rate of 9.364%.
77
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
The equipment lease arrangement commenced on April 1, 1996 in connection
with the issuance of tax-exempt industrial development revenue bearing interest
at 5.8%. Principal and interest are payable monthly through April 2002. The
equipment has a cost of $5,100, and has accumulated depreciation of $665 and
$830 at December 31, 1997 and May 29, 1998, respectively. Future minimum lease
payments under the capital leases are as follows:
Seven Months Ending December 21,................................. $ 790
Year Ending December 31, 1999.................................... 1,172
Year Ending December 31, 2000.................................... 919
Year Ending December 31, 2001.................................... 871
Year Ending December 31, 2002 ................................... 349
------
Total future minimum lease payments.......................... 4,101
------
Less portion representing interest .......................... 442
Net minimum lease payments................................... $3,659
======
8. OPERATING LEASES
PCI rents certain property and equipment used in connection with its
operations under noncancellable operating leases. Rental expense under these
lease was $8,054, $13,773 and $5,733 for the years ended December 31, 1996 and
1997 and the period from January 1, 1998 through May 29, 1998, respectively. On
December 17, 1996, CPC completed a sale to General Electric Capital Corporation
and certain other financial institutions, and the leaseback to CPC, of certain
equipment located in five of its facilities. The proceeds to the Company from
the sale/leaseback were $40,566, which approximated the book value of the
equipment.
Substantially all of the operating leases require PCI to pay taxes,
maintenance, insurance and certain operating expenses applicable to the lease.
The Company plans to renew or replace many of these leases as they expire.
Future minimum lease payments under noncancellable operating leases are as
follows:
Seven Months Ending December 21, 1998............................ $ 8,065
Year Ending December 31, 1999.................................... 13,346
Year Ending December 31, 2000.................................... 12,751
Year Ending December 31, 2001.................................... 12,228
Year Ending December 31, 2002 ................................... 10,312
Year Ending December 31, 2003.................................... 8,731
Thereafter....................................................... 12,283
-------
Total future minimum lease payments..................... $77,716
=======
78
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
9. OTHER LIABILITIES
Other liabilities consist of the following:
<TABLE>
<CAPTION>
December 31, May 28,
1997 1998
------------ -------
<S> <C> <C>
Insurance reserves........................... $ 8,896 $ 8,345
Postretirement benefits accrued.............. 6,346 6,820
Other........................................ 5,522 4,314
------- -------
Total..................................... $20,764 $19,479
======= =======
</TABLE>
10. NOTE RECEIVABLE FROM STOCKHOLDER
On December 17, 1996, the Company loaned Continental Can $30,000. The
Company loaned Continental Can additional amounts of $5,300 on May 29, 1998.
The note matures June 15, 2007 and accrues interest, payable at maturity, at
an annual rate of 6.9%, compounded semiannually. The note receivable and
accrued interest thereon have been presented as a reduction of stockholders'
equity.
Proceeds from the $30,000 loan were used by Continental Can to acquire
an additional 34 shares of the Company's common stock from another
stockholder, increasing their ownership in PCI at that time to 84%. The
acquisition was accounted for by Continental Can under the purchase method of
accounting and resulted in the "push down" of goodwill and additional paid-in
capital of $17,648 in the accompanying consolidated financial statements of
PCI.
11. INCOME TAXES
Total income tax expense (benefit) for the years ended December 31,
1996 and 1997 and for the period from January 1, 1998 through May 29, 1998
consists of the following:
<TABLE>
<CAPTION>
Period from January 1, 1998
1996 1997 to May 28, 1998
---------------------------- ------------------------------ ------------------------------
Federal State Total Federal State Total Federal State Total
--------- ------- ------- ------- ------- --------- --------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current...................... $ -- $ 20 $ 20 $ -- $ 39 $ 39 $ -- $ 10 $ 10
Deferred..................... (1,746) (150) (1,896) (900) (100) (1,000) (1,432) (168) $(1,600)
------- ----- ------- ----- ----- ------- ------- ----- -------
$(1,746) $(130) $(1,876) $(900) $ (61) $ (961) $(1,432) $(158) $(1,590)
------- ----- ------- ----- ----- ------- ------- ----- -------
------- ----- ------- ----- ----- ------- ------- ----- -------
</TABLE>
The income tax expense (benefit) for the years ended December 31, 1996
and 1997 and the period from January 1, 1998 through May 29, 1998 differed
from the "expected" income tax expense (benefit) computed by applying the
Federal income tax rate to income (loss) before income taxes and extraordinary
item as a result of the following:
79
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
8. OTHER LIABILITIES
Other liabilities consist of the following:
December 31, May 29,
1997 1998
------------ --------
Insurance reserves ..................... $ 8,896 $ 8,345
Postretirement benefits accrued ........ 6,346 6,820
Other .................................. 5,522 4,314
------- -------
Total ......................... $20,764 $19,479
======= =======
9. NOTE RECEIVABLE FROM STOCKHOLDER
On December 17, 1996, the Company loaned Continental Can $30,000. The
Company loaned Continental Can additional amounts of $5,300 on May 29, 1998. The
note matures June 15, 2007 and accrues interest, payable at maturity, at an
annual rate of 6.9%, compounded semiannually. The note receivable and accrued
interest thereon have been presented as a reduction of stockholders' equity.
Proceeds from the $30,000 loan were used by Continental Can to acquire an
additional 34 shares of the Company's common stock from another stockholder,
increasing their ownership in PCI at that time to 84%. The acquisition was
accounted for by Continental Can under the purchase method of accounting and
resulted in the "push down" of goodwill and additional paid-in capital of
$17,648 in the accompanying consolidated financial statements of PCI.
10. INCOME TAXES
Total income tax expense (benefit) for the years ended December 31, 1996
and 1997 and for the period from January 1, 1998 through May 29, 1998 consists
of the following:
<TABLE>
<CAPTION>
Period from January 1,
1996 1997 1998 to May 28, 1998
------------------------------- ------------------------------- -------------------------------
Federal State Total Federal State Total Federal State Total
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current $ -- 20 $ 20 $ -- $ 39 $ -- $ 10 $ 10 $ 10
Deferred (1,746) (150) (1,896) (900) (100) (1,432) (168) (168) $(1,600)
------- ------- ------- ------- ------- ------- ------- ------- -------
$(1,746) $ (130) $(1,876) $ (900) $ (61) ($1,432) $ (158) $ (158) $(1,590)
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
The income tax expense (benefit) for the years ended December 31, 1996 and
1997 and the period from January 1, 1998 through May 29, 1998 differed from the
"expected" income tax expense (benefit) computed by applying the Federal income
tax rate to income (loss) before income taxes and extraordinary item as a result
of the following:
80
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
<TABLE>
<CAPTION>
Period from
January 1, 1998
through May
29,
1996 1997 1998
------- ------- ---------------
<S> <C> <C> <C>
Computed "expected" income tax expenses (benefit) ..... $(1,862) $ 1,681 $ 30
Additional expense (benefit) resulting from:
Change in valuation allowance allocated to continuing
operations .......................................... 243 (2,745) (1,573)
State and local income taxes, net of Federal income tax
benefit ............................................. (86) (40) 3
Tax effect of nondeductible goodwill .................. -- -- 63
Other ................................................. (171) 143 (113)
------- ------- -------
Income tax expense (benefit) .......................... $(1,876) $ (961) $(1,590)
======= ======= =======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
December 31, May 29,
1997 1998
------------ -------
Deferred tax assets:
Net operating loss carry forwards .................... $18,811 $19,064
Vacation and incentive pay reserves .................. 934 1,178
Self-insurance reserves .............................. 3,730 3,520
Plant rationalization reserve ........................ 758 529
Postretirement benefit reserves ...................... 2,659 2,591
Other ................................................ 3,005 2,919
------- -------
Total gross deferred tax assets .................... 29,897 29,801
Less valuation allowance ............................. 5,049 3,476
------- -------
net deferred tax assets ............................ 24,848 26,325
Deferred tax liabilities:
Book over tax basis of principally fixed assets ...... 13,067 12,996
Prefunded pension .................................... 1,907 1,855
------- -------
Total gross deferred tax liabilities ............... 14,974 14,851
------- -------
Net deferred tax assets .............................. $ 9,874 $11,474
======= =======
81
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
Net deferred tax assets are classified in the accompanying consolidated
balance sheets as follows:
December 31, May 29,
1997 1998
------------ -------
Current--deferred income taxes ............... $ 2,260 $ 2,260
Long-term--other assets ...................... 7,614 9,214
------- -------
$ 9,874 $11,474
======= =======
The valuation allowance for deferred tax assets as of January 1, 1997 was
$7,794. The net change in the total valuation allowance for the year ended
December 31, 1997 and for the period from January 1, 1998 through May 29, 1998
was a decrease of $2,745 and $1,573 respectively. In assessing the realizability
of deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences
become deductible. Management considers projected future taxable income, the
scheduled reversal of deferred tax liabilities and tax-planning strategies in
making this assessment. Based upon this assessment, management believes it is
more likely than not the Company will realize the benefits of these deductible
differences at May 29, 1998.
At May 29, 1998, PCI has operating loss carry forwards for Federal income
tax purposes of approximately $50,000, which are available to offset future
Federal taxable income. The carry forward periods extend from 2007 through 2010.
In addition, the Company has alternative minimum tax credit carry forwards of
approximately $132 which are available to reduce future Federal regular income
taxes over an indefinite period and research and experimentation credits of
approximately $480 available to reduce future Federal income taxes through 2010.
12. EMPLOYEE BENEFITS
Pension Plans--PCI maintains a defined benefit pension plan for
substantially all salaried employees hired prior to August 1, 1997. Plan
benefits are based on all years of continuous service and the employee's
compensation during the highest five continuous years of the last ten years of
employment, minus a profit-sharing annuity. The profit-sharing annuity is based
on the amount of profit-sharing contributions received for 1988 through 1992.
Any employee who terminated employment prior to August 31, 1993 is governed by
the terms of the plan in effect at the time the termination occurred. In
addition, PCI maintains a benefit equalization plan for salaried employees hired
prior to August 1, 1997 whose compensation level exceeds the limits within the
defined benefit pension plan.
PCI maintains a noncontributory defined benefit pension plan for
substantially all hourly workers hired prior to August 1, 1997 who have attained
21 years of age. Plan benefits are variable by location/contract but are based
primarily on years of service and the employee's highest wage classification for
twelve consecutive months in the five years prior to retirement. Normal
retirement is at age 65, with at least five years of continuous service.
However, employees may retire as early as age 55 and receive reduced benefits.
Subject to the limitation on deductibility imposed by Federal income tax
laws, PCI's policy has been to contribute funds to the plans annually in amounts
required to maintain sufficient plan assets to provide for accrued benefits.
Plan assets are held in a master trust and are comprised primarily of common
stock, corporate bonds and U.S. Government and government agency obligations.
Postretirement Benefits Other Than Pensions--PCI provides certain
health care and life insurance benefits for retired PCI employees. Certain of
PCI's hourly and salaried employees became eligible for these benefits when
82
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
they became eligible for an immediate pension under a formal company pension
plan. In 1993, the plan was amended to eliminate health care benefits for
employees hired after January 1, 1993. PCI's policy is to fund the cost of
medical benefits as claims are incurred.
The following table provides a reconciliation of the benefit obligation,
plan assets and funded status of the pension and postretirement benefit plans:
<TABLE>
<CAPTION>
Pension Benefits Other Postretirement Benefits
-------------------------- -----------------------------
Period from Period from
January 1, January 1,
1998 through 1998 through
1997 May 29, 1998 1997 May 29, 1998
-------- ------------ -------- -------------
<S> <C> <C> <C> <C>
Change in benefit obligations:
Benefit obligation at January 1 ............ $ 56,582 $ 61,174 $ 5,107 $ 5,259
Service cost ............................... 1,208 494 83 39
Interest cost .............................. 4,246 1,865 380 154
Amendment .................................. 207 -- -- --
Actuarial loss (gain) ...................... 2,781 972 51 630
Benefit plan ............................... (3,850) (1,658) (362) (182)
-------- -------- -------- --------
Benefit obligation at end of period .......... 61,174 62,847 5,259 5,900
Change in plan assets:
Fair value of plan assets at January 1 ..... 58,899 62,787 -- --
Actual return on plan assets ............... 7,283 3,246 -- --
Employer contribution ...................... 455 -- 362 182
Participant contributions .................. -- -- 177 72
Benefits paid .............................. (3,850) (1,658) (539) (254)
-------- -------- -------- --------
Fair value of plan assets at end of period ... 62,787 64,375 -- --
Funded status ................................ 1,613 1,528 (5,259) (5,900)
Unrecognized actuarial loss (gain) ........... 3,474 3,518 (723) --
Unrecognized prior service cost .............. (59) (85) (364) --
-------- -------- -------- --------
Prepaid (accrued) benefit cost ............... $ 5,028 $ 4,961 $ (6,346) $ (5,900)
======== ======== ======== ========
Weighted average assumptions at end of period:
Discount rate ................................ 7.35% 7.35% 7.35% 6.50%
Expected asset return ........................ 9.50% 9.00% 9.50% 9.00%
Rate of compensation increase ................ 5.00% 5.00%
</TABLE>
83
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
The components of net periodic benefit cost are as follows:
Period from
January 1, 1998
through
1996 1997 May 29, 1998
------- ------- ---------------
Pension benefits:
Service cost ....................... $ 1,362 $ 1,208 $ 494
Interest cost ...................... 4,001 4,246 1,865
Expected return on plan assets ..... (4,910) (5,259) (2,330)
Amortization of prior service cost . 125 108 59
Recognized net actuarial loss ...... 177 94 8
------- ------- -------
Net periodic benefit cost ........ 755 397 96
Other postretirement benefits:
Service cost ....................... 87 83 39
Interest cost ...................... 447 380 154
Amortization of prior service cost . (34) (34) (14)
Recognized net actuarial gain ...... -- (19) (5)
------- ------- -------
Net periodic benefit cost ........ $ 500 $ 410 $ 174
======= ======= =======
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in
assumed health care cost trend rates would have the following effects:
1-Percentage Point 1-Percentage Point
Increase Decrease
---------------- -----------------
1997 1998 1997 1998
----- ----- ----- -----
Effect on total of service and
interest cost components ....... $ 39 $ 37 $ (34) $ (32)
Effect on postretirement
benefit obligation ............. 416 535 (376) (483)
Retirement Thrift Plan--PCI maintains a defined contribution plan which
covers substantially all hourly employees who meet eligibility requirements.
Provisions regarding employee and employer contributions and the benefits
provided under the plan vary between PCI's manufacturing facilities. PCI's
defined contribution plan's expense was $303, $302 and $122 for the years ended
December 31, 1996 and 1997 and the period from January 1, 1998 through May 29,
1998, respectively.
Savings Plan--PCI maintains a contributory defined contribution 401(k)
savings plan which covers substantially all nonorganized salaried employees.
Employees may contribute up to 12% and 8% of pay on a pretax and after-tax
basis, respectively. However, the total employee contribution rate may not
exceed 15% of pay. PCI matches up to 3% of employees' pretax contributions.
Employees vest in PCI's contributions at 25% per year, becoming fully vested
after four years of employment. Employees may make withdrawals from the plan
prior to attaining age 59 1/2, subject to certain penalties. PCI's savings plan
expense was $553, $560 and $262 for the years ended December 31, 1996 and 1997
and for the period from January 1, 1998 through May 28, 1998, respectively.
Union Benefit Plans--PCI contributes to various union pension plans
pursuant to its labor agreements. Union benefit plan expense was $1,083, $1,013
and $419 for the years ended December 31, 1996 and 1997 and for the period from
January 1, 1998 through May 29, 1998, respectively.
84
<PAGE>
PLASTIC CONTAINERS LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEAR ENDED DECEMBER 31, 1996 AND 1997 AND FOR THE
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998
(in thousands)
Postemployment Benefits--PCI provides certain postemployment benefits to
former and inactive employees, their beneficiaries and covered dependents. These
benefits include disability related benefits, continuation of health care
benefits and life insurance coverage. Additional costs charged to operations for
postemployment benefits in 1996, 1997 and 1998 were $38, $57 and $15,
respectively.
12. MAJOR CUSTOMERS
Sales to one customer represented approximately 29%, 31% and 28.5% of net
sales for the years ended December 31, 1996 and 1997 and for the period from
January 1, 1998 to May 29, 1998, respectively. Included in accounts receivable
are receivables from this customer of $8,332 and $10,442 at December 31, 1997
and May 29, 1998, respectively. A second customer represented approximately 13%,
15% and 17% of net sales for each of the years ended December 31, 1996 and 1997
and the period from January 1, 1998 through May 29, 1998, respectively, and
$1,131 and $1,516 of receivables from this customer are included in accounts
receivable at December 31, 1997 and May 29, 1998, respectively. A third customer
represented approximately 10%, 10%, and 11% of net sales for the years ended
December 31, 1996 and 1997 and the period from January 1, 1998 through May 29,
1998, respectively, and $860 and $781 of receivables from this customer are
included in accounts receivable at December 31, 1997 and May 29, 1998,
respectively.
13. PLANT CLOSINGS
In 1996, PCI recorded charges amounting to $6,500 for plant
rationalization and realignment in connection with a plan to consolidate certain
manufacturing operations. The Company closed one plant in 1996 and another plant
in 1997. The Company remains obligated under a noncancellable operating lease at
one of the facilities through June 1999. Accrued liabilities include $1,072 at
May 29,1998 related to plant rationalization and realignment. Payments made in
1998 against the accrued liability amounted to approximately $603.
14. EXTRAORDINARY ITEM
In 1996, PCI incurred an extraordinary loss of $7,305 related to the
purchase and redemption of senior secured notes.
15. CONTINGENCIES
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management and legal counsel, the
ultimate disposition of these matters will not have a material adverse effect on
the Company's consolidated financial statements.
17. FAIR VALUE FINANCIAL INSTRUMENTS
Financial Accounting Standards Board's Statement No. 107, Disclosure about
Fair Value of Financial Instruments, defines fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. Except for the senior secured notes at May
29, 1998, the carrying amount approximates fair value for financial instruments
included in the accompanying consolidated balance sheets at December 31, 1997
and May 29, 1998.
The carrying amounts of cash and cash equivalents, accounts
receivable, accounts payable--trade and other current liabilities approximate
fair value because of the short maturity of those instruments. The fair value of
investment securities is based on the quoted market prices at the reporting date
for those or similar investments. The carrying value and fair value of the
senior secured notes at May 29, 1998 was $125,000 and $135,364, respectively.
The fair value is estimated based on quoted market prices for the notes.
85
<PAGE>
SCHEDULE V
OWNED AND LEASED PROPERTIES
MORTGAGED PROPERTIES
1. 1402 Pleasant Hill
Monroe (Middlesex), NJ (1)
2. Grove Street,
South Croton Ave.
New Castle (Lawrence), PA
3. 910 Seventh Avenue
Berwick (Columbia), PA
4. 268 North Union Street
Rochester, NY
5. 18 Champeney Terrace
Rochester (Monroe), NY
6. 15 Mineral Street
Oil City (Venango), PA
7. 7100 East Baltimore Street
Baltimore (Baltimore-Independent City), MD
8. 6300 Strawberry Lane
Louisville (Jefferson), KY
9. Watrous Street
East Hampton (Middlesex), CT
10. 28 Slater Drive
Elizabeth (Union), NJ
11. New Hampshire Route 111
Hampstead (Rockingham), NH
12. 5000 Fulton Drive
Fairfield (Solano), CA
13. 1217 East Saint Gertrude PL
Santa Ana (Orange), CA
14. 75 W. Valpico Road
Tracy (San Joaquin), CA
15. 800 20th Street NW
Albuquerque (Bernalillo), NM
16. 4239 N. 39th Avenue
Phoenix (Maricopa), AZ
17. 701 East Jackson Street
P.O. Drawer 1247
Demopolis (Marengo), AL
<PAGE>
18. 4525 Fruit Valley Road
Vancouver (Clark), WA
19. 2.57 acres in 16-2-1 95358
Vancouver (Clark) WA
20. 1070 Samuelson Street
City of Industry (Los Angeles), CA (Leasehold)
21. 516 Turnbull Canyon Road
City of Industry (Los Angeles), CA
(Leasehold)
22. 211 North Willow Avenue
City of Industry (Los Angeles), CA (Leasehold)
23. 4245 N. 39th Avenue
Phoenix (Maricopa), AZ
(Leasehold)
24. 1201 E. Cerritos Avenue
Anaheim, CA (Leasehold)
LEASEHOLD PROPERTIES (not to be mortgaged)
25. 1201 West Central Street
Franklin, MA (4)
26. Off Route 122
Poland Springs, ME
27. 4330 20th Street
Zephyrmills, FL
28. 15 Lightner Road
York, PA
29. 4201 Highway 75 South
Sherman, TX
30. Jennersville Industrial Bldg.
Penn Township, PA
31. 1201 West Lincoln
Caseyville, IL
32. 8258 Richfood Road
Mechanicsville, VA (2)
33. 2030 East Market Street
Greensboro, NC
34. 405 Nestles Way
Breingsville, PA
35. 301 Frontage Road
Kentwood, LA
2
<PAGE>
36. 155 King Mill Road
McDonough, GA
37. 1917 Joyce Avenue
Columbus, OH
38. 433 Park Street
New Britain, CT
39. 6813 Ruppsville Road
Allentown, PA (5)
40. Seldon Street
Verona, PA (3)
41. Falls Street
Columbus Inner Belt
New Castle, PA
42. 14 Hall Street
Batavia, NY
43. 200 Public Marketing Bldg
Rochester, NY
44. 6831 Silsbee Road
Houston, TX
45. 11725 West 85th Street
Lenexa, KS
46. 2727 E. Higgins Road
2425 Touchy
Elk Grove, IL
47. 2375 Touchy Avenue
Elk Grove, IL
48. 2355 Touchy Avenue
Elk Grove, IL
49. 1400 Northwest
West Chicago, IL
50. 1300 Northwest
West Chicago, IL
51. 4015 Executive Park Drive, Suite 205
Cincinnati, OH
52. 95 West Crescentville
Springdale (Cincinnati), OH
53. 400 Indeco Drive
Atlanta, GA
54. 435 Roush Road
Lima, OH (7)
3
<PAGE>
55. 5225 Region Court
Lakeland, FL
56. 5200 Region Court
Lakeland, FL
57. 170 Circle Drive North
Piscataway, NJ (7)
58. 1234 North 7th Street
West Memphis, AR
59. Mostelter & Kemper Roads
Cincinnati, OH (7)
60. 5111 Rogers Avenue
Forth Smith, AR (office)
61. 654 East North Belt
Houston, TX (office)
62. 401 Merritt
Norwalk, CT (office)
63. 8420 West Dodge Road
Omaha, NE (office)
64. 7198 Mykawa Street
Houston, TX
65. 7300 Mykawa Street
Houston, TX
66. 2215 McKinney Avenue, Suite 175
Dallas, TX (8)
67. 6907 & 6911 Marlin Circle
La Palma, CA (subleased)
68. 6545 S. Glacier Place
Tukwila, WA
69. GATX Warehouse No. 14
Port of Vancouver, WA
70. 9200 Van Horn Way
Richmond, B.C.
71. 1393 Border Street, Unit 8,
Winnipeg, Manitoba, Canada
72. 7300 Bolsa Avenue
Westminster, CA
73. 5772 Jurupa Street
Ontario, CA
74. 2679 Slough Street
Mississauga, Ontario
4
<PAGE>
75. 7122 W. 62nd Street
Chicago, IL (actual address is 6155 So. Harlem Ave., Chicago, IL)
76. 4525 Joseph Hardin Drive
Dallas, TX
77. 306 Industrial Park N
Demopolis, AL
78. 701 E. Jackson Street
Demopolis, AL
79. 473 Mundet Place
Hillside, NJ
80. 27815-A Highway Blvd.
Katy, TX
81. 1600-B Comet Drive
Lancaster, PA
82. Avenue B., Buncher Industrial District
Leetsdale, PA
83. Av. Guillermo Gonzalez Camarena, No. 17, Parque Industrial Cuamatla,
Cuautitlan, Izealli, Estado de Mexico
84. 17851 E. Railroad Street
Industry, CA
85. 4961 Distribution Drive
Tampa, FL
86. 30020 Ahern Street
Union City, CA (actual address is 2931 Faber Street, Union City, CA)
87. 21700 E. Copley Dr.
Diamond Bar, CA
88. 30887 San Antonio St.
Hayward, CA (subleased)
89. 4 Market Circle
Windsor, CT
90. 5651 Gateway Freeway
Fort Worth, TX
91. 2410 Gordon Avenue
Monroe, LA
92. 900 E. Semand
Conroe, TX
93. 1 D'Angelo Drive
Marlborogh, MA (5)
94. 4711 34th Street North
St. Petersburg, FL (5)
5
<PAGE>
95. 2600 E 4th
Hutchinson, KS (5)
96. 5800 NW 74th Avenue
Miami, FL (5)
97. 626 Lynnway
Lynn, MA (4)
98. 504 3rd Avenue
Renssalear, NY (4)
99. Rt 130 Cumberland Blvd
Burlington, NJ (4)
100. 731 Main Street Bldg B2
Monroe, CT
101. 25025 I-45 North
Woodlands, TX
102. 1000 Av Parque Central
Caguas, PR
103. 2800 Congo Road
Newell, WV
104. 1216 Madera Way
Riverside, CA (4)
105. 301 Merritt 7 Corp. Park
Norwalk, CT (6)
(1) Same location as 4 Pleasant Hill Road, Cranbury, NJ
(2) Same location as 1505 Robinwood Lane, Richmond, VA
(3) Rostan Acquisition Corp. has a requirement to purchase the Seldon Street,
Verona, PA property if certain environmental designations are met,
pursuant to the Lease dated July 2, 1998, by and between Sandmar
Associates, Rostan Corporation and Rostan Acquisition Corp.
(4) Plastics operations are conducted at a dairy location owned by one of
Suiza Foods' dairy companies; a sublease of the facility utilized by the
plastics operations will be executed.
(5) Lease terms are contained in supply agreement with a customer.
(6) Subleased by Continental Plastic Containers LLC to Gloucester Trading
Corp. and Keyes Fibre Company.
(7) To be assigned to CPCI prior to Closing.
(8) Suite 850 to be subleased to the Company at or prior to Closing.
6
<PAGE>
SCHEDULE VI
[INTENTIONALLY OMITTED]
7
<PAGE>
SCHEDULE VII - CONVERTIBLE SECURITIES, OPTIONS OR RIGHTS
1. Employee Options granted pursuant to:
a. the Consolidated Container Holdings LLC 1999 Unit Option Plan
b. the Consolidated Container Holdings LLC Unit Option Agreements
between Consolidated Container Holdings LLC and the Participants
c. the Special Unit Acquisition, Ownership and Redemption Agreements
between Consolidated Container Holdings LLC and the Holders
d. the Consolidated Container Holdings LLC Replacement Unit Option Plan
for Options issued pursuant to the Franklin Plastics, Inc. 1998
Stock Option Plan
e. the Replacement Unit Option Agreements for Options issued pursuant
to the Franklin Plastics, Inc. 1998 Stock Option Plan between
Consolidated Container Holdings LLC and the Participants
2. Indemnity payable in preferred interests pursuant to the Contribution and
Merger Agreement
<PAGE>
SCHEDULE VIII - SUBSIDIARIES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Jurisdiction of
Corporation Owned by Percentage Owned Incorporation
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reid Plastics Group LLC Consolidated Container Company LLC 100% Delaware
- -------------------------------------------------------------------------------------------------------------------
Consolidated Container Capital, Inc. Consolidated Container Company LLC 100% Delaware
- -------------------------------------------------------------------------------------------------------------------
Plastic Containers LLC Consolidated Container Company LLC 100% Delaware
- -------------------------------------------------------------------------------------------------------------------
Reid Mexico, S.A. de C.V. Reid Plastics Group LLC 51% Districto Federal
de Mexico
- -------------------------------------------------------------------------------------------------------------------
Reid Canada, Inc. Reid Plastics Group LLC 100% Ontario, Canada
- -------------------------------------------------------------------------------------------------------------------
Stewart/Walker Plastics, Ltd. Reid Plastics Group LLC 100% British Columbia,
Canada
- -------------------------------------------------------------------------------------------------------------------
Master Plastics, Inc. Stewart/Walker Plastics, Ltd. 100% Alberta, Canada
- -------------------------------------------------------------------------------------------------------------------
Continental Plastic Containers LLC Plastic Containers LLC 100% Delaware
- -------------------------------------------------------------------------------------------------------------------
Continental Carribean Containers, Inc. Plastic Containers LLC 100% Delaware
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE IX - EXISTING INDEBTEDNESS
A. Letters of Credit
<TABLE>
<CAPTION>
Account
Party Issuing Bank Beneficiary Amount Termination Date
----- ------------ ----------- ------ ----------------
<S> <C> <C> <C> <C>
PCI* The Dai-Ichi Kangyo Bank Ltd. NJ Department of $46,000 June 7, 2000
NY Branch Environmental (annual extension unless
Protection 120 days notice)
PCI* The Dai-Ichi Kangyo Bank Ltd. Travelers $900,100 November 15, 1999 (annual
NY Branch Indemnity Co. (reduction to extension unless 30 days
$659,021 notice)
in process)
PCI* The Dai-Ichi Kangyo Bank Ltd. Zurich Insurance $2,470,740 November 9, 1999 (annual
NY Branch Company extension unless 30 days
notice)
PCI* The Dai-Ichi Kangyo Bank Ltd. Bell Atlantic $148,500 November 15, 1999 (annual
NY Branch Credit extension unless 60 days
Corporation notice)
PCI* The Dai-Ichi Kangyo Bank Ltd. John Hancock $148,500 November 15, 1999 (annual
NY Branch Leasing Corp. extension unless 60 days
notice)
Suiza Foods* First Union National Bank Florida Power $66,600 June 22, 2000 (annual
Corporation extension unless 60 days
notice)
Suiza Foods** First Union National Bank Employers $125,000 July 1, 2000 (annual
Insurance of extension unless 30 days
Wausau notice)
Suiza Foods** First Union National Bank Liberty Mutual $425,000 January 1, 2000 (annual
Insurance Company extension unless 30 days
notice)
Suiza Foods** First Union National Bank Liberty Mutual $220,000 January 1, 2000
Insurance Company
Suiza Foods** First Union National Bank Liberty Mutual $500,000 March 1, 2000 (annual
Insurance Company extension unless 60 days
notice)
Suiza Foods** First Union National Bank Liberty Mutual $1,145,000 March 31, 2000 (annual
Insurance Company extension unless 30 days
notice)
Suiza Foods** First Union National Bank The Aetna $150,000 March 31, 2000 (annual
Casualty and extension unless 30 days
Surety Company notice)
</TABLE>
<PAGE>
2
- ----------
* To be replaced by Bankers Trust Company after closing
** The obligations under these L/Cs will be backed up by the Borrower under
the Transitions Service Agreement
B.Capital Leases
1. $3.8 million of capital leases at Reid Plastics Group LLC, as more fully
described on Schedule X
2. $2.9 million of capital leases at Consolidated Plastic Containers, Inc.,
as more fully described on Schedule X
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
1. California Plastic Supplies, Inc. CA State Charter Financial, Inc.
2. California Plastic Supplies, Inc. CA State Charter Financial, Inc.
3. Chester County Container Corporation PA State General Electric Capital Corporation
4. Consolidated Plastechs, Inc. Contech NH, The Butcher Company, Inc.
Town of Hamstead
5. Continental Plastic Containers, Inc. AR State General Electric Capital Corporation
6. Continental Plastic Containers, Inc. AR State General Electric Capital Corporation
7. Continental Plastic Containers, Inc. AR State General Electric Capital Corporation
8. Continental Plastic Containers, Inc. AR State General Electric Capital Corporation
9. Continental Plastic Containers, Inc. AR State General Electric Capital Corporation
10. Continental Plastic Containers, Inc. AR State General Electric Capital Corporation
11. Continental Plastic Containers, Inc. AR State General Electric Capital Corporation
12. Continental Plastic Containers, Inc. AR State General Electric Capital Corporation
13. Continental Plastic Containers, Inc. AR State General Electric Capital Corporation
14.+ Continental Plastic Containers, Inc. AR State The CIT Group - Business Credit, Inc.
15. Continental Plastic Containers, Inc. AR State The CIT Group - Business Credit, Inc.
16. Continental Plastic Containers, Inc. AR State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
--------- --------- ---- ----------
<S> <C> <C> <C> <C>
1. 94188753 9/13/94 UCC-1 Equipment
2. 94307C0203 10/24/94 UCC-2 Equipment
Amendment to
94188753
3. 23870465 1/5/95 UCC-1 Equipment
4. 2494 12/18/98 UCC-1 Equipment
5. 934236 11/30/94 UCC-1 Equipment
6. 945528 02/17/95 UCC-1 Equipment
7. 9590303 05/02/95 UCC-1 Equipment
8. 963740 05/31/95 UCC-1 Equipment
9. 981882 09/22/95 UCC-1 Equipment
10. 986816 10/25/95 UCC-1 Equipment
11. 1015923 05/02/96 UCC-1 Equipment
12. 1072089 05/01/97 UCC-1 Equipment
13. 1119413 03/06/98 UCC-1 Equipment
14.+ 982850 09/28/95 UCC-1 Personal Property
15. 98250 12/06/95 UCC-3
Amendment to
982850
16. 1126239 04/04/98 UCC-1 Equipment
</TABLE>
<PAGE>
2
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
17. Continental Plastic Containers, Inc. Crittenden, AR General Electric Capital Corporation
18. Continental Plastic Containers, Inc. Crittenden, AR General Electric Capital Corporation
19. Continental Plastic Containers, Inc. Crittenden, AR General Electric Capital Corporation
20. Continental Plastic Containers, Inc. Crittenden, AR General Electric Capital Corporation
21. Continental Plastic Containers, Inc. Crittenden, AR General Electric Capital Corporation
22. Continental Plastic Containers, Inc. Crittenden, AR General Electric Capital Corporation
23. Continental Plastic Containers, Inc. Crittenden, AR General Electric Capital Corporation
24. Continental Plastic Containers, Inc. Crittenden, AR General Electric Capital Corporation
25. Continental Plastic Containers, Inc. Crittenden, AR General Electric Capital Corporation
26.+ Continental Plastic Containers, Inc. Crittenden, AR The CIT Group - Business Credit, Inc.
27. Continental Plastic Containers, Inc. Crittenden, AR The CIT Group - Business Credit, Inc.
28. Continental Plastic Containers, Inc. Crittenden, AR General Electric Capital Corporation
29. Continental Plastic Containers, Inc. CA State General Electric Capital Corporation
30. Continental Plastic Containers, Inc. CA State General Electric Capital Corporation
31. Continental Plastic Containers, Inc. CA State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<C> <C> <C> <C> <C>
17. 76302 11/30/94 UCC-1 Equipment
18. 76574 02/17/95 UCC-1 Equipment
19. 76934 05/01/95 UCC-1 Equipment
20. 77044 05/31/95 UCC-1 Equipment
21. 77394 09/21/95 UCC-1 Equipment
22. 77513 10/23/95 UCC-1 Equipment
23. 78194 05/01/96 UCC-1 Equipment
24. 79450 04/30/97 UCC-1 Equipment
25. 80488 03/06/98 UCC-1 Equipment
26.+ 77423 09/28/95 UCC-1 Personal Property
27. 77423 12/01/95 UCC-3
Amendment to
77423
28. 80660 04/13/98 UCC-1 Equipment
29. 9509060895 3/28/95 UCC-1 Equipment
30. 9510860287 4/17/95 UCC-1 Equipment
31. 9515360023 5/30/95 UCC-1 Equipment
</TABLE>
<PAGE>
3
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
32. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
33. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
34. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
35. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
36. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
37. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
38. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
39. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
40. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
41. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
42. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
43. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
44. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
45.* Continental Plastic Containers, Inc CA State General Electric Capital Corporation
46. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
32. 9517460227 6/22/95 UCC-1 Equipment
33. 9519861100 7/10/95 UCC-1 Equipment
34. 9524161024 8/29/95 UCC-1 Equipment
35. 9527160588 9/25/95 UCC-1 Equipment
36. 9529760957 10/23/95 UCC-1 Equipment
37 9532160085 11/16/95 UCC-1 Equipment
38. 9534260494 12/8/95 UCC-1 Equipment
39. 9600360268 1/2/96 UCC-1 Equipment
40. 9609260117 3/29/96 UCC-1 Equipment
41. 9612460811 6/10/96 UCC-1 Equipment
42. 9617960351 6/26/96 UCC-1 Equipment
43. 9622060159 8/6/96 UCC-1 Equipment
44. 9633961443 12/4/96 UCC-1 Equipment
45.* 9635860299 12/20/96 UCC-1 Personal Property
46. 9700660041 1/3/97 UCC-1 Equipment
</TABLE>
<PAGE>
4
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
47. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
48. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
49. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
50. Continental Plastic Containers, Inc CA State Associates Leasing, Inc.
51. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
52. Continental Plastic Containers, Inc CA State Norwest Financial Leasing, Inc.
53. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
54. Continental Plastic Containers, Inc CA State General Electric Capital Corporation
55. Continental Plastic Containers, Inc CT State General Electric Capital Corporation
56. Continental Plastic Containers, Inc CT State General Electric Capital Corporation
57. Continental Plastic Containers, Inc CT State General Electric Capital Corporation
58. Continental Plastic Containers, Inc CT State General Electric Capital Corporation
59. Continental Plastic Containers, Inc CT State General Electric Capital Corporation
60. Continental Plastic Containers, Inc CT State General Electric Capital Corporation
61. Continental Plastic Containers, Inc CT State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
47. 9706260621 3/3/97 UCC-1 Equipment
48. 9708560144 3/25/97 UCC-1 Equipment
49. 9712160712 4/30/97 UCC-1 Equipment
50. 9716160886 6/6/97 UCC-1 Equipment
51. 9716860186 6/13/97 UCC-1 Equipment
52. 9718960989 7/7/97 UCC-1 Equipment
53. 9803360694 1/30/98 UCC-1 Equipment
54. 9810360886 4/13/98 UCC-1 Equipment
55. 0001848906 5/7/98 UCC-1 Equipment
56. 0001843555 4/14/98 UCC-1 Equipment
57. 0001837592 3/16/98 UCC-1 Equipment
58. 0001828640 2/2/98 UCC-1 Equipment
59. 0001816949 11/26/97 UCC-1 Equipment
60. 0001811081 10/28/97 UCC-1 Equipment
61. 0001797963 8/26/97 UCC-1 Equipment
</TABLE>
<PAGE>
5
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
62. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
63. Continental Plastic Containers, Inc. CT State MBC Leasing Corp.
64. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
65. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
66. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
67. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
68. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
69. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
70. Continental Plastic Containers, Inc. CT State Mellon US Leasing
71. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
72. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
73. Continental Plastic Containers, Inc. CT State John Hancock Leasing Corporation
74. Continental Plastic Containers, Inc. CT State Nynex Credit Company
75. Continental Plastic Containers, Inc. CT State MDFC Equipment Leasing Corporation
76.* Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
62. 0001791345 7/24/97 UCC-1 Equipment
63. 0001783005 1/1/97 UCC-1 Equipment
64. 0001777322 6/13/97 UCC-1 Equipment
65. 0001775006 6/4/97 UCC-1 Equipment
66. 0001838857 3/24/98 UCC-3 Equipment
Amendment to
0001775006
67. 0001767368 4/30/97 UCC-1 Equipment
68. 0001758641 3/25/97 UCC-1 Equipment
69. 0001753567 3/3/97 UCC-1 Equipment
70. 0001746840 1/27/97 UCC-1 Equipment
71. 0001742484 1/3/97 UCC-1 Equipment
72. 0001740860 12/31/96 UCC-1 Equipment
73. 0001740076 12/24/96 UCC-1 Equipment
74. 0001739469 12/23/96 UCC-1 Equipment
75. 0001739017 12/20/96 UCC-1 Equipment
76.* 0001739042 12/20/96 UCC-1 Personal Property
</TABLE>
<PAGE>
6
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
77. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
78. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
79. Continental Plastic Containers, Inc. CT State Leasetec Corporation
80. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
81. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
82. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
83. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
84. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
85. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
86. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
87. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
88. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
89. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
90. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
91. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
77. 0001736304 12/04/96 UCC-1 Equipment
78. 0001734577 10/31/96 UCC-1 Equipment
79. 0001725867 10/10/96 UCC-1 Equipment
80. 0001704094 6/26/96 UCC-1 Equipment
81. 0001692474 5/2/96 UCC-1 Equipment
82. 0001682765 3/28/96 UCC-1 Equipment
83. 0001671912 2/13/96 UCC-1 Equipment
84. 0001668915 1/2/96 UCC-1 Equipment
85. 0001663024 12/13/95 UCC-1 Equipment
86. 0001662077 12/7/95 UCC-1 Equipment
87. 0001658388 11/16/95 UCC-1 Equipment
88. 0001653501 10/23/95 UCC-1 Equipment
89. 0001645627 9/21/95 UCC-1 Equipment
90. 0001631219 7/7/95 UCC-1 Equipment
91. 0001628095 6/22/95 UCC-1 Equipment
</TABLE>
<PAGE>
7
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
92. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
93. Continental Plastic Containers, Inc. CT State Leasetec Corporation
94. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
95. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
96. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
97.+ Continental Plastic Containers, Inc. CT State The CIT Group/Business Credit, Inc.
98. Continental Plastic Containers, Inc. CT State The CIT Group/Business Credit, Inc.
99. Continental Plastic Containers, Inc. CT State General Electric Capital Corporation
100. Continental Plastic Containers, Inc. FL State General Electric Capital Corporation
101. Continental Plastic Containers, Inc. FL State General Electric Capital Corporation
102. Continental Plastic Containers, Inc. FL State General Electric Capital Corporation
103. Continental Plastic Containers, Inc. FL State General Electric Capital Corporation
104.* Continental Plastic Containers, Inc. FL State General Electric Capital Corporation
105. Continental Plastic Containers, Inc. FL State General Electric Capital Corporation
106. Continental Plastic Containers, Inc. FL State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
92. 0001625057 6/7/95 UCC-1 Equipment
93. 0001624310 6/1/95 UCC-1 Equipment
94. 0001623326 5/26/95 UCC-1 Equipment
95. 0001615396 4/17/95 UCC-1 Equipment
96. 0001611008 3/23/95 UCC-1 Equipment
97.+ 0001647720 9/28/95 UCC-1 Personal Property
98. 0001664762 12/4/95 UCC-3
Amendment to
0001647720
99. 0001605143 2/15/95 UCC-1 Equipment
100. 950000107149 5/30/95 UCC-1 Equipment
101. 950000190857 9/22/95 UCC-1 Equipment
102. 960000089935 5/2/96 UCC-1 Equipment
103. 960000132562 6/26/96 UCC-1 Equipment
104.* 970000042466 2/27/97 UCC-1 Personal Property
105. 970000091559 4/30/97 UCC-1 Equipment
106. 970000164546 7/24/97 UCC-1 Equipment
</TABLE>
<PAGE>
8
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
107. Continental Plastic Containers, Inc. FL State General Electric Capital Corporation
108. Continental Plastic Containers, Inc. FL State General Electric Capital Corporation
109. Continental Plastic Containers, Inc. FL State Pitney Boews Credit Corporation
110. Continental Plastic Containers, Inc. FL State Pitney Boews Credit Corporation
111. Continental Plastic Containers, Inc. FL State Pitney Boews Credit Corporation
112. Continental Plastic Containers, Inc. FL State Pitney Boews Credit Corporation
113. Continental Plastic Containers, Inc. Polk County, FL General Electric Capital Corporation
114. Continental Plastic Containers, Inc. Polk County, FL General Electric Capital Corporation
115. Continental Plastic Containers, Inc. Polk County, FL General Electric Capital Corporation
116. Continental Plastic Containers, Inc. Polk County, FL General Electric Capital Corporation
117. Continental Plastic Containers, Inc. Polk County, FL General Electric Capital Corporation
118. Continental Plastic Containers, Inc. Polk County, FL General Electric Capital Corporation
119. Continental Plastic Containers, Inc. Polk County, FL General Electric Capital Corporation
120. Continental Plastic Containers, Inc. Fulton, GA General Electric Capital Corporation
121.** Continental Plastic Containers, Inc. Fulton, GA GE Capital Public Finance, Inc.
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
107. 980000080146 4/13/98 UCC-1 Equipment
108. 980000050281 3/5/98 UCC-1 Equipment
109. 940000245556 12/5/94 UCC-1 Equipment
110. 97000082710 4/21/97 UCC-1 Equipment
111. 970000101880 5/12/97 UCC-1 Equipment
112. 980000153044 7/13/98 UCC-1 Equipment
113. 3466 11/30/94 UCC-1 Equipment
114. 3671 5/1/96 UCC-1 Equipment
115. 3697 6/26/96 UCC-1 Equipment
116. 3833 5/1/97 UCC-1 Equipment
117. 3875 7/25/97 UCC-1 Equipment
118. 987 3/7/98 UCC-1 Equipment
119. 4007 4/14/98 UCC-1 Equipment
120. 060199602997 2/9/97 UCC-1 Equipment
121.** 060199607231 4/16/96 UCC-1 Personal Property
</TABLE>
<PAGE>
9
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
122. Continental Plastic Containers, Inc. Fulton, GA General Electric Capital Corporation
123. Continental Plastic Containers, Inc. Fulton, GA General Electric Capital Corporation
124.* Continental Plastic Containers, Inc. Fulton, GA General Electric Capital Corporation
125. Continental Plastic Containers, Inc. Fulton, GA General Electric Capital Corporation
126. Continental Plastic Containers, Inc. Fulton, GA GE Capital Public Finance, Inc.
127. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
128. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
129. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
130. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
131. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
132. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
133. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
134. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
135. Continental Plastic Containers, Inc. IL State Vanguard Financial Service Corp.
136. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
122. 060199615243 8/7/96 UCC-1 Equipment
123. 060199624110 12/4/96 UCC-1 Equipment
124.* 060199701197 1/21/97 UCC-1 Personal Property
125. 060199708433 4/30/97 UCC-1 Equipment
126. 175063 4/15/96 UCC-2 Fixture
127. 302576 09/06/94 UCC-1 Equipment
128. 3312942 10/03/94 UCC-1 Equipment
129. 335134 12/01/94 UCC-1 Equipment
130. 349580 01/06/95 UCC-1 Equipment
131. 3379971 03/23/95 UCC-1 Equipment
132. 3389389 04/17/95 UCC-1 Equipment
133. 3394660 05/01/95 UCC-1 Equipment
134. 3406328 05/03/95 UCC-1 Equipment
135. 3407670 06/02/95 UCC-1 Equipment
136. 3416331 06/22/95 UCC-1 Equipment
</TABLE>
<PAGE>
10
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
137. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
138. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
139. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
140. Continental Plastic Containers, Inc. IL State Vanguard Financial Service Corp.
141. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
142. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
143. Continental Plastic Containers, Inc. IL State Pitney Bowes Credit Corporation
144. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
145. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
146.* Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
147. Continental Plastic Containers, Inc. IL State MDFC Equipment Leasing Corporation
148. Continental Plastic Containers, Inc. IL State Mellon US Leasing
149. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
150. Continental Plastic Containers, Inc. IL State Mellon US Leasing
151. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
137. 3460751 10/23/95 UCC-1 Equipment
138. 3471042 11/16/95 UCC-1 Equipment
139. 3478838 12/07/95 UCC-1 Equipment
140. 3482875 12/18/95 UCC-1 Equipment
141. 3522840 03/26/96 UCC-1 Equipment
142. 3537365 05/02/96 UCC-1 Equipment
143. 3551315 06/10/96 UCC-1 Equipment
144. 3575004 08/06/96 UCC-1 Equipment
145. 3620425 12/04/96 UCC-1 Equipment
146.* 3629915 12/20/96 UCC-1 Personal Property
147. 3629987 12/20/96 UCC-1 Equipment
148. 3634001 01/02/97 UCC-1 Fixture Filing
149. 3636610 01/06/97 UCC-1 Equipment
150. 3642465 01/23/97 UCC-1 Equipment
151. 3657496 03/03/97 UCC-1 Equipment
</TABLE>
<PAGE>
11
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
152. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
153. Continental Plastic Containers, Inc. IL State LINC Quantum Analytics, Inc.
154. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
155. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
156. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
157. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
158. Continental Plastic Containers, Inc. IL State Panasonic Communications
159. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
160. Continental Plastic Containers, Inc. IL State Blacksheep Equipment Unlimited, LLC
161. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
162. Continental Plastic Containers, Inc. IL State General Electric Capital Corporation
163.+ Continental Plastic Containers, Inc. IL State The CIT Group - Business Credit, Inc.
164. Continental Plastic Containers, Inc. IL State The CIT Group - Business Credit, Inc.
165. Continental Plastic Containers, Inc. IL State Pitney Bowes Credit Corp.
166. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
152. 3668654 03/25/97 UCC-1 Equipment
153. 3696763 06/03/97 UCC-1 Equipment
154. 3702925 06/13/97 UCC-1 Equipment
155. 3720266 07/24/97 UCC-1 Equipment
156. 3732506 08/26/97 UCC-1 Equipment
157. 3767131 11/24/97 UCC-1 Equipment
158. 3793480 01/26/98 UCC-1 Equipment
159. 3796994 02/03/98 UCC-1 Equipment
160. 3811903 03/05/98 UCC-1 Equipment
161. 3812067 03/06/98 UCC-1 Equipment
162. 3832515 04/13/98 UCC-1 Equipment
163.+ 3452082 09/28/95 UCC-1 Personal Property
164. 3476390 12/04/95 UCC-3
Amendment to
3452082
165. 4015543 04/05/99 UCC-1 Equipment
166. 95-U00229 1/5/95 UCC-1 Equipment
</TABLE>
<PAGE>
12
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
167. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
168. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
169. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
170. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
171. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
172. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
173. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
174. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
175. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
176. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
177. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
178. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
179. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
180. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
181. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
167. 94-U13256 9/7/94 UCC-1 Equipment
168. 95-U02056 2/15/95 UCC-1 Equipment
169. 95-U03642 3/24/95 UCC-1 Equipment
170. 95-U06799 5/31/95 UCC-1 Equipment
171. 95-U07858 6/22/95 UCC-1 Equipment
172. 95-U14442 11/16/95 UCC-1 Equipment
173. 96-U03889 3/28/96 UCC-1 Equipment
174. 96-U13275 12/5/96 UCC-1 Equipment
175. 96-U05486 5/2/96 UCC-1 Equipment
176. 96-U08334 7/2/96 UCC-1 Equipment
177. 97-U00458 1/10/97 UCC-1 Equipment
178. 97-U02479 3/4/97 UCC-1 Equipment
179. 97-U03438 3/25/97 UCC-1 Equipment
180. 97-U07061 6/13/97 UCC-1 Equipment
181. 97-U08857 7/24/97 UCC-1 Equipment
</TABLE>
<PAGE>
13
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
182. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
183. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
184. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
185. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
186. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
187. Continental Plastic Containers, Inc. Cook, IL General Electric Capital Corporation
188. Continental Plastic Containers, Inc. Cook, IL Mellon US Leasing
189. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
190. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
191. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
192. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
193. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
194. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
195. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
196. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
182. 97-U10176 8/26/97 UCC-1 Equipment
183. 97-U14120 11/26/97 UCC-1 Equipment
184. 97-U01144 1/30/98 UCC-1 Equipment
185. 98-U02569 3/6/98 UCC-1 Equipment
186. 98-U03929 4/13/98 UCC-1 Equipment
187. 98-U04739 5/5/98 UCC-1 Equipment
188. 97-067224 1/30/97 UCC-1 Fixture
189. 94U3565 9/6/94 UCC-1 Equipment
190. 94U4591 11/30/94 UCC-1 Equipment
191. 95U1317 4/14/95 UCC-1 Equipment
192. 95U1494 5/1/95 UCC-1 Equipment
193. 95U1988 6/20/95 UCC-1 Equipment
194. 95U3275 10/24/95 UCC-1 Equipment
195. 96U1329 5/1/96 UCC-1 Equipment
196. 96U2021 6/26/96 UCC-1 Equipment
</TABLE>
<PAGE>
14
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
197. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
198. Continental Plastic Containers, Inc. Du Page, IL MDFC Equipment Leasing
199. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
200. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
201. Continental Plastic Containers, Inc. Du Page, IL Blackshop Equipment Unlimited
202. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
203. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
204. Continental Plastic Containers, Inc. Du Page, IL General Electric Capital Corporation
205. Continental Plastic Containers, Inc. KS State Commercial Capital Corporation
206. Continental Plastic Containers, Inc. KS State Commercial Capital Corporation
(Assignee: First Community Bank)
207. Continental Plastic Containers, Inc. KS State Commercial Capital Corporation,
(Assignee: Bank of Blue Valley)
208. Continental Plastic Containers, Inc. KS State First National Bank Shawnee MSN.
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
197. 96U2503 8/6/96 UCC-1 Equipment
198. 96U4335 12/27/96 UCC-1 Equipment
199. 97U721 3/3/97 UCC-1 Equipment
200. 97U2139 6/16/97 UCC-1 Equipment
201. 98U0708 3/5/98 UCC-1 Equipment
202. 98U0724 3/9/98 UCC-1 Equipment
203. 98U1138 4/13/98 UCC-1 Equipment
204. 98U1421 5/5/98 UCC-1 Equipment
205. 944387 9/23/94 UCC-1 Equipment
206. 953537 8/29/95 UCC-1 Equipment
207. 971375 8/29/97 UCC-1 Equipment
208. 2065066 9/29/94 UCC-1 Equipment
209. 2133615 5/1/95 UCC-1 Equipment
210. 2145185 1/6/96 UCC-1 Equipment
</TABLE>
<PAGE>
15
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
209. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
210. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
211. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
212. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
213. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
214. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
215. Continental Plastic Containers, Inc. KS State Commercial Capital Corporation
(Assignee: First Community Bank)
216. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
217. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
218. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
219. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
220. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
221.* Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
222. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
223. Continental Plastic Containers, Inc. KS State Commercial Capital Corporation
(Assignee: Bank ofBlue Valley)
224. Continental Plastic Containers, Inc. KS State Quality Financial Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
211. 2149369 6/21/95 UCC-1 Equipment
212. 2154512 7/10/95 UCC-1 Equipment
213. 2168741 8/25/95 UCC-1 Equipment
214. 2168742 8/25/95 UCC-1 Equipment
215. 2170243 8/31/95 UCC-1 Equipment
216. 2185491 10/24/95 UCC-1 Equipment
217. 2231055 3/26/96 UCC-1 Equipment
218. 2242511 5/1/96 UCC-1 Equipment
219. 2270214 8/6/96 UCC-1 Equipment
220. 2312342 1/3/97 UCC-1 Equipment
221.* 2317499 1/21/97 UCC-1 Personal Property
222. 2349205 4/30/97 UCC-1 Equipment
223. 2349505 5/1/97 UCC-1 Equipment
224. 2370180 7/14/97 UCC-1 Equipment
</TABLE>
<PAGE>
16
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
(Assignee: Peoples Naitonal Bank)
225. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
226. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
227. Continental Plastic Containers, Inc. KS State General Electric Capital Corporation
228. Continental Plastic Containers, Inc. KS State Bank of Blue Valley
229. Continental Plastic Containers, Inc. KS State Bank of Blue Valley
230. Continental Plastic Containers, Inc. KS State Pitney Bowes Credit Corporation
231. Continental Plastic Containers, Inc. KS State Central States Leasing
232. Continental Plastic Containers, Inc. KS State Johnson County Bank
233. Continental Plastic Containers, Inc. KS State Pitney Bowes Credit Corporation
234. Continental Plastic Containers, Inc. MD State General Electric Capital Corporation
235. Continental Plastic Containers, Inc. MD State General Electric Capital Corporation
236. Continental Plastic Containers, Inc. MD State General Electric Capital Corporation
237. Continental Plastic Containers, Inc. MD State General Electric Capital Corporation
238. Continental Plastic Containers, Inc. MD State MBC Leasing Corp.
239.* Continental Plastic Containers, Inc. MD State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
225. 2397789 10/24/97 UCC-1 Equipment
226. 2435196 3/10/98 UCC-1 Equipment
227. 2445632 4/13/98 UCC-1 Equipment
228. 2497787 10/15/98 UCC-1 Equipment
229. 2514797 12/16/98 UCC-2 Equipment
Amendment to
2497787
230. 2268341 7/30/96 UCC-1 Equipment
231. 2319454 1/27/97 UCC-1 Equipment
232. 2497169 10/13/98 UCC-1 Fixture
233. 2501977 10/30/98 UCC-1 Equipment
234. 63248093 11/17/95 UCC-1 Equipment
235. 91808013 6/27/96 UCC-1 Equipment
236. 62208218 8/6/96 UCC-1 Equipment
237. 63408381 12/5/96 UCC-1 Equipment
238. 63588200 12/20/96 UCC-1 Equipment
239.* 70568747 2/25/97 UCC-1 Personal Property
</TABLE>
<PAGE>
17
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
240. Continental Plastic Containers, Inc. MD State General Electric Capital Corporation
241. Continental Plastic Containers, Inc. MD State General Electric Capital Corporation
242. Continental Plastic Containers, Inc. MD State General Electric Capital Corporation
243. Continental Plastic Containers, Inc. MD State General Electric Capital Corporation
244. Continental Plastic Containers, Inc. NE State General Electric Capital Corporation
245. Continental Plastic Containers, Inc. NE State General Electric Capital Corporation
246.+ Continental Plastic Containers, Inc. NE State The CIT Group/Business Credit, Inc.
247. Continental Plastic Containers, Inc. NE State The CIT Group/Business Credit, Inc.
248. Continental Plastic Containers, Inc. NE State Business Equipment Leasing Co.
249. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
250. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
251. Continental Plastic Containers, Inc. OH State Sherman & Company
252. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
253. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
240. 71678439 6/16/97 UCC-1 Equipment
241. 71718329 6/19/97 UCC-1 Equipment
242. 80348089 2/2/98 UCC-1 Equipment
243. 71278080 5/6/97 UCC-1 Equipment
244. 734694 6/5/97 UCC-1 Equipment
245. 763788 3/23/96 UCC-3 Equipment
Amendment
to 734694
246.+ 669227 7/28/95 UCC-1 Personal Property
247. 675544 12/5/95 UCC-3
Amendment to
669227
248. 744236 9/15/97 UCC-1 Equipment
249. AL18050 7/29/94 UCC-1 Equipment
250. AL89598 5/30/95 UCC-1 Equipment
251. AM23158 10/19/95 UCC-1 Equipment
252. AM29914 11/16/95 UCC-1 Equipment
253. AM49497 2/12/96 UCC-1 Equipment
</TABLE>
<PAGE>
18
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
254. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
255. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
256. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
257. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
258. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
259.* Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
260. Continental Plastic Containers, Inc. OH State Nynex Credit Company
261. Continental Plastic Containers, Inc. OH State John Hancock Leasing Corporation
262. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
263. Continental Plastic Containers, Inc. OH State Nynex Credit Company
264. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
265. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
266. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
267. Continental Plastic Containers, Inc. OH State General Electric Capital Corporation
268. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
254. AM60518 3/28/96 UCC-1 Equipment
255. AM70207 5/2/9 UCC-1 Equipment
256. AM84031 6/26/96 UCC-1 Equipment
257. AM94072 8/7/9 UCC-1 Equipment
258. AN23145 12/4/96 UCC-1 Equipment
259.* AN27534 12/23/96 UCC-1 Personal Property
260. AN282025 12/24/96 UCC-1 Equipment
261. AN29155 12/30/96 UCC-1 Equipment
262. AN31127 1/6/97 UCC-1 Equipment
263. AN42575 2/24/97 UCC-1 Equipment
264. AN60709 4/30/97 UCC-1 Equipment
265. AN73325 6/13/97 UCC-1 Equipment
266. AN91760 8/26/97 UCC-1 Equipment
267. AO06053 10/24/97 UCC-1 Equipment
268. 95-70212 05/31/95 UCC-1 Equipment
</TABLE>
<PAGE>
19
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
269. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
270. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
271. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
272. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
273. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
274.* Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
275. Continental Plastic Containers, Inc. Hamilton, OH Nynex Credit Company
276. Continental Plastic Containers, Inc. Hamilton, OH John Hancock Leasing Corporation
277. Continental Plastic Containers, Inc. Hamilton, OH John Hancock Leasing Corporation
278. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
279. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
280. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
281. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
282.+ Continental Plastic Containers, Inc. Hamilton, OH The CIT Group - Business Credit, Inc.
283.+ Continental Plastic Containers, Inc. Hamilton, OH The CIT Group - Business Credit, Inc.
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
269. 95-149777 10/23/95 UCC-1 Equipment
270. 96-66681 05/02/96 UCC-1 Equipment
271. 96-98784 06/26/96 UCC-1 Equipment
272. 96-122371 08/06/96 UCC-1 Equipment
273. 96-185541 12/04/96 UCC-1 Equipment
274.* 96-196328 12/26/96 UCC-1 Personal Property
275. 96-196610 12/26/96 UCC-1 Equipment
276. 96-197627 12/30/96 UCC-1 Equipment
277. 96-197617 12/30/96 UCC-1 Equipment
278. 97-62002 05/01/97 UCC-1 Equipment
279. 97-887818 06/17/97 UCC-1 Equipment
280. 97-129830 08/28/97 UCC-1 Equipment
281. 97-166113 10/28/97 UCC-1 Equipment
282.+ 95-137006 09/28/95 UCC-1 Personal Property
283.+ 95-174703 12/07/95 UCC-1 Personal Property
</TABLE>
<PAGE>
20
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
284. Continental Plastic Containers, Inc. Hamilton, OH General Electric Capital Corporation
285. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
286. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
287. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
288. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
289. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
290. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
291. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
292. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
293. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
294. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
295. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
296.* Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
297. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
298. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
284. 97-187991 12/04/97 UCC-1 Equipment
285. 24111344 3/23/95 UCC-1 Equipment
286. 24200113 4/17/95 UCC-1 Equipment
287. 24240076 5/1/95 UCC-1 Equipment
288. 24330300 5/30/95 UCC-1 Equipment
289. 24461027 7/10/95 UCC-1 Equipment
290. 24621170 8/28/95 UCC-1 Equipment
291. 24951582 12/7/95 UCC-1 Equipment
292. 25031270 1/2/96 UCC-1 Equipment
293. 25301319 3/28/96 UCC-1 Equipment
294. 25731780 8/6/96 UCC-1 Equipment
295. 26121321 12/4/96 UCC-1 Equipment
296.* 26191145 12/20/96 UCC-1 Personal Property
297. 26630052 4/30/97 UCC-1 Equipment
298. 28501653 1/30/98 UCC-1 Equipment
</TABLE>
<PAGE>
21
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
299. Continental Plastic Containers, Inc. PA State General Electric Capital Corporation
300. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
301. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
302. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
303. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
304.* Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
305. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
306. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
307. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
308. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
308. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
310. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
311. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
312. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
313. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
299. 28640620 3/6/98 UCC-1 Equipment
300. 369-1998 3/6/98 UCC-1 Equipment
301. 129-1998 1/30/98 UCC-1 Equipment
302. 639-1997 4/30/97 UCC-1 Equipment
303. 278-1997 2/28/97 UCC-1 Equipment
304.* 1789-1996 12/20/96 UCC-1 Personal Property
305. 1084-1996 8/6/96 UCC-1 Equipment
306. 409-1996 3/26/96 UCC-1 Equipment
307. 7-1996 1/2/96 UCC-1 Equipment
308. 1860-1995 12/8/95 UCC-1 Equipment
309. 1302-1995 8/25/95 UCC-1 Equipment
310. 1044-1995 7/11/95 UCC-1 Equipment
311. 817-1995 5/26/95 UCC-1 Equipment
312. 640-1995 5/2/95 UCC-1 Equipment
313. 547-1995 4/17/95 UCC-1 Equipment
</TABLE>
<PAGE>
22
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
314. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
315. Continental Plastic Containers, Inc. Venango, PA General Electric Capital Corporation
316. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
317. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
318. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
319. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
320. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
321. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
322. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
323. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
324. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
325. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
326. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
327. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
328. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
314. 428-1995 3/23/95 UCC-1 Equipment
315. 2049-1994 12/30/94 UCC-1 Equipment
316. 932861 3/9/98 UCC-1 Equipment
317. 921855 4/30/97 UCC-1 Equipment
318. 920336 3/25/97 UCC-1 Equipment
319. 917541 1/2/97 UCC-1 Equipment
320. 918105 1/16/97 UCC-1 Equipment
321. 911412 6/26/96 UCC-1 Equipment
322. 912893 8/6/96 UCC-1 Equipment
323. 909085 5/1/96 UCC-1 Equipment
324. 907471 3/26/96 UCC-1 Equipment
325. 903477 12/11/95 UCC-1 Equipment
326. 902674 11/17/95 UCC-1 Equipment
327. 899565 8/25/95 UCC-1 Equipment
328. 895699 5/30/95 UCC-1 Equipment
</TABLE>
<PAGE>
23
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
329. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
330. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
331. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
332. Continental Plastic Containers, Inc. Harris, TX General Electric Capital Corporation
333. Continental Plastic Containers, Inc. WV State General Electric Capital Corporation
334. Continental Plastic Containers, Inc. WV State General Electric Capital Corporation
335.* Continental Plastic Containers, Inc. WV State General Electric Capital Corporation
336. Continental Plastic Containers, Inc. WV State General Electric Capital Corporation
337. Continental Plastic Containers, Inc. WV State General Electric Capital Corporation
338. Continental Plastic Containers, Inc. WV State General Electric Capital Corporation
339.* Continental Plastic Containers, Inc. Hancock, WV General Electric Capital Corporation
340. First Capital Plastics, Inc. PA State General Electric Capital Corporation
341. First Capital Plastics, Inc. PA State General Electric Capital Corporation
342. First Capital Plastics, Inc. PA State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
329. 893766 4/17/95 UCC-1 Equipment
330. 894386 5/1/95 UCC-1 Equipment
331. 892857 3/24/95 UCC-1 Equipment
332. S905739 2/3/97 UCC-1 Fixture
333. 452197 8/6/96 UCC-1 Equipment
334. 459983 12/4/96 UCC-1 Equipment
335.* 461001 12/20/96 UCC-1 Personal Property
336. 483207 11/25/97 UCC-1 Equipment
337. 489224 3/6/98 UCC-1 Equipment
338. 493505 5/5/98 UCC-1 Equipment
339.* 571480 12/24/96 UCC-1 Personal Property
340. 23251313 6/22/94 UCC-1 Equipment
341. 28431384 1/5/98 UCC-3 Equipment
Release of
23251313
342. 29750138 12/30/98 UCC-3 Equipment
Continuation of
23251313
</TABLE>
<PAGE>
24
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
343. First Capital Plastics, Inc. York, PA General Electric Capital Corporation
344. First Capital Plastics, Inc. York, PA General Electric Capital Corporation
345. First Capital Plastics, Inc. York, PA General Electric Capital Corporation
346. Florida Plastics, Inc. FL State General Electric Capital Corporation
347. Florida Plastics, Inc. Pasco, FL General Electric Capital Corporation
348.*** Hartford Plastics, Inc. CT State First National Bank of New England
349.*** Hartford Plastics, Inc. CT State First National Bank of New England
350. Hartford Plastics, Inc. CT State BancBoston Leasing Inc.
351. Liquitane Corp. Columbia, PA Phoenixcor, Inc.
352. Liquitane Corp. Columbia, PA Phoenixcor, Inc.
353. Maine Plastics, Inc. Androscoggin, ME SAFECO Credit Company, Inc.
354. Propak-California Corp. CA State Fleet Credit Corporation
355. Propak-California Corp. CA State Fleet Credit Corporation
356. Propak-California Corp. CA State Transamerica Business Credit Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
343. 94ST1486 6/24/94 UCC-1 Equipment
344. 1/5/98 UCC-3 Equipment
Release of
94ST1486
345. 12/30/98 UCC-3 Equipment
Continuation of
94ST1486
346. 950000003410 1/6/95 UCC-1 Equipment
347. 33791051 1/3/95 UCC-1 Equipment
348.*** 0001691196 4/26/96 UCC-1 Personal Property
349.*** 0001691192 4/26/96 UCC-1 Personal Property
350. 0001576148 9/19/94 UCC-1 Equipment
351. 39326 12/28/95 UCC-1 Equipment
352. 5880 2/23/96 UCC-1 Equipment
353. 2643-081 1/8/91 UCC-1 Equipment (Expired)
354. 90082591 3/20/90 UCC-1 Equipment
355. 94355C0169 12/5/94 UCC-2
Continuation of
90082591
356. 96330C0895 11/25/96 UCC-2 Assignment of
90082591
</TABLE>
<PAGE>
25
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
357. Propak-California Corp. CA State Fleet Credit Corporation
358. Propak-California Corp. CA State Fleet Credit Corporation
359. Propak-California Corp. CA State MDFC Equipment Leasing Corp.
360. Propak-California Corp. CA State MDFC Equipment Leasing Corporation
361. Propak California Corporation CA State MDFC Equipment Leasing Corporation
362 Propak California Corporation CA State MDFC Equipment Leasing Corporation
363. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
364. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
365. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
366. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
367. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
368. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
369. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
357. 90094491 4/13/90 UCC-1 Equipment
358. 94355C0172 12/5/94 UCC-2 Continuation of 90094491
359. 90128088 5/18/90 UCC-1 Equipment
360. 95060C0542 2/24/95 UCC-2 Continuation of 90128088
361. 90132707 5/23/90 UCC-1 Equipment
362. 95060C0541 2/24/95 UCC-2 Continuation of 90132707
363. 90233545 9/20/90 UCC-1 Equipment
364. 95268C0299 9/20/95 UCC-3 Continuation of 90233545
365. 90266814 10/29/90 UCC-1 Equipment
366. 95300C0502 10/25/95 UCC-2 Continuation of 90266814
367. 90281232 11/16/90 UCC-1 Equipment
368. 95300C0501 10/25/95 UCC-3 Continuation of 90281232 Equipment
369. 91021724 2/1/91 UCC-1
</TABLE>
<PAGE>
26
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
370. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
371. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
372. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
373. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
374. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
375. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
376. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
377. Propak-California Corp. CA State MDFC Equipment Leasing Corporation
378. Propak-California Corp. CA State MDFC Equipment Leasing Corporation
379. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
380. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
381. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
382. Propak-California Corp. CA State Fleet Credit Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
370. 96004C0309 1/2/96 UCC-3 Continuation of 91021724
371. 91066277 3/28/91 UCC-1 Equipment
372. 96004C0310 1/2/96 UCC-3 Continuation of 91066277
373. 91067271 3/29/91 UCC-1 Equipment
374. 96004C0314 1/2/96 UCC-3 Continuation of 91067271
375. 91094123 4/29/91 UCC-1 Equipment
376. 96004C0319 1/2/96 UCC-3 Continuation of 91094123
377. 91142665 7/2/91 UCC-1 Equipment
378. 96100C0592 4/8/96 UCC-2 Continuation of 91142665
379. 91170400 8/5/91 UCC-1 Equipment
380. 91170400A0 5/12/92 UCC-2 Release of 91170400
381. 96178C0335 6/24/96 UCC-3 Continuation of 91170400
382. 91265279 12/17/91 UCC-1 Equipment
</TABLE>
<PAGE>
27
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
383. Propak-California Corp. CA State Fleet Credit Corporation
384. Propak-California Corp. CA State Transamerica Business Credit Corp.
385. Propak-California Corp. CA State General Electric Capital Corporation
386. Propak-California Corp. CA State General Electric Capital Corporation
387. Propak-California Corp. CA State Fleet Credit Corporation
388. Propak-California Corp. CA State Transamerica Business Credit Corp.
389. Propak-California Corp. CA State The CIT Group/Equipment Financing, Inc.
390. Propak-California Corp. CA State The CIT Group/Equipment Financing, Inc.
391. Propak-California Corp. CA State Transamerica Business Credit Corp.
392. Propak-California Corp. CA State Fleet Credit Corporation
393. Propak-California Corp. CA State Trransamerica Business Credit Corporation
394. Propak-California Corp. CA State Transamerica Business Credit Corp.
395. Propak-California Corp. CA State Fleet Credit Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
383. 91265279A0 7/1/92 UCC-2 Amendment of 91265279
384. 96330C0896 11/25/96 UCC-2 Assignment of 91265279
385. 92104464 5/8/92 UCC-1 Equipment
386. 96317C0500 11/12/96 UCC-2 Continuation of 92104464
387. 92151810 7/15/92 UCC-1 Equipment
388. 96331C0433 11/25/96 UCC-2 Assignment of 92151810
389. 92188846 8/31/92 UCC-1 Equipment
390. 97209C0292 11/25/97 UCC-2 Continuation of 92188846
391. 97024C0256 1/22/97 [caad 214]UCC-2 Continuation of 92151810
392. 92205090 9/22/92 UCC-1 Equipment
393. 96331C0390 11/25/96 UCC-2 Assignment of 92205090
394. 97119C0659 4/28/97 UCC-2 Continuation of 92205090
395. 93061523 3/26/93 UCC-1 Fixture
</TABLE>
<PAGE>
28
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
396. Propak-California Corp. CA State Fleet Credit Corporation
397. Propak-California Corp. CA State Transamerica Business Credit Corp.
398. Propak California Corporation CA State Transamerica Business Credit Corp.
399. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
400. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
401. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
402. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
403. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
404. Propak-California Corp. CA State Fleet Credit Corporation
405. Propak-California Corp. CA State Fleet Credit Corporation
406. Propak-California Corp. CA State Fleet Credit Corporation
407. Propak-California Corp. CA State Transamerica Business Credit Corp.
408. Propak-California Corp. CA State Fleet Credit Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
396. 930615A0 11/29/93 UCC-2 Amendment of 93061523
397. 96331C0381 11/25/96 UCC-2 Assignment of 93061523
398. 97283C0424 10/7/97 UCC-2 Continuation of 93061523
399. 93159730 8/5/93 UCC-1 Equipment
400. 98070C0498 3/2/98 UCC-3 Continuation of 93159730
401. 93207850 10/12/93 UCC-1 Equipment
402. 94243C0430 8/19/94 UCC-3 Release of 93207850
403. 98126C0536 5/6/98 UCC-3 Continuation of 93207850
404. 94035328 2/28/94 UCC-1 Equipment
405. 94035328A0 7/14/94 UCC-2 Amendment of 94035328
406. 96331C0376 11/25/96 UCC-2 Assignment of 94035328
407. 98252C0325 9/23/98 UCC-2 Continuation of 94035328
408. 94044097 3/11/94 UCC-1 Equipment
</TABLE>
<PAGE>
29
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
409. Propak-California Corp. CA State Fleet Credit Corporation
410. Propak-California Corp. CA State Transamerica Business Credit Corp.
411. Propak-California Corp. CA State Transamerica Business Credit Corp.
412. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
413. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
414. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
415. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
416. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
417. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
418. Propak-California Corp. CA State Fleet Credit Corporation
419. Propak-California Corp. CA State Fleet Credit Corporation
420. Propak-California Corp. CA State Transamerica Business Credit Corp.
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
409. 94044097A0 7/19/94 UCC-2 Amendment of 94044097
410. 96331C0363 11/25/96 UCC-2 Assignment of 94044097
411. 98299C0213 10/19/98 UCC-2 Continuation of 94044097
412. 94049494 3/14/94 UCC-1 Equipment
413. 98343C0220 12/7/98 UCC-3 Continuation of 94049494
414. 94086323 5/2/94 UCC-1 Equipment
415. 99117C0532 4/19/99 UCC-3 Continuation of 94086323
416. 94105545 5/26/94 UCC-1 Equipment
417. 9913C0499 5/6/99 UCC-3 Continuation of 94105545
418. 94126236 6/21/94 UCC-1 Equipment
419. 94126236A0 7/21/94 UCC-2 Amendment of 94126236
420. 96330C0876 11/25/96 UCC-2 Assignment of 94126236
</TABLE>
<PAGE>
30
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
421. Propak-California Corp. CA State Transamerica Business Credit Corp.
422. Propak-California Corp. CA State Transamerica Business Credit Corp.
423. Propak-California Corp. CA State Xerox Corporation
424. Propak-California Corp. CA State Fleet Credit Corporation
425. Propak-California Corp. CA State Fleet Credit Corporation
426. Propak-California Corp. CA State Transamerica Business Credit Corp.
427. Propak-California Corp. CA State Transamerica Business Credit Corp.
428. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
429. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
430. Propak-California Corp. CA State Fleet Credit Corporation
431. Propak-California Corp. CA State Fleet Credit Corporation
432. Propak-California Corp. CA State Transamerica Business Credit Corp.
433. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
421. 99022C0164 1/19/99 UCC-2 Continuation of 94126236
422. 99039C0420 2/1/99 UCC-2 Continuation of 94126236
423. 94142968 7/13/94 UCC-1 Equipment
424. 94162115 8/9/94 UCC-1 Equipment
425. 94363C0427 12/23/94 UCC-2 Amendment of 94162115
426. 96330C0873 11/25/96 UCC-2 Assignment of 94162115
427. 99069C0280 3/1/99 UCC-2 Continuation of 94162115
428. 9429560438 9/29/94 UCC-1 Equipment
429. 99123C0057 4/26/99 UCC-2 Continuation of 9429560438
430. 9501060085 1/5/95 UCC-1 Equipment
431. 95087C0412 3/24/95 UCC-2 Amendment of 9501060085
432. 96330C0871 11/25/96 UCC-2 Assignment of 9501060085
433. 9502660113 1/17/95 UCC-1 Equipment
</TABLE>
<PAGE>
31
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
434. Propak-California Corp. CA State U.S. Bancorp Leasing & Financial
435. Propak-California Corp. CA State Security of Los Angeles (Assignee: Comstock
Leasing, Inc.)
436. Propak-California Corp. CA State Security of Los Angeles (Assignee: Comstock
Leasing, Inc.)
437. Propak-California Corp. CA State Security of Los Angeles (Assignee: Comstock
Leasing, Inc.)
438. Propak-California Corp. CA State GTE Leasing Corporation
439. Propak-California Corp. CA State Toyota-Lift of Los Angeles, Inc. (Assignee: Toyota
Motor Credit Corp.)
440. Propak-California Corp. CA State Toyota Motor Credit Corp.
441. Reid Plastics, Inc., CA State General Electric Capital Corporation (Assignee: USL
Propak-California Corp., and Capital Corporation)
Juice Tree, Inc.
442. Propak-California Corporation CA State Toyota Motor Credit Corporation
443. Propak-California Corporation CA State Toyota Motor Credit Corporation
444. Propak-California Corp. CA State General Electric Capital Corporation
445. Propak-California Corp. CA State General Electric Capital Corporation
446. Propak-California Corp. San Bernardino General Electric Capital Corporation
County, CA
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
434. 9530060778 10/25/95 UCC-1 Equipment
435. 9504160899 2/6/95 UCC-1 Equipment
436. 9535560581 12/19/95 UCC-1 Equipment
437. 96909460467 4/2/96 UCC-1 Equipment
438. 9506860290 3/6/95 UCC-1 Equipment
439. 9510160488 4/6/95 UCC-1 Equipment
440. 9622661018 8/9/96 UCC-1 Equipment
441. 9605360278 2/21/96 UCC-1 Equipment
442. 9633960302 12/2/96 UCC-1 Equipment
443. 9633961362 12/2/96 UCC-1 Equipment
444. 9719160948 7/9/97 UCC-1 Equipment
445. 97196C0312 7/14/97 UCC-2 Amendment of 9719160948
446. 19970234852 7/2/97 UCC-1 Equipment
</TABLE>
<PAGE>
32
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
447. Propak California Corporation Orange County, CA MDFC Equipment Leasing Corporation
448. Propak California Corporation Orange County, CA MDFC Equipment Leasing Corporation
449.*** Propak-California Corp. Hillsborough, FL Banque Paribas, as Agent
450.*** Propak-California Corp. Hillsborough, FL Banque Paribas, as Agent
451. Reid Plastics, Inc., Orange County, CA General Electric Corporation (Assignee: USL Capital
Propak-California Corp., and Corporation)
Juice Tree, Inc.
452. Reid Plastics, Inc. Cook County, IL General Electric Capital Corporation (Assignee: USL
Propak-California Corp. Capital Corporation)
Juice Tree, Inc.
453. Reid Plastics, Inc. Cook County, IL Heller Financial Leasing, Inc.
Propak-California Corp.
454. Reid Plastics, Inc. NJ Union County General Electric Capital Corporation
455. Reid Plastics, Inc. PA State General Electric Capital Corporation (Assignee: USL
Propak-California Corp. Capital Corporation)
Juice Tree Inc.
456. Reid Plastics, Inc. PA State Heller Financial Leasing, Inc.
Propak-California Corp.
457. Reid Plastics, Inc. PA State Heller Financial Leasing, Inc.
Propak-California Corp
458. Reid Plastics, Inc. TX State General Electric Capital Corporation (Assignee: USL
Propak-California Corp. Capital Corporation)
Juice Tree, Inc.
459. Reid Plastics, Inc. CA State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
447. 90-315598 6/14/90 UCC-1 Equipment (as Fixture Filing)
448. 95-0085308 3/2/95 UCC-2 Continuation of 90-315598
449.*** BK7963,pg460 11/27/95 UCC-1 Real Estate
450.*** BK7963,pg470 11/27/95 UCC-1 Real Estate
451. 19960211869 4/29/96 UCC-1 Equipment (as Fixture Filing)
452. 02987 3/7/96 UCC-1 Equipment
453. 96-U04334 4/8/96 UCC-1 Equipment (as Fixture Filing)
454. 002654 5/22/95 UCC-1 Equipment
455. 25151663 2/12/96 UCC-1 Equipment
456. 25380618 4/22/96 UCC-1 Equipment
457. 25020660 11/1/96 UCC-1 Equipment
458. 025692 2/9/96 UCC-1 Equipment
459. 9514260662 05/19/95 UCC-1 Equipment
</TABLE>
<PAGE>
33
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
460. Reid Plastics, Inc. CA State General Electric Capital Corporation (Assignee: USL
Propak-California Corp. Capital Corporation)
461. Reid Plastics, Inc. CA State Heller Financial Leasing, Inc.
Propak-California Corp.
462. Reid Plastics, Inc. CA State USL Capital Corporation
463. Reid Plastics, Inc. CA State General Electric Capital Corporation
464. Reid Plastics, Inc. CA State Canon Financial Services, Inc.
465. Reid Plastics, Inc. CA State Canon Financial Services, Inc.
466. Reid Plastics, Inc. CA State Canon Financial Services, Inc.
467. Reid Plastics, Inc. CA State Mita Copier
468. Reid Plastics, Inc. CA State Toyota Motor Credit Corp.
469. Reid Plastics, Inc. Lancaster, PA Heller Financial Leasing, Inc.
Propak-California Corp.
470. Reid Plastics, Inc. Lancaster, PA Heller Financial Leasing, Inc.
Propak-California Corp.
471. Reid Plastics, Inc. Lancaster, PA Heller Financial Leasing, Inc.
Propak-California Corp.
472. Reid Plastics, Inc. Lancaster, PA Heller Financial Leasing, Inc.
Propak-California Corp.
473. Reid Plastics, Inc. Allegheny, PA General Electric Capital Corporation (Assignee: USL
Propak-California Corp. Capital Corporation)
Juice Tree, Inc.
474. Reid Plastics, Inc. CA State General Electric Capital Corporation
Propak-California Corp.
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
460. 9605360278 02/21/96 UCC-1 Equipment
461. 9609560036 04/03/96 UCC-1 Equipment
462. 9616661020 06/14/96 UCC-1 Equipment
463. 9513560599 5/11/95 UCC-1 Equipment
464. 9705860213 02/21/97 UCC-1 Equipment
465. 9710060303 04/03/97 UCC-1 Equipment
466. 9710060410 04/03/97 UCC-1 Equipment
467. 9835560064 12/17/98 UCC-1 Equipment
468. 9904760061 02/04/99 UCC-1 Equipment
469. 15603 04/04/96 UCC-1 Equipment (as Fixture Filing)
470. 15910 11/05/96 UCC-1 Equipment (as Fixture Filing)
471. 413-D138-P104 04/04/96 UCC-1 Equipment
472. 799-D139-P267 11/05/96 UCC-1 Fixture
473. 96-000943 2/9/96 UCC-1 Equipment
474. 9605360278 02/21/96 UCC-1 Equipment
</TABLE>
<PAGE>
34
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
475. Propak-California Corp. Los Angeles County, CA Heller Financial Leasing, Inc.
Reid Plastics, Inc.
476. Reid Plastics, Inc. Stanislaus County, CA General Electric Capital Corporation
477. Reid Plastics, Inc. IL State General Electric Capital Corporation (Assignee: USL
Capital Corporation)
478. Reid Plastics, Inc. IL State Heller Financial Leasing, Inc.
Propak-California Corp.
479. Reid Plastics, Inc. IL State Atlas Lift Truck Rentals & Sales
480. Reid Plastics, Inc. IL State Atlas Lift Truck Rentals & Sales
481. Reid Plastics, Inc. IL State Atlas Lift Truck Rentals & Sales
482. Propak-California Corp. Los Angeles County, CA General Electric Capital Corporation
483. Propak-California Corp. Los Angeles County, CA General Electric Capital Corporation
484. Propak-California Corp. Los Angeles County, CA Heller Financial Leasing, Inc.
485. Propak-California Corp. Los Angeles County, CA MDFC Equipment Leasing Corp.
486. Propak-California Corp. Los Angeles County, CA MDFC Equipment Leasing Corp.
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
475. 96-628309 04/22/96 UCC-1 Equipment (as Fixture Filing)
476. 95-0041328 05/25/95 UCC-1 Fixture
477. 3503746 02/09/96 UCC-1 Equipment
478. 3530304 04/16/96 UCC-1 Equipment
479. 3571956 07/30/96 UCC-1 Equipment
480. 3604792 10/29/96 UCC-1 Equipment
481. 3643831 01/28/97 UCC-1 Equipment
482 92-891171 05/18/92 UCC-1 Equipment
483. 96-1912953 11/26/96 UCC-2 Continuation of 92-891171
484. 96-628309 04/22/96 UCC-1 Equipment (as Fixture Filing)
485. 90-994381 6/4/90 UCC-1 Equipment (as Fixture Filing)
486. 95-339371 3/3/95 UCC-2 Continuation of 90-944381
</TABLE>
<PAGE>
35
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
487. Reid Plastics, Inc. NJ State General Electric Capital Corporation
488. Reid Plastics, Inc. NJ State General Electric Capital Corporation
489. Sherman Plastics, Inc. TX State General Electric Capital Corporation
490. Sherman Plastics, Inc. TX State General Electric Capital Corporation
491. Sherman Plastics, Inc. TX State General Electric Capital Corporation
492. Sherman Plastics, Inc. TX State General Electric Capital Corporation
493. Sherman Plastics, Inc. TX State Southwest Materials Handling Co., Inc.
494. Sherman Plastics, Inc. Grayson, TX General Electric Capital Corporation
495. Sherman Plastics, Inc. Grayson, TX General Electric Capital Corporation
496. Sherman Plastics, Inc. Grayson, TX General Electric Capital Corporation
497. Suiza Foods Corporation TX State Norwest Equipment Finance, Inc.
Velda Farms, Inc.
498. Suiza Foods Corporation TX State CIT Leasing Corporation
499. Suiza Foods Corporation TX State STI Credit Corporation
500. Suiza Foods Corporation TX State MITA Copystar America, Inc.
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
487. 1637357 6/1/95 UCC-1 Equipment
488. 1635680 5/19/95 UCC-1 Equipment
489. 121156 06/22/94 UCC-1 Equipment
490. 98-603563 01/14/98 UCC-3 Partial Release of 121156
491. 98757194 12/30/98 UCC-3 Continuation of 121156
492. 001564 01/05/95 UCC-1 Equipment
493. 0691 01/02/96 UCC-1 Equipment
494. 318 06/27/94 UCC-1 Equipment
495. 10 01/08/99 UCC-3 Continuation of 318
496. (illegible) 01/03/95 UCC-1 Equipment
497. 176023 9/9/96 UCC-1 Equipment
498. 081075 4/29/97 UCC-1 Equipment
499. 99-029974 2/12/99 UCC-1 Equipment
500. 99-050065 3/15/99 UCC-1 Equipment
</TABLE>
<PAGE>
36
- --------------------------------------------------------------------------------
SCHEDULE X - EXISTING LIENS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
501. Suiza Foods Corporation TX Dallas CIT Leasing Corporation
502. Vanguard Manufacturing, Inc. PA State MetLife Capital Corporation
Vanguard Plastics, Inc., co-Lessee
503. Vanguard Manufacturing, Inc. PA State MetLife Capital Corporation
Vanguard Plastics, Inc., co-Lessee
504. Vanguard Manufacturing, Inc. PA State MetLife Capital Corporation
Vanguard Plastics, Inc., co-Lessee
505. Vanguard Plastics, Inc. PA State Wentworth Capital Corporation
506. Vanguard Plastics, Inc. PA State Modern Handling Equipment Co. (Assignee: Hyster
Credit Company)
507. Vanguard Plastics, Inc. PA, Lehigh County The CIT Group/Equipment Financing, Inc.
(Real Estate records)
508. Vanguard Plastics, Inc. PA, Lehigh County The CIT Group/Equipment Financing, Inc.
(Real Estate records)
509. Vanguard Plastics, Inc. PA, Lehigh County The CIT Group/ Equipment Financing, Inc.
510. Vanguard Plastics, Inc. PA, Lehigh County
511. Vanguard Manufacturing, Inc. PA, Lehigh County MetLife Capital Corporation
Vanguard Plastics, Inc.
512. Vanguard Manufacturing, Inc. PA, Lehigh County MetLife Capital Corporation
Vanguard Plastics, Inc.
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
501. 003935 5/1/97 UCC-1 Equipment
502. 21881430 4/28/93 UCC-1 Equipment
503. 22371622 9/8/93 UCC-3 Amendment of 21881430
504. 28760053 4/2/98 UCC-3 Continuation of 21881430
505. 23581463 10/4/94 UCC-1 Equipment
506.
23841395 12/29/94 UCC-1 Equipment
507. 9640 ST 1/2/92 UCC-1 Equipment
508. 9640 12/27/96 UCC-3 Continuation of 9640 ST
509. 91 UC-2084 12/23/91 UCC-1 Equipment
510. 91 UC-2084 12/17/96 UCC-3 Continuation of 91 UC-2084
511. 92 UC-1893 10/9/92 UCC-1 Equipment
512. 92 UC-1893 10/1/97 UCC-3 Continuation of 92 UC-1893
</TABLE>
<PAGE>
37
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
513. Vanguard Manufacturing, Inc. PA, Lehigh County MetLife Capital Corporation
514. Vanguard Manufacturing, Inc. PA, Lehigh County MetLife Capital Corporation
515. Vanguard Plastics, Inc. PA, Lehigh County General Electric Capital Corporation
Vanguard Manufacturing, Inc.
516. Vanguard Manufacturing, Inc. PA, Lehigh County General Electric Capital Corporation
Vanguard Plastics, Inc.
517. Vanguard Manufacturing, Inc. PA, Lehigh County General Electric Capital Corporation
518. Vanguard Plastics, Inc.
Vanguard Manufacturing, Inc. PA, Lehigh County MetLife Capital Corporation
519. Vanguard Plastics, Inc.
Vanguard Manufacturing, Inc. PA, Lehigh County MetLife Capital Corporation
520. Vanguard Plastics, Inc. PA, Lehigh County MetLife Capital Corporation
Vanguard Manufacturing, Inc.
521. Vanguard Plastics, Inc. PA, Lehigh County Wentworth Capital Corporation
522. Vanguard Plastics, Inc. PA, Lehigh County Phoenixcor, Inc.
523. Vanguard Plastics, Inc. PA, Lehigh County Modern Handling Equipment Co. (assignee: Hyster
Credit Company)
524. Vanguard Manufacturing, Inc. NJ State General Electric Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
513. 92 UC-1893 11/26/97 UCC-3 Amendment of 92 UC-1893
514. 92 UC-1893 11/26/97 UCC-3 Amendment of 92 UC-1893
515. 93 UC-689 5/13/93 UCC-1 Equipment
516. 93 UC-689 3/11/98 UCC-3 Continuation of 93 UC-689
517. 93 UC-689 4/9/98 UCC-3 Amendment of 93 UC-689
518. 93 UC-613 5/3/93 UCC-1 Equipment
519. 93 UC-613 9/8/93 UCC-3 Amendment of 93 UC-613
520. 93 UC-613 4/6/98 UCC-3 Continuation of 93 UC-613
521. 94 UC-1522 10/5/94 UCC-1 Equipment
522. 94 UC-1522 4/1/96 UCC-3 Partial Release of 94 UC-1522
523. 94 UC-1994 12/27/94 UCC-1 Equipment
524. 1509509 5/10/93 UCC-1 Equipment
</TABLE>
<PAGE>
38
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
525. Vanguard Manufacturing, Inc. NJ State General Electric Capital Corporation
526. Vanguard Plastics, Inc. NJ State Met-Life Capital Corporation
527. Vanguard Plastics, Inc. NJ State MetLife Capital Corporation
528. Vanguard Plastics, Inc. NJ State MetLife Capital Corporation
529. Vanguard Plastics, Inc. NJ State MetLife Capital Corporation
530. Vanguard Plastics, Inc. NJ State MetLife Capital Corporation
of Pennsylvania
531. Vanguard Plastics, Inc. NJ State MetLife Capital Corporation
of Pennsylvania
532. Vanguard Manufacturing, Inc. NJ State MetLife Capital Corporation
533. Vanguard Plastics, Inc. NJ State MetLife Capital Corporation
of Pennsylvania
534. Vanguard Plastics, Inc. NJ State MetLife Capital Corporation
535. Vanguard Plastics, Inc. NJ State MetLife Capital Corporation
536. Vanguard Manufacturing, Inc. NJ State MetLife Capital Corporation
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
525. 4050755-001 3/4/98 UCC-3 Continuation of 1509509
526. 1508151 4/29/93 UCC-1 Equipment
527. 1508151 9/8/93 UCC-3 Amendment to 1508151
528. 1508151 7/5/96 UCC-3 Amendment to 1508151
529. 1508151 9/3/98 UCC-3 Continuation of 1508151
530. 1475577 9/25/92 UCC-1 Equipment
531. 7/29/97 UCC-3 Continuation of 1475577
532. 11/10/97 UCC-3 Amendment to 1475577
533. 5724392001 MM MMS 11/10/97 UCC-3 Amendment to 1475577 (name change)
534. 1528868 9/2/93 UCC-1 Equipment
535. 11/10/97 UCC-3 Amendment to 1528868 (name change)
536. 11/10/97 UCC-3 Amendment to 1528868
</TABLE>
<PAGE>
38
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
537. Vanguard Manufacturing, Inc. NJ State MetLife Capital Corporation
538. Vanguard Manufacturing, Inc. NJ State Wentworth Capital Corporation
539. Vanguard Manufacturing, Inc. NJ State Phoenixcor, Inc.
540. Vanguard Plastics, Inc. NJ State General Electric Capital Corporation
541. Vanguard Plastics, Inc. NJ State General Electric Capital Corporation
542. Vanguard Manufacturing, Inc. NJ State General Electric Capital Corporation
543.*** Vanguard Plastics, Inc. PA State Continental Bank
544. Vanguard Plastics, Inc. PA State Midlantic Bank (f.k.a. Continental Bank)
545. Vanguard Plastics, Inc. PA State Midlantic Bank (f.k.a. Continental Bank)
546. Vanguard Plastics, Inc. PA State PNC Bank, National Association (f.k.a. Midlantic Bank)
547.*** Vanguard Plastics, Inc. PA, Lehigh County Continental Bank
548. Vanguard Plastics, Inc. PA, Lehigh County Continental Bank
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
537. 7/31/98 UCC-3 Continuation of 1528868
538. 1596204 10/4/94 UCC-1 Equipment
539. S166842 4/11/96 UCC-3 Partial Release of 1596204
540. 1509512 5/10/93 UCC-1 Equipment
541. 3/31/98 UCC-3 Amendment to 1509512
542. 3/4/98 UCC-3 Continuation of 1509512
543.*** 19480509 3/11/91 UCC-1 Personal Property
544. 24771795 10/19/95 UCC-3 Continuation of 19480509
545. 24911175 11/27/95 UCC-3 Partial Release of 19480509
546. 28191466 11/27/96 UCC-3 Amendment of 19480509
547.*** 9257 12/19/90 UCC-1 Personal Property
548. 9257 8/1/95 UCC-3 Continuation of 9257
</TABLE>
<PAGE>
38
<TABLE>
<CAPTION>
Debtor Juris. Secured Party
------ ------ -------------
<S> <C> <C> <C>
549. Vanguard Plastics, Inc. PA, Lehigh County Midlantic National Bank (f.k.a. Continental Bank)
550.*** Vanguard Plastics, Inc. PA, Lehigh County Continental Bank
551. Vanguard Plastics, Inc. PA, Lehigh County Continental Bank
552. Vanguard Plastics, Inc. PA, Lehigh County Midlantic Bank (f.k.a. Continental Bank)
553. Vanguard Plastics, Inc. PA, Lehigh County PNC Bank, National Association (f.k.a. Midlantic Bank)
554.*** Vanguard Manufacturing, Inc. NJ State Continental Bank
555. Vanguard Manufacturing, Inc. NJ State Continental Bank
556. Vanguard Manufacturing, Inc. NJ State Continental Bank
<CAPTION>
File No. File Date Type Collateral
-------- --------- ---- ----------
<S> <C> <C> <C> <C>
549. 9257 12/7/95 UCC-3 Release of 9257
550.*** 90 UC-2403 12/6/90 UCC-1 Personal Property
551. 2403 8/1/95 UCC-3 Continuation of 90 UC-2403
552. 2403 11/27/95 UCC-3 Partial Release of 90 UC-2403
553. 2403 11/6/97 UCC-3 Amendment of 90 UC-2403
554.*** 1375239 12/11/90 UCC-1 Personal Property
555. 505326 8/1/95 UCC-3 Continuation of 1375239
556. 214412 12/23/96 UCC-3 Partial Release of 1375239
</TABLE>
- ----------
* Non-Equipment Liens to be amended, removed or subordinated post-closing.
** Lien securing the Industrial Revenue Bond.
*** Facility has been terminated and liens will be terminated post-closing.
+ Liens securing letters of credit issued by CIT which are expected to be
released be on the Initial Borrowing Date once back-up L/Cs are issued by
Bankers Trust Company.
<PAGE>
SHEDULE XI - PERMITTED AFFILIATE TRANSACTIONS
1. Transactions under the Supply Agreements as of July 2, 1999 between Suiza
Foods Corporation and Consolidated Container Holdings LLC
2. Management Agreement as of April 29, 1999 between Consolidated Container
Holdings LLC, Consolidated Container Company LLC and Vestar Capital
Partners
3. Distribution Agreement with W.G. Bell Sales, Inc., dated January 1, 1995.
4. Amended and Restated Lease Agreement, by and between Carl and Shirley
Frahm and Reid Valve Company, dated January 10, 1989, as further amended,
with respect to the real property located at 133 East Maple, Monrovia,
California.
5. Agreement to cover medical benefits for Carl (deceased) and Shirley Frahm,
as provided for in Section 4 of the Consulting Agreement, by and between
Reid Valve Company and Shirley Frahm, dated January 10, 1989.
6. Arrangement pursuant to which the Company pays for home delivery of
bottled water for B. Joseph Rokus.
7. Vestar Indemnification Agreement distributed October 1, 1997.
8. Vestar Advisory Agreement distributed October 1, 1997.
9. Transition Services Agreement, dated as of July 2, 1998, by and among
Suiza Foods Corporation, Consolidated Container Holdings LLC and
Consolidated Container Company.
10. Various leases and subleases of real property on which former Suiza
Packaging plastics operations are now located.
11. Trademark License Agreement, dated April __, 1999, between Continental Can
Company, Inc., Consolidated Container Holdings LLC and Consolidated
Container Company LLC.
12. Employment Agreement, dated July 2, 1999, by and between Peter Bernon and
Consolidated Container Company LLC
13. Employment Agreement (not executed as of the Initial Borrowing Date), by
and between Hank Carter and Consolidated Container Company LLC
14. Employment Agreement (not executed as of the Initial Borrowing Date), by
and between Ron Justice and Consolidated Container Company LLC
15. Employment Agreement (not executed as of the Initial Borrowing Date), by
and between William L. Estes and Consolidated Container Company LLC
<PAGE>
2
16. Unit option agreements and replacement unit option agreement between
Consolidated Container Holdings LLC and certain directors, officers and
partners of Consolidated Container Holdings LLC, Consolidated Container
Company LLC and subsidiaries of Consolidated Container Company LLC
17. Assumption Agreement between Reid Plastics Holdings, Inc., Holdings and
Borrower dated July 1, 1999 by means of which Holdings and the Borrower
assume all obligations of Reid Holdings, Inc. under the following
agreements:
a. Agreement among Vestar Reid LLC, Reid Plastics Holdings, Inc., Reid
Plastics, Inc., ING Equity Partners, L.P. I, B. Joseph Rokus and
Tari F. Rokus, dated as of September 15, 1998 (including the
provisions of the Master Reorganization Agreement between Vestar
Reid LLC and Reid Plastics Holdings, Inc., dated as of October 10,
1997, amended thereby).
b. Amended and Restated Employment Agreement between Reid Plastics,
Inc. and B. Joseph Rokus, dated as of September 15, 1998.
c. Agreement dated as of April 28, 1999 among Vestar Reid LLC, Vestar
Packaging LLC, Reid Plastics Holdings, Inc., Reid Plastics, Inc., B.
Joseph Rokus and Tari F. Rokus.
d. Agreement dated as of April 28, 1999 among Vestar Reid LLC, Vestar
Packaging LLC, Reid Plastics Holdings, Inc., Reid Plastics, Inc., B.
Joseph Rokus, Tari F. Rokus and Shirley Frahm.
<PAGE>
SCHEDULE XII - EXISTING INVESTMENTS
1. Reid Plastics, Inc.
a. Advance paid in connection with Rebate and Supply Agreement, by and
between Reid Plastics, Inc. and California Bottling Company, dated
May 1, 1997.
b. Extended payment terms granted to McKesson Water in connection with
sale by Reid Plastics, Inc. of filler/capper machines.
2. Propak - California Corp.
a. Propak - California Corp. guarantees the lease payments of Juice
Tree, Inc. with respect to Juice Tree Inc.'s lease of real property
located at 7300 Bolsa Avenue, Westminster, California 92683 and
certain vehicles.
b. Promissory Note dated June 28, 1996, by Far West Container in favor
of S/W, in the original principal amount of $290,000, with an
outstanding balance of $211,000.
<PAGE>
SCHEDULE XIII - EXISTING DIVIDEND REQUIREMENTS
1. Assumption Agreement between Reid Plastics Holdings, Inc., Holdings and
Borrower dated July 1, 1999 by means of which Holdings and the Borrower
assume all obligations of Reid Holdings, Inc. under the following
agreements:
a. Agreement among Vestar Reid LLC, Reid Plastics Holdings, Inc., Reid
Plastics, Inc., ING Equity Partners, L.P. I, B. Joseph Rokus and
Tari F. Rokus, dated as of September 15, 1998 (including the
provisions of the Master Reorganization Agreement between Vestar
Reid LLC and Reid Plastics Holdings, Inc., dated as of October 10,
1997, amended thereby).
b. Amended and Restated Employment Agreement between Reid Plastics,
Inc. and B. Joseph Rokus, dated as of September 15, 1998.
c. Agreement dated as of April 28, 1999 among Vestar Reid LLC, Vestar
Packaging LLC, Reid Plastics Holdings, Inc., Reid Plastics, Inc., B.
Joseph Rokus and Tari F. Rokus.
d. Agreement dated as of April 28, 1999 among Vestar Reid LLC, Vestar
Packaging LLC, Reid Plastics Holdings, Inc., Reid Plastics, Inc., B.
Joseph Rokus, Tari F. Rokus and Shirley Frahm.
2. Payment of Taxes under Clause 13.5 of the Contribution and Merger
Agreement among Suiza Foods Corporation, Franklin Plastics, Inc, Vestar
Packaging LLC, Consolidated Container Holdings LLC, Consolidated Container
Company LLC and others as of April 29, 1999.
3. Consolidated Container Holdings LLC's obligation to honor certain
liquidity rights under certain unit option agreements entered into with
former officers, directors and employees of Franklin Plastics or its
affiliates.
<PAGE>
[Draft: (New York) June 25, 1999]
EXHIBIT A
FORM OF NOTICE OF BORROWING
Bankers Trust Company, as Administrative Agent
for the Banks party to the
Credit Agreement referred
to below
130 Liberty Street
New York, New York 10006
Attention: ____________________
Ladies and Gentlemen:
The undersigned, Consolidated Container Company LLC (the
"Borrower"), refers to the Credit Agreement, dated as of July 1, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement," the terms defined therein being used herein as therein defined),
among Consolidated Container Holdings LLC, the Borrower, certain financial
institutions from time to time party thereto (the "Banks"), Morgan Guaranty
Trust Company of New York, as Documentation Agent, Donaldson, Lufkin &
Jenrette Securities, as Syndication Agent and you, as Administrative Agent
for such Banks, and hereby gives you notice, irrevocably, pursuant to Section
1.03 of the Credit Agreement, that the undersigned hereby requests a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 1.03 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is [Date].(1)
(ii) The aggregate principal amount of the Proposed Borrowing is
$_____________.
(iii) The Proposed Borrowing is to consist of [A Term Loans] [B Term
Loans] [C Term Loans] [Revolving Loans].
(iv) The Loans to be made pursuant to the Proposed Borrowing shall
be initially maintained as [Base Rate Loans] [Eurodollar Loans].(2)
- ----------
(1) Shall be a Business Day at least one Business Day in the case of Base Rate
Loans and three Business Days in the case of Eurodollar Loans, in each
case, after the date hereof.
(2) Eurodollar Loans may not be incurred prior to the Syndication Date except
on the first day of a Pre-Syndication Interest Period.
<PAGE>
Exhibit A-1
Page 2
[(v) The initial Interest Period for the Proposed Borrowing is [one
week](3) [one, two, three, six, nine or twelve month[s]].(4)
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit
Agreement or in the other Credit Documents are and will be true and
correct in all material respects, before and after giving effect to the
Proposed Borrowing and to the application of the proceeds thereof (except
for any representation and warranty that speaks only as of a specific
date, which shall be true and correct in all material respects as of such
date), as though made on such date; and
(B) no Default or Event of Default has occurred and is continuing,
or would result from such Proposed Borrowing or from the application of
the proceeds thereof.
Very truly yours,
CONSOLIDATED CONTAINER COMPANY LLC
By:_____________________________________
Title:
- ----------
(3) To be included only prior to the Syndication Date.
(4) To be included for a Proposed Borrowing of Eurodollar Loans.
<PAGE>
EXHIBIT B-1
FORM OF A TERM NOTE
$___________________ New York, New York
[Date of Issuance]
FOR VALUE RECEIVED, Consolidated Container Company LLC, a Delaware
limited liability company (the "Borrower"), hereby promises to pay to the order
of ______________________ (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Bankers Trust Company
(the " Administrative Agent") located at 130 Liberty Street, New York, New York
10006, on the A Term Loan Maturity Date (as defined in the Agreement referred to
below) the principal sum of __________________ DOLLARS or, if less, the then
unpaid principal amount of all A Term Loans (as defined in the Agreement) made
by the Bank to the Borrower pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement referred to
below.
This Note is one of the A Term Notes referred to in the Credit
Agreement, dated as of July 1, 1999, among Consolidated Container Holdings, LLC,
the Borrower, the financial institutions from time to time party thereto
(including the Bank), Morgan Guaranty Trust Company of New York, as
Documentation Agent, Donaldson, Lufkin & Jenrette Securities Corporation, as
Syndication Agent and the Administrative Agent (as from time to time in effect,
the "Agreement") and is entitled to the benefits thereof. This Note is also
entitled to the benefits of the Guaranties (as defined in the Agreement) and is
secured by and entitled to the benefits of the Security Documents (as defined in
the Agreement). As provided in the Agreement, this Note is subject to voluntary
prepayment and mandatory repayment prior to the A Term Loan Maturity Date, in
whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
CONSOLIDATED CONTAINER COMPANY LLC
By: _____________________________________
Title:
<PAGE>
EXHIBIT B-2
FORM OF B TERM NOTE
$_______________ New York, New York
[Date of Issuance]
FOR VALUE RECEIVED, Consolidated Container Company LLC, a Delaware
limited liability company (the "Borrower"), hereby promises to pay to the order
of ______________________ (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Bankers Trust Company
(the "Administrative Agent") located at 130 Liberty Street, New York, New York
10006, on the B Term Loan Maturity Date (as defined in the Agreement referred to
below) the principal sum of __________________ DOLLARS or, if less, the then
unpaid principal amount of all B Term Loans (as defined in the Agreement) made
by the Bank to the Borrower pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement referred to
below.
This Note is one of the B Term Notes referred to in the Credit
Agreement, dated as of July 1, 1999, among Consolidated Container Holdings LLC,
the Borrower, the financial institutions from time to time party thereto
(including the Bank), Morgan Guaranty Trust Company of New York, as
Documentation Agent, Donaldson, Lufkin & Jenrette Securities Corporation, as
Syndication Agent, and the Administrative Agent (as from time to time in effect,
the "Agreement") and is entitled to the benefits thereof. This Note is also
entitled to the benefits of the Guaranties (as defined in the Agreement) and is
secured by and entitled to the benefits of the Security Documents (as defined in
the Agreement). As provided in the Agreement, this Note is subject to voluntary
prepayment and mandatory repayment prior to the B Term Loan Maturity Date, in
whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
CONSOLIDATED CONTAINER COMPANY LLC
By: _____________________________________
Title:
<PAGE>
EXHIBIT B-3
FORM OF C TERM NOTE
$___________________ New York, New York
[Date of Issuance]
FOR VALUE RECEIVED, Consolidated Container Company LLC, a Delaware
limited liability company (the 'Borrower"), hereby promises to pay to the order
of ______________________ (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Bankers Trust Company
(the "Administrative Agent") located at 130 Liberty Street, New York, New York
10006, on the C Term Loan Maturity Date (as defined in the Agreement referred to
below) the principal sum of __________________ DOLLARS or, if less, the then
unpaid principal amount of all C Term Loans (as defined in the Agreement) made
by the Bank to the Borrower pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement referred to
below.
This Note is one of the C Term Notes referred to in the Credit
Agreement, dated as of July 1, 1999, among Consolidated Container Holdings LLC,
the Borrower, the financial institutions from time to time party thereto
(including the Bank), Morgan Guaranty Trust Company of New York, as
Documentation Agent, Donaldson, Lufkin & Jenrette Securities Corporation, as
Syndication Agent, and the Administrative Agent (as from time to time in effect,
the "Agreement") and is entitled to the benefits thereof. This Note is also
entitled to the benefits of the Guaranties (as defined in the Agreement) and is
secured by and entitled to the benefits of the Security Documents (as defined in
the Agreement). As provided in the Agreement, this Note is subject to voluntary
prepayment and mandatory repayment prior to the C Term Loan Maturity Date, in
whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
CONSOLIDATED CONTAINER COMPANY LLC
By:______________________________________
Title:
<PAGE>
EXHIBIT B-4
FORM OF REVOLVING NOTE
$___________________ New York, New York
[Date of Issuance]
FOR VALUE RECEIVED, Consolidated Container Company LLC, a Delaware
limited liability company (the "Borrower"), hereby promises to pay to the order
of _____________________ (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Bankers Trust Company
(the "Administrative Agent") located at 130 Liberty Street, New York, New York
10006, on the Revolving Loan Maturity Date (as defined in the Agreement referred
to below) the principal sum of ________________ DOLLARS or, if less, the then
unpaid principal amount of all Revolving Loans (as defined in the Agreement)
made by the Bank to the Borrower pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement referred to
below.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of July 1, 1999, among Consolidated Container Holdings LLC,
the Borrower, the financial institutions from time to time party thereto
(including the Bank), Morgan Guaranty Trust Company of New York, as
Documentation Agent, Donaldson, Lufkin & Jenrette Securities Corporation, as
Syndication Agent, and the Administrative Agent (as from time to time in effect,
the "Agreement") and is entitled to the benefits thereof. This Note is also
entitled to the benefits of the Guaranties (as defined in the Agreement) and is
secured by and entitled to the benefits of the Security Documents (as defined in
the Agreement). As provided in the Agreement, this Note is subject to voluntary
prepayment and mandatory repayment prior to the Revolving Loan Maturity Date, in
whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
CONSOLIDATED CONTAINER COMPANY LLC
By:______________________________________
Title:
<PAGE>
EXHIBIT B-5
FORM OF SWINGLINE NOTE
$___________________ New York, New York
[Date of Issuance]
FOR VALUE RECEIVED, Consolidated Container Company LLC, a Delaware
limited liability company (the "Borrower"), hereby promises to pay to the order
of Bankers Trust Company (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Bankers Trust Company
(the "Administrative Agent") located at 130 Liberty Street, New York, New York
10006, on the Swingline Expiry Date (as defined in the Agreement referred to
below) the principal sum of ________________ DOLLARS or, if less, the then
unpaid principal amount of all Swingline Loans (as defined in the Agreement)
made by the Bank to the Borrower pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement referred to
below.
This Note is the Swingline Note referred to in the Credit Agreement,
dated as of July 1, 1999, among Consolidated Container Holdings LLC, the
Borrower, the financial institutions from time to time party thereto (including
the Bank), Morgan Guaranty Trust Company of New York, as Documentation Agent,
Donaldson, Lufkin & Jenrette Securities Corporation, as Syndication Agent, and
the Administrative Agent (as from time to time in effect, the "Agreement") and
is entitled to the benefits thereof. This Note is also entitled to the benefits
of the Guaranties (as defined in the Agreement) and is secured by and entitled
to the benefits of the Security Documents (as defined in the Agreement). As
provided in the Agreement, this Note is subject to voluntary prepayment and
mandatory repayment prior to the Swingline Expiry Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
CONSOLIDATED CONTAINER COMPANY LLC
By:______________________________________
Title:
<PAGE>
EXHIBIT C-1
FORM OF C TERM LOAN COMMITMENT AGREEMENT
[Names(s) of Bank (s)]
_____________, ____
Consolidated Container Company LLC
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201
re: C Term Loan Commitment
Gentlemen:
Reference is hereby made to the Credit Agreement, dated as of July
1, 1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Consolidated Container Holdings LLC, Consolidated
Container Company LLC (the "Borrower" or "you"), the financial institutions from
time to time party thereto (the "Banks"), Morgan Guaranty Trust Company of New
York, as Documentation Agent, Donaldson, Lufkin & Jenrette Securities
Corporation, as Syndication Agent, and Bankers Trust Company, as Administrative
Agent (the "Administrative Agent"). Unless otherwise defined herein, capitalized
terms used herein shall have the respective meanings set forth in the Credit
Agreement.
Each Bank (each a "C Term Loan Bank") party to this letter agreement
(this "Agreement") hereby severally agrees to provide the C Term Loan Commitment
set forth opposite its name on Annex I attached hereto (for each such C Term
Loan Bank, its "C Term Loan Commitment"). Each C Term Loan Commitment provided
pursuant to this Agreement shall be subject to the terms and conditions set
forth in the Credit Agreement, including Section 1.14 thereof.
Each C Term Loan Bank party to this Agreement acknowledges and
agrees that the C Term Loan Commitment provided pursuant to this Agreement shall
constitute a C Term Loan Commitment under, and as defined in, the Credit
Agreement. Each C Term Loan Bank party to this Agreement further agrees that,
with respect to the C Term Loan Commitment provided by it pursuant to this
Agreement, such C Term Loan Bank shall receive an upfront fee equal to that
amount set forth opposite its name on Annex I hereto.
The Borrower agrees that with respect to each C Term Loan Commitment
provided pursuant to this Agreement, (i) the Applicable Margin for Base Rate
Loans and Eurodollar Loans shall be as set forth on Annex II hereto, (ii) the C
Term Loan Maturity Date shall be ___________, ____ and (iii) the C Term Loan
Scheduled Repayments shall be as set forth on Annex III hereto.
Each C Term Loan Bank party to this Agreement (i) confirms that it
has received a copy of the Credit Agreement and the other Credit Documents,
together with copies of the financial
<PAGE>
EXHIBIT C-1
Page 2
statements referred to therein and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Agreement and to become a Bank under the Credit Agreement, (ii) agrees
that it will, independently and without reliance upon the Administrative Agent
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement, (iii) appoints and authorizes the
Administrative Agent and the Collateral Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other
Credit Documents as are delegated to the Administrative Agent and the Collateral
Agent, as the case may be, by the terms thereof, together with such powers as
are reasonably incidental thereto, (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank, and (v) in the
case of each lending institution organized under the laws of a jurisdiction
outside the United States, attaches the forms prescribed by the Internal Revenue
Service of the United States, certifying as to its entitlement to a complete
exemption from United States withholding taxes with respect to all payments to
be made under the Credit Agreement and the other Credit Documents. Upon the
execution of a counterpart of this Agreement by the Administrative Agent and the
Borrower, the delivery to the Administrative Agent of a fully executed copy
(including by way of counterparts and by fax) hereof and the payment of any fees
(including, without limitation, the upfront fees payable pursuant to the
immediately preceding paragraph) required in connection herewith, each C Term
Loan Bank party hereto shall become a Bank pursuant to the Credit Agreement and,
to the extent provided in this Agreement, shall have the rights and obligations
of a Bank thereunder and under the other Credit Documents.
You may accept this Agreement by signing the enclosed copies in the
space provided below, and returning one copy of same to us before the close of
business on ____________, _____. If you do not so accept this Agreement by such
time, our C Term Loan Commitment set forth in this Agreement shall be deemed
canceled.
After the execution and delivery to the Administrative Agent of a
fully executed copy of this Agreement (including by way of counterparts and by
fax) by the parties hereto, this Agreement may only be changed, modified or
varied by written instrument in accordance with the requirements for the
modification of Credit Documents pursuant to Section 13.12 of the Credit
Agreement.
<PAGE>
EXHIBIT C-1
Page 3
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
Very truly yours,
[NAME OF LENDER]
By _____________________________________
Name:
Title:
Agreed and Accepted this
___ day of __________, ____:
CONSOLIDATED CONTAINER
COMPANY LLC
By:_____________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Administrative Agent
By:_____________________________
Name:
Title:
<PAGE>
ANNEX I TO EXHIBIT C-1
UP FRONT FEES
Amount of C Term
Name of Bank Loan Commitment Upfront Fee
- ------------ --------------- -----------
-------------------------- -----------------
Total:
<PAGE>
ANNEX II TO EXHIBIT C-1
APPLICABLE MARGINS
Applicable Margin
for C Term Loans
----------------
Eurodollar Base Rate
Pricing Level Adjusted Leverage Ratio Loans Loans
- ------------- ----------------------- ----- -----
The Applicable Margin shall be determined and adjusted quarterly on
each Determination Date; provided, however, that (i) the Applicable Margins
shall be determined by the Leverage Ratio as of the last day of the most
recently ended fiscal quarter of Holdings preceding the applicable Determination
Date, and (ii) if Holdings fails to provide the officer's certificate to the
Banks as required by Section 7.01(e) of the Credit Agreement for the last day of
the most recently ended fiscal quarter of Holdings preceding the Determination
Date, the Applicable Margins from such Determination Date shall be based on
Pricing Level I until such time as an appropriate officer's certificate is
provided, whereupon the Applicable Margins shall be determined by the Leverage
Ratio as of the last day of the most recently ended fiscal quarter of Holdings
preceding such Determination Date. Each Applicable Margin shall be effective
from one Determination Date until the next Determination Date. Any adjustments
in the Applicable Margins shall be applicable to all existing C Term Loans as
well as any new C Term Loans made.
<PAGE>
ANNEX III TO EXHIBIT C-1
C TERM LOAN SCHEDULED REPAYMENTS
C Term Loan Scheduled Repayment Date Amount
- ------------------------------------ ------
<PAGE>
EXHIBIT C-2
FORM OF ADDITIONAL REVOLVING LOAN COMMITMENT AGREEMENT
[Names(s) of Banks(s)]
_____________, ____
Consolidated Container Company LLC
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201
Re: Additional Revolving Loan Commitment
Gentlemen:
Reference is hereby made to the Credit Agreement, dated as of July
1, 1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Consolidated Container Holdings LLC, Consolidated
Container Company LLC (the "Borrower" or "you"), the financial institutions from
time to time party thereto (the "Banks"), Morgan Guaranty Trust Company of New
York, as Documentation Agent, Donaldson, Lufkin & Jenrette Securities
Corporation, as Syndication Agent, and Bankers Trust Company, as Administrative
Agent (the "Administrative Agent"). Unless otherwise defined herein, capitalized
terms used herein shall have the respective meanings set forth in the Credit
Agreement.
Each Bank (each an "Additional Revolving Loan Bank") party to this
letter agreement (this "Agreement") hereby severally agrees to provide the
Additional Revolving Loan Commitment set forth opposite its name on Annex I
attached hereto (for each such Additional Revolving Loan Bank, its "Additional
Revolving Loan Commitment"). Each Additional Revolving Loan Commitment provided
pursuant to this Agreement shall be subject to the terms and conditions set
forth in the Credit Agreement, including Section 1.14 thereof.
Each Additional Revolving Loan Bank party to this Agreement
acknowledges and agrees that the Additional Revolving Loan Commitment provided
pursuant to this Agreement shall constitute an Additional Revolving Loan
Commitment under, and as defined in, the Credit Agreement. Each Additional
Revolving Loan Bank party to this Agreement further agrees that, with respect to
the Additional Revolving Loan Commitment provided by it pursuant to this
Agreement, such Additional Revolving Loan Bank shall receive an upfront fee
equal to that amount set forth opposite its name on Annex I hereto.
Each Additional Revolving Loan Bank party to this Agreement (i)
confirms that it has received a copy of the Credit Agreement and the other
Credit Documents, together with copies of the financial statements referred to
therein and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Agreement and
<PAGE>
Exhibit C-2
Page 2
to become a Bank under the Credit Agreement, (ii) agrees that it will,
independently and without reliance upon the Administrative Agent or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement, (iii) appoints and authorizes the
Administrative Agent and the Collateral Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other
Credit Documents as are delegated to the Administrative Agent and the Collateral
Agent, as the case may be, by the terms thereof, together with such powers as
are reasonably incidental thereto, (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank, and (v) in the
case of each lending institution organized under the laws of a jurisdiction
outside the United States, attaches the forms prescribed by the Internal Revenue
Service of the United States, certifying as to its entitlement to a complete
exemption from United States withholding taxes with respect to all payments to
be made under the Credit Agreement and the other Credit Documents. Upon the
execution of a counterpart of this Agreement by the Administrative Agent and the
Borrower, the delivery to the Administrative Agent of a fully executed copy
(including by way of counterparts and by fax) hereof and the payment of any fees
(including, without limitation, the upfront fees payable pursuant to the
immediately preceding paragraph) required in connection herewith, each
Additional Revolving Loan Bank party hereto shall become a Bank pursuant to the
Credit Agreement and, to the extent provided in this Agreement, shall have the
rights and obligations of a Bank thereunder and under the other Credit
Documents.
You may accept this Agreement by signing the enclosed copies in the
space provided below, and returning one copy of same to us before the close of
business on ____________, _____. If you do not so accept this Agreement by such
time, our Additional Revolving Loan Commitment set forth in this Agreement shall
be deemed cancelled.
After the execution and delivery to the Administrative Agent of a
fully executed copy of this Agreement (including by way of counterparts and by
fax) by the parties hereto, this Agreement may only be changed, modified or
varied by written instrument in accordance with the requirements for the
modification of Credit Documents pursuant to Section 13.12 of the Credit
Agreement.
<PAGE>
Exhibit C-2
Page 3
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
Very truly yours,
[NAME OF BANK]
By:______________________________________
Name:
Title:
Agreed and Accepted this
___ day of __________, ____:
CONSOLIDATED CONTAINER
COMPANY LLC
By:____________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Administrative Agent
By:____________________________
Name:
Title:
<PAGE>
ANNEX I TO EXHIBIT C-2
UPFRONT FEES
Amount of Additional Revolving
Name of Bank Loan Commitment Upfront Fee
Total ______________________ _________________
<PAGE>
EXHIBIT D
FORM OF LETTER OF CREDIT REQUEST
No. (1) Dated (2)
Bankers Trust Company, as Administrative
Agent and as Issuing Bank, under the
Credit Agreement (as amended, supplemented
or otherwise modified from time to time,
the "Credit Agreement"), dated as of July
1, 1999, among Consolidated Container
Holdings LLC, Consolidated Container
Company LLC, the financial institutions
from time to time party thereto (the
"Banks"), Morgan Guaranty Trust Company of
New York, as Documentation Agent,
Donaldson, Lufkin & Jenrette Securities
Corporation, as Syndication Agent, and
Bankers Trust Company, as Administrative
Agent 130 Liberty Street, New York, New
York 10006
Attention:
Ladies and Gentlemen:
We hereby request that the Issuing Bank referred to above issue a
[Trade] [Standby] Letter of Credit for the account of the undersigned on (3)
(the "Date of Issuance") in the aggregate stated amount of (4).
For purposes of this Letter of Credit Request, unless otherwise
defined herein, all capitalized terms used herein which are defined in the
Credit Agreement shall have the respective meaning provided therein.
- ----------
(1) Letter of Credit Request Number.
(2) Date of Letter of Credit Request.
(3) Date of Issuance at least three Business days from the date indicated in
(2) above (or such shorter period as is acceptable to the Issuing Bank in
any given case).
(4) Aggregate initial stated amount of Letter of Credit.
<PAGE>
Exhibit D
Page 2
The beneficiary of the requested Letter of Credit will be (5), and
such Letter of Credit will be in support of (6) and will have a stated
expiration date of (7).
We hereby certify that:
(A) The representations and warranties contained in the Credit
Agreement or in the other Credit Documents will be true and correct in all
material respects, before and after giving effect to the issuance of the Letter
of Credit requested hereby (except for any representation and warranty that
speaks only as of a specific date, which shall be true and correct in all
material respects as of such date), on the Date of Issuance.
(B) No Default or Event of Default has occurred and is continuing
nor, after giving effect to the issuance of the Letter of Credit requested
hereby, would such a Default or Event of Default occur.
Copies of all documentation with respect to the supported
transaction are attached hereto.
CONSOLIDATED CONTAINER
COMPANY LLC
By:____________________________
Title:
- ----------
(5) Insert name and address of beneficiary.
(6) Insert description of L/C Supportable Obligations or applicable trade
obligations, as the case may be.
(7) Insert last date upon which drafts may be presented which may not be later
than (A) in the case of Standby Letters of Credit, the earlier of (x) 12
months after the Date of Issuance and (y) the tenth Business Day preceding
the Revolving Loan Maturity Date and (B) in the case of Trade Letters of
Credit, (x) 12 months after the Date of Issuance and (y) 30 days prior to
the Revolving Loan Maturity Date.
<PAGE>
EXHIBIT E
Form of Section 4.04(b)(ii) Certificate
Reference is hereby made to the Credit Agreement, dated as of July
1, 1999, among Consolidated Container Holdings LLC, Consolidated Container
Company LLC, the financial institutions from time to time party thereto, Morgan
Guaranty Trust Company of New York, as Documentation Agent, Donaldson, Lufkin &
Jenrette Securities Corporation, as Syndication Agent, and Bankers Trust
Company, as Administrative Agent, as amended to the date hereof (the "Credit
Agreement"). Pursuant to the provisions of Section 4.04(b)(ii) of the Credit
Agreement, the undersigned hereby certifies that it is not a "bank" as such term
is used in Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended.
[NAME OF BANK]
By:________________________________
Title:
Date:
<PAGE>
EXHIBIT F-1
[LETTERHEAD]
July 2, 1999
Bankers Trust Company, as Administrative Agent under
the Credit Agreement, as hereinafter
defined (the "Administrative Agent")
and
The Lenders listed on Schedule I hereto which are parties to the Credit
Agreement on the date hereof
Re: Credit Agreement dated as of July 1, 1999 (the "Credit
Agreement") among Consolidated Container Holdings LLC,
Consolidated Container Company LLC, the lending institutions
identified in the Credit Agreement (the "Lenders"), the
Administrative Agent, Morgan Guaranty Trust Company of New
York, as Documentation Agent, and Donaldson, Lufkin & Jenrette
Securities Corporation, as Syndication Agent
Ladies and Gentlemen:
We have acted as counsel to Consolidated Container Holdings
LLC ("Holdings"), a Delaware limited liability company, Consolidated Container
Company LLC (the "Borrower"), a Delaware limited liability company, and each
subsidiary of the Borrower named on Schedule II attached hereto (each, a
"Subsidiary Guarantor" and, collectively, the "Subsidiary Guarantors"; Holdings,
the Borrower and the Subsidiary Guarantors being referred to herein collectively
as the "Credit Parties") in connection with the preparation, execution and
delivery of the following documents:
(a) the Credit Agreement;
(b) the Notes delivered to the Lenders on the date hereof;
(c) the Subsidiary Guaranty;
(d) the Security Agreement;
<PAGE>
SIMPSON THACHER & BARTLETT 2
(e) the Pledge Agreement; and
(f) the Mortgage covering real property located in the State of
New York (the "NY Mortgage").
The documents described in the foregoing clauses (a) through (f) are
collectively referred to herein as the "Credit Documents", and the documents
described in the foregoing clauses (d) through (f) are collectively referred to
herein as the "Security Documents". Unless otherwise indicated, capitalized
terms used but not defined herein shall have the respective meanings set forth
in the Credit Agreement. This opinion is furnished to you pursuant to Section
5.04(i) of the Credit Agreement.
In connection with this opinion, we have examined:
(A) the Credit Agreement, signed by each Credit Party that is a
party thereto and by the Administrative Agent and certain of
the Lenders;
(B) each other Credit Document, signed by each Credit Party that
is a party thereto;
(C) forms of the Notes to be delivered after the date hereof; and
(D) unfiled copies of the financing statements attached as
Schedule III hereto (the "Financing Statements"), naming the
Credit Parties indicated therein as debtors and the
Administrative Agent as secured party; we understand such
financing statements will be filed in the filing offices in
the State of New York indicated on such Financing Statements
(collectively, the "Filing Offices").
We also have examined the originals, or duplicates or certified or conformed
copies, of such records, agreements, instruments and other documents and have
made such other investigations as we have deemed relevant and necessary in
connection with the opinions expressed herein. As to questions of fact material
to this opinion, we have relied upon certificates of public officials and of
officers and representatives of the Credit Parties. In addition, we have
examined, and have relied as to matters of fact upon, the representations made
in the Credit Documents.
In rendering the opinions set forth below, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as duplicates or certified
or conformed copies, and the authenticity of the originals of such latter
documents.
<PAGE>
SIMPSON THACHER & BARTLETT 3
In addition, we have assumed that (1) the Credit Parties have rights in
the Collateral existing on the date hereof and will have rights in property
which becomes Collateral after the date hereof, (2) "value" (as defined in
Section 1-201(44) of the Uniform Commercial Code as in effect in the State of
New York (the "New York UCC")) has been given by the Lenders to the Credit
Parties for the security interests and other rights in the Collateral and (3) to
the extent our opinion in paragraph 12 relates to securities purportedly
represented by a certificate and issued by an issuer not organized under the
laws of one of States of the United States, such securities are "certificated
securities" within the meaning of New York UCC Section 8-102(4).
In rendering the opinion set forth in paragraph 4 below with respect to
the Notes, we have assumed that at the time of any execution and delivery of
Notes after the date hereof, the management committee of the Borrower (or any
committee thereof acting pursuant to authority properly delegated to such
committee by the management committee) has not taken any action to rescind or
otherwise reduce its prior authorization of the issuance of such Notes.
Based upon and subject to the foregoing, and subject to the
qualifications and limitations set forth herein, we are of the opinion that:
1. Each of the Credit Parties (a) has been duly formed or incorporated
and is validly existing and in good standing as a limited liability company or
corporation under the laws of the State of Delaware, (b) has the corporate power
and authority to execute and deliver each of the Credit Documents to which it is
a party and to borrow, perform its obligations thereunder and to grant the
security interests to be granted by it pursuant to the Security Documents and
(c) has duly authorized, executed and delivered each Credit Document to which it
is a party.
2. The execution and delivery by any Credit Party of the Credit
Documents to which it is a party, its borrowings in accordance with the terms of
the Credit Documents, performance of its payment obligations thereunder and
granting of the security interests to be granted by it pursuant to the Security
Documents (a) will not result in any violation of (1) the Certificate of
Formation or Limited Liability Company Agreement of any Credit Party which is a
limited liability company or the Certificate of Incorporation or By-Laws of any
Credit Party which is a corporation (2) assuming that proceeds of borrowings
will be used in accordance with the terms of the Credit Agreement, any Federal
or New York statute or the Delaware General Corporation Law or the Delaware
Limited Liability Company Act or any rule or regulation issued pursuant to any
New York or Federal statute or the Delaware General Corporation Law or Delaware
Limited Liability Company Act (including without limitation, Regulations T, U
and X of the Board of Governors of the Federal Reserve System) or any order
known to us issued by any court or governmental agency or body and (b) will not
breach or result in a default under or result in the creation of any lien upon
or security interest in the Credit Parties' properties pursuant to the terms of
any agreement or
<PAGE>
SIMPSON THACHER & BARTLETT 4
instrument identified on Schedule IV hereto furnished to us by the Borrower and
which the Borrower has represented lists all material agreements and instruments
to which Holdings, the Borrower or any Subsidiary Guarantor is a party or by
which any such Person is bound or to which any of the property or assets of such
Person is subject (other than the agreements and instruments identified on
Schedule V hereto which are being repaid, redeemed, retired or terminated or
under which security interests are being released, as the case may be, on the
date hereof as identified on Schedule V).
3. No consent, approval, authorization, order, filing, registration or
qualification of or with any Federal or New York governmental agency or body or
any Delaware governmental agency or body acting pursuant to the Delaware General
Corporation Law or the Delaware Limited Liability Company Act is required (i)
for the execution and delivery by any Credit Party of the Credit Documents to
which it is a party, (ii) for the borrowings by any Credit Party in accordance
with the terms of the Credit Documents, (iii) for the performance by the Credit
Parties of their respective payment obligations under the Credit Documents or
the granting of any security interests under the Security Documents, except
filings required for the perfection of security interests granted pursuant to
the Security Documents, or (iv) in connection with the legality, validity,
binding effect or enforceability of the payment obligations under the Credit
Documents.
4. Assuming that each of the Credit Documents is a valid and legally
binding obligation of each of the Lenders parties thereto and assuming that
execution, delivery and performance by each Credit Party of the Credit Documents
to which it is a party do not constitute a breach or violation of any agreement
or instrument which is binding upon any Credit Party (except that we do not make
this assumption with respect to the agreements and instruments that are the
subject of opinion paragraph 2 of this letter), each Credit Document
constitutes, and each Note delivered to a Lender after the date hereof will
constitute, the valid and legally binding obligation of each Credit Party which
is a party thereto, enforceable against such Credit Party in accordance with its
terms.
5. To our knowledge, there is no action, suit or proceeding before or
by any court, arbitrator or governmental agency, body or official, now pending
to which any Credit Party is a party or to which the business, assets or
property of any Credit Party is subject and no such action, suit or proceeding
is threatened to which any Credit Party or the business, assets or property of
any Credit Party would be subject that, in either case, questions the validity
of, or is otherwise in respect of, the Credit Documents.
6. No Credit Party is an "investment company" within the meaning of and
subject to regulation under the Investment Company Act of 1940, as amended, or a
"holding company," or a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
<PAGE>
SIMPSON THACHER & BARTLETT 5
7. Based solely on a certificate of the sole member of the Borrower,
all membership interests of the Borrower are owned by Holdings.
8. Based solely on a certificate of the Secretary of each Subsidiary
Guarantor which is a corporation, all of the shares of capital stock such
Subsidiary Guarantor described on Annex A to the Pledge Agreement are owned of
record by the Borrower or a Subsidiary of the Borrower. Based solely on a
certificate of the sole member of each Subsidiary Guarantor which is a limited
liability company, the membership interests of such Subsidiary Guarantor
described on Annex A to the Pledge Agreement are owned by the Borrower or a
Subsidiary of the Borrower.
9. The Security Agreement creates in favor of the Administrative Agent
for the benefit of the Lenders a security interest in the collateral described
therein in which a security interest may be created under Article 9 of the New
York UCC (the "Security Agreement Article 9 Collateral"). The membership
interests in the Borrower and each Subsidiary Guarantor which is a limited
liability company identified on Annex D to the Pledge Agreement constitute
"general intangibles" as defined under Section 9-106 of the New York UCC.
10. Upon the filing in the Filing Offices of the Financing Statements,
the Administrative Agent will have a perfected security interest for the benefit
of the Lenders in that portion of the Security Agreement Article 9 Collateral in
which a security interest is perfected by filing a financing statement under the
New York UCC.
11. The Pledge Agreement creates in favor of the Administrative Agent
for the benefit of the Lenders a security interest under the New York UCC in the
investment property identified on Annexes B and D to the Pledge Agreement
described as being pledged pursuant to the Pledge Agreement on such Annexes.
12. The Administrative Agent will have a perfected security interest in
the capital stock identified on Annex B to the Pledge Agreement described as
being pledged pursuant to the Pledge Agreement on such Annex (the "Pledged
Stock") for the benefit of the Lenders under the New York UCC upon delivery to
the Administrative Agent for the benefit of the Lenders in the State of New York
of the certificates representing the Pledged Stock in registered form, indorsed
in blank by an effective indorsement or accompanied by undated stock powers with
respect thereto duly indorsed in blank by an effective indorsement. Assuming the
Administrative Agent and each of the Lenders does not have notice of any adverse
claim to the Pledged Stock, the Administrative Agent will acquire the security
interest in the Pledged Stock for the benefit of the Lenders free of any adverse
claim.
13. Under the laws of the State of New York the perfection and priority
of the security interests granted by such Credit Party in its Receivables,
Contracts, Contract Rights and General Intangibles (as defined in the Security
Agreement) are governed by
<PAGE>
SIMPSON THACHER & BARTLETT 6
the laws of the State in which such Credit Party's chief executive office is
located to the extent that said Receivables, Contracts, Contract Rights and
General Intangibles consist of "accounts" and "general intangibles" as described
in the UCC.
14. Upon recordation in the Office of the Register of Monroe County,
New York and payment of all applicable mortgage recording tax imposed thereon,
the NY Mortgage described on Schedule VI hereto, together with the financing
statements under Article 9 of the New York UCC described on Schedule VII, will
create a perfected lien on the Mortgaged Property described (and as defined)
therein.
15. All Obligations are within the definition of "Senior Debt" included
in the Senior Subordinated Note Indenture.
16. The submission by each Credit Party to the jurisdiction of the
courts of New York and of the United States for the Southern District of New
York (assuming the other relevant federal jurisdictional prerequisites are met),
as set forth in the Credit Documents, is valid and binding on such Credit Party.
Our opinions in paragraphs 4, 9, 11 and 14 above are subject to (i) the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law) and (iii) an implied covenant of good faith and fair
dealing. Our opinion in paragraph 4 above also is subject to the qualification
that certain provisions of the Security Documents in whole or in part, may not
be enforceable, although the inclusion of such provisions does not render the
Security Documents invalid, and the Security Documents and the laws of the State
of New York contain adequate remedial provisions for the practical realization
of the rights and benefits afforded thereby.
Our opinions in paragraphs 9 and 10 are limited to Article 9 of the
New York UCC, and our opinion in paragraphs 11 and 12 are limited to Articles
8 and 9 of the New York UCC, and therefore those opinion paragraphs do not
address (i) collateral of a type not subject to Article 9 or 8, as the case
may be, of the New York UCC, and (ii) under New York UCC Section 9-103 what
law governs perfection of the security interests granted in the collateral
covered by this opinion letter.
We express no opinion with respect to:
(A) perfection of any security interest (1) in any Security Agreement
Article 9 Collateral of a type represented by a certificate of title, (2) in any
proceeds and (3) in any collateral consisting of money or Cash Equivalents;
(B) the effect of Section 9-306(2) of the New York UCC with respect
to any proceeds of Collateral that are not identifiable;
<PAGE>
SIMPSON THACHER & BARTLETT 7
(C) perfection of any security interest whose priority is subject to
Section 9-313 of the New York UCC;
(D) the effect of Section 552 of the Bankruptcy Code (11 U.S.C. 552)
(relating to property acquired by a pledgor after the commencement of a case
under the United States Bankruptcy Code with respect to such pledgor) and
Section 506(c) of the Bankruptcy Code (11 U.S.C. 506(c) (relating to certain
costs and expenses of a trustee in preserving or disposing of collateral));
(E) the effect of any provision of the Credit Documents which is
intended to establish any standard other than a standard set forth in the New
York UCC as the measure of the performance by any party thereto of such party's
obligations of good faith, diligence, reasonableness or care or of the
fulfillment of the duties imposed on any secured party with respect to the
maintenance, disposition or redemption of collateral, accounting for surplus
proceeds of collateral or accepting collateral in discharge of liabilities;
(F) the effect of any provision of the Credit Documents which is
intended to permit modification thereof only by means of an agreement signed in
writing by the parties thereto;
(G) the effect of any provision of the Credit Documents insofar as it
provides that any Person purchasing a participation from a Lender or other
Person may exercise set-off or similar rights with respect to such participation
or that any Lender or other Person may exercise set-off or similar rights other
than in accordance with applicable law;
(H) the effect of any provision of the Credit Documents imposing
penalties or forfeitures;
(I) the enforceability of any provision of any of the Credit Documents
to the extent that such provision constitutes a waiver of illegality as a
defense to performance of contract obligations; and
(J) the effect of any provision of the Credit Documents relating to
indemnification or exculpation in connection with violations of any securities
laws or relating to indemnification, contribution or exculpation in connection
with willful, reckless or criminal acts or gross negligence of the indemnified
or exculpated Person or the Person receiving contribution.
<PAGE>
SIMPSON THACHER & BARTLETT 8
With respect to the NY Mortgage, we understand that with respect to
title matters you will be relying on the title insurance commitments issued to
you by Chicago Title Insurance Company bearing Title Nos. 9916-25025 and
9916-25022, and redated as of today. We have not made any investigation of, and
do not express an opinion as to, any matters of title to or the descriptions of
any property (whether real, personal or mixed) or priority of liens.
In connection with the provisions of the Credit Documents whereby
Credit Parties submit to the jurisdiction of the United States District Court
for the Southern District of New York, we note the limitations of 28 U.S.C.
Sections 1331 and 1332 on Federal court jurisdiction, and we also note that
such submissions cannot supersede such court's discretion in determining
whether to transfer an action from one Federal court to another under 28
U.S.C. Section 1404(a).
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the law of the State
of New York, the Federal law of the United States, the Delaware General
Corporation Law and the Delaware Limited Liability Company Act.
This opinion letter is rendered to you in connection with the above
described transactions. This opinion letter may not be relied upon by you for
any other purpose, or relied upon by, or furnished to, any other person, firm
or corporation without our prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
<PAGE>
SIMPSON THACHER & BARTLETT SCHEDULE I
THE LENDERS
Morgan Guaranty Trust Company of New York
Donaldson, Lufkin, Jenrette Securities Corporation
Banco Popular de Puerto Rico
Bank Austria Creditanstalt
Bank of Montreal
The Bank of New York
The Bank of Nova Scotia
BankBoston
DG Bank Deutsche Genossenschaftsbank AG
Erste Bank Der Oesterreichischen Sparkassen
Fleet National Bank
Allfirst Bank
Firstrust Bank
General Electric Capital Corporation
Bayeresche Hypo - und Vereinsbank AG, New York Branch
The Industrial Bank of Japan, Limited
The Mitsubishi Trust and Banking Corporation
National City Bank
Transamerica Business Credit Corporation
Webster Bank
Oak Brook Bank
The Governor and Company of the Bank of Ireland
The Dai-Ichi Kango Bank, Limited
<PAGE>
SIMPSON THACHER & BARTLETT SCHEDULE II
SUBSIDIARY GUARANTORS
Reid Plastics Group LLC
Consolidated Container Capital, Inc.
Plastics Containers LLC
Continental Plastics Containers LLC
Continental Carribean Containers, Inc.
<PAGE>
SIMPSON THACHER & BARTLETT SCHEDULE III
FINANCING STATEMENTS
The attached financing statements on form UCC-1, naming the
Person listed therein as debtor and the Administrative Agent as secured party
for the benefit of the Lenders, to be filed in the offices set forth on such
financing statements.
<PAGE>
SIMPSON THACHER & BARTLETT SCHEDULE IV
AGREEMENTS AND INSTRUMENTS
A. CUSTOMER CONTRACTS
1. Agreement dated March 9, 1999 between Reid Plastics, Inc. and Dean
Foods Company.
2. Letter Agreement dated January 29, 1999 between Reid Plastics, Inc.
and McKesson Water Products Company relating to the Manufacturing and Supply
Agreement between RPI and McKesson Water Products Company dated September 5,
1997 and the sublease agreement between McKesson Water Products Company and Reid
Plastics, Inc. dated November 1, 1995.
3. Letter Agreement dated March 31, 1997 between Reid Plastics, Inc.
and Suntory Water Group.
4. Amendment dated January 15, 1999 to the Purchase, Lease and Supply
Agreement between Reid Plastics, Inc. and Suntory Water Group, Inc., as assignee
of Cloister Spring Water Co.; First Amendment dated February 1, 1996 to the
Purchase, Lease and Supply Agreement by and between Reid Plastics, Inc. and
Cloister Spring Water Company; and Purchase, Lease and Supply Agreement dated
August 15, 1995 by and between Reid Plastics, Inc. and Cloister Spring Water Co.
5. Asset Purchase Agreement dated as of October 20, 1989 by and between
Reid Plastics, Inc. and Sierra Spring Water Company; First Amendment dated
October 20, 1992 to the Asset Purchase Agreement between Reid Plastics, Inc.,
Sierra Spring Water Company and Hinckley & Schmitt, Inc.; Letter Agreement dated
January 10, 1995 between Reid Plastics, Inc. and Hinckley & Schmitt, Inc.; and
Consent to Assignment dated March 22, 1996 between Reid Plastics, Inc. and
Hinckley & Schmitt Holdings Corp.
B. RESIN SUPPLY CONTRACTS
1. Agreement dated as of January 1, 1999 between Reid Plastics, Inc.
and Phillips Chemical Company.
2. Agreement dated as of January 1, 1997 between Reid Plastics, Inc.
and GE Plastics and related letter agreements dated January 3, 1998 and
September 4, 1998.
3. Letter Agreement dated January 5, 1999 between Exxon Chemical
Americas and Reid Plastics, Inc.
<PAGE>
SIMPSON THACHER & BARTLETT 2
C. STOCK PURCHASE AND RELATED AGREEMENTS
1. Master Reorganization Agreement dated as of October 10, 1997 between
Vestar Reid LLC and Reid Plastics Holdings, Inc. and Agreement dated as of
September 15, 1998 among Vestar Reid LLC, Reid Plastics Holdings, Inc., Reid
Plastics, Inc., ING Equity Partners L.P., B. Joseph Rokus and Tari Rokus.
2. Asset Purchase Agreement dated April 8, 1995 among Crystal Clear
Container Corporation, Crystal Clear, Inc., Ruyintan E. Mehta, Monica R. Mehta,
Reid Plastics, Inc. and Reid Plastics Holdings, Inc.
3. Agreement dated as of April 28, 1999 by and among Vestar Reid LLC,
Vestar Packaging LLC, Reid Plastics Holdings, Inc., Reid Plastics, Inc., B.
Joseph Rokus, Tari F. Rokus and Shirley Fram.
4. Agreement dated as of April 28, 1999 by and among Vestar Reid LLC,
Vestar Packaging LLC, Reid Plastics Holdings, Inc., Reid Plastics, Inc., B.
Joseph Rokus and Tari F. Rokus.
D. MERGER AND CONTRIBUTION AGREEMENT AND RELATED AGREEMENTS
1. Contribution and Merger Agreement dated as of April 29, 1999, by and
among Suiza Foods Corporation, Franklin Plastics, Inc., the Suiza Companies
identified therein, Vestar Packaging LLC, Reid Plastics Holdings, Inc., the Reid
Companies identified therein, Reid Plastics Group LLC, Consolidated Container
Holdings LLC and Consolidated Container Company LLC.
2. Trademark License Agreement to be dated as of July 1, 1999 between
Continental Can Company, Inc., as Licensor, and Consolidated Container Holdings
LLC and Consolidated Container Company LLC, as Licensee.
3. Assumption Agreement to be dated as of July 1, 1999 among Reid
Plastics Holdings, Inc., Consolidated Container Holdings LLC and Consolidated
Container Company LLC.
4. Bill of Sale, Assignment and Assumption Agreement dated as of June
30, 1999 between Franklin Plastics, Inc. and Consolidated Container Company LLC.
5. Supply Agreements to be dated as of July 1,1999 between Suiza Foods
Corporation and Consolidated Container Holdings LLC.
6. Management Agreement dated as of April 29, 1999 among Consolidated
Container Holdings LLC, Consolidated Container Company LLC and Vestar Capital
Partners.
<PAGE>
SIMPSON THACHER & BARTLETT 3
7. Consolidated Container Holdings LLC 1999 Unit Option Plan, the form
of the Consolidated Container Holdings LLC Unit Option Agreement and the form of
Special Unit Acquisition, Ownership and Redemption Agreement, the form of each
of which is included in Exhibit B to the Contribution and Merger Agreement.
8. The form of the Consolidated Container Holdings LLC Replacement
Units Option Plan For Options Issued Pursuant to the Franklin Plastics, Inc.
1998 Stock Option Plan and the form of the Consolidated Container Holdings LLC
Replacement Units Option Agreement For Options Issued Pursuant to the Franklin
Plastics, Inc. 1998 Stock Option Plan.
9. Transition Services Agreement dated as of July 1, 1999 by and
between Suiza Foods Corporation and Consolidated Container Holdings LLC.
10. Letter Agremeent dated as of July 1, 1999 among Suiza Foods
Corporation, Consolidated Container Holdings LLC, Vestar Packaging LLC and Reid
Plastics Holdings, Inc. regarding indemnity by Suiza Foods Corporation for
failure to obtain certain consents.
E. SENIOR SUBORDINATED NOTE DOCUMENTS
1. Indenture, dated as of July 1, 1999, among the Borrower, the
Subsidiary Guarantors, The Bank of New York, as trustee, relating to the Notes
referred to below and the related guarantees of the Subsidiary Guarantors listed
therein.
2. Form of 10-1/8% Senior Subordinated Notes due 2009 of the Borrower
and Consolidated Container Capital Inc. (collectively, the "Issuers") and the
annexed Guarantees.
3. Purchase Agreement dated June 24, 1999 among Donaldson, Lufkin &
Jenrette Securities Corporation, Bear, Stearns & Co., Inc., Deutsche Bank
Securities Inc. and J.P. Morgan Securities Inc., as initial purchasers (the
"Initial Purchasers"), the Issuers, and the Subsidiary Guarantors listed
therein.
4. Registration Rights Agreement dated as of July 1, 1999 among the
Issuers, the Subsidiary Guarantors listed therein and the Initial Purchasers.
<PAGE>
SIMPSON THACHER & BARTLETT Schedule V
AGREEMENTS AND INSTRUMENTS BEING REPAID,
REDEEMED, RETIRED OR TERMINATED OR UNDER WHICH
SECURITY INTERESTS ARE BEING RELEASED
1. The $134.0 million Credit Agreement dated as of February 17, 1995,
as amended and restated, among Reid Plastics, the Guarantors named therein,
Morgan Guaranty Trust Company of New York, as agent, and the lenders named
therein, as to which all outstanding amounts thereunder will be repaid and such
agreement will be terminated on the date hereof.
2. $23.7 million aggregate principal amount in revolving credit loans
under a revolving credit facility, which are being repaid, and which facility is
being terminated, on the date hereof.
3. $125.5 million in aggregate principal amount of the Senior Notes of
Franklin Plastics, which are being repaid on the date hereof.
4. $118.7 million in aggregate principal amount of the Mezzanine Notes
of Franklin Plastics, which are being repaid on the date hereof.
5. $72.6 million in aggregate liquidation amount of the Series A
Redeemable Preferred Stock, par value $0.001 per share, of Franklin Plastics,
which are being redeemed on the date hereof.
6. Credit Agreement dated as of May 22, 1998 by and among Suiza Foods
Corporation, the lenders named therein and First Union National Bank, as agent,
under which certain guarantees and security interests thereunder will be
released on the date hereof.; and $1,486,000 million in aggregate principal
amount of letters of credit issued pursuant to the Credit Agreement dated as of
May 22, 1998 by and among Suiza Foods Corporation, the lenders named therein and
First Union National Bank, as agent, as listed in Schedule 4.6(b) of the Suiza
Parties' Disclosure Letter for the Contribution and Merger Agreement, which are
being backed by new letters of credit issued under the Senior Credit Facility.
7. Indenture dated as of December 17, 1996 among Plastic Containers,
Inc., as Issuer, and Continental Plastic Containers, Inc. and Continental
Caribbean Containers, Inc., as Guarantors, and United States Trust Company of
New York, as Trustee, relating to the 10% Senior Secured Notes due 2006, Series
B, of which the entire outstanding principal amount is being tendered, pursuant
to the tender offer for them, on the date hereof and under which security
interests are being released on the date hereof.
<PAGE>
SIMPSON THACHER & BARTLETT 2
8. Amended and Restated Financing Agreement dated December 17, 1994
between Plastic Containers, Inc. and The CIT Group/Business Credit, Inc., which
is being terminated, and under which the security interests granted thereunder
are being released, on the date hereof; and $3,713,840 million in aggregate
principal amount of letters of credit issued pursuant to the Amended and
Restated Financing Agreement dated December 17, 1996 between Plastic Containers,
Inc. and The CIT Group/Business Credit Inc. as listed in Schedule 4.6(b) of the
Suiza Parties' Disclosure Letter for the Contribution and Merger Agreement,
which are being backed by new letters of credit issued under the Senior Credit
Facility.
<PAGE>
SIMPSON THACHER & BARTLETT Schedule VI
NY MORTGAGE INFORMATION
1. Mortgage, Security Agreement, Assignment of Leases, Rents and Profits,
Financing Statement and Fixture Filing made by Consolidated Container
Company, as the Mortgagor, to Bankers Trust Company, as Administrative
Agent and Collateral Agent for Various Lending Institutions, as the
Mortgagee
2. Two UCC-1 financing statements executed by Consolidated Container
Company, as debtor and Bankers Trust Company as Administrative Agent
and Collateral Agent, as secured party, one of which is intended to be
filed with the Office of the Secretary of the State of New York and the
other of which is intended to be filed with the Office of the Register
of Monroe County, New York
<PAGE>
EXHIBIT F-2
[Letterhead of White & Case LLP]
DIRECT DIAL: YOUR DIRECT DIAL NUMBER
E-MAIL: Your E-Mail Address
DIRECT FACSIMILE: YOUR DIRECT FAX NUMBER
____________, 1999
BY HAND
To: The Administrative Agent, the
Documentation Agent, the Syndication
Agent and various lending institutions
(collectively, the "Banks") party to the
Credit Agreement referred to below
Re: Credit Agreement dated as of July 1, 1999 (the "Credit Agreement"), among
Consolidated Container Holdings LLC, Consolidated Container Company LLC
(the "Borrower"), certain financial institutions from time to time party
thereto, Morgan Guaranty Trust Company, as Documentation Agent, Donaldson,
Lufkin & Jenrette as Syndication Agent and Bankers Trust Company, as
Administrative Agent
Ladies and Gentlemen:
We have acted as special counsel to the Banks party to the Credit
Agreement in connection with the execution and delivery of the Credit Agreement.
This opinion is delivered to you pursuant to Section 5.04(ii) of the Credit
Agreement. Terms used herein which are defined in the Credit Agreement shall
have the respective meanings set forth in the Credit Agreement unless otherwise
defined herein.
In connection with this opinion, we have examined the originals, or
certified, conformed or reproduction copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinions hereinafter expressed. In stating our opinion, we have assumed
the genuineness of all signatures on original or certified copies, the
authenticity of documents submitted to us as originals and the conformity to
original or certified copies of all copies submitted to us as certified or
reproduction copies.
We have also assumed, for purposes of the opinions expressed herein,
that the parties to the Credit Agreement have the corporate power and authority
to enter into and perform the Credit Agreement and that the Credit Agreement has
been duly authorized, executed and delivered by each such party.
Based upon the foregoing, and subject to the limitations set forth
herein, we are of the opinion that the Credit Agreement constitutes the valid
and binding obligation of the Borrower
<PAGE>
Exhibit F-2
Page 2
enforceable in accordance with its terms except to the extent that enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting creditors' rights generally and by equity principles
(regardless of whether enforcement is sought in equity or at law).
We have not been requested to render and, with your permission, we
express no opinion as to the applicability to the obligations of the Borrower
under the Credit Agreement of Section 548 of the Bankruptcy Code and Article 10
of the New York Debtor & Creditor Law relating to fraudulent transfers and
obligations. We understand, without independent verification, that, to the
extent they have deemed necessary in the context of the proposed transaction,
the Banks have satisfied themselves on the basis of, among other things, the
financial information furnished to the Banks and their knowledge of the credit
facilities available to the Borrower, that neither the Borrower nor any of its
Subsidiaries are insolvent and that neither the Borrower nor any of its
Subsidiaries will be rendered insolvent by the transactions contemplated by the
Credit Agreement and the other Credit Documents and that, after giving effect to
such transactions, neither the Borrower nor any of its Subsidiaries will be left
with unreasonably small capital with which to engage in their anticipated
business and that neither the Borrower nor any of its Subsidiaries will have
intended to incur, or will have believed they have incurred, debts beyond their
ability to pay as such debts mature.
This opinion is limited to the federal law of the United States of
America and the law of the State of New York.
Very truly yours,
INITS:
<PAGE>
EXHIBIT G
[NAME OF CREDIT PARTY]
Officers' Certificate
I, the undersigned, [President/Chief Financial Officer/Treasurer/
Assistant Treasurer/Vice President/Secretary/General Counsel] of [Name of Credit
Party], a [corporation] [limited liability company] organized and existing under
the laws of the State of ________ (the "Company"), do hereby certify on behalf
of the Company that:
This Certificate is furnished pursuant to the Credit Agreement,
dated as of July 1, 1999, among Consolidated Container Holdings LLC
("Holdings"), Consolidated Container Company LLC (the "Borrower"), the financial
institutions from time to time party thereto (the "Banks"), Morgan Guaranty
Trust Company of New York, as Documentation Agent, Donaldson, Lufkin & Jenrette
Securities Corporation, as Syndication Agent and Bankers Trust Company, as
Administrative Agent (such Credit Agreement, as in effect on the date of this
Certificate, being herein called the "Credit Agreement"). Unless otherwise
defined herein, capitalized terms used in this Certificate shall have the
meanings set forth in the Credit Agreement.
The following named individuals are elected officers of the Company;
each holds the office of the Company set forth opposite his name and has held
such office since _______ __, 19__.(1) The signature written opposite the name
and title of each such officer is his or her correct signature.
Name(2) Office Signature
------- ------ ---------
________________________ __________________________ ______________________
________________________ __________________________ ______________________
________________________ __________________________ ______________________
1. Attached hereto as Exhibit A is a certified copy of the
[Certificate of Incorporation] [Limited Liability Company Agreement] of the
Company as filed in the Office of the Secretary of State of the State of
_________ on _________ ___, 19__, together with all amendments thereto adopted
through the date hereof.
[2. Attached hereto as Exhibit B is a true and correct copy of the
By-Laws of the Company, together with all amendments thereto, which were duly
adopted and are in full force and effect on the date hereof, and have been
effective since ________ ___, 19__.](3)
- ----------
(1) Insert a date prior to the time of any corporate action relating to the
Credit Agreement or any other Credit Document.
(2) Include name, office and signature of each officer who will sign any
Credit Document, including the officer who will sign the certification at
the end of this Certificate.
(3) Insert if applicable.
<PAGE>
Exhibit G
Page 2
3. Attached hereto as Exhibit C is a true and correct copy of
resolutions which were duly adopted on __________, 19__ [by unanimous written
consent of the Board of Directors of the Company] [by a meeting of the Board of
Directors of the Company at which a quorum was present and acting throughout],
and said resolutions have not been rescinded, amended or modified. Except as
attached hereto as Exhibit C, no resolutions have been adopted by the Board of
Directors or the Management Committee of the Company which deal with the
execution, delivery or performance of any of the Documents to which the Company
is party.
[4. Attached hereto as Exhibit D is a true and correct list of: (i)
all material Plans of Holdings and its Subsidiaries; (ii) all material
Shareholders' Agreements with respect to the capital stock of Holdings and its
Subsidiaries; (iii) all material Management Agreements of Holdings and its
Subsidiaries; (iv) all material Employment Agreements of Holdings and its
Subsidiaries; (v) all material Collective Bargaining Agreements of Holdings and
its Subsidiaries; (vi) all material Debt Agreements of Holdings and its
Subsidiaries; (vii) all material Tax Sharing Agreements entered into by Holdings
or any of its Subsidiaries; (viii) all Material Contracts of Holdings or any of
its Subsidiaries; (ix) all Affiliate Contracts of Holdings or any of its
Subsidiaries; (x) the Acquisition Documents; (xi) the Existing PCI Tender Offer
Documents; (xii) the Equity Financing Documents; and (xiii) the Senior
Subordinated Note Documents.](4)
[5. On the date hereof, all of the conditions in Sections 5.02,
5.07, 5.11, 5.12 and 5.15 have been satisfied (except to the extent as to the
acceptability of any items to the Administrative Agent and/or the Required Banks
or as to whether the Administrative Agent and/or the Required Banks are
satisfied with any of the matters described in said Sections).](5)
[4.] [5.] [16.] On the date hereof, the representations and
warranties contained in the Credit Agreement or in the other Credit Documents
are true and correct in all material respects, both before and after giving
effect to each Credit Event to occur on the date hereof and the application of
the proceeds thereof.
[5.] [6.] [17.] On the date hereof, no Default or Event of Default
has occurred and is continuing or would result from the Credit Events to occur
on the date hereof or from the application of the proceeds thereof.
[6.] [7.] [18.] There is no proceeding for the dissolution or
liquidation of the Company or threatening its existence.
- ----------
(4) Insert items 4-16 only in the certificate delivered by Holdings.
(5) Insert item 4 only in the certificate delivered by the Borrower.
<PAGE>
Exhibit G
Page 3
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
____, 1999.
[NAME OF CREDIT PARTY]
-----------------------------------
Name:
Title:
<PAGE>
Exhibit G
Page 4
I, the undersigned, [Secretary/Assistant Secretary] of the Company,
do hereby certify on behalf of the Company that:
1. [Name of Person making above certifications] is the duly elected
and qualified [President/Vice President] of the Company and the signature above
is his genuine signature.
2. The certifications made by [name of Person making above
certifications] on behalf of the Company in Items 1, [2], 3 and [6] [7] [19]
above are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
______, 1999.
[NAME OF COMPANY]
By: ________________________________
Name:
Title:
<PAGE>
Exhibit H
FORM OF SOLVENCY CERTIFICATE
I, the undersigned, the chief financial officer of Consolidated
Container Company LLC, a limited liability company organized and existing under
the laws of the State of Delaware (the "Borrower"), do hereby certify on behalf
of the Borrower that:
1. This Certificate is furnished pursuant to Section 5.17 of the
Credit Agreement, dated as of July 1, 1999, among Consolidated Container
Holdings, LLC, the Borrower, the financial institutions from time to time party
thereto, Morgan Guaranty Trust Company of New York, as Documentation Agent,
Donaldson, Lufkin & Jenrette Securities Corporation, as Syndication Agent and
Bankers Trust Company, as Administrative Agent (as from time to time in effect,
the "Credit Agreement") and shall be subject to the provisions thereof. Unless
otherwise defined herein, capitalized terms used in this Certificate shall have
the means set forth in the Credit Agreement.
2. For purposes of this Certificate, the terms below shall have the
following definitions:
(a) "Fair Value" shall mean the amount at which the assets, in their
entirety, determined on a going concern basis of the Borrower (on a stand-alone
basis), the Borrower and its Subsidiaries (on a consolidated basis) and Holdings
and its Subsidiaries (on a consolidated basis), in each case would change hands
between a willing buyer and a willing seller, within a commercially reasonable
period of time, each having reasonable knowledge of the relevant facts, with
neither being under any compulsion to act.
(b) "Present Fair Salable Value" shall mean the amount that could be
obtained by an independent willing seller from an independent willing buyer if
the assets of each of the Borrower (on a stand-alone basis), the Borrower and
its Subsidiaries (on a consolidated basis) and Holdings and its Subsidiaries (on
a consolidated basis) are sold in an arm's-length transaction with reasonable
promptness under present conditions for the sale of comparable business
enterprises.
The same methodology has been used in determining Fair Value and
Present Fair Salable Value.
(c) "New Financing" shall mean the indebtedness incurred or to be
incurred by Holdings and its Subsidiaries under (i) the Credit Documents
(assuming the utilization by the Borrower of the Total Revolving Loan Commitment
under the Credit Agreement) and (ii) the Senior Subordinated Note Documents.
(d) "Stated Liabilities" shall mean the recorded liabilities
(including Contingent Liabilities that would be recorded in accordance with
generally accepted accounting principles ("GAAP") consistently applied) of the
Borrower (on a stand-alone pro forma basis after giving effect to the
Transaction), the Borrower and its Subsidiaries (on a consolidated pro forma
basis after giving effect to the Transaction) and Holdings and its Subsidiaries
(on a consolidated pro forma basis after giving effect to the Transaction) in
each case at December 31, 1998, together with (i) the net change in long-term
debt (including current maturities) between December 31, 1998 and the date
hereof; and (ii) without duplication, the amount of all New Financing.
<PAGE>
Exhibit H
Page 2
(e) "Contingent Liabilities" shall mean the maximum estimated amount
of liability reasonably like to result from pending litigation, asserted claims
and assessments, guarantees, uninsured risks and other contingent liabilities of
each of the Borrower (on a stand-alone basis), the Borrower and its Subsidiaries
(on a consolidated basis) and Holdings and its Subsidiaries (on a consolidated
basis) (exclusive of such Contingent Liabilities to the extent reflected in
Stated Liabilities).
(f) "Will be able to pay its Stated Liabilities and Contingent
Liabilities, as they mature," shall mean for the period from the date hereof
through the stated maturity of all New Financing, each of the Borrower (on a
stand-alone basis), the Borrower and its Subsidiaries (on a consolidated basis)
and Holdings and its Subsidiaries (on a consolidated basis) will have sufficient
assets and cash flow to pay its Stated Liabilities and Contingent Liabilities as
those liabilities mature or otherwise become payable.
(g) "Will not have Unreasonably Small Capital" shall mean for the
period from the date hereof through the stated maturity of all New Financing,
each of the Borrower (on a stand-alone basis), the Borrower and its Subsidiaries
(on a consolidated basis) and Holdings and its Subsidiaries (on a consolidated
basis) in each case after all Indebtedness (including the Loans) being incurred
or assumed and Liens created in connection therewith, is a going concern and has
sufficient capital to ensure that it will continue to be a going concern for
such period and to remain a going concern.
3. For purposes of this Certificate, I, or officers of the Borrower
under my direction and supervision, have performed the following procedures as
of and for the periods set forth below:
(a) I have reviewed the financial statements of the Borrower and its
Subsidiaries referred to in Sections 6.05(a) of the Credit Agreement.
(b) I have reviewed the audited pro forma consolidated financial
statements of the Borrower and its Subsidiaries referred to in Section
5.16 of the Credit Agreement after giving effect to the incurrence of the
New Financing.
(c) I have made inquiries of certain other officers of the Borrower
and its Subsidiaries that I deemed necessary as a foundation for this
Certificate.
(d) I have read the Credit Documents (together with the Schedules
and Exhibits thereto) and the Senior Subordinated Note Documents.
(e) With respect to Contingent Liabilities, I have made inquires of
certain other officials of the Borrower and its Subsidiaries that I deemed
necessary as a foundation for this Certificate.
(f) I have had the projections, which have been previously delivered
to the Banks, re-examined on the date hereof and considered the effect
thereof on any changes since the
<PAGE>
Exhibit H
Page 3
date of the preparation hereof and considered the effect thereon of any
changes since the date of the preparation thereof on the results projected
therein. After such review, I hereby certify that in my opinion such
projections were based on good faith estimates and assumptions, believed
to be reasonable at the time made, it being recognized that projections as
to future events are not to be viewed as facts and that actual results
during the period or periods covered thereby may differ from the projected
results.
4. This certificate is being delivered to the Banks and the Initial
Purchasers under the Purchase Agreement dated as of June 24, 1999 among the
Borrower, Consolidated Container Capital, Inc., Holdings, the Subsidiary
Guarantors listed therein, Donaldson, Lufkin & Jenrette Securities Corporation,
Bear Stearns & Co. Inc., Deutsche Bank Securities Inc. and J.P. Morgan
Securities Inc.
5. Based on and subject to the foregoing, I hereby certify on behalf
of the Borrower that, after giving effect to the New Financing, it is my opinion
that as of the date hereof (i) the Fair Value and Present Fair Salable Value of
the assets of the Borrower (on a stand alone basis), of the Borrower and its
Subsidiaries (on a consolidated basis) and of Holdings and its Subsidiaries (on
a consolidated basis) exceeds its and their Stated Liabilities and Contingent
Liabilities; (ii) the Borrower (on a stand alone basis), the Borrower and its
Subsidiaries (on a consolidated basis) and Holdings and its Subsidiaries (on a
consolidated basis) will not have Unreasonably Small Capital; and (iii) the
Borrower (on a stand alone basis), the Borrower and its Subsidiaries (on a
consolidated basis) and Holdings and its Subsidiaries (on a consolidated basis)
will be able to pay its Stated Liabilities and Contingent Liabilities as they
mature or otherwise become payable.
IN WITNESS WHEREOF, the Borrower has caused its duly authorized
chief financial officers to execute and deliver this ___ day of ____________,
1999.
CONSOLIDATED CONTAINER COMPANY
LLC
By __________________________________
Name:
Title:
<PAGE>
EXHIBIT I
FORM OF PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July __, 1999 (as same may be amended,
amended and restated, modified or supplemented from time to time, this
"Agreement"), made by Consolidated Container Holdings LLC ("Holdings"),
Consolidated Container Company LLC (the "Borrower"), the Subsidiary Guarantors
(as defined in the Credit Agreement referred to below) and each other Subsidiary
of the Borrower that is required to execute a counterpart hereof pursuant to
Section 25 of this Agreement (the "Pledgors", and each, a "Pledgor"), and
Bankers Trust Company, not in its individual capacity but solely as Collateral
Agent (including any successor collateral agent, the "Pledgee") (x) for the
benefit of the Banks, the Issuing Bank and the Administrative Agent under, and
any other lenders from time to time party to, the Credit Agreement hereinafter
referred to (such Banks, the Issuing Bank and the Agent and other lenders, if
any, are hereinafter called the "Bank Creditors") and (y) if Bankers Trust
Company, in its individual capacity ("Bankers Trust"), any Bank or any Affiliate
of a Bank enters into one or more interest rate protection agreements or other
hedging agreements relating to the Loans (including, without limitation,
interest rate swaps, caps, floors, collars and similar agreements)
(collectively, the "Interest Rate Protection Agreements or Other Hedging
Agreements") with, or guaranteed by, any of the Pledgors, for the benefit of
Bankers Trust, any such Bank or Banks or a syndicate of financial institutions
organized by Bankers Trust or an affiliate of Bankers Trust (even if Bankers
Trust or the respective Bank subsequently ceases to be a Bank under the Credit
Agreement for any reason), so long as any such Bank or Affiliate participates in
the extension of such Interest Rate Protection Agreements or Other Hedging
Agreements and their subsequent assigns, if any (collectively, the "Interest
Rate Creditors", and the Interest Rate Creditors together with the Bank
Creditors, are hereinafter called the "Secured Creditors"). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement shall be
used herein as so defined.
W I T N E S S E T H:
WHEREAS, Holdings, the Borrower, the financial institutions from
time to time party thereto (the "Banks"), Morgan Guaranty Trust Company of New
York, as Documentation Agent, Donaldson, Lufkin & Jenrette Securities
Corporation, as Syndication Agent and Bankers Trust Company, as Administrative
Agent (together with any successor Administrative Agent, the "Administrative
Agent"), have entered into a Credit Agreement, dated as of July 1, 1999,
providing for the making of Loans to the Borrower and the issuance of, and
participation in, Letters of Credit as contemplated therein (as used herein, the
term "Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified or supplemented from time to
time, and including any successor agreement extending the maturity of, or
restructuring (including, but not limited to, the inclusion of additional
borrowers thereunder that are Subsidiaries of the Borrower and whose obligations
are guaranteed by the Guarantors thereunder or any increase in the amount
borrowed) all or any portion of the Indebtedness under such agreement or any
successor agreements);
WHEREAS, the Borrower may from time to time be party to one or more
Interest Rate Protection Agreements or Other Hedging Agreements with an Interest
Rate Creditor;
<PAGE>
2
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed
to the Secured Creditors the payment when due of all obligations and liabilities
of the Borrower under or with respect to the Credit Documents and the Interest
Rate Protection Agreements or Other Hedging Agreements which may hereinafter
arise;
WHEREAS, pursuant to a Subsidiaries Guaranty, dated as of July 1,
1999 (as amended, modified or supplemented from time to time, the "Subsidiaries
Guaranty"), each Pledgor (other than the Borrower and Holdings) has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Borrower under or with respect to the Credit
Documents and the Interest Rate Protection Agreements or Other Hedging
Agreements;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower and the issuance of, and participation in, Letters of Credit for the
account of the Borrower under the Credit Agreement that each Pledgor shall have
executed and delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor will obtain benefits from the incurrence of
Loans by the Borrower and the issuance of Letters of Credit for the account of
the Borrower under the Credit Agreement and the Borrower's entering into
Interest Rate Protection Agreements or Other Hedging Agreements and,
accordingly, desires to execute this Agreement in order to satisfy the
conditions precedent described in the preceding paragraph and to induce the
Banks to make Loans to the Borrower and participate in Letters of Credit, to
induce the Issuing Bank to issue Letters of Credit for the account of the
Borrower, and to induce the Interest Rate Creditors to enter into Interest Rate
Protection Agreements or Other Hedging Agreements with the Borrower;
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor
for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, indemnities, Fees and
interest thereon) of such Pledgor owing to the Bank Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection
with the Credit Agreement and the other Credit Documents to which such
Pledgor is a party (including all such obligations, liabilities and
indebtedness under the Guaranty to which such Pledgor is a party) and the
due performance and compliance by such Pledgor with all of the terms,
conditions and agreements contained in the Credit Agreement and such other
Credit Documents (all such obligations, liabilities and indebtedness under
this clause (i), except to the extent guaranteeing obligations of the
Borrower under Interest Rate Protection Agreements or Other Hedging
Agreements, being herein collectively called the "Credit Agreement
Obligations");
<PAGE>
3
(ii) the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, indemnities, fees and
interest thereon) of such Pledgor owing to the Interest Rate Creditors,
now existing or hereafter arising out of or in connection with any
Interest Rate Protection Agreement, whether such Interest Rate Protection
Agreement is now in existence or hereinafter arising, and the due
performance and compliance with the terms, conditions and agreements of
each such Interest Rate Protection Agreement including, in the case of
Pledgors other than the Borrower, all obligations, liabilities and
indebtedness under the Holdings Secured Guaranty and Subsidiaries Guaranty
(as applicable), in each case, in respect of the Interest Rate Protection
Agreements or Other Hedging Agreements, and the due performance and
compliance by such Pledgor with all of the terms, conditions and
agreements contained in each such Interest Rate Protection Agreement (all
such obligations, liabilities and indebtedness under this clause (ii)
being herein collectively called the "Interest Rate Obligations");
(iii) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) and/or preserve its security
interest therein;
(iv) in the event of any proceeding for the collection of the
Obligations (as defined below) or the enforcement of this Agreement, after
an Event of Default (such term, as used in this Agreement, shall mean any
Event of Default under, and as defined in, the Credit Agreement or any
payment default under any Interest Rate Protection Agreement and shall in
any event include, without limitation, any payment default (after the
expiration of any applicable grace period) on any of the Obligations (as
defined below)) shall have occurred and be continuing, the reasonable
expenses of retaking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral, or of any exercise
by the Pledgee of its rights hereunder, together with reasonable
attorneys' fees and court costs; and
(v) all amounts paid by any Indemnitee to which such Indemnitee has
the right to reimbursement under Section 11 of this Agreement.
all such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (v) of this Section 1 being collectively called the
"Obligations", it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITIONS; ANNEXES. (a) Unless otherwise defined herein, all
capitalized terms used herein and defined in the Credit Agreement shall be used
herein as therein defined. Reference to singular terms shall include the plural
and vice versa.
(b) The following capitalized terms used herein shall have the
definitions specified below:
"Administrative Agent" has the meaning set forth in the Recitals
hereto.
<PAGE>
4
"Adverse Claim" has the meaning given such term in Section
8-102(a)(1) of the UCC.
"Agreement" has the meaning set forth in the first paragraph hereof.
"Bank Creditors" has the meaning set forth in the first paragraph
hereof.
"Banks" has the meaning set forth in the Recitals hereto.
"Certificated Security" has the meaning given such term in Section
8-102(a)(4) of the UCC.
"Clearing Corporation" has the meaning given such term in Section
8-102(a)(5) of the UCC.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Accounts" means any and all accounts established and
maintained by the Pledgee in the name of any Pledgor to which Collateral
may be credited.
"Credit Agreement" has the meaning set forth in the Recitals hereto.
"Credit Agreement Obligations" has the meaning set forth in Section
1 hereof.
"Domestic Corporation" has the meaning set forth in the definition
of "Stock."
"Event of Default" has the meaning set forth in Section 1 hereof.
"Financial Asset" has the meaning given such term in Section
8-102(a)(9) of the UCC.
"Foreign Corporation" has the meaning set forth in the definition of
"Stock."
"Indemnitees" has the meaning set forth in Section 11 hereof.
"Instrument" has the meaning given such term in Section 9-105(1)(i)
of the UCC.
"Interest Rate Creditors" has the meaning set forth in the first
paragraph hereof.
"Interest Rate Protection Agreements or Other Hedging Agreements"
has the meaning set forth in the first paragraph hereof.
"Interest Rate Obligations" has the meaning set forth in Section 1
hereof.
"Investment Property" has the meaning given such term in Section
9-115(f) of the UCC.
<PAGE>
5
"Limited Liability Company Assets" means all assets, whether
tangible or intangible and whether real, personal or mixed (including,
without limitation, all limited liability company capital and interest in
other limited liability companies), at any time owned or represented by
any Limited Liability Company Interest.
"Limited Liability Company Interests" means the entire limited
liability company membership interest at any time owned by any Pledgor in
any limited liability company.
"Non-Voting Stock" means all capital stock which is not Voting
Stock.
"Notes" means (x) all intercompany notes at any time issued to each
Pledgor and (y) all other promissory notes from time to time issued to, or
held by, each Pledgor.
"Noticed Event of Default" shall mean (i) an Event of Default with
respect to the Borrower under Section 9.05 of the Credit Agreement and
(ii) any other Event of Default in respect of which the Pledgee has given
the Borrower notice that such Event of Default constitutes a "Noticed
Event of Default."
"Obligations" has the meaning set forth in Section 1 hereof.
"Partnership Assets" means all assets, whether tangible or
intangible and whether real, personal or mixed (including, without
limitation, all partnership capital and interest in other partnerships),
at any time owned or represented by any Partnership Interest.
"Partnership Interest" means the entire general partnership interest
or limited partnership interest at any time owned by any Pledgor in any
general partnership or limited partnership.
"Pledged Notes" has the meaning set forth in Section 3.5 hereof.
"Pledgee" has the meaning set forth in the first paragraph hereof.
"Pledgor" has the meaning set forth in the first paragraph hereof.
"Proceeds" has the meaning given such term in Section 9-306(l) of
the UCC.
"Required Banks" has the meaning given such term in the Credit
Agreement.
"Secured Creditors" has the meaning set forth in the first paragraph
hereof.
"Secured Debt Agreements" has the meaning set forth in Section 5
hereof.
"Securities Account" has the meaning given such term in Section
8-501(a) of the UCC.
<PAGE>
6
"Securities Act" means the Securities Act of 1933, as amended, as in
effect from time to time.
"Security" and "Securities" has the meaning given such term in
Section 8-102(a)(15) of the UCC and shall in any event include all Stock
and Notes (to the extent same constitute "Securities" under Section
8-102(a)(15)).
"Security Entitlement" has the meaning given such term in Section
8-102(a)(17) of the UCC.
"Stock" means (x) with respect to corporations incorporated under
the laws of the United States or any State or territory thereof (each a
"Domestic Corporation"), all of the issued and outstanding shares of
capital stock of any corporation at any time owned by any Pledgor of any
Domestic Corporation and (y) with respect to corporations not Domestic
Corporations (each a "Foreign Corporation"), all of the issued and
outstanding shares of capital stock at any time owned by any Pledgor of
any Foreign Corporation.
"Termination Date" has the meaning set forth in Section 19 hereof.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York from time to time; provided that all references herein to
specific sections or subsections of the UCC are references to such
sections or subsections, as the case may be, of the Uniform Commercial
Code as in effect in the State of New York on the date hereof.
"Uncertificated Security" has the meaning given such term in Section
8-102(a)(18) of the UCC.
"Voting Stock" means all classes of capital stock of any Foreign
Corporation entitled to vote.
3. PLEDGE OF SECURITY INTEREST, ETC.
3.1 Pledge. To secure the Obligations now or hereafter owed or to be
performed by such Pledgor, each Pledgor does hereby grant, pledge and assign to
the Pledgee for the benefit of the Secured Creditors, and does hereby create a
continuing security interest (subject to those Liens permitted to exist with
respect to the Collateral pursuant to the terms of all Secured Debt Agreements
then in effect) in favor of the Pledgee for the benefit of the Secured Creditors
in, all of the right, title and interest in and to the following, whether now
existing or hereafter from time to time acquired (collectively, the
"Collateral"):
(a) each of the Collateral Accounts (to the extent a security
interest therein is not created pursuant to the Security Agreement),
including any and all assets of whatever type or kind deposited by such
Pledgor in such Collateral Account, whether now owned or hereafter
acquired, existing or arising, including, without limitation, all
Financial Assets, Investment Property, moneys, checks, drafts,
Instruments, Securities or interests therein of any type or nature
deposited or required by the Credit Agreement or any other Secured Debt
<PAGE>
7
Agreement to be deposited in such Collateral Account, and all investments
and all certificates and other Instruments (including depository receipts,
if any) from time to time representing or evidencing the same, and all
dividends, interest, distributions, cash and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing;
(b) all Stock of such Pledgor from time to time;
(c) all Limited Liability Company Interests of such Pledgor from
time to time and all of its right, title and interest in each limited
liability company to which each such interest relates, whether now
existing or hereafter acquired, including, without limitation:
(A) all the capital thereof and its interest in all profits,
losses, Limited Liability Company Assets and other distributions to
which such Pledgor shall at any time be entitled in respect of such
Limited Liability Company Interests;
(B) all other payments due or to become due to such Pledgor in
respect of Limited Liability Company Interests, whether under any
limited liability company agreement or otherwise, whether as
contractual obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority,
options, security interests, liens and remedies, if any, under any
limited liability company agreement or operating agreement, or at
law or otherwise in respect of such Limited Liability Company
Interests;
(D) all present and future claims, if any, of such Pledgor
against any such limited liability company for moneys loaned or
advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any limited liability
company agreement or operating agreement or at law to exercise and
enforce every right, power, remedy, authority, option and privilege
of such Pledgor relating to such Limited Liability Company
Interests, including any power to terminate, cancel or modify any
limited liability company agreement or operating agreement, to
execute any instruments and to take any and all other action on
behalf of and in the name of any of such Pledgor in respect of such
Limited Liability Company Interests and any such limited liability
company, to make determinations, to exercise any election
(including, but not limited to, election of remedies) or option or
to give or receive any notice, consent, amendment, waiver or
approval, together with full power and authority to demand, receive,
enforce, collect or receipt for any of the foregoing or for any
Limited Liability Company Asset, to enforce or execute any checks,
or other instruments or orders, to file any claims and to take any
action in connection with any of the foregoing; and
<PAGE>
8
(F) all other property hereafter delivered in substitution for
or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at
any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof;
(d) all Partnership Interests of such Pledgor from time to time and
all of its right, title and interest in each partnership to which each
such interest relates, whether now existing or hereafter acquired,
including, without limitation:
(A) all the capital thereof and its interest in all profits,
losses, Partnership Assets and other distributions to which such
Pledgor shall at any time be entitled in respect of such Partnership
Interests;
(B) all other payments due or to become due to such Pledgor in
respect of Partnership Interests, whether under any partnership
agreement or otherwise, whether as contractual obligations, damages,
insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority,
options, security interests, liens and remedies, if any, under any
partnership agreement or operating agreement, or at law or otherwise
in respect of such Partnership Interests;
(D) all present and future claims, if any, of such Pledgor
against any such partnership for moneys loaned or advanced, for
services rendered or otherwise;
(E) all of such Pledgor's rights under any partnership
agreement or operating agreement or at law to exercise and enforce
every right, power, remedy, authority, option and privilege of such
Pledgor relating to such Partnership Interests, including any power
to terminate, cancel or modify any partnership agreement or
operating agreement, to execute any instruments and to take any and
all other action on behalf of and in the name of any of such Pledgor
in respect of such Partnership Interests and any such partnership,
to make determinations, to exercise any election (including, but not
limited to, election of remedies) or option or to give or receive
any notice, consent, amendment, waiver or approval, together with
full power and authority to demand, receive, enforce, collect or
receipt for any of the foregoing or for any Partnership Asset, to
enforce or execute any checks, or other instruments or orders, to
file any claims and to take any action in connection with any of the
foregoing (with all of the foregoing rights only to be exercisable
upon the occurrence and during the continuation of an Event of
Default); and
(F) all other property hereafter delivered in substitution for
or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at
any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof;
<PAGE>
9
(e) all Security Entitlements of such Pledgor from time to time in
any and all of the foregoing;
(f) all Financial Assets and Investment Property of such Pledgor
from time to time;
(g) all Notes and other debt securities constituting Indebtedness
permitted by Section 8.05(i), (ii), (iii) and (xiii); and
(h) all Proceeds of and all products (including interest, dividends,
distributions and other earnings) any and all of the foregoing; provided
that the Collateral shall not include (i) more that 65% of the Stock of
any Foreign Corporation, (ii) to the extent that applicable law requires
that a Subsidiary of the Pledgor issue directors' qualifying shares, such
qualifying shares, (iii) Cash Equivalents or (iv) Equity Interests in
Persons which are not Subsidiaries to the extent that the Pledgor is
contractually restricted from pledging such Equity Interests owned by it.
3.2 Procedures. (a) To the extent that any Pledgor at any time or
from time to time owns, acquires or obtains any right, title or interest in any
Collateral, such Collateral shall automatically (and without the taking of any
action by the respective Pledgor) be pledged pursuant to Section 3.1 of this
Agreement and, in addition thereto, such Pledgor shall (to the extent provided
below) take the following actions as set forth below (as promptly as practicable
and, in any event, within 10 days after it obtains such Collateral) for the
benefit of the Pledgee and the Secured Creditors:
(i) with respect to a Certificated Security (other than a
Certificated Security credited on the books of a Clearing Corporation) or
any Note, the respective Pledgor shall physically deliver such
Certificated Security or Note to the Pledgee, indorsed to the Pledgee or
indorsed in blank;
(ii) with respect to an Uncertificated Security (other than an
Uncertificated Security credited on the books of a Clearing Corporation),
the respective Pledgor shall cause the issuer of such Uncertificated
Security to duly authorize and execute, and deliver to the Pledgee, an
agreement for the benefit of the Pledgee and the Secured Creditors
substantially in the form of Annex G hereto (appropriately completed to
the reasonable satisfaction of the Pledgee and with such modifications, if
any, as shall be reasonably satisfactory to the Pledgee) pursuant to which
such issuer agrees to comply with any and all instructions originated by
the Pledgee without further consent by the registered owner and not to
comply with instructions regarding such Uncertificated Security (and any
Partnership Interests and Limited Liability Company Interests issued by
such issuer) originated by any other Person other than a court of
competent jurisdiction (provided that the Pledgee agrees with each Pledgor
which executes any such agreement that it shall not give any instructions
to any issuer pursuant to any such agreement Uncertificated Security
except upon the instruction of such Pledgor unless a Noticed Event of
Default has occurred and is continuing);
<PAGE>
10
(iii) with respect to a Certificated Security, Uncertificated
Security, Partnership Interest or Limited Liability Company Interest
credited on the books of a Clearing Corporation (including a Federal
Reserve Bank, Participants Trust Company or The Depository Trust Company),
the respective Pledgor shall promptly notify the Pledgee thereof and shall
promptly take all actions required (i) to comply with the applicable rules
of such Clearing Corporation and (ii) to perfect the security interest of
the Pledgee under applicable law (including, in any event, under Sections
9-115 (4)(a) and (b), 9-115 (1)(e) and 8-106 (d) of the UCC). The Pledgor
further agrees to take such actions as the Pledgee reasonably deems
necessary or desirable to effect the foregoing;
(iv) with respect to a Partnership Interest or a Limited Liability
Company Interest (other than a Partnership Interest or Limited Liability
Interest credited on the books of a Clearing Corporation), (1) if such
Partnership Interest or Limited Liability Company Interest is represented
by a certificate, the procedure set forth in Section 3.2(a)(i), with
respect to such interest and (2) if such Partnership Interest or Limited
Liability Company Interest is not represented by a certificate, the
procedure set forth in Section 3.2(a)(ii) with respect to such interest if
it is an Uncertificated Security;
(v) with respect to any Note, physical delivery of such Note to the
Pledgee, indorsed to the Pledgee or indorsed in blank; and
(vi) with respect to cash, to the extent not otherwise provided in
the Security Agreement, only when a Noticed Event of Default has occurred
and is continuing (i) establishment by the Pledgee of a cash account in
the name of such Pledgor over which the Pledgee shall have exclusive and
absolute control and dominion (and no withdrawals or transfers may be made
therefrom by any Person except with the prior written consent of the
Pledgee) and (ii) deposit of such cash in such cash account.
(b) In addition to the actions required to be taken pursuant to
proceeding Section 3.2(a), each Pledgor shall take the following additional
actions with respect to the Securities and Collateral (as defined below):
(i) with respect to all Collateral of such Pledgor whereby or with
respect to which the Pledgee may obtain "control" thereof within the
meaning of Section 8-106 of the UCC (or under any provision of the UCC as
same may be amended or supplemented from time to time, or under the laws
of any relevant State other than the State of New York), the respective
Pledgor shall take all actions as may be requested from time to time by
the Pledgee so that "control" of such Collateral is obtained and at all
times held by the Pledgee; and
(ii) each Pledgor shall from time to time cause appropriate
financing statements (on Form UCC-1 or other appropriate form) under the
Uniform Commercial Code as in effect in the various relevant States, on
form covering all Collateral hereunder (with the form of such financing
statements to be satisfactory to the Pledgee), to be filed in the relevant
filing offices so that at all times the Pledgee has a security interest in
all Investment Property and other Collateral which is perfected by the
filing of such financing statements (in each case
<PAGE>
11
to the maximum extent perfection by filing may be obtained under the laws
of the relevant States, including, without limitation, Section 9-115(4)(b)
of the UCC).
3.3 Subsequently Acquired Collateral. If any Pledgor shall acquire
(by purchase, stock dividend or otherwise) any additional Collateral at any time
or from time to time after the date hereof, such Collateral shall automatically
(and without any further action being required to be taken) be subject to the
pledge and security interests created pursuant to Section 3.1 and, furthermore,
the Pledgor will promptly thereafter take (or cause to be taken) all action with
respect to such Collateral in accordance with the procedures set forth in
Section 3.2, and will promptly thereafter deliver to the Pledgee (i) a
certificate executed by a principal executive officer of such Pledgor describing
such Collateral and certifying that the same has been duly pledged in favor of
the Pledgee (for the benefit of the Secured Creditors) hereunder and (ii)
supplements to Annexes A through F hereto as are necessary to cause such annexes
to be complete and accurate at such time. Without limiting the foregoing, each
Pledgor shall be required to pledge hereunder any shares of stock at any time
and from time to time after the date hereof acquired by such Pledgor of any
Foreign Corporation, provided that no Pledgor (to the extent that it is the
Borrower or a Domestic Subsidiary of the Borrower) shall be required at any time
to pledge hereunder more than 65% of the Stock of any Foreign Corporation.
3.4 Transfer Taxes. Each pledge of Collateral under Section 3.1 or
Section 3.3 shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.
3.5 Definition of Pledged Notes. All Notes at any time pledged or
required to be pledged hereunder are hereinafter called the "Pledged Notes".
3.6 Certain Representations and Warranties Regarding the Collateral.
Each Pledgor represents and warrants that on the date hereof (i) each Subsidiary
of such Pledgor, and the direct ownership thereof, is listed in Annex A hereto;
(ii) the Stock held by such Pledgor consists of the number and type of shares of
the stock of the corporations as described in Annex B hereto; (iii) such Stock
constitutes that percentage of the issued and outstanding capital stock of the
issuing corporation as is set forth in Annex B hereto; (iv) the Notes held by
such Pledgor consist of the promissory notes described in Annex C hereto where
such Pledgor is listed as the lender; (v) the Limited Liability Company
Interests held by such Pledgor consist of the number and type of interests of
the Persons described in Annex D hereto; (vi) each such Limited Liability
Company Interest constitutes that percentage of the issued and outstanding
equity interest of the issuing Person as set forth in Annex D hereto; (vii) the
Partnership Interests held by such Pledgor consist of the number and type of
interests of the Persons described in Annex E hereto; (viii) each such
Partnership Interest constitutes that percentage or portion of the entire
partnership interest of the Partnership as set forth in Annex E hereto; (ix) the
Pledgor has complied with the respective procedure set forth in Section 3.2(a)
with respect to each item of Collateral described in Annexes A through E hereto;
and (x) on the date hereof, such Pledgor owns no other Stock, Notes, Limited
Liability Company Interests or Partnership Interests.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Collateral, which may be held (in the discretion of
the Pledgee) in the name of the
<PAGE>
12
relevant Pledgor, endorsed or assigned in blank or in favor of the Pledgee or
any nominee or nominees of the Pledgee or a sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there
shall have occurred and be continuing a Noticed Event of Default, each Pledgor
shall be entitled to exercise all voting rights attaching to any and all
Collateral owned by it, and to give consents, waivers or ratifications in
respect thereof provided that no vote shall be cast or any consent, waiver or
ratification given or any action taken which would violate, result in breach of
any covenant contained in, or be inconsistent with, any of the terms of this
Agreement, the Credit Agreement, any other Credit Document or any Interest Rate
Protection Agreement (collectively, the "Secured Debt Agreements"), or which
would have the effect of impairing the value of the Collateral, the position or
interests of the Pledgee or any Secured Creditor therein. All such rights of a
Pledgor to vote and to give consents, waivers and ratifications shall cease in
case a Noticed Event of Default shall occur and be continuing and Section 7
hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until a Noticed
Event of Default shall have occurred and be continuing, all cash dividends, cash
distributions, cash Proceeds and other cash amounts payable in respect of the
Collateral shall be paid to the respective Pledgor. Subject to Section 3.2
hereof, the Pledgee shall be entitled to receive directly, and to retain as part
of the Collateral:
(i) all other or additional Stock, Notes, Limited Liability Company
Interests, Partnership Interests, Instruments or other Securities or
property (including, but not limited to, cash dividends other than as set
forth above) paid or distributed by way of dividend or otherwise in
respect of the Collateral;
(ii) all other or additional Stock, Notes, Limited Liability Company
Interests, Partnership Interests, Instruments or other Securities or
property (including, but not limited to, cash) paid or distributed in
respect of the Collateral by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement; and
(iii) all other or additional Stock, Notes, Limited Liability
Company Interests, Partnership Interests, Instruments or other Securities
or property (including, but not limited to, cash) which may be paid in
respect of the Collateral by reason of any consolidation, merger, exchange
of stock, conveyance of assets, liquidation or similar corporate
reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive the proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. Furthermore, the foregoing
provisions of this Section 6 shall not apply to dividends or distributions made
in connection with the Transaction contemplated by Sections 9.02 of the Credit
Agreement, provided that such transactions are consummated in accordance with
the applicable terms and conditions set forth in the Credit Agreement. All
dividends, distributions or other payments which are received by the respective
Pledgor contrary to the provisions of this Section 6 or Section 7 shall be
received in trust for the benefit of the Pledgee, shall be segregated from other
property or funds
<PAGE>
13
of such Pledgor and shall be forthwith paid over to the Pledgee as Collateral in
the same form as so received (with any necessary endorsement).
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT OR CERTAIN DEFAULTS. In
case a Noticed Event of Default shall have occurred and be continuing, the
Pledgee shall be entitled to exercise all of the rights, powers and remedies
(whether vested in it by this Agreement or by any other Secured Debt Agreement
or by law) for the protection and enforcement of its rights in respect of the
Collateral, including, without limitation, all the rights and remedies of a
secured party upon default under the Uniform Commercial Code of the State of New
York, and the Pledgee shall be entitled, without limitation, to exercise any or
all of the following rights, which each Pledgor hereby agrees to be commercially
reasonable:
(i) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 to such Pledgor;
(ii) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect
upon any Pledged Note (including, without limitation, to make any demand
for payment thereon);
(iv) to vote all or any part of the Collateral (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (each Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution to do
so);
(v) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time
or place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of
credit risk, and for such price or prices and on such terms as the Pledgee
in its absolute discretion may determine; provided that at least 10 days'
notice of the time and place of any such sale shall be given to such
Pledgor. The Pledgee shall not be obligated to make such sale of
Collateral regardless of whether any such notice of sale has theretofore
been given. Each purchaser at any such sale shall hold the property so
sold absolutely free from any claim or right on the part of each Pledgor,
and each Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, all rights, if any, of
marshalling the Collateral and any other security for the Obligations or
otherwise, and all rights, if any, of stay and/or appraisal which it now
has or may at any time in the future have under rule of law or statute now
existing or hereafter enacted. At any such sale, unless prohibited by
applicable law, the Pledgee on behalf of all Secured Creditors (or certain
of them) may bid for and purchase (by bidding in Obligations or otherwise)
all or any part of the Collateral so sold free from any such right or
equity of redemption. Neither the
<PAGE>
14
Pledgee nor any Secured Creditor shall be liable for failure to collect
or realize upon any or all of the Collateral or for any delay in so
doing nor shall any of them be under any obligation to take any action
whatsoever with regard thereto; and
(vi) to set-off any and all Collateral against any and all
Obligations, and to withdraw any and all cash or other Collateral from
any and all Collateral Accounts and to apply such cash and other
Collateral to the payment of any and all Obligations;
provided that, upon the occurrence of a Default under Section 9.05 of the Credit
Agreement, the Pledgee may exercise the rights specified in clause (i) above.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement, or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or any other Secured Debt Agreement or now or hereafter existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any Secured Creditor of all
such other rights, powers or remedies, and no failure or delay on the part of
the Pledgee or any Secured Creditor to exercise any such right, power or remedy
shall operate as a waiver thereof. Unless otherwise required by the Credit
Documents, no notice to or demand on any Pledgor in any case shall entitle such
Pledgor to any other or further notice or demand in similar other circumstances
or constitute a waiver of any of the rights of the Pledgee or any Secured
Creditor to any other or further action in any circumstances without demand or
notice. The Secured Creditors agree that this Agreement may be enforced only by
the action of the Pledgee, acting upon the instructions of the Required Banks
(or, after the date on which all Credit Agreement Obligations have been paid in
full, the holders of at least a majority of the Interest Rate Obligations) and
that no other Secured Creditor shall have any right individually to seek to
enforce or to enforce this Agreement or to realize upon the security to be
granted hereby, it being understood and agreed that such rights and remedies may
be exercised by the Pledgee or the holders of at least a majority of the
Interest Rate Obligations, as the case may be, for the benefit of the Secured
Creditors upon the terms of this Agreement and the other Credit Documents.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee
upon any sale or other disposition of the Collateral pursuant to the terms of
this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied to the payment of the Obligations in the manner
provided in Section 7.4 of the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency between the amount
of proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers
<PAGE>
15
shall not be obligated to see to the application of any part of the purchase
money paid over to the Pledgee or such officer or be answerable in any way for
the misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee, each Secured Creditor and their and
their affiliates' respective successors, assigns, employees, agents and servants
(individually an "Indemnitee", and collectively, the "Indemnitees") from and
against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, and (ii) to
reimburse each Indemnitee for all costs and expenses, including reasonable
attorneys' fees, in each case arising out of or resulting from this Agreement or
the exercise by any Indemnitee of any right or remedy granted to it hereunder or
under any other Secured Debt Agreement (but excluding any claims, demands,
losses, judgments and liabilities (including liabilities for penalties) or
expenses of whatsoever kind or nature to the extent incurred or arising by
reason of gross negligence or willful misconduct of such Indemnitee). In no
event shall any Indemnitee hereunder be liable, in the absence of gross
negligence or willful misconduct on its part, for any matter or thing in
connection with this Agreement other than to account for monies or other
property actually received by it in accordance with the terms hereof. If and to
the extent that the obligations of any Pledgor under this Section 11 are
unenforceable for any reason, each Pledgor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law. The indemnity obligations of each Pledgor
contained in this Section 11 shall continue in full force and effect
notwithstanding the full payment of all the Notes issued under the Credit
Agreement, the termination of all Interest Rate Protection Agreements or Other
Hedging Agreements and Letters of Credit, and the payment of all other
Obligations and notwithstanding the discharge thereof.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) Each Pledgor agrees
that it will join with the Pledgee in executing and, at such Pledgor's own
expense, file and refile under the Uniform Commercial Code such financing
statements, continuation statements and other documents in such offices as the
Pledgee (acting on its own or on the instructions of the Required Banks) may
reasonably deem necessary or appropriate and wherever required or permitted by
law in order to perfect and preserve the Pledgee's security interest in the
Collateral hereunder and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the signature of such Pledgor where permitted by law, and agrees to do
such further acts and things and to execute and deliver to the Pledgee such
additional conveyances, assignments, agreements and instruments as the Pledgee
may reasonably require or deem advisable to carry into effect the purposes of
this Agreement or to further assure and confirm unto the Pledgee its rights,
powers and remedies hereunder or thereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time after the occurrence
and during the continuance of a Noticed Event of Default, in the Pledgee's
discretion to take any action and to execute any instrument which the Pledgee
may deem necessary or advisable to accomplish the purposes of this Agreement.
13. THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the obligations
of the Pledgee as holder of
<PAGE>
16
the Collateral and interests therein and with respect to the disposition
thereof, and otherwise under this Agreement, are only those expressly set forth
in this Agreement. The Pledgee shall act hereunder on the terms and conditions
set forth herein and in Section 12 of the Credit Agreement.
14. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except in accordance
with the terms of this Agreement and the Credit Documents).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. (a)
Each Pledgor represents, warrants and covenants that:
(i) it is the legal, beneficial and record owner of, and has good
and marketable title to, all Collateral and that it has sufficient
interest in all Collateral in which a security interest is purported to be
created hereunder for such security interest to attach (subject, in each
case, to no pledge, lien, mortgage, hypothecation, security interest,
charge, option, Adverse Claim or other encumbrance whatsoever, except the
liens and security interests created by this Agreement or the Security
Agreement and Permitted Liens);
(ii) it has full corporate and limited liability company power,
authority and legal right to pledge all the Collateral pledged by it
pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and
delivered by such Pledgor and constitutes a legal, valid and binding
obligation of such Pledgor enforceable against such Pledgor in accordance
with its terms, subject to the effects of bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (regardless of whether considered in proceedings in equity or
at law) and an implied covenant of good faith and fair dealing;
(iv) no consent of any other party (including, without limitation,
any stockholder or creditor of such Pledgor or any of their Subsidiaries)
and no consent, license, permit, approval or authorization of, exemption
by, notice or report to, or registration, filing or declaration with, any
governmental authority is required to be obtained by such Pledgor in
connection with (a) the execution, delivery or performance of this
Agreement, (b) the validity or enforceability of this Agreement (except as
set forth in clause (iii) above), (c) the perfection or enforceability of
the Pledgee's security interest in the Collateral or (d) except for
compliance with or as may be required by applicable securities laws, the
exercise by the Pledgee of any of its rights or remedies provided herein
except those (A) which have been obtained or made prior to the Initial
Borrowing Date, (B) the absence of which, either individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect on either (x) the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole or (y) the rights or remedies of the Banks
or the Administrative Agent or on the ability of Holdings or any of its
Subsidiaries to perform their respective obligations hereunder and under
the other Documents to which they are, or will be, a party or (C) for
filings and recordings required
<PAGE>
17
to perfect the security interests created under the Security Documents,
which filings and recordings will be made within 10 Business Days after
the Initial Borrowing Date;
(v) the execution, delivery or performance by such Pledgor of this
Agreement, nor compliance by it with the terms and provisions hereof, (i)
will contravene any provision of any applicable law, statute, rule or
regulation or any applicable order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with, or result
in any breach of any of the terms, covenants, conditions or provisions of,
or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (except pursuant to this
Agreement) upon any of the properties or assets of such Pledgor or any of
its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement or loan agreement, or any other material
agreement, contract or instrument, to which such Pledgor or any of its
Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of
the certificate of incorporation or by-laws or other organizational
documents, as applicable, of such Pledgor or any of its Subsidiaries;
(vi) all of the Collateral (consisting of Stock, Notes, Limited
Liability Company Interests or Partnership Interests) has been duly and
validly issued, is fully paid and non-assessable and is subject to no
options to purchase or similar rights; and
(vii) the pledge, collateral assignment and delivery to the Pledgee
of the Collateral consisting of certificated securities pursuant to this
Agreement creates a valid and perfected first priority security interest
in such Securities, and the proceeds thereof, subject to no prior Lien or
encumbrance or to any agreement purporting to grant to any third party a
Lien or encumbrance on the property or assets of such Pledgor which would
include the Securities (other than Permitted Liens) and the Pledgee is
entitled to all the rights, priorities and benefits afforded by the UCC or
other relevant law as enacted in any relevant jurisdiction to perfect
security interests in respect of such Collateral; and
(viii) "control" (as defined in Section 8-106 of the UCC) has been
obtained by the Pledgee over all Collateral consisting of Securities
(including Notes which are Securities) with respect to which such
"control" may be obtained pursuant to Section 8-106 of the UCC.
(b) Each Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Securities and the
proceeds thereof against the claims and demands of all persons whomsoever; and
each Pledgor covenants and agrees that it will have like title to and right to
pledge any other property at any time hereafter pledged to the Pledgee as
Collateral hereunder and will likewise defend the right thereto and security
interest therein of the Pledgee and the Secured Creditors.
(c) Each Pledgor covenants and agrees that it will take no action
which would violate any of the terms of any Secured Debt Agreement.
16. CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive office of
each Pledgor is located at the address specified in Annex F hereto. Each Pledgor
will not move its
<PAGE>
18
chief executive office except to such new location as such Pledgor may establish
in accordance with the last sentence of this Section 16. The originals of all
documents in the possession of such Pledgor evidencing all Collateral, including
but not limited to all Limited Liability Company Interests and Partnership
Interests, and the only original books of account and records of the Pledgor
relating thereto are, and will continue to be, kept at such chief executive
office at the location specified in Annex F hereto, or at such new locations as
the Pledgor may establish in accordance with the last sentence of this Section
16. All Limited Liability Company Interests and Partnership Interests are, and
will continue to be, maintained at, and controlled and directed (including,
without limitation, for general accounting purposes) from, such chief executive
office location specified in Annex F hereto, or such new locations as the
Pledgor may establish in accordance with the last sentence of this Section 16.
No Pledgor shall establish a new location for such offices until (i) it shall
have given to the Collateral Agent not less than 15 days' prior written notice
of its intention so to do, clearly describing such new location and providing
such other information in connection therewith as the Collateral Agent may
reasonably request and (ii) with respect to such new location, it shall have
taken all action, satisfactory to the Collateral Agent, to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect. Promptly after
establishing a new location for such offices in accordance with the immediately
preceding sentence, the respective Pledgor shall deliver to the Pledgee a
supplement to Annex F hereto so as to cause such Annex F hereto to be complete
and accurate.
17. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever (other than termination of this Agreement pursuant to
Section 19 hereof), including, without limitation:
(i) any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from any Secured Debt Agreement
(other than this Agreement in accordance with its terms), or any other
instrument or agreement referred to therein, or any assignment or transfer
of any thereof;
(ii) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of any such agreement or instrument or this
Agreement (other than a waiver, consent or extension with respect to this
Agreement in accordance with its terms);
(iii) any furnishing of any additional security to the Pledgee or
its assignee or any acceptance thereof or any release of any security by
the Pledgee or its assignee;
(iv) any limitation on any party's liability or obligations under
any such instrument or agreement or any invalidity or unenforceability, in
whole or in part, of any such instrument or agreement or any term thereof;
or
(v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
any Pledgor or any Subsidiary of any Pledgor, or any action taken with
respect to this Agreement by any trustee or receiver,
<PAGE>
19
or by any court, in any such proceeding, whether or not such Pledgor shall
have notice or knowledge of any of the foregoing.
18. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the Pledgee
a written request or requests that such Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any part of the Collateral consisting of
Securities, Limited Liability Company Interests or Partnership Interests, such
Pledgor as soon as practicable and at its expense will use its best efforts to
cause such registration to be effected (and be kept effective) and will use its
best efforts to cause such qualification and compliance to be effected (and be
kept effective) as may be so requested and as would permit or facilitate the
sale and distribution of such Collateral consisting of Securities, Limited
Liability Company Interests or Partnership Interests, including, without
limitation, registration under the Securities Act of 1933, as then in effect (or
any similar statute then in effect), appropriate qualifications under applicable
blue sky or other state securities laws and appropriate compliance with any
other governmental requirements; provided, that the Pledgee shall furnish to
such Pledgor such information regarding the Pledgee as such Pledgor may request
in writing and as shall be required in connection with any such registration,
qualification or compliance. Each Pledgor will cause the Pledgee to be kept
reasonably advised in writing as to the progress of each such registration,
qualification or compliance and as to the completion thereof, will furnish to
the Pledgee such number of prospectuses, offering circulars and other documents
incident thereto as the Pledgee from time to time may reasonably request, and
will indemnify, to the extent permitted by law, the Pledgee and all other
Secured Creditors participating in the distribution of such Collateral
consisting of Securities, Limited Liability Company Interests or Partnership
Interests against all claims, losses, damages and liabilities caused by any
untrue statement (or alleged untrue statement) of a material fact contained
therein (or in any related registration statement, notification or the like) or
by any omission (or alleged omission) to state therein (or in any related
registration statement, notification or the like) a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same may have been caused by an untrue statement or
omission based upon information furnished in writing to such Pledgor by the
Pledgee expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Collateral consisting of Securities,
Limited Liability Company Interests or Partnership Interests pursuant to Section
7 hereof, and such Collateral or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Securities Act of 1933,
as then in effect, the Pledgee may, in its sole and absolute discretion, sell
such Collateral or part thereof by private sale in such manner and under such
circumstances as the Pledgee may deem necessary or advisable in order that such
sale may legally be effected without such registration. Without limiting the
generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion: (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Collateral or
part thereof shall have been filed under such Securities Act; (ii) may approach
and negotiate with a single possible purchaser to effect such sale; and (iii)
may restrict such sale to a purchaser who will represent and agree that such
purchaser is purchasing for its own account, for investment, and not with a view
to the distribution or sale of such Collateral or part thereof. In the event of
any such sale, the Pledgee shall incur no responsibility or liability for
selling all or any part of the Collateral at a price which the Pledgee, in its
sole and absolute discretion, may in good faith
<PAGE>
20
deem reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until the
registration as aforesaid.
19. TERMINATION; RELEASE. (a) On the Termination Date (as defined
below), this Agreement shall terminate (provided that all indemnities set forth
herein including, without limitation, in Section 11 hereof shall survive any
such termination) and the Pledgee, at the request and expense of the respective
Pledgor, will execute and deliver to such Pledgor a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement
(including, without limitation, UCC termination statements and instruments of
satisfaction, discharge and/or reconveyance), and will duly assign, transfer and
deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Pledgee and
as has not theretofore been sold or otherwise applied or released pursuant to
this Agreement, together with any moneys at the time held by the Pledgee or any
of its sub-agents hereunder and, with respect to any Collateral consisting of an
Uncertificated Security (other than an Uncertificated Security credited on the
books of a Clearing Corporation), a Partnership Interest or a Limited Liability
Company Interest, a termination of the agreement relating thereto executed and
delivered by the issuer of such Uncertificated Security pursuant to Section
3.2(a)(ii) hereof or by the respective partnership or limited liability company
pursuant to Section 3.2(a)(iv) hereof. As used in this Agreement, "Termination
Date" shall mean the date upon which the Total Commitments and all Interest Rate
Protection Agreements or Other Hedging Agreements have been terminated, no
Letter of Credit or Note is outstanding (and all Loans have been paid in full),
all Letters of Credit have been terminated, and all other Obligations then due
and payable have been paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed of in connection with a sale or disposition permitted by the
Credit Agreement or is otherwise released at the direction of the Required Banks
(or all the Banks if required by Section 13.12 of the Credit Agreement), and the
proceeds of such sale or sales or from such release are applied in accordance
with the terms of the Credit Agreement to the extent required to be so applied,
the Pledgee, at the request and expense of the respective Pledgor will duly
assign, transfer and deliver to such Pledgor (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in possession of the Pledgee and has not
theretofore been released pursuant to this Agreement.
(c) At any time that any Pledgor desires that Collateral be released
as provided in the foregoing Section 19(a) or (b), it shall deliver to the
Pledgee a certificate signed by a principal executive officer of such Pledgor
stating that the release of the respective Collateral is permitted pursuant to
Section 19(a) or (b). The Pledgee shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it as permitted
by this Section 19.
(d) The Pledgee shall have no liability whatsoever to any Secured
Creditor as the result of any release of Collateral by it in accordance with
this Section 19.
20. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
(i) if to any Pledgor, at its address set forth opposite its
signature below;
<PAGE>
21
(ii) if to the Pledgee, at:
Bankers Trust Company
Tel: (212)
Fax: (212)
(iii) if to any Bank (other than the Pledgee), at such address as
such Bank shall have specified in the Credit Agreement;
(iv) if to any Interest Rate Creditor, at such address as such
Interest Rate Creditor shall have specified in writing to the Borrower and
the Pledgee;
or at such address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
21. THE PLEDGEE. The Pledgee will hold, directly or indirectly in
accordance with this Agreement, all items of the Collateral at any time received
by it under this Agreement. It is expressly understood and agreed that the
obligations of the Pledgee with respect to the Collateral, interests therein and
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in the UCC and this Agreement.
22. WAIVER; AMENDMENT. Except as contemplated in Section 25 hereof,
none of the terms and conditions of this Agreement may be changed, waived,
discharged or terminated in any manner whatsoever unless such change, waiver,
discharge or termination is in writing duly signed by each Pledgor to be bound
thereby and the Pledgee (with the consent of the Required Banks or, to the
extent required by Section 13.12 of the Credit Agreement, all of the Banks),
provided, however, that no such change, waiver, modification or variance shall
be made to Section 9 hereof or this Section 22 without the consent of each
Secured Creditor adversely affected thereby, provided further that any change,
waiver, modification or variance affecting the rights and benefits of a single
Class (as defined below) of Secured Creditors (and not all Secured Creditors in
a like or similar manner) shall require the written consent of the Requisite
Creditors of such Class of Secured Creditors. For the purpose of this Agreement,
the term "Class" shall mean each class of Secured Creditors, i.e., whether (x)
the Bank Creditors as holders of the Credit Agreement Obligations, or (y) the
Interest Rate Creditors as holders of the Interest Rate Obligations. For the
purpose of this Agreement, the term "Requisite Creditors" of any Class shall
mean each of (x) with respect to each of the Credit Agreement Obligations, the
Required Banks and (y) with respect to the Interest Rate Obligations, the
holders of at least a majority of all obligations outstanding from time to time
under the Interest Rate Protection Agreements or Other Hedging Agreements.
23. MISCELLANEOUS. This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect,
subject to release and/or termination as set forth in Section 19, (ii) be
binding upon each Pledgor, its successors and assigns; provided, however, that
no Pledgor shall assign any of its rights or obligations hereunder without the
prior written consent of the Pledgee (with the prior written consent of the
Required Banks or to the extent required by Section 13.12 of the Credit
Agreement, all of the Banks), and (iii) inure, together with the rights and
remedies of the Pledgee hereunder, to the benefit of the Pledgee, the Secured
Creditors
<PAGE>
22
and their respective successors, transferees and assigns. THIS AGREEMENT SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. The headings of the several sections and subsections in this Agreement are
for purposes of reference only and shall not limit or define the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
In the event that any provision of this Agreement shall prove to be invalid or
unenforceable, such provision shall be deemed to be severable from the other
provisions of this Agreement which shall remain binding on all parties hereto.
24. WAIVER OF JURY TRIAL. Each Pledgor hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this agreement or the transactions contemplated hereby.
25. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become a Pledgor hereunder by executing a counterpart hereof and
delivering the same to the Pledgee.
26. RECOURSE. This Agreement is made with full recourse to the
Pledgors and pursuant to and upon all the representations, warranties, covenants
and agreements on the part of the Pledgors contained herein and in the other
Secured Debt Agreements and otherwise in writing in connection herewith or
therewith.
27. LIMITED OBLIGATIONS. It is the desire and intent of each Pledgor
and the Secured Creditors that this Agreement shall be enforced against each
Pledgor to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. Notwithstanding
anything to the contrary contained herein, in furtherance of the foregoing, it
is noted that the obligations of each Pledgor constituting a Subsidiary
Guarantor have been limited as provided in the Subsidiaries Guaranty.
28. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER. (a)
Nothing herein shall be construed to make the Pledgee or any other Secured
Creditor liable as a member of any limited liability company or partnership and
neither the Pledgee nor any other Secured Creditor by virtue of this Agreement
or otherwise (except as referred to in the following sentence) shall have any of
the duties, obligations or liabilities of a member of any limited liability
company or partnership. The parties hereto expressly agree that this Agreement
shall not be construed as creating a partnership or joint venture among the
Pledgee, any other Secured Creditor and/or any Pledgor.
(b) The Pledgee, by accepting this Agreement, did not intend to
become a member of any limited liability company or partnership or otherwise be
deemed to be a co-venturer with respect to any Pledgor or any limited liability
company or partnership either before or after an Event of Default shall have
occurred. The Pledgee shall have only those powers set forth herein and the
Secured Creditors shall assume none of the duties, obligations or liabilities of
a member of any limited liability company or partnership or any Pledgor.
<PAGE>
23
(c) The Pledgee and the other Secured Creditors shall not be
obligated to perform or discharge any obligation of any Pledgor as a result of
the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Pledgee or any other Secured Creditor to appear in or
defend any action or proceeding relating to the Collateral to which it is not a
party, or to take any action hereunder or thereunder, or to expend any money or
incur any expenses or perform or discharge any obligation, duty or liability
under the Collateral.
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
ADDRESS: CONSOLIDATED CONTAINER HOLDINGS
LLC
2515 McKinney Avenue
Suite 850, Lock Box 14 By:__________________________________
Dallas, Texas 75201 Name:
Title:
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
ADDRESS: CONSOLIDATED CONTAINER COMPANY
LLC, as a Pledgor
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201 By:__________________________________
Title:
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
2515 McKinney Avenue REID PLASTICS GROUP LLC, as a Pledgor
Suite 850, Lock Box 14
Dallas, Texas 75201
By:__________________________________
Telephone No.: (214) 303-3400 Title:
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
<PAGE>
24
2515 McKinney Avenue CONSOLIDATED CONTAINER CAPITAL
Suite 850, Lock Box 14 LLC, as a Pledgor
Dallas, Texas 75201
Telephone No.: (214) 303-3400 By:__________________________________
Facsimile No.: (214) 303-3499 Title:
Attention: Timothy Brasher
2515 McKinney Avenue PLASTIC CONTAINERS LLC, as a Pledgor
Suite 850, Lock Box 14
Dallas, Texas 75201
By:___________________________________
Telephone No.: (214) 303-3400 Title:
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
2515 McKinney Avenue CONTINENTAL PLASTIC CONTAINERS
Suite 850, Lock Box 14 LLC, as a Pledgor
Dallas, Texas 75201
Telephone No.: (214) 303-3400 By:___________________________________
Facsimile No.: (214) 303-3499 Title:
Attention: Timothy Brasher
2515 McKinney Avenue CONTINENTAL CARRIBEAN CONTAINERS
Suite 850, Lock Box 14 INC, as a Pledgor
Dallas, Texas 75201
Telephone No.: (214) 303-3400 By:___________________________________
Facsimile No.: (214) 303-3499 Title:
Attention: Timothy Brasher
Accepted and Agreed to:
BANKERS TRUST COMPANY
as Pledgee
By:__________________________
Title:
<PAGE>
ANNEX A
TO
PLEDGE AGREEMENT
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Jurisdiction
Percentage of
Corporation Owned by Owned Incorporation
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reid Plastics Group LLC Consolidated Container 100% Delaware
Company LLC
- ------------------------------------------------------------------------------------------
Consolidated Container Consolidated Container 100% Delaware
Capital, Inc. Company LLC
- ------------------------------------------------------------------------------------------
Plastic Containers LLC Consolidated Container 100% Delaware
Company LLC
- ------------------------------------------------------------------------------------------
Reid Mexico, S.A. de C.V.* Reid Plastics Group LLC 51% Mexico
- ------------------------------------------------------------------------------------------
Reid Canada, Inc. Reid Plastics Group LLC 100% Ontario,
Canada
- ------------------------------------------------------------------------------------------
Stewart/Walker Plastics, Ltd. Reid Plastics Group LLC 100% British
Columbia,
Canada
- ------------------------------------------------------------------------------------------
Master Plastics, Inc. Stewart/Walker Plastics, Ltd. 100% Alberta,
Canada
- ------------------------------------------------------------------------------------------
Continental Plastic Plastic Containers LLC 100% Delaware
Containers LLC
- ------------------------------------------------------------------------------------------
Continental Carribean
Containers, Inc. Plastic Containers LLC 100% Delaware
- ------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Stock not being pledged pursuant to Pledge Agreement
<PAGE>
ANNEX B
TO
PLEDGE AGREEMENT
LIST OF STOCK
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Type Number
Name of Issuing of of Certificate Percentage
Corporation Shares Shares No. Owned
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consolidated Common N/A N/A 100% Uncertificated
Container Capital, Inc. Stock
- ---------------------------------------------------------------------------------------------
Reid Mexico, S.A. de Common 25,500 n/a 51% Not being
C.V. Stock, pledged
Class A
- ---------------------------------------------------------------------------------------------
Reid Canada, Inc. Common 157,700 C-6 100% 66-2/3%
Stock pledged
- ---------------------------------------------------------------------------------------------
Master Plastics, Inc. Common 100 100% 66-2/3%
Stock pledged
- ---------------------------------------------------------------------------------------------
Continental Carribean Common
Containers, Inc. Stock 100 5 100%
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ANNEX C
TO
PLEDGE AGREEMENT
ANNEX C TO PLEDGE AGREEMENT
LIST OF NOTES
None
<PAGE>
ANNEX D
TO
PLEDGE AGREEMENT
LIST OF LIMITED LIABILITY COMPANY INTERESTS
- --------------------------------------------------------------------------------
Name of Issuing Corporation Percentage Owned
- --------------------------------------------------------------------------------
Consolidated Container 100%
Company LLC
- --------------------------------------------------------------------------------
Reid Plastics Group LLC 100%
- --------------------------------------------------------------------------------
Plastics Containers LLC 100%
- --------------------------------------------------------------------------------
Stewart/Walker Plastics, Ltd. 100% 65% to be pledged
- --------------------------------------------------------------------------------
Continental Plastics Containers
LLC 100%
- --------------------------------------------------------------------------------
<PAGE>
ANNEX E
TO
PLEDGE AGREEMENT
LIST OF PARTNERSHIP INTERESTS
None
<PAGE>
ANNEX F
TO
PLEDGE AGREEMENT
LIST OF CHIEF EXECUTIVE OFFICES
Consolidated Container Holdings LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Consolidated Container Company LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Consolidated Container Capital, Inc.
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Reid Plastics Group LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Plastic Containers LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Continental Plastic Containers LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Continental Carribean Containers, Inc.
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
<PAGE>
ANNEX G
TO
PLEDGE AGREEMENT
Form of Agreement Regarding Uncertificated Securities, Limited Liability
Company Interests and Partnership Interests
AGREEMENT (as amended, modified or supplemented from time to time, this
"Agreement"), dated as of _________ __, _____, among each of the undersigned
pledgors (each a "Pledgor" and, collectively, the "Pledgors"), __________, not
in its individual capacity but solely as Collateral Agent (the "Pledgee"), and
__________, as the issuer of the Uncertificated Securities, Limited Liability
Company Interests and/or Partnership Interests (each as defined below) (the
"Issuer").
W I T N E S S E T H:
WHEREAS, each Pledgor and the Pledgee are entering into Pledge Agreement,
dated as of June ___, 1999 (as amended, amended and restated, modified or
supplemented from time to time, the "Pledge Agreement"), under which, among
other things, in order to secure the payment of the Obligations (as defined in
the Pledge Agreement), each Pledgor will pledge to the Pledgee for the benefit
of the Secured Creditors (as defined in the Pledge Agreement), and grant a
security interest in favor of the Pledgee for the benefit of the Secured
Creditors in, all of the right, title and interest of such Pledgor in and to any
and all (1) "uncertificated securities" (as defined in Section 8-102(a)(18) of
the Uniform Commercial Code, as adopted in the State of New York)
("Uncertificated Securities"), (2) Partnership Interests (as defined in the
Pledge Agreement) and (3) Limited Liability Company Interests (as defined in the
Pledge Agreement), in each case issued from time to time by the Issuer, whether
now existing or hereafter from time to time acquired by such Pledgor (with all
of such Uncertificated Securities, Partnership Interests and Limited Liability
Company Interests being herein collectively called the "Issuer Pledged
Interests"); and
WHEREAS, each Pledgor desires the Issuer to enter into this Agreement in
order to perfect the security interest of the Pledgee under the Pledge Agreement
in the Issuer Pledged Interests, to vest in the Pledgee control of the Issuer
Pledge Interests and to provide for the rights of the parties under this
Agreement;
NOW THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Each Pledgor hereby irrevocably authorizes and directs the Issuer, and
the Issuer hereby agrees, to comply with any and all instructions and orders
originated by the Pledgee (and its successors and assigns) regarding any and all
of the Issuer Pledged Interests without the further consent by the registered
owner (including the respective Pledgor), and not to comply with any
instructions or orders regarding any or all of the Issuer Pledged Interests
originated by any person or entity other than the Pledgee (and its successors
and assigns) or a court of competent jurisdiction.
<PAGE>
2
2. The Issuer hereby certifies that (i) no notice of any security
interest, lien or other encumbrance or claim affecting the Issuer Pledged
Interests (other than the security interest of the Pledgee) has been received by
it, and (ii) the security interest of the Pledgee in the Issuer Pledged
Interests has been registered in the books and records of the Issuer.
3. The Issuer hereby represents and warrants that (i) the pledge by the
Pledgors of, and the granting by the Pledgors of a security interest in, the
Issuer Pledged Interests to the Pledgee, for the benefit of the Secured
Creditors, does not violate the charter, by-laws, partnership agreement,
membership agreement or any other agreement governing the Issuer or the Issuer
Pledged Interests, and (ii) if the Issuer is a corporation, the Issuer Pledged
Interests are fully paid and nonassessable.
4. All notices, statements of accounts, reports, prospectuses, financial
statements and other communications to be sent to any Pledgor by the Issuer in
respect of the Issuer will also be sent to the Pledgee at the following address:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Patsy Hogan
Tel: (212) 250-5175
Fax: (212) 250-7218
5. Except as expressly provided otherwise in Section 4, all notices,
instructions, orders and communications hereunder shall be sent or delivered by
mail, telex, telecopy or overnight courier service and all such notices and
communications shall, when mailed, telexed, telecopied or sent by overnight
courier, be effective when deposited in the mails or delivered to the overnight
courier, prepaid and properly addressed for delivery on such or the next
Business Day, or sent by telex or telecopier, except that notices and
communications to the Pledgee shall not be effective until received by the
Pledgee. All notices and other communications shall be in writing and addressed
as follows:
(a) if to any Pledgor, at:
Consolidated Container Company, LLC
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201
Attention: Timothy Brasher
Telephone No.: (214) 303-3400
Telecopier No.: (214) 303-3499
<PAGE>
3
(b) if to the Pledgee, at:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Patsy Hogan
Tel: (212) 250-5175
Fax: (212) 250-7218
(c) if to the Issuer, at:
Attention: ______________
Telephone No.:___________
Telecopier No.:___________
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, "Business Day" means any day other than a Saturday, Sunday, or other
day on which banks in New York are authorized to remain closed.
6. This Agreement shall be binding upon the successors and assigns of each
Pledgor and the Issuer and shall inure to the benefit of and be enforceable by
the Pledgee and its successors and assigns. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall constitute one instrument. In the event that any provision of this
Agreement shall prove to be invalid or unenforceable, such provision shall be
deemed to be severable from the other provisions of this Agreement which shall
remain binding on all parties hereto. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
except in writing signed by the Pledgee, the Issuer and any Pledgor which at
such time owns any Issuer Pledged Interests.
7. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
<PAGE>
4
IN WITNESS WHEREOF, each Pledgor, the Pledgee and the Issuer have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
2515 McKinney Avenue CONSOLIDATED CONTAINER COMPANY
Suite 850, Lock Box 14 LLC
Dallas, Texas 75201
By: Consolidated Container Holdings LLC, as
Telephone No.: (214) 303-3400 its Sole Member and Manager
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher By:________________________________________
Name:
Title:
2515 McKinney Avenue REID PLASTICS GROUP LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Company LLC, as
its Sole Member and Manager
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499 By: Consolidated Container Holdings LLC, as
Attention: Timothy Brasher its Sole Member and Manager
By:____________________________________
Name:
Title:
2515 McKinney Avenue CONSOLIDATED CONTAINER CAPITAL,
Suite 850, Lock Box 14 INC.
Dallas, Texas 75201
By:________________________________________
Telephone No.: (214) 303-3400 Name:
Facsimile No.: (214) 303-3499 Title:
Attention: Timothy Brasher
<PAGE>
5
2515 McKinney Avenue PLASTIC CONTAINERS LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Company LLC
Telephone No.: (214) 303-3400 By: Consolidated Container Holdings LLC, as
Facsimile No.: (214) 303-3499 its Sole Member and Manager
Attention: Timothy Brasher
By:_________________________________________
Name:
Title:
2515 McKinney Avenue CONTINENTAL PLASTIC CONTAINERS
Suite 850, Lock Box 14 LLC
Dallas, Texas 75201
By: Plastic Containers LLC, as its Sole
Telephone No.: (214) 303-3400 Member and Manager
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher By: Consolidated Container Company LLC, as
its Sole Member and Manager
By: Consolidated Container Holdings LLC, as
its Sole Member and Manager
By:_________________________________________
Name:
Title:
2515 McKinney Avenue CONTINENTAL CARIBBEAN
Suite 850, Lock Box 14 CONTAINERS, INC.
Dallas, Texas 75201
By:_________________________________________
Telephone No.: (214) 303-3400 Name:
Facsimile No.: (214) 303-3499 Title:
Attention: Timothy Brasher
<PAGE>
6
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Collateral Agent
and Pledgee
By:_________________________________________
Name:
Title:
By:_________________________________________
Name:
Title:
<PAGE>
EXHIBIT J
================================================================================
FORM OF SECURITY AGREEMENT
among
CONSOLIDATED CONTAINER HOLDINGS LLC,
CONSOLIDATED CONTAINER COMPANY LLC,
VARIOUS SUBSIDIARIES,
and
BANKERS TRUST COMPANY
as Collateral Agent
Dated as of July 1, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I SECURITY INTERESTS...............................................2
1.1 Grant of Security Interests......................................2
1.2 Power of Attorney................................................2
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS................3
2.1 Necessary Filings................................................3
2.2 No Liens.........................................................3
2.3 Other Financing Statements.......................................3
2.4 Chief Executive Office; Records..................................3
2.5 Location of Inventory and Equipment..............................4
2.6 Trade Names; Change of Name......................................4
2.7 Recourse.........................................................5
ARTICLE III SPECIAL PROVISIONS CONCERNING RECEIVABLES; CONTRACT RIGHTS;
INSTRUMENTS......................................................5
3.1 Additional Representations and Warranties........................5
3.2 Maintenance of Records...........................................5
3.3 Modification of Terms; etc.......................................5
3.4 Collection.......................................................6
3.5 Direction to Account Debtors; etc................................6
3.6 Instruments......................................................6
3.7 Further Actions..................................................7
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS.........................7
4.1 Additional Representations and Warranties........................7
4.2 Licenses and Assignments.........................................7
4.3 Infringements....................................................7
4.4 Preservation of Marks............................................8
4.5 Maintenance of Registration......................................8
4.6 Future Registered Marks..........................................8
4.7 Remedies.........................................................8
ARTICLE V SPECIAL PROVISIONS CONCERNING TRADE SECRET RIGHTS, PATENTS
AND COPYRIGHTS...................................................9
5.1 Additional Representations and Warranties........................9
5.2 Licenses and Assignments.........................................9
(i)
<PAGE>
5.3 Infringements....................................................9
5.4 Maintenance of Patents or Copyrights.............................9
5.5 Prosecution of Patent or Copyright Application..................10
5.6 Other Patents and Copyrights....................................10
5.7 Remedies........................................................10
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL............................10
6.1 Protection of Collateral Agent's Security.......................10
6.2 Further Actions.................................................11
6.3 Financing Statements............................................11
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT....................11
7.1 Remedies; Obtaining the Collateral Upon Default.................11
7.2 Remedies; Disposition of the Collateral.........................13
7.3 Waiver of Claims................................................14
7.4 Application of Proceeds.........................................14
7.5 Remedies Cumulative.............................................16
7.6 Discontinuance of Proceedings...................................16
ARTICLE VIII INDEMNITY.......................................................16
8.1 Indemnity.......................................................16
8.2 Indemnity Obligations Secured by Collateral; Survival...........17
ARTICLE IX DEFINITIONS.....................................................18
ARTICLE X MISCELLANEOUS...................................................23
10.1 Notices.........................................................23
10.2 Waiver; Amendment...............................................23
10.3 Obligations Absolute............................................24
10.4 Successors and Assigns..........................................24
10.5 Headings Descriptive............................................25
10.6 Severability....................................................25
10.7 Governing Law...................................................25
10.8 Assignors' Duties...............................................25
10.9 Termination; Release............................................25
10.10 Collateral Agent................................................26
10.11 Counterparts....................................................26
10.12 Additional Assignors............................................26
(ii)
<PAGE>
ANNEX A Schedule of Chief Executive Offices; Record Locations
ANNEX B Schedule of Equipment and Inventory Locations
ANNEX C Schedule of Trade and Fictitious Names
ANNEX D Schedule of Marks
ANNEX E Schedule of Patents and Patenet Applications
ANNEX F Schedule of Copyrights and Copyright Applications
ANNEX G Assignment of Security Interest in United States Trademarks
ANNEX H Assignment of Security Interest in United States Patents
(iii)
<PAGE>
EXHIBIT J
FORM OF SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 1, 1999, among each of the
undersigned (each, an "Assignor" and, together with any other entity that
becomes a party hereto pursuant to Section 10.12 hereof, collectively, the
"Assignors") and BANKERS TRUST COMPANY, as Collateral Agent (the "Collateral
Agent") for the Secured Creditors (as defined below). Capitalized terms used
herein shall have the meaning specified in Article IX herein or, if not defined
therein, as specified in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, Consolidated Container Holdings LLC ("Holdings"),
Consolidated Container Company LLC (the "Borrower"), the financial institutions
from time to time party thereto (the "Banks"), Morgan Guaranty Trust Company of
New York, as Documentation Agent, Donaldson, Lufkin & Jenrette Securities
Corporation, as Syndication Agent and Bankers Trust Company, as Administrative
Agent (the "Administrative Agent"), (the Administrative Agent, the Banks and the
Collateral Agent, collectively, the "Bank Creditors") have entered into a Credit
Agreement, dated as of July 1, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement") providing for the making of
Loans and the issuance or creation of, and participation in, Letters of Credit
as contemplated therein;
WHEREAS, the Borrower may from time to time be party to one or more
Interest Rate Protection Agreements or Other Hedging Agreements with a Bank or
an affiliate of a Bank (each such Bank or affiliate, even if the respective Bank
subsequently ceases to be a Bank under the Credit Agreement for any reason,
together with such Bank's or affiliate's successors and assigns, collectively,
the "Interest Rate Creditors", and together with the Bank Creditors, the
"Secured Creditors");
WHEREAS, pursuant to the Guaranty contained in the Credit Agreement
(the "Holdings Guaranty"), Holdings has guaranteed to the Secured Creditors the
payment when due of all obligations and liabilities of the Borrower under or
with respect to the Credit Documents and the Interest Rate Protection Agreements
or Other Hedging Agreements which may hereinafter arise;
WHEREAS, pursuant to the Subsidiary Guaranty dated as of even date
herewith (as amended, modified or supplemented from time to time, the
"Subsidiary Guaranty"), each Assignor (other than Holdings and the Borrower) has
jointly and severally guaranteed to the Secured Creditors the payment when due
of the Guaranteed Obligations (as and to the extent defined in the Subsidiary
Guaranty);
WHEREAS, it is a condition precedent to the making of Loans and the
issuance and participation in, Letters of Credit under the Credit Agreement that
each Assignor shall have executed and delivered to the Collateral Agent this
Agreement; and
WHEREAS, each Assignor desires to execute this Agreement to satisfy
the condition described in the preceding paragraph;
<PAGE>
2
NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties and hereby
covenants and agrees as follows:
ARTICLE I
SECURITY INTERESTS
1.1 Grant of Security Interests. As security for the prompt and
complete payment and performance when due of all of its Obligations, each
Assignor does hereby grant to the Collateral Agent for the ratable benefit of
the Secured Creditors, a continuing security interest in, all of the right,
title and interest of such Assignor in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) each and every
Receivable, (ii) all Contracts, together with all Contract Rights arising
thereunder, (iii) all Inventory, (iv) all Equipment, (v) all Marks, together
with the registrations and right to all renewals thereof, and the goodwill of
the business of such Assignor symbolized by the Marks, (vi) the Cash Collateral
Account if established for such Assignor and all moneys securities and
instruments deposited or required to be deposited in such Cash Collateral
Account, (vii) all Patents and Copyrights and all reissues, renewals or
extensions thereof, (viii) all computer programs of such Assignor and all
intellectual property rights therein and all other proprietary information of
such Assignor, including, but not limited to, Trade Secret Rights, (ix) all
insurance policies, (x) all other Goods, General Intangibles, Chattel Paper,
Documents and Instruments (other than the Pledged Securities), and (xi) all
Proceeds and products of any and all of the foregoing (all of the above
collectively, the "Collateral"; provided, however that so long as the Lease
Agreement dated April 1, 1996 between Development Authority of Fulton County,
Georgia, as Issuer, Continental Plastic Containers, Inc., as Lessee and GE
Capital Public Finance, Inc., as Lessor (the "Lease Agreement") remains in
effect and obligations thereunder remain outstanding, any assets encumbered
pursuant to the Lease Agreement shall not be included in the definition of
"Collateral").
1.2 Power of Attorney. Each Assignor hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of a Noticed Event of Default
(in the name of such Assignor or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all moneys and claims for moneys due
or to become due to such Assignor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be necessary or advisable in the premises, which
appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which representation,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
2.1 Necessary Filings. All filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the security
interest granted by such Assignor to
<PAGE>
3
the Collateral Agent hereby in respect of all the Collateral have been
accomplished or shall be accomplished within ten days of the Initial Borrowing
Date (or, in the case of property acquired after the Initial Borrowing Date,
within ten days after the acquisition thereof) and the security interest granted
to the Collateral Agent pursuant to this Agreement in and to all the Collateral
constitutes or will constitute, upon satisfaction of such filings, registrations
and recordings, a perfected security interest therein superior and prior to the
rights of all other Persons therein (other than any such rights pursuant to
Permitted Liens) and subject to no other Liens (other than Permitted Liens) and
is entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests.
2.2 No Liens. Such Assignor is, and as to Collateral acquired by it
from time to time after the date hereof such Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any Person (other than Permitted Liens), and such Assignor
shall defend the Collateral against all claims and demands of all Persons at any
time claiming the same or any interest therein (other than in connection with
Permitted Liens) adverse to the Collateral Agent.
2.3 Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens or otherwise approved by the Collateral Agent) and so long as
the Total Commitment has not been terminated or any Note remains unpaid or any
Letter of Credit remains outstanding or any of the Obligations remain unpaid or
any Interest Rate Protection Agreement remains in effect, such Assignor will not
execute or authorize to be filed in any public office any financing statement
(or similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security
interests granted hereby by such Assignor or as otherwise permitted by the
Credit Agreement.
2.4 Chief Executive Office; Records. As of the date hereof, the
chief executive office of such Assignor is located at the address or addresses
indicated on Annex A hereto. Such Assignor will not move its chief executive
office except to such new location as such Assignor may establish in accordance
with the last sentence of this Section 2.4. The original records and books of
account of such Assignor evidencing all Receivables and Contract Rights and
Trade Secret Rights of such Assignor are, and will continue to be, kept at such
chief executive office and/or one or more of the locations shown on Annex A, or
at such new locations as such Assignor may establish in accordance with the last
sentence of this Section 2.4. All Receivables and Contract Rights and Trade
Secret Rights of such Assignor are, and will continue to be, maintained at, and
controlled and directed (including, without limitation, for general accounting
purposes) from, the office locations described above, or such new locations as
such Assignor may establish in accordance with the last sentence of this Section
2.4. Such Assignor shall not establish new locations for such chief executive
offices until (i) it shall have given to the Collateral Agent not less than 15
days' prior written notice (or such lesser notice as shall be acceptable to the
Collateral Agent) of its intention to do so, clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, and (ii) with respect to such new
location, it shall have taken all action, reasonably satisfactory to the
Collateral Agent, to maintain the security
<PAGE>
4
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
2.5 Location of Inventory and Equipment. All Inventory and Equipment
held on the date hereof by each Assignor is located at one of the locations
shown on Annex B attached hereto, is in transit between such locations, or is in
transit to customers. Each Assignor agrees that all Inventory and Equipment now
held or subsequently acquired by it shall be kept at (or shall be in transport
to or from) any one of the locations shown on Annex B hereto, such new location
as such Assignor may establish in accordance with the last sentence of this
Section 2.5 or such other locations to the extent such Assignor (and the
Assignors taken as a whole) remain in compliance with this Section 2.5. Each
Assignor may establish a new location for Inventory and Equipment only if (i) it
shall have given to the Collateral Agent not less than 15 days' prior written
notice of its intention so to do, clearly describing such new location and
providing such other information in connection therewith as the Collateral Agent
may reasonably request, and (ii) with respect to such new location, such
Assignor shall have taken all action reasonably satisfactory to the Collateral
Agent to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.6 Trade Names; Change of Name. As of the date hereof, such
Assignor does not have or operate in any jurisdiction under, or in the preceding
5 year period has not had or has not operated in any jurisdiction under, any
trade names, fictitious names or other names (including, without limitation, any
names of divisions or operations) except its legal name and such other trade,
fictitious or other names as are listed on Annex C hereto. Such Assignor has
only operated under each name set forth in Annex C in the jurisdiction or
jurisdictions set forth opposite each such name on Annex C. Such Assignor shall
not change its legal name or assume or operate in any jurisdiction under any
trade, fictitious or other name except those names listed on Annex C hereto in
the jurisdictions listed with respect to such names and new names (including,
without limitation, any names of divisions or operations) and/or jurisdictions
established in accordance with the last sentence of this Section 2.6. Such
Assignor shall not assume or operate in any jurisdiction under any new trade,
fictitious or other name or operate under any existing name in any additional
jurisdiction until (i) it shall have given to the Collateral Agent not less than
15 days' prior written notice of its intention so to do, clearly describing such
new name and/or jurisdiction and, in the case of a new name, the jurisdictions
in which such new name shall be used and providing such other information in
connection therewith as the Collateral Agent may reasonably request, (ii) with
respect to such new name and/or new jurisdiction, it shall have taken all
action, reasonably satisfactory to the Collateral Agent, to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect, (iii)
at the request of the Collateral Agent, it shall have furnished an opinion of
counsel reasonably acceptable to the Collateral Agent as to the continued
perfection of the security interest granted hereby, which opinions shall be
deemed acceptable to the Collateral Agent if substantially similar to the
perfection opinions given in the legal opinions on the Initial Borrowing Date,
and (iv) the Collateral Agent shall have received evidence that all other
actions (including, without limitation, the payment of all filing fees and
taxes, if any, payable in connection with such filings) have been taken, in
order to perfect (and maintain the perfection and priority of) the first
priority security interest granted hereby.
<PAGE>
5
2.7 Recourse. This Agreement is made with full recourse to such
Assignor and pursuant to and upon all the warranties, representations,
covenants, and agreements on the part of such Assignor contained herein, in the
Interest Rate Protection Agreements and otherwise in writing in connection
herewith or therewith.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1 Additional Representations and Warranties. As of the time when
each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all material records, papers
and documents relating thereto (if any) are genuine and in all material respects
what they purport to be, and that all papers and documents (if any) relating
thereto (i) will be the only original writings evidencing and embodying such
obligation of the account debtor named therein (other than copies created for
general accounting purposes) and (ii) will, to the knowledge of such Assignor,
evidence true and valid obligations of the account debtor named therein.
3.2 Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense satisfactory and complete records of its Receivables
and Contracts, and such Assignor will make the same available to the Collateral
Agent for inspection, at such Assignor's own cost and expense, at any and all
reasonable times upon reasonable prior notice (or at any time upon Noticed Event
of Default) to such Assignor. If the Collateral Agent so directs, upon the
occurrence and during the continuance of an Event of Default, such Assignor
shall legend, in form and manner reasonably satisfactory to the Collateral
Agent, the Receivables and Contracts, as well as books, records and documents of
such Assignor evidencing or pertaining to such Receivables with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.
3.3 Modification of Terms; etc. No Assignor shall rescind or cancel
any indebtedness evidenced by any Receivable or under any Contract, or modify
any term thereof or make any adjustment with respect thereto, or extend or renew
the same, or compromise or settle any material dispute, claim, suit or legal
proceeding relating thereto, or sell any Receivable or Contract, or interest
therein, in any manner which could reasonably be expected to adversely affect
the value thereof, without the prior written consent of the Collateral Agent,
except (i) as permitted by Section 3.4 hereof and (ii) in accordance with such
Assignor's reasonable business practices. Each Assignor will duly fulfill all
obligations on its part to be fulfilled under or in connection with all material
Receivables and Contracts and will do nothing to impair the rights of the
Collateral Agent in the Receivables or Contracts.
3.4 Collection. Each Assignor shall endeavor in accordance with
reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable or Contract,
and
<PAGE>
6
apply forthwith upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Receivable or under such Contract, except that, so
long as no Event of Default is then in existence in respect of which the
Collateral Agent has given notice that this exception is no longer applicable,
any Assignor may allow in the ordinary course of business as adjustments to
amounts owing under its Receivables and Contracts (i) an extension or renewal of
the time or times of payment, or settlement for less than the total unpaid
balance, which such Assignor finds appropriate in accordance with sound business
judgment and (ii) a refund or credit due as a result of returned or damaged
merchandise or improperly performed services. The reasonable costs and expenses
(including, without limitation, attorneys' fees) of collection, whether incurred
by any Assignor or the Collateral Agent, shall be borne by such Assignor.
3.5 Direction to Account Debtors; etc. Upon the occurrence and
during the continuance of an Event of Default, and if the Collateral Agent so
directs any Assignor, to the extent permitted by applicable law, such Assignor
agrees (x) to cause all payments on account of the Receivables and Contracts to
be made directly to the Cash Collateral Account, (y) that the Collateral Agent
may, at its option, directly notify the obligors with respect to any Receivables
and/or under any Contracts to make payments with respect thereto as provided in
preceding clause (x) and (z) that the Collateral Agent may enforce collection of
any Receivables or Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as the Assignor. The
Collateral Agent may apply any or all amounts then in, or thereafter deposited
in, the Cash Collateral Account in the manner provided in Section 7.4 of this
Agreement. The reasonable costs and expenses (including reasonable attorneys'
fees) of collection, whether incurred by any Assignor or the Collateral Agent,
shall be borne by such Assignor. The Collateral Agent shall deliver a copy of
each notice referred to in the preceding clause (y) to the relevant Assignor;
provided that, the failure of the Collateral Agent to so notify such Assignor
shall not affect the effectiveness of such notice or the other rights of the
Collateral Agent created by this Section 3.5.
3.6 Instruments. If any Assignor owns or acquires any Instrument,
such Assignor will within 10 Business Days notify the Collateral Agent thereof,
and upon request by the Collateral Agent promptly deliver such Instrument (other
than checks payable to any Assignor and processed in the ordinary course of
business) to the Collateral Agent appropriately endorsed to the order of the
Collateral Agent as further security hereunder.
3.7 Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require to give effect to the purposes of this Agreement.
<PAGE>
7
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1 Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of the Patent and
Trademark Office registrations, and applications for registrations, of the Marks
listed in Annex D, Part I attached hereto and that Annex D, Part I lists all the
United States Patent and Trademark Office, or the equivalent office thereof in
any foreign country, registrations and applications for registrations, of the
Marks that such Assignor now owns or uses in connection with its business. Each
Assignor represents and warrants that except with respect to those licensed
marks set forth in Annex D, Part I, it owns, is licensed to use or otherwise has
the right to use all material Marks that it uses. Each Assignor further warrants
that it is aware of no third party claim that any aspect of such Assignor's
present or contemplated business operations infringes or will infringe any
material Mark. Except as set forth on Annex D, Part II, each Assignor represents
and warrants that it is the true and lawful owner of or otherwise has the right
to use all U.S. trademark registrations and applications listed in Annex D, Part
I hereto and that said registrations are valid, subsisting, have not been
cancelled and that such Assignor is not aware of any third-party claim that any
of said registrations or applications for registration with respect to a Mark is
invalid or unenforceable or is not aware that there is any reason that any of
said registrations or applications for registration with respect to a Mark is
invalid or unenforceable. Each Assignor hereby grants to the Collateral Agent an
absolute power of attorney to sign, upon the occurrence and during the
continuance of a Noticed Event of Default, any document which may be required by
the United States Patent and Trademark Office in order to effect an absolute
assignment of all right, title and interest in each Mark owned by an Assignor,
and record the same.
4.2 Licenses and Assignments. Subject to the provisions of Sections
4.4 and 4.5, each Assignor hereby agrees not to divest itself of any right under
a Mark other than in the ordinary course of business absent prior written
approval of the Collateral Agent.
4.3 Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who may be infringing or otherwise violating in any material respect
any of such Assignor's rights in and to any Mark material to the operation of
its business, or with respect to any party claiming that such Assignor's use of
any Mark material to the operation of its business violates in any material
respect any property right of that party. Each Assignor further agrees, to
prosecute diligently any Person infringing any Mark owned by such Assignor and
material to the operation of the business in a manner consistent with its past
practice and in accordance with reasonable business practices.
4.4 Preservation of Marks. Each Assignor agrees to use or license
the use of its Marks in interstate commerce during the time in which this
Agreement is in effect, sufficiently to preserve such Marks as trademarks or
service marks registered under the laws of the United States or the relevant
foreign jurisdiction; provided, that no Assignor shall be obligated to preserve
any Mark in the event such Assignor determines, in its reasonable business
judgment, that the preservation of such Mark is no longer necessary in the
conduct of its business.
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4.5 Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required to maintain trademark
registrations, including but not limited to affidavits of use and applications
for renewals of registration in the United States Patent and Trademark Office or
equivalent governmental agency in any foreign jurisdiction for all of its Marks
(excluding unregistered Marks), and shall pay all fees and disbursements in
connection therewith, and shall not abandon any such filing of affidavit of use
or any such application of renewal prior to the exhaustion of all administrative
and judicial remedies without prior written consent of the Collateral Agent;
provided, that no Assignor shall be obligated to maintain any Mark or prosecute
any such application for registration in the event that such Assignor
determines, in its reasonable business judgment, that such application is no
longer necessary in the conduct of its business.
4.6 Future Registered Marks. If any Mark registration issues
hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office or equivalent
governmental agency in any foreign jurisdiction, within thirty (30) days of
receipt of such registration such Assignor shall deliver a copy of such
registration certificate, and a confirmatory grant of security in such Mark to
the Collateral Agent hereunder, the form of such confirmatory grant to be
substantially the same as the form hereof.
4.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks, together with all
trademark rights and rights of protection to the same, vested, in which event
such rights, title and interest shall immediately vest, in the Collateral Agent
for the benefit of the Secured Creditors pursuant to a trademark security
agreement in form and substance satisfactory to the Collateral Agent, executed
by such Assignor and filed, pursuant to which all of such Assignor's rights,
title and interest in and to the Marks are assigned to the Collateral Agent for
the benefit of the Secured Creditors; (ii) take and use or sell the Marks and
the goodwill of such Assignor's business symbolized by the Marks and the right
to carry on the business and use the assets of such Assignor in connection with
which the Marks have been used; and (iii) direct such Assignor to refrain, in
which event such Assignor shall refrain, from using the Marks in any manner
whatsoever, directly or indirectly, and, if requested by the Collateral Agent,
change such Assignor's corporate name to eliminate therefrom any use of any Mark
and execute such other and further documents that the Collateral Agent may
request to further confirm this and to transfer ownership of the Marks and
registrations and any pending trademark application in the United States Patent
and Trademark Office or any equivalent governmental agency or office in any
foreign jurisdiction to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
TRADE SECRET RIGHTS, PATENTS AND COPYRIGHTS
5.1 Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner or licensee of all
rights in (i) all Trade Secret Rights, (ii) the Patents of such Assignor listed
in Annex E attached hereto and that said Patents constitute all the
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9
patents and applications for patents that such Assignor now owns and (iii) the
Copyrights of such Assignor listed in Annex F attached hereto and that said
Copyrights constitute all the registered copyrights and applications for
copyright registrations that such Assignor now owns. Each Assignor further
warrants that it is aware of no third party claim that any aspect of such
Assignor's present or contemplated business operations infringes or will
infringe any material patent or any material copyright or that such Assignor has
misappropriated any material Trade Secret Rights.
5.2 Licenses and Assignments. Subject to the provisions of Sections
5.4 and 5.5, each Assignor hereby agrees not to divest itself of any right under
a Patent or Copyright other than in the ordinary course of business absent prior
written approval of the Collateral Agent.
5.3 Infringements. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement or other
violation of such Assignor's rights in any Patent or Copyright, in each case
material to its business, or with respect to any claim that the practice of any
Patent or the use of any Copyright, in each case material to its business,
violates in any material respect any property right of a third party or with
respect to any misappropriation of any Trade Secret Right material to its
business or any claim that the practice of any Trade Secret Right material to
its business violates any property right of a third party. To the extent
consistent with its past practice and in accordance with reasonable business
practices, each Assignor further agrees, to prosecute diligently any Person
infringing any Patent or Copyright owned by such Assignor or any Person
misappropriating any Trade Secret Right in each case if such patent, copyright
or Trade Secret Right is material to its business.
5.4 Maintenance of Patents or Copyrights. At its own expense, each
Assignor shall make timely payment of all post-issuance fees required to
maintain in force rights under each of its Patents and Copyrights; provided,
that no Assignor shall be obligated to maintain any Patent in the event such
Assignor determines, in its reasonable business judgment, that the maintenance
of such Patent is no longer necessary in the conduct of its business.
5.5 Prosecution of Patent or Copyright Application. At its own
expense, each Assignor shall diligently prosecute all applications for (i)
Patents of such Assignor listed on Annex E hereto and (ii) Copyrights listed on
Annex F hereto, and, in each case, shall not abandon any such application prior
to exhaustion of all administrative and judicial remedies, absent written
consent of the Collateral Agent, provided that no Assignor shall be obligated to
maintain any Patent or Copyright in the event such Assignor reasonably
determines it is no longer necessary in the conduct of its business.
5.6 Other Patents and Copyrights. Within thirty (30) days of the
acquisition or issuance of a Patent or Copyright registration, or of filing of
an application for a Patent or Copyright registration, the relevant Assignor
shall deliver to the Collateral Agent a copy of said Patent or Copyright
registration, as the case may be, with a confirmatory grant of security as to
such Patent or Copyright, as the case may be hereunder, the form of such
confirmatory grant to be substantially the same as the form hereof; provided,
that no Assignor shall be obligated to prosecute any application in the event
such Assignor determines, in its reasonable business judgment, that such
application is no longer necessary in the conduct of its business.
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10
5.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the relevant Assignor take any or
all of the following actions: (i) declare the entire right, title and interest
of such Assignor in each of the Patents and Copyrights vested, in which event
such right, title and interest shall immediately vest in the Collateral Agent
for the benefit of the Secured Creditors, pursuant to a patent security
agreement or copyright security agreement, as the case may be, in form and
substance satisfactory to the Collateral Agent, executed by such Assignor and
filed on the date hereof, pursuant to which all of such Assignor's right, title,
and interest to such Patents and Copyrights are assigned to the Collateral Agent
for the benefit of the Secured Creditors; (ii) take and practice, use or sell
the Patents and Copyrights; (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such other
and further documents as the Collateral Agent may request further to confirm
this and to transfer ownership of the Patents and Copyrights to the Collateral
Agent for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1 Protection of Collateral Agent's Security. Each Assignor will at
all times keep its Inventory and Equipment insured in favor of the Collateral
Agent, at its own expense, to the extent required by the Credit Agreement;
copies of all policies or certificates with respect to such insurance (i) shall
be endorsed to the Collateral Agent's reasonable satisfaction for the benefit of
the Collateral Agent (including, without limitation, by naming the Collateral
Agent as additional insured or additional loss payee) and (ii) shall state that
such insurance policies shall not be cancelled or materially revised without at
least 30 days' (or at least 10 days' in the case of nonpayment of premium) prior
written notice thereof by the insurer to the Collateral Agent. If any Assignor
shall fail to insure such Inventory or Equipment to the extent required by the
Credit Agreement, or if any Assignor shall fail to so endorse copies of all
policies or certificates with respect thereto, the Collateral Agent shall have
the right (but shall be under no obligation), upon prior written notice to such
Assignor, to procure such insurance and such Assignor agrees to reimburse the
Collateral Agent for all reasonable costs and expenses of procuring such
insurance. Except as otherwise provided in the Credit Agreement, the Collateral
Agent shall apply any proceeds of such insurance required after an Event of
Default in accordance with Section 7.4 (it being understood that so long as no
Event of Default has occurred and is continuing, the Collateral Agent will
release any interest it has in the proceeds of any casualty insurance to the
Assignors for the repair or replacement of the asset damaged). Each Assignor
assumes all liability and responsibility in connection with the Collateral
acquired by it and the liability of such Assignor to pay its Obligations shall
in no way be affected or diminished by reason of the fact that such Collateral
may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable
to such Assignor.
6.2 Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the
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11
Collateral and other property or rights covered by the security interest hereby
granted, which the Collateral Agent deems reasonably appropriate or advisable to
perfect, preserve or protect its security interest in the Collateral.
6.3 Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form acceptable to
the Collateral Agent, as the Collateral Agent may from time to time reasonably
request or as are reasonably necessary or desirable in the reasonable opinion of
the Collateral Agent to establish and maintain a valid, enforceable, first
priority perfected security interest in the Collateral (subject to the Permitted
Liens) as provided herein and the other rights and security contemplated hereby
all in accordance with the Uniform Commercial Code as enacted in any and all
relevant jurisdictions or any other relevant law. Each Assignor will pay any
applicable filing fees, recordation taxes and related expenses. Each Assignor
hereby authorizes the Collateral Agent to file any such financing statements
without the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1 Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if a Noticed Event of Default shall have occurred and be
continuing, then and in every such case, subject to any mandatory requirements
of applicable law then in effect, the Collateral Agent, in addition to any
rights now or hereafter existing under applicable law, shall have all rights as
a secured creditor under the Uniform Commercial Code in all relevant
jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument
or other obligation (including, without limitation, the Receivables and
the Contracts) constituting the Collateral to make any payment required by
the terms of such instrument or agreement directly to the Collateral
Agent;
(iii) withdraw all moneys, securities and other instruments in the
Cash Collateral Account for application to the Obligations in accordance
with Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate, or direct such Assignor to
sell, assign or otherwise liquidate, any or all of the Collateral or any
part thereof in accordance with Section 7.2 hereof, and take possession of
the proceeds of any such sale or liquidation;
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(v) take possession of the Collateral or any part thereof, by
directing such Assignor in writing to deliver the same to the Collateral
Agent at any place or places reasonably designated by the Collateral
Agent, in which event such Assignor shall at its own expense:
(A) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there delivered to
the Collateral Agent,
(B) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action by
the Collateral Agent as provided in Section 7.2, and
(C) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good
condition; and
(vi) license or sublicense whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for
such term and on such conditions and in such manner as the Collateral
Agent shall in its sole judgment determine;
it being understood that such Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Administrative Agent or the Collateral Agent, in each case acting upon
the instructions of the Required Banks (or, after the date on which all Credit
Document Obligations have been paid in full, the holders of at least the
majority of the outstanding Interest Rate Protection or Other Hedging
Obligations, to the extent same remain outstanding) and that no other Secured
Creditor shall have any right individually to seek to enforce or to enforce this
Agreement or to realize upon the security to be granted hereby, it being
understood and agreed that such rights and remedies may be exercised by the
Administrative Agent or the Collateral Agent or the holders of at least a
majority of the outstanding Interest Rate Protection or Other Hedging
Obligations, as the case maybe, for the benefit of the Secured Creditors upon
the terms of this Agreement.
7.2 Remedies; Disposition of the Collateral. Upon the occurrence and
continuance of a Noticed Event of Default, any Collateral repossessed by the
Collateral Agent under or pursuant to Section 7.1 and any other Collateral
whether or not so repossessed by the Collateral Agent, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an entirety,
and without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Collateral Agent may, in compliance with any
mandatory requirements of applicable law, determine to be commercially
reasonable. Any of the Collateral may be sold, leased or otherwise disposed of,
in the condition in which the same existed when taken by the Collateral Agent or
after any overhaul or repair which the Collateral Agent shall determine to be
commercially reasonable. Any such disposition which shall be a private sale or
other private proceedings permitted by such requirements shall be made upon not
less than ten (10) days' written notice to the relevant Assignor specifying the
time at which such disposition is to be made and the intended sale price or
other consideration
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13
therefor, and shall be subject, for the ten (10) days after the giving of such
notice, to the right of the relevant Assignor or any nominee of such Assignor to
acquire the Collateral involved at a price or for such other consideration at
least equal to the intended sale price or other consideration so specified. Any
such disposition which shall be a public sale permitted by such requirements
shall be made upon not less than ten (10) days' written notice to the relevant
Assignor specifying the time and place of such sale and, in the absence of
applicable requirements of law, shall be by public auction (which may, at the
Collateral Agent's option, be subject to reserve), after publication of notice
of such auction not less than 10 days prior thereto in two newspapers in general
circulation in the City of New York. To the extent permitted by any such
requirement of law, the Collateral Agent on behalf of the Secured Creditors (or
certain of them) may bid for and become the purchaser (by bidding in the
Obligations or otherwise) of the Collateral or any item thereof, offered for
sale in accordance with this Section without accountability to the relevant
Assignor (except to the extent of surplus money received as provided in Section
7.4). If, under mandatory requirements of applicable law, the Collateral Agent
shall be required to make disposition of the Collateral within a period of time
which does not permit the giving of notice to the relevant Assignor as
hereinabove specified, the Collateral Agent need give such Assignor only such
notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law.
7.3 Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and such Assignor hereby further waives, to the extent
permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or wilful misconduct;
(ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral hereunder shall operate to divest all right, title, interest,
claim and demand, either at law or in equity, of the relevant Assignor therein
and thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
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7.4 Application of Proceeds. (a) All moneys collected by the
Collateral Agent (or, to the extent the Pledge Agreement or the Mortgages
require proceeds of collateral thereunder to be applied in accordance with the
provisions of this Agreement, the Pledgee or Mortgagee thereunder) upon any sale
or other disposition of the Collateral hereunder, together with all other moneys
received by the Collateral Agent hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing to the Collateral
Agent or Pledgee resulting from their acting as Collateral Agent or
Pledgee, respectively;
(ii) second, to the extent proceeds remain after the application
pursuant to preceding clause (i), an amount equal to the outstanding
Obligations to the Secured Creditors shall be paid to the Secured
Creditors as provided in Section 7.4(d) with each Secured Creditor
receiving an amount equal to its outstanding Obligations or, if the
proceeds are insufficient to pay in full all such Obligations, its Pro
Rata Share of the amount remaining to be distributed to be applied, with
respect to the Credit Document Obligations, firstly to the payment of
interest in respect of the unpaid principal amount of Loans outstanding,
secondly to the payment of principal of Loans outstanding, then to the
other Credit Document Obligations; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii) to the relevant Assignor
or, to the extent directed by such Assignor or a court of competent
jurisdiction, to whomever may be lawfully entitled to receive such
surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount, the
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then outstanding amount of the relevant Obligations owed such Secured
Creditor and the denominator of which is the then outstanding amount of all
Obligations.
(c) All payments required to be made to the (i) Bank Creditors
hereunder shall be made to the Agent for the account of the respective Bank
Creditors and (ii) Interest Rate Creditors hereunder shall be made to the paying
agent under the applicable Interest Rate Protection Agreement or Other Hedging
Agreement or, in the case of Interest Rate Protection Agreements or Other
Hedging Agreements without a paying agent, directly to the applicable Other
Creditor.
(d) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent for a determination (which the Administrative Agent agrees
to provide upon request to the Collateral Agent) of the outstanding Credit
Document Obligations and (ii) upon any Other Creditor for a determination (which
each Other Creditor agrees to provide upon request to the Collateral Agent) of
the outstanding Interest Rate Protection or Other Hedging Obligations owed to
such Other Creditor. Unless it has actual knowledge (including by way of written
notice from a Secured Creditor) to the contrary, the Administrative Agent under
the Credit Agreement, in furnishing information pursuant to the preceding
sentence, and the Collateral Agent, in acting hereunder, shall be entitled to
assume that (x) no Credit Document Obligations other than principal, interest
and regularly accruing fees
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are owing to any Bank Creditor and (y) no Interest Rate Protection Agreements or
Interest Rate Protection or Other Hedging Obligations with respect thereto are
in existence.
(e) It is understood that each Assignor shall remain liable to the
extent of any deficiency between (x) the amount of the Obligations for which it
is liable directly or as a Guarantor that are satisfied with proceeds of the
Collateral and (y) the aggregate outstanding amount of such Obligations.
7.5 Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, any
Interest Rate Protection Agreement or Other Hedging Agreement or the other
Credit Documents or now or hereafter existing at law or in equity, or by statute
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Collateral Agent. All
such rights, powers and remedies shall be cumulative and the exercise or the
beginning of exercise of one shall not be deemed a waiver of the right to
exercise of any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. In the event that the Collateral Agent shall bring any suit to enforce
any of its rights hereunder and shall be entitled to judgment, then in such suit
the Collateral Agent may recover expenses, including attorneys' fees, and the
amounts thereof shall be included in such judgment.
7.6 Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted (except to the
extent of a determination adverse to the Collateral Agent in such a proceeding).
ARTICLE VIII
INDEMNITY
8.1 Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each Secured Creditor and
its and its affiliates' respective successors, permitted assigns, employees,
agents and servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
suits, judgments and any and all costs and expenses (including reasonable
attorneys' fees and expenses) (for the purposes of this Section 8.1 the
foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising
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out of this Agreement, any Interest Rate Protection Agreement or Other Hedging
Agreement, any other Credit Document or the documents executed in connection
herewith and therewith or in any other way connected with the enforcement of any
of the terms of, or the preservation of any rights hereunder or thereunder, or
in any way relating to or arising out of the manufacture, ownership, ordering,
purchase, delivery, control, acceptance, lease, financing, possession,
operation, condition, sale, return or other disposition, or use of the
Collateral (including, without limitation, latent or other defects, whether or
not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for expenses, losses, damages or liabilities to
the extent caused by the gross negligence or wilful misconduct of such
Indemnitee. Each Assignor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, loss, damage, penalty, claim,
demand, action, judgment or suit, such Assignor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its reasonable efforts to
promptly notify such Assignor of any such assertion of which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 8.1(a), each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for (if the Collateral Agent shall have incurred fees, costs or expenses
because such Assignor shall have failed to comply with its obligations under
this Agreement or any Credit Document), any and all reasonable fees, costs and
expenses of whatever kind or nature incurred in connection with the creation,
preservation or protection of the Collateral Agent's Liens on, and security
interest in, the Collateral, including, without limitation, all fees and taxes
in connection with the recording or filing of instruments and documents in
public offices, payment or discharge of any taxes or Liens upon or in respect of
the Collateral, premiums for insurance with respect to the Collateral and all
other reasonable fees, costs and expenses in connection with protecting,
maintaining or preserving the Collateral and the Collateral Agent's interest
therein, whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or relating to the
Collateral.
(c) Without limiting the application of Section 8.1(a) or (b)
hereof, each Assignor jointly and severally agrees to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any material misrepresentation by an Assignor in this Agreement, or in
any statement or writing contemplated by or made or delivered pursuant to or in
connection with this Agreement.
(d) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, each Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements or
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Other Hedging Agreements and the payment of all of the other Obligations and
notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified unless
the context otherwise requires. Such definitions shall be equally applicable to
the singular and plural forms of the terms defined.
"Administrative Agent" shall have the meaning provided in the first
WHEREAS clause of this Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning specified in the first paragraph
of this Agreement.
"Banks" shall have the meaning provided in the first WHEREAS clause
of this Agreement.
"Bank Creditor" shall have the meaning provided in the first WHEREAS
clause of this Agreement.
"Borrower" shall have the meaning provided in the first WHEREAS
clause of this Agreement.
"Business Day" means any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law to close.
"Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with, and in the sole dominion and control of, the
Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Class" shall have the meaning provided in Section 10.2.
"Collateral" shall have the meaning provided in Section 1.1(a).
"Collateral Agent" shall have the meaning specified in the first
paragraph of this Agreement.
<PAGE>
18
"Contract Rights" shall mean all rights of an Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between an Assignor and one or
more additional parties (including, without limitation, any Interest Rate
Protection Agreement and related documents entered into in connection therewith)
to the extent the grant by an Assignor of a security interest pursuant to this
Agreement in its right, title and interest in any such contract is not
prohibited by such contract without the consent of any other party thereto or
would not give any other party to such contract the right to terminate its
obligations thereunder; provided, that the foregoing limitation shall not
affect, limit, restrict or impair the grant by an Assignor of a security
interest pursuant to this Agreement in any account or any money or other amounts
due or to become due under any such contract, agreement, instrument or
indenture.
"Copyrights" shall mean any United States or foreign copyright owned
by any Assignor now or hereafter, including any registration of any copyrights,
in the United States Copyright Office or the equivalent thereof in any foreign
country, as well as any application for a United States or foreign copyright
registration now or hereafter made with the United States Copyright Office or
the equivalent thereof in any foreign jurisdiction by any Assignor.
"Credit Agreement" shall have the meaning provided in the first
WHEREAS clause of this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Documents" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Equipment" shall mean any "equipment," as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, fixtures now
or hereafter owned by such Assignor and any and all additions, substitutions and
replacements of any of the foregoing, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto but excluding Equipment constituting vehicles and Equipment to
the extent it is subject to a Permitted Lien and the terms of the Indebtedness
securing such Permitted Liens prohibits assignment or granting of a security
interest in such Assignor's rights and obligations thereunder.
"Event of Default" shall mean any Event of Default under the Credit
Agreement or any payment default, after any applicable grace period, under any
Interest Rate Protection Agreement.
"General Intangibles" shall have the meaning assigned that term
under the Uniform Commercial Code as in effect on the date hereof in the State
of New York but excluding these General Intangibles to the extent the terms
thereof expressly prohibit the assignment of, or the granting of a security
interest in, such Assignor's rights and obligations thereunder.
<PAGE>
19
"Goods" shall have the meaning assigned that term under the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1.
"Instrument" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Interest Rate Creditors" shall have the meaning provided in the
preamble to this Agreement.
"Interest Rate Protection or Other Hedging Obligations" shall have
the meaning provided in the definition of "Obligations" in this Article IX.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through
work-in-process to finished goods -- and all products and proceeds of whatever
sort and wherever located and any portion thereof which may be returned,
rejected, reclaimed or repossessed by the Collateral Agent from any Assignor's
customers, and shall specifically include all "inventory" as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by any Assignor.
"Marks" shall mean all right, title and interest in and to any
United States or foreign trademarks, service marks and trade names now held or
hereafter acquired by any Assignor, including any registration or application
for registration of any trademarks and service marks now held or hereafter
acquired by an Assignor, which are registered in the United States Patent and
Trademark Office or the equivalent thereof in any State of the United States or
in any foreign country, as well as any unregistered marks used by any Assignor,
and any trade dress including logos, designs, company names, business names,
fictitious business names and other business identifiers used by any Assignor in
the United States or any foreign country.
"Noticed Event of Default" shall mean (i) an Event of Default with
respect to the Borrower under Section 9.05 of the Credit Agreement and (ii) any
other Event of Default in respect of which the Collateral Agent has given the
Borrower notice that such Event of Default constitutes a "Noticed Event of
Default."
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and indebtedness (including, without limitation, indemnities, fees
and interest thereon) of the Borrower and each Assignor owing to the Bank
Creditors, now existing or hereafter incurred under, arising out of or in
connection with any Credit Document and the due performance and compliance by
the Borrower and each Assignor with the terms of each such Credit Document,
including, without limitation, in the case of (x) Holdings, all obligations
under the Holdings Guaranty and (y) each Subsidiary Guarantor, all obligations
under the Subsidiary Guaranty (other than those in respect of Interest Rate
Protection Agreements and
<PAGE>
20
Other Hedging Agreements) (all such obligations and indebtedness under this
clause (i), except to the extent consisting of obligations or indebtedness with
respect to Interest Rate Protection Agreements, being herein collectively called
the "Credit Document Obligations"); (ii) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and indebtedness (including, without limitation, indemnities, fees
and interest thereon) of the Borrower and each Assignor owing to the Interest
Rate Creditors now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Protection Agreement or Other Hedging
Agreement including, without limitation, in the case of (x) Holdings, all
obligations under the Holdings Guaranty and (y) each Subsidiary Guarantor, all
obligations under the Subsidiary Guaranty, in each case in respect of Interest
Rate Protection Agreements or Other Hedging Agreements (all such obligations and
indebtedness under this clause (ii) being herein collectively called the
"Interest Rate Protection or Other Hedging Obligations"); (iii) any and all sums
advanced by the Collateral Agent in order to preserve the Collateral or preserve
its security interest in the Collateral; (iv) in the event of any proceeding for
the collection or enforcement of any indebtedness, obligations, or liabilities
referred to in clauses (i), (ii) and (iii) above, after an Event of Default
shall have occurred and be continuing, the reasonable expenses of re-taking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Collateral Agent of its
rights hereunder, together with reasonable attorneys' fees and court costs; and
(v) all amounts paid by any Indemnitee as to which such Indemnitee has the right
to reimbursement under Section 8.1 of this Agreement.
"Patents" shall mean any United States or foreign patent to which
any Assignor now or hereafter has title and any divisions or continuations
thereof, as well as any application for a United States or foreign patent now or
hereafter made by such Assignor.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of the
date hereof, among the Borrower, the other pledgors party thereto and the
Collateral Agent, as Pledgee.
"Pledgee" shall have the meaning provided in the Pledge Agreement.
"Proceeds" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect in the State of New York on the date hereof
or under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Agent or an Assignor from time to time with respect to
any of the Collateral, (ii) any and all payments (in any form whatsoever) made
or due and payable to an Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b)
of this Agreement.
"Receivables" shall mean any "account" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's
<PAGE>
21
rights to payment for goods sold or leased or services performed by such
Assignor, whether now in existence or arising from time to time hereafter,
including, without limitation, rights evidenced by an account, note, contract,
security agreement, chattel paper, or other evidence of indebtedness or
security, together with (a) all security pledged, assigned, hypothecated or
granted to or held by such Assignor to secure the foregoing, (b) all of any
Assignor's right, title and interest in and to any goods or services, the sale
of which gave rise thereto, (c) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (d) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all evidences of the filing of financing statements and
other statements and the registration of other instruments in connection
therewith and amendments thereto, notices to other creditors or secured parties,
and certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto and (h) all other writings
related in any way to the foregoing.
"Requisite Creditors" shall have the meaning provided in Section
10.2 of this Agreement.
"Secured Creditors" shall have the meaning provided in the second
WHEREAS clause of this Agreement.
"Interest Rate Protection Agreements" shall have the meaning
provided in the second WHEREAS clause of this Agreement.
"Trade Secret Rights" shall mean the rights of an Assignor in any
Trade Secret it holds.
"Trade Secrets" means any secretly held existing engineering and
other data, information, production procedures and other know-how relating to
the design, manufacture, assembly, installation, use, operation, marketing, sale
and servicing of any products or business of an Assignor worldwide whether
written or not written.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed:
(i) if to any Assignor, at its address contained in the Credit
Agreement (for the Borrower) or the Subsidiary Guaranty (for the other
Assignors);
<PAGE>
22
(ii) if to the Collateral Agent, at:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attn.: Patsy Hogan
Tel: (212) 250-5175
Fax: (212) 250-7218
(iii) if to any Bank, at such address as such Bank shall have
specified in the Credit Agreement;
(iv) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to the Assignors and the
Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
10.2 Waiver; Amendment. (a) None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Collateral Agent (with the consent of the
Required Banks or, to the extent required by Section 13.12 of the Credit
Agreement, all of the Banks) and each Assignor affected thereby (it being
understood that the addition or release of any Assignor hereunder shall not
constitute a change, waiver, modification or variance affecting any Assignor
other than the Borrower and the Assignor so added or released) provided that (i)
no such change, waiver, modification or variance shall be made to Section 7.4 or
this Section 10.2(a) without the consent of each Secured Creditor adversely
affected thereby, and (ii) any change, waiver, modification or variance
affecting the rights and benefits of a single Class of Secured Creditors (and
not all Secured Creditors in a like or similar manner) shall require the written
consent of the Requisite Creditors of such Class of Secured Creditors. For the
purpose of this Agreement, the term "Class" shall mean each class of Secured
Creditors, i.e., whether (x) the Bank Creditors as holders of the Credit
Document Obligations or (y) the Interest Rate Creditors as holders of the
Interest Rate Protection or Other Hedging Obligations. For the purpose of this
Agreement, the term "Requisite Creditors" of any Class shall mean each of (x)
with respect to the Credit Document Obligations, the Required Banks and (y) with
respect to the Interest Rate Protection or Other Hedging Obligations, the
holders of at least a majority of all obligations outstanding from time to time
under the Interest Rate Protection Agreements and Other Hedging Agreements.
(b) No delay on the part of the Collateral Agent in exercising any
of its rights, remedies, powers and privileges hereunder or partial or single
exercise thereof, shall constitute a waiver thereof. No notice to or demand on
any Assignor shall constitute a waiver of any of the rights of the Collateral
Agent to any other or further action without notice or demand to the extent such
action is permitted to be taken by the Collateral Agent without notice or demand
under the terms of this Agreement.
<PAGE>
23
10.3 Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, composition,
arrangement, adjustment, readjustment, dissolution, liquidation or other like
proceeding relating to any Assignor or any Subsidiary of any Assignor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not such Assignor shall have
notice or knowledge of any of the foregoing; (b) any exercise or non-exercise,
or any waiver, consent, extension, or indulgence of, or other action or inaction
under or in respect of any such agreement or instrument or this Agreement (other
than a waiver, consent or extension with respect to this Agreement in accordance
with its terms) any right, remedy, power or privilege under or in respect of
this Agreement or any other Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement except as specifically set forth in a
waiver granted pursuant to the restrictions of Section 10.2 hereof; or (c) any
renewal, extension, amendment or modification of, or addition or supplement to
or deletion from any other Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement or any security for any of the Obligations
(other than this Agreement in accordance with its terms), or any other
instrument or agreement referred to therein, or any assignment or transfer of
any thereof; whether or not any Assignor shall have notice or knowledge of any
of the foregoing; (d) any furnishing of any additional security to the
Collateral Agent or its assignee or any acceptance thereof or any release of any
security by the Collateral Agent or its assignee; (e) any limitation on any
party's liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof.. The rights and remedies of the Collateral Agent
herein provided are cumulative and not exclusive of any rights or remedies which
the Collateral Agent would otherwise have.
10.4 Successors and Assigns. This Agreement shall be binding upon
each Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and its successors and assigns. All agreements, statements,
representations and warranties made by such Assignor herein or in any
certificate or other instrument delivered by each Assignor or on its behalf
under this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement, the
other Credit Documents and the Interest Rate Protection Agreements and Other
Hedging Agreements regardless of any investigation made by the Secured Creditors
on their behalf.
10.5 Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
10.6 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.7 Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the
law of the State of New York.
<PAGE>
24
10.8 Assignors' Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of any Assignor under or with
respect to any Collateral.
10.9 Termination; Release. (a) After the termination of the Total
Commitment and all Interest Rate Protection Agreements and Other Hedging
Agreements, when no Note or Letter of Credit is outstanding and when all Loans
and other Obligations have been paid in full, this Agreement shall terminate
(provided that all indemnities set forth herein including, without limitation,
in Section 8.1 hereof shall survive such termination), and the Collateral Agent,
at the request and expense of the relevant Assignor, will execute and deliver to
such Assignor a proper instrument or instruments (including Uniform Commercial
Code termination statements on form UCC-3) acknowledging the satisfaction and
termination of this Agreement, and will duly assign, transfer and deliver to
such Assignor (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Collateral Agent and as has
not theretofore been sold or otherwise applied or released pursuant to this
Agreement.
(b) So long as no payment default on any of the Obligations is in
existence or would exist after the application of proceeds as provided below,
the Collateral Agent shall, at the request of the relevant Assignor, release any
or all of the Collateral, provided that (x) such release is permitted by the
terms of the Credit Agreement (it being agreed for such purposes that a release
will be deemed "permitted by the terms of the Credit Agreement" if the proposed
transaction constitutes an exception to Section 8.02 of the Credit Agreement) or
otherwise has been approved in writing by the Required Banks or all of the
Banks, if so required under the Credit Agreement and (y) the proceeds of such
Collateral are applied as required pursuant to the Credit Agreement or any
consent or waiver with respect thereto.
(c) At any time that the relevant Assignor desires that the
Collateral Agent take any action to give effect to any release of Collateral
pursuant to the foregoing Section 10.9(b), it shall deliver to the Collateral
Agent a certificate signed by an authorized officer describing the Collateral to
be sold and the relevant provision of Section 8.02 of the Credit Agreement on
which it is relying to make such sale. In the event that any part of the
Collateral is released as provided in the preceding paragraph (b), the
Collateral Agent, at the request and expense of such Assignor, will duly release
such Collateral and assign, transfer and deliver to such Assignor or its
designee (without recourse and without any representation or warranty) such of
the Collateral as is then being (or has been) so sold and as may be in the
possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement. The Collateral Agent shall have no liability
whatsoever to any Secured Creditor as the result of any release of Collateral by
it as permitted by this Section 10.9. Upon any release of Collateral pursuant to
Section 10.9(a) or (b), none of the Secured Creditors shall have any continuing
right or interest in such Collateral, or the proceeds thereof.
10.10 Collateral Agent. The Collateral Agent will hold in accordance
with this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed by the parties hereto and each
Secured Creditor, by accepting the benefits of
<PAGE>
25
this Agreement, acknowledges and agrees that the obligations of the Collateral
Agent as the holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Collateral Agent shall act hereunder
on the terms and conditions set forth in Section 11 of the Credit Agreement.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Collateral Agent.
10.12 Additional Assignors. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall become an
Assignor hereunder by executing a counterpart hereof and delivering the same to
the Collateral Agent.
* * *
<PAGE>
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
ADDRESS: CONSOLIDATED CONTAINER HOLDINGS
LLC
2515 McKinney Avenue
Suite 850, Lock Box 14 By:______________________________________
Dallas, Texas 75201 Name:
Title:
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
CONSOLIDATED CONTAINER COMPANY
2515 McKinney Avenue LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Holdings LLC, as
its sole Member and Manager
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499 By:______________________________________
Attention: Timothy Brasher Name:
Title:
REID PLASTICS GROUP LLC
2515 McKinney Avenue
Suite 850, Lock Box 14 By: Consolidated Container Company LLC, as
Dallas, Texas 75201 its Sole Member and Manager
Telephone No.: (214) 303-3400 By: Consolidated Container Holdings LLC, as
Facsimile No.: (214) 303-3499 its Sole Member and Manager
Attention: Timothy Brasher
By:______________________________________
Name:
Title:
2515 McKinney Avenue CONSOLIDATED CONTAINER CAPITAL,
Suite 850, Lock Box 14 INC.
Dallas, Texas 75201
By:______________________________________
Telephone No.: (214) 303-3400 Name:
Facsimile No.: (214) 303-3499 Title:
Attention: Timothy Brasher
<PAGE>
27
2515 McKinney Avenue PLASTICS CONTAINERS LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Company LLC
Telephone No.: (214) 303-3400 By: Consolidated Container Holdings LLC, as
Facsimile No.: (214) 303-3499 its Sole Member and Manager
Attention: Timothy Brasher
By:________________________________________
Name:
Title:
CONTINENTAL PLASTIC CONTAINERS LLC
2515 McKinney Avenue
Suite 850, Lock Box 14 By: Plastic Container LLC, as its Sole
Dallas, Texas 75201 Member and Manager
Telephone No.: (214) 303-3400 By: Consolidated Container Company LLC, as
Facsimile No.: (214) 303-3499 its Sole Member and Manager
Attention: Timothy Brasher
By: Consolidated Container Holdings LLC, as
its Sole Member and Manager
By:________________________________________
Name:
Title:
2515 McKinney Avenue
Suite 850, Lock Box 14 CONTINENTAL CARRIBEAN CONTAINERS
Dallas, Texas 75201 INC.
Telephone No.: (214) 303-3400 By:________________________________________
Facsimile No.: (214) 303-3499 Name:
Attention: Timothy Brasher Title:
<PAGE>
28
Acknowledged And Agreed:
BANKERS TRUST COMPANY,
as Collateral Agent
By__________________________________
Name:
Title:
<PAGE>
29
ANNEX A
TO
SECURITY AGREEMENT
LIST OF CHIEF EXECUTIVE OFFICES
Consolidated Container Holdings LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Consolidated Container Company LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Consolidated Container Capital, Inc.
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Reid Plastics Group LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Plastics Containers LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Continental Plastic Containers LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Continental Carribean Containers, Inc.
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
<PAGE>
ANNEX B
TO
SECURITY AGREEMENT
SCHEDULE OF EQUIPMENT AND INVENTORY LOCATIONS
A. REID:
Alabama
306 Industrial Park N, Demopolis (Marengo), Alabama 36732
701 East Jackson Street, P.O. Drawer 1247, Demopolis (Marengo), Alabama 36732
Arizona
4239 N. 39th Avenue, Phoenix (Maricopa), Arizona 85019
4245 N. 39th Avenue, Phoenix (Maricopa), Arizona 85019
California
75 W. Valpico Road, Tracy (San Joaquin), California 95376
211 N. Willow Avenue, City of Industry/La Puente (Los Angeles), California
91746
1201 E. Cerritos Avenue, Anaheim, California 92805
7300 Bolsa Avenue, Westminster, California 92683
5772 Jurupa Street, Ontario, California 91761
1070 Samuelson Street, City of Industry (Los Angeles), California 91748
17851 E. Railroad Street, Industry, California 91748
30020 Ahern Street, Union City, California 94587 (actual address is 2931 Faber
Street, Union City, California 94587)
21700 E. Copley Dr., Diamond Bar, California 91765
Connecticut
731 Main Street Building B2, Monroe, Connecticut 06468
Florida
4961 Distribution Drive, Tampa, Florida 33605
Illinois
7122 W. 62nd Street, Chicago, Illinois 60638 (actual address is 6155 So.
Harlem Avenue, Chicago, Illinois 60638)
<PAGE>
2
New Jersey
473 Mundet Place, Hillside, New Jersey 07205
New Mexico
800 20th Street NW, Albuquerque (Bernalillo), New Mexico 87104
Pennsylvania
1600-B Comet Drive, Lancaster, Pennsylvania 17601
Avenue B., Buncher Industrial District, Leetsdale, Pennsylvania 15056-1309
Texas
4525 Joseph Hardin Drive, Dallas, Texas 75236-1915
27815-A Highway Blvd., Katy, Texas 77494
Washington
6545 S. Glacier Place, Talkily, Washington 98188
4525 Fruit Valley Road, Vancouver (Clark), Washington 98660
GATE Warehouse No. 14, Port of Vancouver, Washington 98660
Canada
9200 Van Horn Way, Richmond, British Columbia, Canada V6X 1W3
1393 Border Street, Unit 8, Winnipeg, Manitoba, Canada R3H ON1
2679 Slough Street, Mississauga, Ontario L4T 1G2
Mexico
Av. Guillermo Gonzalez Camarena, No. 17, Parque Industrial Cuamatla,
Cuautitlan, Izealli, Estado de Mexico, C.P 54730
<PAGE>
3
B. SUIZA:
Arkansas
1234 North 7th Street, W. Memphis, Arkansas, 72303
5111 Rogers Avenue, Fort Smith, Arkansas, 72903
California
5000 Fulton Dr., Fairfield (Solano), California, 94585
1217 E. St. Gertrude Pl., Santa Ana, (Orange), California, 92707
1216 Madera Way, P.O. Box 7843, Riverside, California, 92503
Connecticut
3 Watrous Street, E. Hampton, Connecticut, 06424
4 Market Circle, Windsor, Connecticut, 06095
90 Pleasant Street, New Britain, Connecticut, 06051
401 Merritt, Norwalk, Connecticut 06853
433 Park Street, New Britain, CT
731 Main Street, Building 2, Monroe, CT
Florida
4330 20th Street, Zephyrhills, Florida, 33540
4711 34th Street North, St. Petersburg, Florida, 33714
5800 N.W. 74th Avenue, Miami, Florida, 33166
5200 Region Court, Lakeland, Florida, 33815
5225 Region Court, Lakeland, Florida, 33815
Georgia
155 King Mill Road, McDounough, Georgia, 30253
400 Indeco Dr., Suite A, Atlanta, Georgia, 30336
Illinois
2355 Touhy Avenue, Elk Grove, Illinois, 60007
2375 Touhy Avenue, Elk Grove, Illinois, 60007
2425 Touhy Avenue, Elk Grove, Illinois, 60007
2727 E. Higgins Rd., Elk Grove, Illinois, 60007
1300 NW Avenue, W. Chicago, Illinois, 60185
1400 NW Avenue, W. Chicago, Illinois, 60185
1201 West Lincoln, P.O. Box 626, Caseyville, Illinois, 62232
<PAGE>
4
Kansas
2600 E 4th P.O. Box 429, Hutchinson, Kansas, 67504-0429
11725 W. 85th Street, Lenexa, Kansas, 66214
Kentucky
6300 Strawberry Lane, Louisville (Jefferson), Kentucky, 40214
Louisiana
2410 Gordon Avenue, Monroe, Louisiana, 71202
303 Frontage Road, I-55, Kentwood, Louisiana, 70444
Massachusetts
1199 W. Central Street, Franklin, Massachusetts, 02038
626 Lynn Way, Lynn, Massachusetts, 01905
1 D'Angelo Drive, Marlborough, Massachusetts, 01752
1201 W. Central Street, Franklin, Massachusetts, 02038
Maryland
7100 E. Baltimore St., Baltimore, (Baltimore -Independent City), Maryland,
21224
Maine
P.O. Box 576, (off Route 122), Poland Springs, Maine, 04274
Nebraska
8420 West Dodge Road, Omaha, Nebraska 68114
New Hampshire
New Hampshire Route 111, Hampstead (Rockingham), New Hampshire, 03841
New Jersey
Rt. 130, Cumberland Blvd., Burlington, New Jersey, 08016
26 Slater Drive, Elizabeth (Union), New Jersey, 07206
4 Pleasant Hill Road, Cranbury (Middlesex), New Jersey, 08512
170 Circle Drive North, Piscataway, New Jersey 08854
1402 Pleasant Hill, Monroe, NJ
<PAGE>
5
New York
18 Champeney Terrace, Rochester Monroe, New York, 14605
504 3rd Ave. Extension, Rensselaer, New York, 12144
14 Hall Street, Batavia, New York, 14020
268 North Union Street, Rochester, New York 14605
200 Public Marketing Building, Rochester, New York 14609
North Carolina
2030 East Market Street, Greensboro, North Carolina, 27401
Ohio
95 W. Cresentville Rd., Springdale, Ohio, 45246
1917 Joyce Avenue, Columbus, Ohio, 43228
4015 Executive Park Drive, #226, Cincinnati, Ohio 45241
Mostelter & Kemper Roads, Cincinnati, Ohio 45241
435 Roush Road, Lima, Ohio 45801
Pennsylvania
405 Nestles Way, Breinigsville, Pennsylvania, 18031
P.O. Box 147, Kelton, Pennsylvania, 19346
6831 Ruppsville Road, Allentown, Pennsylvania, 18106
910 Seventh Avenue, Berwick (Columbia), Pennsylvania, 18603
15 Mineral Street, Oil City (Venango), Pennsylvania, 16301
15 Lightner Road, York, Pennsylvania, 17404
601 Seldon Avenue, Verona, Pennsylvania, 15147
Grove Street, South Croton Ave, P.O. Box 230, New Castle, Pennsylvania, 16103
1600-B Cloister Drive, Lancaster, Pennsylvania, 17601
Jennersville Industrial Building, Penn Township, Pennsylvania 15632
Texas
3405 Roy Orr Blvd., Grand Prairie, Texas, 75050
900 E Semond, P.O. Box 932, Conroe, Texas, 77305
6831 Silsbee Road, Houston, Texas, 77033
5651 Gateway Freeway, Ft. Worth, Texas, 76178
4201 Hwy 75 S.,Sherman, Texas, 75090
2515 Mc Kinney Avenue, Suite 850, Dallas, Texas, 75201
7198 Mykawa Street, Houston, Texas 77033
7300 Mykawa Street, Houston, Texas 77033
654 East North Belt, Houston, Texas 77060
2502 I-North, Woodlands, Texas 77380
<PAGE>
6
Virginia
1505 Robinwood Lane, P.O. Box 4754, Richmond, Virginia, 23220
8258 Richford Road, Mechanicville, Virginia
West Virginia
2800 Congo Road, Newell, West Virginia, 26050
Puerto Rico
Avenida Parque Central 1000, Parque Industrial Bairoa,Caguas, Puerto Rico,
00725
<PAGE>
ANNEX C
TO
SECURITY AGREEMENT
SCHEDULE OF TRADE AND FICTITIOUS NAMES
1. REID:
Juice Tree
Crystal Clear
Fast Flow
Propak California
Propak California Company
Stewart Walker Plastics
Stewart Walker Company
Reid Plastics
2. Consolidated Container Company LLC:
Quality Containers
double r enterprises, a division of Franklin Plastics, Inc.
California Plastics
Contech Connecticut
Contech New Hampshire New Jersey Plastics, Inc.
Contech New Jersey North Carolina Plastics, Inc.
Florence Plastics Richmond Container, Inc.
Fort Worth Plastics Sherman Plastics, Inc.
Texas State Plastics Vanguard Manufacturing, Inc.
Gulf Coast Plastics
Miami Plastics
Monroe Plastics
Hartford Plastics
Kansas State Plastics
Ocean Park Plastics
West Central Plastics
New York Plastics
Double RR New Castle
Double RR Verona
Liquitane Batavia
Liquitane Rochester
Liquitane Berwick
Ohio State Container
Allentown Plastics
Atlanta Container, Inc.
Chester County Container Corporation
First Capital Plastics, Inc.
Franklin Plastics, Inc.
Illinois Plastics, Inc.
<PAGE>
8
Kentwood Plastics, Inc.
Maine Plastics, Inc.
Marlborough Plastics, Inc.
Middlesex Plastics, Inc.
<PAGE>
ANNEX D
TO
SECURITY AGREEMENT
SCHEDULE OF MARKS
REID PLASTICS GROUP LLC
REGISTERED TRADEMARKS
DOMESTIC
DOCKET REGISTERED REGISTERED
# # DATE TITLE EXPIRES
- ------ ---------- ---------- ----- -------
135/58 943,092 09-19-72 VALVE AND DESIGN 09-19-92
151/83 1,121,793 07-10-79 FAST FLOW 07-10-99
151/84 1,110,051 12-26-78 FF 12-26-98
153/157 1,148,958 03-24-81 AQUALITE 03-24-2001
153/158 1,228,506 02-22-83 CRADLE-KRATE 02-22-2003
155/79 1,160,058 07-07-81 6-PAK 07-07-2001
155/80 1,160,057 07-07-81 SUPER SIX 07-07-2001
163/64 1,294,331 09-11-84 GO WITH THE FLOW 09-11-2004
163/105 1,292,890 09-04-84 CRADLE-KLIP 09-04-2004
163/106 1,336,692 05-21-85 SANI-SEAL
163/107 1,292,059 08-28-84 EZ-FAST FLOW
163/108 1,307,920 12-04-84 TRI-AIR
167/29 1,346,243 07-02-85 AQUATOTE 07-02-2005
167/030 1,336,693 05-21-85 TOP-CAP
175/134 1,579,954 01-30-90 VALVE (design only) 01-30-2000
221/016 1,669,487 12-24-91 CRYSTAL CLEAR
(Assigned to Reid 6-13-95)
TM9,541 10-26-90 CRYSTAL AND DESIGN
(Registered in NJ)
US "JUICE TREE" DESIGN Cancelled on
1,331,704 3-11-59 TRADEMARK 11/19/91
<PAGE>
2
REID PLASTICS GROUP LLC
REGISTERED TRADEMARKS
FOREIGN
<TABLE>
<CAPTION>
REGISTRATION REGISTRATION RENEWAL
DOCKET # APPLICANT COUNTRY MARK NO. DATE DATE
- -------- --------- ------- ---- --- ---- ----
<S> <C> <C> <C> <C> <C> <C>
153/157 Reid Plastics, Inc. Canada AQUALITE 392093 12-20-91 12-20-06
153/157 Reid Plastics, Inc. Colombia AQUALITE 206692 03-18-98 03-18-08
153/157 Reid Plastics, Inc. Great AQUALITE A142805 11-29-91 07-19-07
Britain
175/134 Reid Valve Co. Inc. Indonesia VALVE 245631 02-01-89 02-01-99
175/134 Reid Valve Co., Inc. Japan VALVE 2391900 03-31-92 03-31-02
175/134 Reid Valve Co., Inc. Malaysia VALVE
175/134 Reid Valve Co., Inc. Thailand VALVE 118001 08-10-88 10-06-97
175/134 Reid Valve Co., Inc. Turkey VALVE 102518 08-26-88 08-26-07
175/134 Reid Valve Co., Inc. Germany VALVE 1125040 07-19-88 08-31-07
175/134-1 Reid Valve Co., Inc. China P.R. VALVE 334392 12-29-88 12-29-98
175/134-1 Reid Valve Co., Inc. Mexico VALVE 357542 12-29-88
175/134-1 Reid Valve Co., Inc. Taiwan VALVE 398216 04-15-88 04-15-98
175/134-2 Reid Valve Co., Inc. China P.R. VALVE
175/134-2 Reid Valve Co., Inc. Mexico VALVE 368628 10-20-89
175/134-3 Reid Valve Co., Inc. Mexico VALVE 351826 01-25-89
175/134-4 Reid Valve Co., Inc. Mexico VALVE 352254 09-08-88
175/134-5 Reid Valve Co., Inc. Great VALVE 1319867 11-16-90
Britain
175/134-6 Reid Valve Co., Inc. Singapore VALVE 1497 03-23-90 03-31-05
221/016 Reid Plastics, Inc. Colombia CRYSTAL
CLEAR
</TABLE>
<PAGE>
3
JUICE TREE
REGISTERED TRADEMARKS
REGISTERED
REGISTERED # DATE TRADEMARK EXPIRES
- ------------ ---- --------- -------
<PAGE>
PART II Infringement of Intellectual Property
Dean Foods Company On February 12, 1999, Dean Foods Company notified RPI of
an alleged trademark infringement caused by the
manufacture of bottles for Shamrock Foods Company. It
was the position of Dean Foods Company that Shamrock's
use of bottles produced by RPI infringes and dilutes
Dean's trade identity rights and that RPI is
contributing to Shamrock's violations of Dean's rights
by manufacturing the bottles. The letter was a
clarification that Dean's was not waiving any potential
claims against RPI for the volition of Dean's trademark
rights and that Dean's award of a new supply contract to
RPI should not be interpreted as a waiver of Dean's
rights to proceed against RPI as a contributory
infringer. Shamrock has offered to indemnify RPI from
damages in connection with Dean's claim. RPI has at this
time in its possession an indemnity agreement executed
by Shamrock Foods Company (Indemnity Agreement between
Shamrock Foods Company and RPI). Management is currently
evaluating whether to execute this agreement.
<PAGE>
ANNEX E
TO
SECURITY AGREEMENT
SCHEDULE OF PATENTS AND PATENT APPLICATIONS
REID PLASTICS GROUP LLC
PATENTS AND APPLICATIONS
FOREIGN
<TABLE>
<CAPTION>
PATENT # ISSUE DATE
OR OR FIRST
DOCKET# COUNTRY SERIAL # FILING DATE TITLE INVENTOR EXPIRES
- ------- ------- -------- ----------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C>
181/273 Canada 63522 06-20-89 Design for a Bottle Carl D. Frahm 06-20-99
195/224 Mexico 7346 10-27-94 Bottle with Handle Joseph B. Rokus et 08-20-08
al.
203/035 Mexico 7347 10-27-94 Bottle with Handle Joseph B. Rokus 08-20-08
203/036 Canada 75765 02-23-95 Bottle with Handle Joseph B. Rokus 02-23-05
203/036 Canada 75766 02-23-95 Bottle with Handle Joseph B. Rokus 02-23-05
203/036 Mexico 7345 10-27-94 Bottle with Handle Joseph B. Rokus 08-20-08
204/097 Canada 2153696 08-14-94 Bottle Valve Bernard Strong
Assembly
With Security Seal
204/097 China P.R. 94191161.6 04-03-97 Bottle Valve Bernard Strong 11-14-14
Assembly
With Security Seal
204/097 Mexico 952346 05-25-95 Bottle Valve Bernard Strong
Assembly
With Security Seal
205/281 Canada 75966 03-16-95 Bottle Phyllis A. Rokus 03-16-05
205/281 Mexico 8222 04-25-96 Bottle Phyllis A. Rokus 10-11-09
216/273 Canada 81115 06-27-97 Bottle Joseph B. Rokus 06-27-07
216/273 Mexico 9048 10-09-97 Bottle Joseph B. Rokus 04-19-11
221/094 Canada 83537 04-03-98 Bottle Joseph B. Rokus 04-03-08
221/094 Mexico 970322 03-25-97 Bottle Joseph B. Rokus
</TABLE>
<PAGE>
2
REID PLASTICS GROUP LLC
ISSUED PATENTS
<TABLE>
<CAPTION>
PATENT ISSUE OR
OR FILING FIRST
DOCKET# SERIAL # DATE TITLE INVENTOR EXPIRES
- ------- -------- --------- ----- -------- -------
<S> <C> <C> <C> <C> <C>
135/051 3,802,595 04-09-74 Bottled Water Cradle Case Construction Carl E. Frahm Expired
Shirley E. Frahm 04-09-91
142/203 D-238,754 02-10-76 Design for Water Bottle of 5-Gallon Carl E. Frahm Expired
Capacity for Use in Water Dispenser 02-10-90
145/162 4,015,741 04-05-77 Collapsible Carrying Case Carl E. Frahm 04-05-94
145/255 3,974,863 08-17-76 Valved Water Container W/seal (Olla) Carl E. Frahm et al. 08-17-93
145/256 3,966,093 06-29-76 Valved Water Container W/seal (Olla) Carl E. Frahm et al. 06-29-93
146/131 D-243928 04-05-77 Design for Water Bottle of 5-gallon Carl E. Frahm et al. 04-05-91
Capacity for Use in Water Dispenser
146/133 D-241,841 10-12-76 Design for Valve for Use in Carl E. Frahm Expired
Water Dispensers Shirley E. Frahm 10-12-90
146/134 4,015,632 04-05-77 Valve Construction Carl E. Frahm et al. 04-05-94
148/188 4,029,209 06-14-77 Stackable Carrying Case Carl E. Frahm et al. 06-14-94
150/208 4,074,986 02-21-78 Valved Water Container W/seal (Olla) Carl E. Frahm 02-21-94
151/085 4,181,243 01-01-80 Device for Filtering Beverages Carl E. Frahm et al. 01-01-97
151/103 4,143,784 03-13-79 Water Bottle & its Storage Case Carl E. Frahm et al. 03-13-96
(Old#1) (Change to #8 (D-326,608)
156/003 D-262521 01-05-82 (Design) Water Bottle or Similar Article Carl E. Frahm et al. 01-05-96
157/297 D-262522 01-05-82 (Design) Water Bottle or Similar Article Carl E. Frahm 01-05-96
159/225 4,416,383 11-22-83 Closure and Sealing Device Machine Carl E. Frahm 11-22-2000
166/128 D-286219 10-14-86 (Design) Bottle Case Carl E. Frahm et al. 10-14-2000
171/284 D-296420 06-28-88 (Design) New, Original & Ornamental Carl E. Frahm et al. 06-28-2002
Design for a Bottle 2.5 Gallon
171/285 4,693,400 09-15-87 Extendable Nestable Dispensing Apparatus Carl E. Frahm et al. 09-15-2004
173/008 D-299,697 02-07-89 (Design) New, Original & Ornamental Carl E. Frahm 02-07-2003
Design for a Bottle
179/261 5,002,199 03-26-91 Stackable Bottle (6 Gallon) Carl E. Frahm et al. 03-06-2008
181/273 D-311329 10-16-90 (Design) 6-gallon Octagonal Bottle Carl E. Frahm 10-16-2004
183/061 D-326,051 05-12-92 (Design) for a Bottle (#5) Carl E. Frahm 05-12-2006
</TABLE>
<PAGE>
3
<TABLE>
<CAPTION>
PATENT ISSUE OR
OR FILING FIRST
DOCKET# SERIAL # DATE TITLE INVENTOR EXPIRES
- ------- -------- --------- ----- -------- -------
<S> <C> <C> <C> <C> <C>
183/062 D-326,608 06-02-92 (Design) for a Bottle (#8) Carl E. Frahm 05-12-2006
191/296 D-304,999 12-12-89 Design for a Bottle Case Richard L. Platte, Sr. 12-12-2003
195/224 D-339,067 09-07-93 (Design) 5-gallon Bottle B. Joseph Rokus et al. 09-07-2007
w/Handle (Mex.&U.S.)
203/035 D- 02-14-95 Two Gallon Bottle B. Joseph Rokus 02-14-2009
355,367*** w/Handle (Mex/U.S.) Squat
***
203/036 D- 08-08-95 Three Gallon Bottle B. Joseph Rokus 08-08-2009
361,039* w/Handle (Mex/U.S.)
Tall, Skinny (Same Diameter
as 5 Gallon)
205/281 D-361,720 03-16-95 Two Gallon Aqua Vend Bottle Phyllis A. Rokus 10-11-2009
04-25-96 Canada & 10-11-2009
08-29-95 Mexico Richard Rendon 10-11-2009
U.S.
5,133,469 07-28-92 Stackable Bottle Ron Mehta
216/273 D-374,824 10-22-96 2.5 Gallon Dispenser Pak Bottle B. Joseph Rokus et al. 10-22-2010
217/183 5,762,317 6-09-98 Child Resistant Valve Button Shirley R. Frahm 5-6-2016
&
Carl E. Frahm
221/094 D-401,859 12-01-98 Bottle (Grupo Seser) B. Joseph Rokus 9-26-2016
D-353,367 12-31-94 Male Connector for Surface Mounting Kiyoshi Sato 12-13-2011
4,181,143 1-1-80 Valve Assembly and Coupler Therefor Merton R. Fallon expired
D-325,608 4-21-92 Exercise Chair Don D. Anderson 4-21-2009
D-325,051 3-31-92 Guide for Carrying Out Word Games Ralph E. Dean 3-31-2009
3,926,322 12-16-75 Apparatus for Removing Containers from Billy Joe Scott
Packages
SN 09-06-94 Bottle Carrier Device
08/302,225
replaces
08/044,270
SN 03-15-94 Bottle Carrier Device (Design)
23/019,939
SN 11-03-93 Bottle Valve Assembly W/security Seal
08/151,725
</TABLE>
- ----------
****** Canada combines Doc. #203/035 & 203/036 into one patent Doc.
#203/036
<PAGE>
4
<TABLE>
<CAPTION>
PATENT ISSUE OR
OR FILING FIRST
DOCKET# SERIAL # DATE TITLE INVENTOR EXPIRES
- ------- -------- --------- ----- -------- -------
<S> <C> <C> <C> <C> <C>
185/020 4,962,872 10-16-90 CONTAINER CLOSURE DEVICE- BERNARD 10/16/07
ROTARY VALVE STRONG
200/126 D360,362 03-15-94 BOTTLE CARRIER DEVICE (Design) BERNARD
STRONG
204/097 5,445,298 11-03-93 BOTTLE VALVE ASSEMBLY BERNARD
W/SECURITY SEAL STRONG
209/159 5,441,320 09-06-94 BOTTLE CARRIER DEVICE BERNARD
STRONG
213/097 5,570,818 11-05-96 VALVE ASSEMBLY W/SECURITY BERNARD
SEAL STRONG
4924770 5-15-90 PORTABLE, AUTOMATIC JUICE ASSIGNED TO Expired because of
EXTRACTION MACHINE JUICE TREE failure to pay
maintenance fee
</TABLE>
<PAGE>
5
Claims of Infringement
Continental Plastic
Containers LLC Continental Plastic Containers LLC may be subject to a
renewed counterclaim by Owens Illinois, Inc. with
respect to Case 95C4670 in the U.S. District Court for
the Northern District of Illinois, in which Owens
Illinois alleged infringement of a composition patent,
owned by Owens Illinois and said to be infringed by the
composition of plastic bottles of Continental Plastic
Containers LLC Counsel to Owens Illinois has indicated
that it is interested in discussing settlement terms
with Suiza Packaging with respect to the claim. These
potential settlement talks follow the issuance of a
"Notice of Intent to Issue Reexamination Certificate" by
the U.S. Patent Office which withdrew the U.S. PTO's
previous rejections of the patent. Suiza Packaging has
been advised that a formal Certificate of Re-examination
may be issued in the near future.
<PAGE>
ANNEX F
TO
SECURITY AGREEMENT
SCHEDULE OF COPYRIGHTS AND
COPYRIGHT APPLICATIONS
None
<PAGE>
ANNEX G
TO
SECURITY AGREEMENT
ASSIGNMENT OF SECURITY INTEREST IN UNITED STATES
TRADEMARKS
FOR GOOD AND VALUABLE CONSIDERATION, the sufficiency and receipt of
which are hereby acknowledged, [________________], a [State]
[corporation/limited liability company] (the "Assignor") with principal offices
at ______________, hereby assigns and grants to BANKERS TRUST COMPANY, as
Collateral Agent, with principal offices at 130 Liberty Street, New York, New
York 10006 (the "Assignee"), a security interest in (i) all of Assignor's right,
title and interest in and to Assignor's trademarks, trademark registrations, and
trademark applications more particularly set forth on Schedule A attached hereto
(the "Marks"), and all renewals thereof, together with (ii) all Proceeds (as
such term is defined in the Security Agreement referred to below) of the Marks,
(iii) the goodwill of the business(es) with which the Marks are associated and
(iv) all causes of action arising prior to or after the date hereof for
infringement of any of the Marks or unfair competition regarding the same.
This ASSIGNMENT OF SECURITY INTEREST is made to secure the
satisfactory performance and payment of all the Obligations of the Assignor, as
such term is defined in the Security Agreement among the Assignor, the other
assignors from time to time party thereto and the Assignee, dated as of June __,
1999 (as amended from time to time, the "Security Agreement") and shall be
effective as of the date of the Security Agreement. Upon the termination of the
Security Agreement pursuant to Section 10.9(a) of the Security Agreement, the
Assignee shall, upon satisfaction, execute, acknowledge, and deliver to the
Assignor an instrument in writing releasing the security interest in the Marks
acquired under this Assignment of Security Interest.
<PAGE>
This Assignment of Security Interest has been granted in conjunction
with the security interest granted to Assignee under the Security Agreement. The
rights and remedies of the Assignee with respect to the security interest
granted herein are without prejudice to, and are in addition to those set forth
in the Security Agreement, all terms and provisions of which are incorporated
herein by reference. In the event that any provisions of this Assignment of
Security Interest are deemed to conflict with the Security Agreement, the
provisions of the Security Agreement shall govern.
* * *
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Assignment of
Security Interest as of the ___ day of June, 1999.
[__________________________]
as Assignor
By__________________________
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
as Collateral Agent, and as Assignee
By_____________________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of June, 1999, before me personally came
___________________ who, being duly sworn, did depose and say that he is
______________________ of [_________________] that he is authorized to execute
the foregoing Assignment of Security Interest on behalf of said
[corporation/limited liability company] and that he did so by authority of the
Board of Directors of said [corporation/limited liability company].
_____________________________________
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of June, 1999, before me personally came
____________________ who, being by me duly sworn, did state as follows: that he
is ________________________ of Bankers Trust Company, that he is authorized to
execute the foregoing Assignment of Security Interest on behalf of said
corporation and that he did so by authority of the Board of Directors of said
corporation.
_____________________________________
Notary Public
<PAGE>
TRADEMARKS
Trademark Registration/Serial Number Registration/Filing Date
- --------- -------------------------- ------------------------
[To be provided by
the Borrower]
<PAGE>
ANNEX H
TO
SECURITY AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of
which are hereby acknowledged, [_______________________], a [State]
[corporation] [limited liability company] ("the Assignor") having its chief
executive office at 2515 McKinney Avenue, Suite 850, Lock Box 14, Dallas, Texas
75201, hereby assigns and grants to BANKERS TRUST COMPANY, as Collateral Agent,
with principal offices at 130 Liberty Street, New York, New York 10006 (the
"Assignee"), a security interest in all of the Assignor's rights, title and
interest in and to the United States patents and patent applications (the
"Patents") set forth on Schedule A attached hereto, in each case together with
(ii) all Proceeds (as such term is defined in the Security Agreement referred to
below) and products of the Patents, (iii) all causes of action arising prior to
or after the date hereof for infringement of any of the Patents or unfair
competition regarding the same.
THIS ASSIGNMENT OF SECURITY INTEREST is made to secure the
satisfactory performance and payment of all the Obligations of the Assignor, as
such term is defined in the Security Agreement among the Assignor, the other
assignors from time to time party thereto and the Assignee, dated as of July __,
1999 (as amended from time to time, the "Security Agreement"). Upon termination
of the Security Agreement pursuant to Section 10.9(a) thereof, the Assignee
shall, upon such satisfaction, execute, acknowledge, and deliver to the Assignor
an instrument in writing releasing the security interest in the Patents acquired
under this Assignment.
<PAGE>
Annex H
Page 2
This Assignment has been granted in conjunction with the security
interest granted to the Assignee under the Security Agreement. The rights and
remedies of the Assignee with respect to the security interest granted herein
are without prejudice to, and are in addition to those set forth in the Security
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Assignment are deemed to
conflict with the Security Agreement, the provisions of the Security Agreement
shall govern.
* * *
<PAGE>
Annex H
Page 3
IN WITNESS WHEREOF, the undersigned have executed this Assignment of
Security Interest as of the first day of July, 1999.
_______________________________
as Assignor
By_____________________________
Name:
Title:
<PAGE>
Annex H
Page 4
BANKERS TRUST COMPANY
as Assignee
By_____________________________
Name:
Title:
<PAGE>
Annex H
Page 5
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of July, 1999, before me personally came
______________________ who, being by me duly sworn, did state as follows: that
[s]he is _____________________________, that [s]he is authorized to execute the
foregoing Assignment on behalf of said corporation and that [s]he did so by
authority of the Board of Directors of said corporation.
_____________________________________
Notary Public
<PAGE>
Annex H
Page 6
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of July, 1999, before me personally came ________
_____________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________ of Bankers Trust Company, that [s]he is authorized
to execute the foregoing Assignment on behalf of said corporation and that [s]he
did so by authority of the Board of Directors of said corporation.
_____________________________________
Notary Public
<PAGE>
Annex H
Page 7
SCHEDULE A
U.S. PATENTS
NAME OF PATENT ISSUE
PATENT NUMBER DATE
------------- ------------ -----------
<PAGE>
EXHIBIT K
SUBSIDIARY GUARANTY
GUARANTY, dated as of July __, 1999, made by each of the
undersigned (each a "Guarantor" and collectively, the "Guarantors"). Except
as otherwise defined herein, terms used herein and defined in the Credit
Agreement (as hereinafter defined) shall be used herein as so defined.
W I T N E S S E T H:
WHEREAS, Consolidated Container Holdings LLC, a limited liability
company organized and existing under the laws of the State of Delaware
("Holdings"), Consolidated Container Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware and a
Wholly-Owned Subsidiary of Holdings (the "Borrower"), various financial
institutions from time to time party thereto (the "Banks"), Morgan Guaranty
Trust Company of New York, as Documentation Agent, Donaldson, Lufkin & Jenrette
Securities Corporation, as Syndication Agent and Bankers Trust Company, as
Administrative Agent (the "Administrative Agent"), have entered into a Credit
Agreement, dated as of July 1, 1999 (as modified, supplemented or amended from
time to time, the "Credit Agreement"), providing for the making of Loans to the
Borrower and the issuance of, and participation in, Letters of Credit issued for
the account of the Borrower as contemplated therein (the Banks and the
Administrative Agent being herein called the "Bank Creditors");
WHEREAS, the Borrower may from time to time be party to one or more
Interest Rate Agreements or Other Hedging Agreements, with a Bank or an
affiliate of a Bank (each such Bank or affiliate, even if the respective Bank
subsequently ceases to be a Bank under the Credit Agreement for any reason,
together with such Bank's or affiliate's successors and assigns, collectively,
the "Other Creditors," and together with the Bank Creditors, are herein called
the "Creditors");
WHEREAS, each Guarantor is a direct or indirect Subsidiary of the
Borrower;
WHEREAS, it is a condition to the making of Loans and the issuance
of, and participation in, Letters of Credit under the Credit Agreement and to
the Other Creditors entering into the Interest Rate Agreements that each
Guarantor shall have executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of
Loans by the Borrower and the issuance of Letters of Credit for the account of
the Borrower under the Credit Agreement and the entering into of the Interest
Rate Agreements and, accordingly, desires to execute this Guaranty in order to
satisfy the conditions described in the preceding paragraph;
<PAGE>
Exhibit K
Page 2
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Creditors and hereby covenants and agrees with each Creditor
as follows:
1. Each Guarantor irrevocably and unconditionally, and jointly and
severally, guarantees (i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of (x) the principal of and
interest on the Notes issued by, and Loans made to, the Borrower under the
Credit Agreement and all reimbursement obligations and Unpaid Drawings with
respect to Letters of Credit issued under the Credit Agreement, and (y) all
other obligations and indebtedness (including, without limitation, indemnities,
Fees and interest thereon) of the Borrower and other Credit Parties owing to the
Bank Creditors now existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement and the other Credit Documents and the due
performance and compliance by the Borrower and other Credit Parties with the
terms, conditions and agreements contained in the Credit Documents (all such
principal, interest, obligations and liabilities being herein collectively
referred to as the "Credit Document Obligations") and (ii) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations and indebtedness (including, without limitation, indemnities,
fees and interest thereon) owing by the Borrower to the Other Creditors under
any Interest Rate Agreement or Other Hedging Agreements, whether such Interest
Rate Agreement or Other Hedging Agreement is now in existence or hereafter
arising, and the due performance and compliance by the Borrower with the terms,
conditions and agreements contained therein (all such obligations and
indebtedness being herein collectively called the "Interest Rate Protection or
Other Hedging Obligations"; and together with the Credit Document Obligations
are herein collectively called the "Guaranteed Obligations"). Each Guarantor
understands, agrees and confirms that the Creditors may enforce this Guaranty up
to the full amount of the Guaranteed Obligations against such Guarantor without
proceeding against the Borrower, against any security for the Guaranteed
Obligations, against any other Guarantor, or against any other guarantor under
any other guaranty covering the Guaranteed Obligations. This Guaranty shall
constitute a guaranty of payment and not of collection. All payments by each
Guarantor under this Guaranty shall be made on the same basis as payments by the
Borrower under Sections 4.03 and 4.04 of the Credit Agreement.
2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations of the Borrower to the Creditors whether or not due or
payable by the Borrower upon the occurrence in respect of the Borrower of any of
the events specified in Section 9.05 of the Credit Agreement, and
unconditionally and irrevocably, jointly and severally, promises to pay such
Guaranteed Obligations to the Creditors, or order, on demand, in lawful money of
the United States.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the indebtedness of the
Borrower whether executed by such Guarantor, any other Guarantor, any other
guarantor or by any other party, and the liability of
<PAGE>
Exhibit K
Page 3
such Guarantor hereunder shall not be affected or impaired by: (i) any direction
as to application of payment by the Borrower; (ii) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the indebtedness of the Borrower; (iii) any payment on or in reduction of
any such other guaranty or undertaking; (iv) any dissolution, termination or
increase, decrease or change in personnel by the Borrower; or (v) any payment
made to any Creditor on the indebtedness which any Creditor repays the Borrower
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding.
4. The obligations of each Guarantor hereunder are independent of
the obligations of any other Guarantor, any other guarantor or the Borrower, and
a separate action or actions may be brought and prosecuted against each
Guarantor whether or not action is brought against any other Guarantor, any
other guarantor or the Borrower, and whether or not any other Guarantor, any
other guarantor or the Borrower be joined in any such action or actions. Each
Guarantor waives, to the fullest extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
taken by the Agent or any other Creditors against, and any other notice to, any
party liable thereon (including such Guarantor or any other Guarantor or
guarantor).
6. Except as provided in any Credit Document, Interest Rate
Agreement, Other Hedging Agreement or any of the instruments or agreements
referred to therein, any Creditor may at any time and from time to time without
the consent of, or notice to, any Guarantor, without incurring liability to any
Guarantor as a result thereof, without impairing or releasing the obligations of
any Guarantor hereunder, upon or without any terms or conditions and in whole or
in part (and each Guarantor hereby irrevocably waives any defenses it may now or
hereafter have in any way relating to any and all of the following):
(i) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to
the Guaranteed Obligations as so changed, extended, renewed or altered;
(ii) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
<PAGE>
Exhibit K
Page 4
(iii) exercise or refrain from exercising any rights against the
Borrower, any Guarantor or others or otherwise act or refrain from acting;
(iv) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to creditors of the
Borrower;
(v) subject to the terms of the Credit Agreement, apply any sums by
whomsoever paid or howsoever realized to any liability or liabilities of
the Borrower to the Creditors regardless of what liabilities of the
Borrower remain unpaid;
(vi) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Agreements, Other Hedging
Agreements or any of the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or supplement
any of the Interest Rate Agreements, Other Hedging Agreements or any of
the Credit Documents or any of such other instruments or agreements;
and/or
(vii) act or fail to act in any manner referred to in this Guaranty
which may deprive any Guarantor of its right to subrogation against the
Borrower to recover full indemnity for any payments made pursuant to this
Guaranty.
7. No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full of the Guaranteed
Obligations.
8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder and no course of
dealing between any Guarantor and any Creditor shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any Guarantor
in any case shall entitle such Guarantor to any other further notice or demand
in similar or other circumstances or constitute a waiver of the rights of any
Creditor to any other or further action in any circumstances without notice or
demand.
9. Any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such
<PAGE>
Exhibit K
Page 5
indebtedness of the Borrower to any Guarantor, if the Administrative Agent,
during the continuance of an Event of Default has occurred, so requests, shall
be collected, enforced and received by such Guarantor as trustee for the
Creditors and be paid over to the Creditors on account of the indebtedness of
the Borrower to the Creditors, but without affecting or impairing in any manner
the liability of such Guarantor under the other provisions of this Guaranty.
Prior to the transfer by such Guarantor of any note or negotiable instrument
evidencing any indebtedness of the Borrower to such Guarantor, such Guarantor
shall mark such note or negotiable instrument with a legend that the same is
subject to this subordination. Without limiting the generality of the foregoing,
each Guarantor hereby agrees with the Creditors that it will not exercise any
right of subrogation which it may at any time otherwise have as a result of this
Guaranty (whether contractual, under Section 509 of the Bankruptcy Code, or
otherwise) until all Obligations have been paid in full in cash.
10. (a) Each Guarantor waives any right (except as shall be required
by applicable statute and cannot be waived) to require the Creditors to (i)
proceed against the Borrower, any other Guarantor, any other guarantor or any
other party, (ii) proceed against or exhaust any security held from the
Borrower, any other Guarantor, any other guarantor or any other party or (iii)
pursue any other remedy in the Creditors' power whatsoever. Each Guarantor
waives any defense based on or arising out of any defense of the Borrower, any
other Guarantor, any other guarantor or any other party other than payment in
full of the Guaranteed Obligations, including without limitation any defense
based on or arising out of the disability of the Borrower, any other Guarantor,
any other guarantor or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower other than payment in full of the
Guaranteed Obligations. The Creditors may, at their election, foreclose on any
security held by the Administrative Agent, the Collateral Agent or the other
Creditors by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Creditors may have against the Borrower or any other party, or any security,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Guaranteed Obligations have been paid in
full. Each Guarantor waives any defense arising out of any such election by the
Creditors, even though such election operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of such Guarantor
against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
<PAGE>
Exhibit K
Page 6
(c) Guarantor hereby acknowledges and affirms that it understands
that to the extent the Guaranteed Obligations are secured by real property
located in the State of California, Guarantor shall be liable for the full
amount of the liability hereunder notwithstanding foreclosure on such real
property by trustee sale or any other reason impairing the Guarantor's or any
secured creditors' right to proceed against the Borrower or any other guarantor
of the Guaranteed Obligations.
(d) Guarantor hereby waives, to the fullest extent permitted by
applicable law, all rights and benefits under Sections 580a, 580b, 580d and 726
of the California Code of Civil Procedure. Guarantor hereby further waives, to
the fullest extent permitted by applicable law, without limiting the generality
of the foregoing or any other provision hereof, all rights and benefits which
might otherwise be available to Guarantor under Sections 2809, 2810, 2815, 2819,
2821, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 of the California Civil Code.
(e) Guarantor waives its rights of subrogation and reimbursement and
any other rights and defenses available to Guarantor by reason of Sections 2787
to 2855, inclusive, of the California Civil Code, including, without limitation,
(1) any defenses Guarantor may have to this Subsidiary Guaranty by reason of an
election of remedies by the Secured Creditors (as defined in the Deed of Trust)
and (2) any rights or defenses Guarantor may have by reason of protection
afforded to the Borrower pursuant to the antideficiency or other laws of
California limiting or discharging the Borrower's indebtedness, including,
without limitation, Section 580a, 580b, 580d or 726 of the California Code of
Civil Procedure. In furtherance of such provisions, Guarantor hereby waives all
rights and defenses arising out of an election of remedies by the Secured
Creditors, even though that election or remedies, such as a nonjudicial
foreclosure destroys Guarantor's rights of subrogation and reimbursement against
the Borrower by the operation of Section 580d of the California Code of Civil
Procedure or otherwise.
Guarantor warrants and agrees that each of the waivers set forth
above is made with full knowledge of its significance and consequences and that
if any of such waivers are determined to be contrary to any applicable law or
public policy, such waivers shall be effective only to the maximum extent
permitted by law.
11. In order to induce the Banks to make Loans to the Borrower, and
to issue, and participate in, Letters of Credit for the account of the Borrower,
pursuant to the Credit Agreement and to induce the Other Creditors to execute,
deliver and perform the Interest Rate Protection and Other Hedging Agreements,
each Guarantor hereby represents, warrants and covenants that:
(i) Such Guarantor (x) is a duly organized and validly existing
corporation or limited liability company in good standing under the laws
of the jurisdiction of its incorporation, (y) has the corporate or limited
liability company power and authority to own its property and assets and
to transact the business in which it is engaged and presently proposes to
engage and (z) is duly qualified and is authorized to do business and is
in good standing in each jurisdiction where the ownership, leasing or
operation of property or the conduct of its business requires such
qualification except for failures to
<PAGE>
Exhibit K
Page 7
be so qualified which, in the aggregate, could not be expected to have a
material adverse effect on the performance, business, assets, nature of
assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of such Guarantor or of such Guarantor and its
Subsidiaries taken as a whole.
(ii) Such Guarantor has the corporate or limited liability company
power to execute, deliver and perform the terms and provisions of this
Guaranty and has taken all necessary corporate or limited liability
company action to authorize the execution, delivery and performance by it
of this Guaranty. Such Guarantor has duly executed and delivered this
Guaranty, and this Guaranty constitutes its legal, valid and binding
obligation enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws relating to or affecting creditors' rights
generally, general equitable principles (regardless of whether considered
in proceedings in equity or at law) and an implied covenant of good faith
and fair dealing.
(iii) Neither the execution, delivery or performance by such
Guarantor of this Guaranty, nor compliance by it with the terms and
provisions hereof, (x) will contravene any provision of any law, statute,
rule or regulation or any order, writ, injunction or decree of any court
or governmental instrumentality, (y) will conflict with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or
the obligation to create or impose) any Lien (except pursuant to the
Security Documents) upon any of the property or assets of such Guarantor
pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement or loan agreement, or any other agreement, contract or
instrument to which such Guarantor is a party or by which it or any of its
property or assets is bound or to which it may be subject or (z) will
violate any provision of the certificate of incorporation or by-laws or
other organizational documents, as applicable, of such Guarantor or any of
its Subsidiaries.
(iv) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as have
been obtained or made prior to the Initial Borrowing Date and are in full
force and effect), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (x) the execution, delivery and performance
of this Guaranty or (y) the legality, validity, binding effect or
enforceability of this Guaranty except those (A) which have been obtained
or made prior to the Initial Borrowing Date, (B) the absence of which,
either individually or in the aggregate, could not reasonably be expected
to have a material adverse effect on either (x) the business, operations,
property, assets, liabilities or condition (financial or otherwise) of
Holdings and its Subsidiaries taken as a whole or (y) the rights or
remedies of the Banks or the Administrative Agent or on the ability of
Holdings or any of its Subsidiaries to perform their respective
obligations hereunder and under the other Documents to which they are, or
will be, a party or (C) for filings and recordings required to perfect the
security
<PAGE>
Exhibit K
Page 8
interests created under the Security Documents, which filings and
recordings will be made within 10 Business Days after the Initial
Borrowing Date.
(v) There are no actions, suits or proceedings pending or, to the
best knowledge of any Guarantor, threatened (y) with respect to this
Guaranty or (z) that could reasonably be expected to have a material and
adverse effect on the business, assets, liabilities, operations,
properties or condition (financial or otherwise) of such Holdings and its
Subsidiaries taken as a whole.
12. Each Guarantor covenants and agrees that on and after the date
hereof and until the Total Commitment has terminated, no Letter of Credit or
Note is outstanding and all Guaranteed Obligations have been paid in full, such
Guarantor will comply with the provisions of Sections 7 and 8 of the Credit
Agreement, to the extent such Sections apply to such Guarantors.
13. Each Guarantor hereby jointly and severally agrees to pay all
reasonable out-of-pocket costs and expenses of each Creditor in connection with
the enforcement of this Guaranty and the protection of such Creditor's rights
hereunder, and in connection with any amendment, waiver or consent relating
hereto (including, without limitation, the reasonable fees and disbursements of
counsel (including in-house counsel) employed by any of the Creditors).
14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns.
15. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated in any manner whatsoever unless in writing duly
signed by the Administrative Agent (with, except as provided in Section 13.12 of
the Credit Agreement, the consent of the Required Banks) and each Guarantor
directly affected thereby (it being understood that the release or addition of
any Guarantor hereunder shall not constitute a change or waiver affecting any
Guarantor other than the Guarantor so released or added); provided, however,
that any change, waiver, modification or variance affecting the rights and
benefits of a single Class (as defined below) of Creditors (and not all
Creditors in a like or similar manner) shall require the written consent of the
Requisite Creditors (as defined below) of such Class of Creditors. For the
purpose of this Guaranty, the term "Class" shall mean each class of Creditors,
i.e., whether (x) the Bank Creditors as holders of the Credit Document
Obligations or (y) the Other Creditors as holders of the Interest Rate
Protection or Other Hedging Obligations. For the purpose of this Guaranty, the
term "Requisite Creditors" of any Class shall mean each of (x) with respect to
the Credit Document Obligations, the Required Banks (or all of the Banks if so
required under the Credit Agreement) and (y) with respect to the Interest Rate
Protection or Other Hedging Obligations, the holders of at least a majority of
all obligations outstanding from time to time under the Interest Rate Agreements
and Other Hedging Agreements.
16. Each Guarantor acknowledges that an executed (or conformed) copy
of the Credit Agreement has been made available to its principal executive
officers and such officers are familiar with its contents.
<PAGE>
Exhibit K
Page 9
17. (a) In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" under, and as defined in, the Credit
Agreement or any payment default (after giving effect to any grace period
applicable thereto) under any Interest Rate Agreement or Other Hedging Agreement
and shall in any event, include without limitation any payment default on any of
the Guaranteed Obligations after giving effect to any grace period applicable
thereto), each Creditor is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any
Guarantor or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Creditor
(including, without limitation, by branches and agencies of such Creditor
wherever located) to or for the credit or the account of such Guarantor, against
and on account of the obligations and liabilities of such Guarantor to such
Creditor under this Guaranty, irrespective of whether or not such Creditor shall
have made any demand hereunder and although said obligations, liabilities,
deposits or claims, or any of them, shall be contingent or unmatured. Each
Creditor agrees to notify any such Guarantor promptly of any such set-off,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
(b) Each Guarantor understands that if all or any part of the
Guaranteed Obligations is secured by real property, such Guarantor shall be
liable for the full amount of its liability hereunder notwithstanding
foreclosure on such real property by trustee sale or any other reason impairing
such Guarantor's or any Secured Creditors' right to proceed against any
Guarantor or any Subsidiary of such Guarantor.
18. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Bank Creditor, as provided in the Credit Agreement, (ii)
in the case of any Guarantor, at its address set forth opposite its signature
below, and (iii) in the case of any Other Creditor, as provided in the Security
Agreement; or in any case at such other address as any of the Persons listed
above may hereafter notify the others in writing.
19. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (b) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon it, notwithstanding any revocation hereof or the
cancellation of any Note or any Interest Rate Agreement, Other Hedging Agreement
or other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for
<PAGE>
Exhibit K
Page 10
the amount so repaid or recovered to the same extent as if such amount had never
originally been received by any such payee.
20. Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by the Borrower or other Persons
liable in respect of the Guaranteed Obligations (including any Guarantor), with
respect to any of the Guaranteed Obligations shall, if the statute of
limitations in favor of any Guarantor against any Creditor shall have commenced
to run, toll the running of such statute of limitations, and if the period of
such statute of limitations shall have expired, prevent the operation of such
statue of limitations.
21. (A) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK. Any legal action or proceeding with respect to this Guaranty
may be brought in the Courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Guaranty, each Guarantor hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the exclusive jurisdiction of the
aforesaid courts. Each Guarantor further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to each Guarantor at its address set forth opposite its signatures
below, such service to become effective 30 days after such mailing. Nothing
herein shall affect the right of any of the Creditors under this guaranty to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any Guarantor in any other
jurisdiction.
(b) Each Guarantor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Guaranty or any other
credit document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
22. It is the desire and intent of each Guarantor and the Creditors
that this Guaranty shall be enforced against each Guarantor to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought If, however, and to the extent, that
the obligations of any Guarantor under this Guaranty shall be adjudicated to be
invalid or unenforceable for any reason (including, without limitation, because
of any applicable state or federal law relating to fraudulent conveyances or
transfers), then the amount of the Guaranteed Obligations of such Guarantor (but
not the Guaranteed Obligations of any other Guarantor unless such other
Guarantor or Guarantors are individually subject to the circumstances covered by
this Section 22) shall be deemed to be reduced and the affected Guarantor shall
pay the maximum amount of the Guaranteed Obligations which would be permissible
under applicable law without causing such Guarantor's obligations hereunder to
be so invalidated.
<PAGE>
Exhibit K
Page 11
23. This Guaranty may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Administrative
Agent.
24. In the event that all of the capital stock of one or more
Guarantors is sold in connection with a sale permitted by the Credit Agreement
and the proceeds of such sale or sales are applied in accordance with the
provisions of the Credit Agreement, to the extent applicable, each Guarantor (x)
all of the capital stock of which is so sold or (y) which is a Subsidiary of a
Guarantor all of the capital stock of which is so sold, shall be released from
this Guaranty and this Guaranty shall, as to each such Guarantor or Guarantors,
terminate, and have no further force or effect.
25. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
26. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense.
27. The Creditors agree that this Guaranty may be enforced only by
the action of the Administrative Agent, in each case acting upon the
instructions of the Required Banks (or, after the date on which all Credit
Document Obligations have been paid in full, the holders of at least a majority
of the outstanding Other Obligations) and that no other Creditor shall have any
right individually to seek to enforce or to enforce this Guaranty or to realize
upon the security to be granted by the Security Documents, it being understood
and agreed that such rights and remedies may be exercised by the Administrative
Agent or the Collateral Agent or the holders of at least a majority of the
outstanding Other Obligations, as the case may be, for the benefit of the
Creditors upon the terms of this Guaranty and the Security Documents. The
Creditors further agree that this Guaranty may not be enforced against any
director, officer, employee, or stockholder of any Guarantor (except to the
extent such stockholder is also a Guarantor hereunder).
28. It is understood and agreed that any Subsidiary of the Borrower
that is required to execute a counterpart of this Guaranty after the date hereof
pursuant to the Credit Agreement shall automatically become a Guarantor
hereunder by executing a counterpart hereof and delivering the same to the
Administrative Agent.
* * *
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
<PAGE>
Exhibit K
Page 12
Address:
2515 McKinney Avenue REID PLASTICS GROUP LLC, as a Pledgor
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Company LLC, as
its Sole Member and Manager
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499 By: Consolidated Container Holdings LLC, as
Attention: Timothy Brasher its Sole Member and Manager
By:_____________________________________
Name:
Title:
2515 McKinney Avenue CONSOLIDATED CONTAINER CAPITAL, INC.
Suite 850, Lock Box 14
Dallas, Texas 75201
By:_________________________________________
Telephone No.: (214) 303-3400 Name:
Facsimile No.: (214) 303-3499 Title:
Attention: Timothy Brasher
2515 McKinney Avenue PLASTIC CONTAINERS LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Company LLC
Telephone No.: (214) 303-3400 By: Consolidated Container Holdings LLC, as
Facsimile No.: (214) 303-3499 its Sole Member and Manager
Attention: Timothy Brasher
By:_____________________________________
Name:
Title:
<PAGE>
Exhibit K
Page 13
2515 McKinney Avenue CONTINENTAL PLASTIC CONTAINERS
Suite 850, Lock Box 14 LLC
Dallas, Texas 75201
By: Consolidated Container LLC, as its Sole
Telephone No.: (214) 303-3400 Member and Manager
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher By: Consolidated Container Company LLC, as
its Sole Member and Manager
By: Consolidated Container Holdings LLC, as
its Sole Member and Manager
By:_________________________________________
Name:
Title:
2515 McKinney Avenue CONTINENTAL CARRIBEAN CONTAINERS, INC.
Suite 850, Lock Box 14
Dallas, Texas 75201
By:_________________________________________
Telephone No.: (214) 303-3400 Name:
Facsimile No.: (214) 303-3499 Title:
Attention: Timothy Brasher
Accepted and Agreed to:
BANKERS TRUST COMPANY
as Administrative Agent for the Banks
By:____________________________________
Name:
Title:
<PAGE>
EXHIBIT L
FORM OF INTERCOMPANY NOTE
New York, New York
[Date]
FOR VALUE RECEIVED, __________________________, a ___________
corporation (the "Payor"), hereby promises to pay on demand to the order of
______________________, (the "Payee"), in lawful money of the United States of
America in immediately available funds, at such location in the United States of
America as the Payee shall from time to time designate, the unpaid principal
amount of all loans and advances made by the Payee to the Payor.
The Payor promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
such rate per annum as shall be agreed upon from time to time by the Payor and
Payee.
Upon the commencement of any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar proceeding of any jurisdiction relating to the Payor, the
unpaid principal amount hereof shall become immediately due and payable without
presentment, demand, protest or notice of any kind in connection with this Note.
This Note is one of the Intercompany Notes referred to in the Credit
Agreement, dated as of July 1, 1999, among Consolidated Container Holdings LLC,
Consolidated Container Company LLC, the financial institutions from time to time
party thereto (the "Banks"), Morgan Guaranty Trust Company of New York, as
Documentation Agent, Donaldson, Lufkin & Jenrette Securities Corporation, as
Syndication Agent and Bankers Trust Company, as Administrative Agent (the
"Administrative Agent") (as amended, modified or supplemented from time to time,
the "Credit Agreement") and is subject to the terms thereof, and shall be
pledged by the Payee pursuant to the Pledge Agreement (as defined in the Credit
Agreement). The Payor hereby acknowledges and agrees that the Collateral Agent
pursuant to and as defined in the Pledge Agreement, as in effect from time to
time, may exercise all rights provided therein with respect to this Note.
The Payee is hereby authorized (but not required) to record all
loans and advances made by it to the Payor (all of which shall be evidenced by
this Note), and all repayments or prepayments thereof, in its books and records,
such books and records constituting prima facie evidence of the accuracy of the
information contained therein.
All payments under this Note shall be made without offset,
counterclaim or deduction of any kind.
<PAGE>
Exhibit L
Page 2
The Payor hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
[NAME OF PAYOR]
By:______________________________________
Title:
Pay to the order of: ____________________
_________________________________________
[NAME OF PAYEE]
By:______________________________________
Title:
<PAGE>
EXHIBIT M
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
[Date]
Reference is made to the Credit Agreement described in Item 2 of
Annex I hereto (as such Credit Agreement may hereafter be amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"). Unless defined
in Annex I hereto, terms defined in the Credit Agreement are used herein as
therein defined. __________________ (the "Assignor") and __________________ (the
"Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof which represents the percentage
interest specified in Item 4 of Annex I hereto (the "Assigned Share") of all of
the outstanding rights and obligations under the Credit Agreement relating to
the facilities listed in Item 4 of Annex I hereto, including, without
limitation, (w) in the case of any assignment of A Term Loans, all rights and
obligations with respect to the Assigned Share of such A Term Loans, (x) in the
case of any assignment of outstanding B Term Loans, all rights and obligations
with respect to the Assigned Share of such outstanding B Term Loans, (y) in the
case of any assignment of C Term Loans, all rights and obligations with respect
to the Assigned Share of such C Term Loans, and (z) in the case of any
assignment of all or any portion of the Total Revolving Loan Commitment, all
rights and obligations with respect to the Assigned Share of such Total
Revolving Loan Commitment and of the Revolving Loans, and Letters of Credit
Outstandings relating thereto. After giving effect to such sale and assignment,
the Assignee's Revolving Loan Commitment and the amount of the outstanding A
Term Loans, B Term Loans and C Term Loans owing to the Assignee will be as set
forth in Item 4 of Annex I hereto.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the other Credit Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of the Credit Agreement or
the other Credit Documents or any other instrument or document furnished
pursuant thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Holdings or any of its
Subsidiaries or the performance or observance by the Credit Parties of any of
their obligations under the Credit Agreement or the other Credit Documents to
which they are a party or any other instrument or document furnished pursuant
thereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement and the other Credit Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to
<PAGE>
Exhibit M
Page 2
make its own credit analysis and decision to enter into this Assignment and
Assumption Agreement; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Transferee under the Credit
Agreement; (iv) appoints and authorizes the Administrative Agent and the
Collateral Agent to take such action as agent and collateral agent on its behalf
and to exercise such powers under the Credit Agreement and the other Credit
Documents as are delegated to the Administrative Agent and the Collateral Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto; [and] (v) agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Credit Agreement are required
to be performed by it as a Bank; [and (vi) to the extent legally entitled to do
so, attaches the forms described in Section 4.04(b)(ii) of the Credit
Agreement.]*
4. Following the execution of this Assignment and Assumption
Agreement by the Assignor and the Assignee, an executed original hereof
(together with all attachments) will be delivered to the Administrative Agent.
The effective date of this Assignment and Assumption Agreement shall be the date
of execution hereof by the Assignor and the Assignee and the receipt of the
consent of the Administrative Agent [and the Borrower] pursuant to Section
13.04(b) of the Credit Agreement and receipt by the Administrative Agent of the
assignment fee referred to in such Section 13.04(b) (the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Assumption Agreement, have the rights and obligations of a Bank thereunder and
under the other Credit Documents and (ii) the Assignor shall, to the extent
provided in this Assignment and Assumption Agreement, relinquish its rights and
be released from its obligations under the Credit Agreement and the other Credit
Documents.
6. It is agreed that the Assignee shall be entitled to (w) all
interest on the Assigned Share of the Loans at the rates specified in Item 6 of
Annex I; (x) all Commitment Fees (if applicable) on the Assigned Share of the
Total Unutilized Revolving Commitment at the rate specified in Item 7 of Annex I
hereto; and (y) all Letter of Credit Fees (if applicable) on the Assignee's
participation in all Letters of Credit at the rate specified in Item 8 of Annex
I hereto, which, in each case, accrue on and after the Settlement Date, such
interest and, if applicable, Commitment Fee and Letter of Credit Fees, to be
paid by the Administrative Agent directly to the Assignee. It is further agreed
that all payments of principal made on the Assigned Share of the Loans which
occur on and after the Settlement Date will be paid directly by the
Administrative Agent to the Assignee. Upon the Settlement Date, the Assignee
shall pay to the Assignor an amount specified by the Assignor in writing which
represents the Assigned Share of the principal amount of the respective Loans
made by the Assignor, and the Assignee's share of
- ----------
* If the Assignee is organized under the laws of a jurisdiction outside the
United States.
<PAGE>
Exhibit M
Page 3
any Letter of Credit Outstandings incurred pursuant to the Credit Agreement
which are outstanding on the Settlement Date, net of any closing costs, and
which are being assigned hereunder. The Assignor and the Assignee shall make all
appropriate adjustments in payments under the Credit Agreement for periods prior
to the Settlement Date directly between themselves on the Settlement Date.
7. THIS BANK ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Assignment and Assumption
Agreement, as of the date first above written, such execution also being made on
Annex I hereto.
Accepted this ____ day [NAME OF ASSIGNOR],
of ____________, _____ as Assignor
By ______________________________________
Title:
[NAME OF ASSIGNEE],
as Assignee
By ______________________________________
Title:
Acknowledged and Agreed:
BANKERS TRUST COMPANY, as
Administrative Agent
By ______________________________
Title:
CONSOLIDATED CONTAINER
COMPANY LLC
By _______________________________
Title:
<PAGE>
ANNEX I
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Borrower: Consolidated Container Company LLC
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of July 1, 1999, among Consolidated Container
Holdings LLC, Consolidated Container Company LLC, the financial
institutions from time to time party thereto (the "Banks"), Morgan
Guaranty Trust Company of New York, as Documentation Agent, Donaldson,
Lufkin & Jenrette Securities Corporation, as Syndication Agent and Bankers
Trust Company, as Administrative Agent (the "Administrative Agent").
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
<TABLE>
<CAPTION>
Outstanding Outstanding Outstanding
Principal of Principal of Principal of Revolving Loan
A Term Loans B Term Loans C Term Loans Commitment
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
a. Aggregate Amount
for all Banks $___________ $___________ $___________ $____________
b. Assigned Share* ___________% ___________% ___________% ___________%
c. Amount of
Assigned Share $___________ $___________ $___________ $___________
</TABLE>
5. Settlement Date:
6. Rate of Interest
to the Assignee: As set forth in Section 1.08 of the Credit Agreement
(unless otherwise agreed to by the Assignor and the
Assignee)**
- ----------
* Percentage taken to 12 decimal places.
** The Borrower and the Administrative Agent shall direct the entire amount
of the interest to the Assignee at the rate set forth in Section 1.08 of
the Credit Agreement, with the Assignor and Assignee effecting the agreed
upon sharing of the interest through payments by the Assignee to the
Assignor.
<PAGE>
Annex I
Page 2
7. Commitment Fee As set forth in Section 3.01(a) of the Credit
to the Assignee: Agreement (unless otherwise agreed to by the
Assignor and the Assignee)***
8. Letter of Credit
Fees to the Assignee: As set forth in Section 3.01(b) of the Credit
Agreement (unless otherwise agreed to by the
Assignor and the Assignee)****
9. Notice:
ASSIGNOR:
_______________________________
_______________________________
_______________________________
_______________________________
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
_______________________________
_______________________________
_______________________________
_______________________________
Attention:
Telephone:
Telecopier:
Reference:
Payment Instructions:
- ----------
*** Insert "Not Applicable" in lieu of text if no portion of the Total
Revolving Loan Commitment is being assigned. Otherwise, the Borrower and
the Administrative Agent shall direct the entire amount of the Commitment
Fee to the Assignee at the rate set forth in Section 3.01(a) of the Credit
Agreement, with the Assignor and the Assignee effecting the agreed upon
sharing of Commitment Fee through payment by the Assignee to the Assignor.
**** Insert "Not Applicable" in lieu of text if no portion of the Total
Revolving Loan Commitment is being assigned. Otherwise, the Borrower and
the Administrative Agent shall direct the entire amount of the Letter of
Credit Fees to the Assignee at the rate set forth in Section 3.01(b) of
the Credit Agreement, with the Assignor and the Assignee effecting the
agreed upon sharing of Letter of Credit Fees through payment by the
Assignee to the Assignor.
<PAGE>
Annex I
Page 3
ASSIGNOR:
_______________________________
_______________________________
_______________________________
_______________________________
Attention:
Reference:
ASSIGNEE:
_______________________________
_______________________________
_______________________________
_______________________________
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE]
By _______________________
_______________________
(Print Name and Title)
[NAME OF ASSIGNOR]
By _______________________
_______________________
(Print Name and Title)
<PAGE>
EXHIBIT N
FORM OF SHAREHOLDER SUBORDINATED NOTE
$_______________ New York, New York
[DATE]
FOR VALUE RECEIVED, CONSOLIDATED CONTAINER HOLDINGS LLC, a Delaware
limited liability company ("Holdings"), hereby promises to pay to _____________
or [his] [her] [its] assigns (the "Payee"), in lawful money of the United States
of America in immediately available funds, at ____________________, the
principal sum of ____________________ DOLLARS, which amount shall be payable on
_________________________.*
[Holdings promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at a
rate per annum equal to ___________________, such interest to be paid
[quarterly] [semi-annually] [annually] on ______________________ [and
________________] of each year and at maturity hereof.]
This Note is subject to voluntary prepayment, in whole or in part,
at the option of Holdings, without premium or penalty.
Notwithstanding anything to the contrary contained in this Note, the
Payee understands and agrees that Holdings shall not be required to make, and
shall not make, any payment of principal, interest or other amounts on this Note
to the extent that such payment is prohibited by the terms of any Senior
Indebtedness.
This Note, and Holdings' obligations hereunder, shall be subordinate
and junior to all indebtedness of Holdings' constituting Senior Indebtedness (as
defined in Section 1.07 of Annex A attached hereto) on the terms and conditions
set forth in Annex A attached hereto, which Annex A is herein incorporated by
reference and made a part hereof as if set forth herein in its entirety.
Holdings hereby waives presentment, demand, protest or notice of any
kind in connection with this Note.
- ----------
* Insert a date after June 30, 2007
<PAGE>
Exhibit N
Page 2
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
CONSOLIDATED CONTAINER HOLDINGS
LLC
By ______________________________________
Name:
Title:
<PAGE>
Annex to
EXHIBIT N
Section 1.01. Subordination of Liabilities. Consolidated Container
Holdings LLC ("Holdings"), for itself, its successors and assigns, covenants and
agrees, and each holder of the Note to which this Annex A is attached (the
"Note") by its acceptance thereof likewise covenants and agrees, that the
payment of the principal of, interest on, and all other amounts owing in respect
of, the Note (the "Subordinated Indebtedness") is hereby expressly subordinated,
to the extent and in the manner hereinafter set forth, to the prior payment in
full in cash of all Senior Indebtedness (as defined in Section 1.07 of this
Annex A). The provisions of this Annex A are made for the benefit of the present
and future holders of Senior Indebtedness, and such holders are hereby made
obligees hereunder the same as if their names were written herein as such, and
they and/or each of them may proceed to enforce such provisions.
Section 1.02. Holdings Not to Make Payments with Respect to
Subordinated Indebtedness in Certain Circumstances. (a) Upon the maturity of any
Senior Indebtedness (including interest thereon or fees or any other amounts
owing in respect thereof), whether at stated maturity, by acceleration or
otherwise, all Obligations (as defined in Section 1.07 of this Annex A) owing in
respect thereof, in each case to the extent due and owing, shall first be paid
in full in cash, before any payment, whether in cash, property, securities or
otherwise, is made on account of the Subordinated Indebtedness.
(b) Until all Senior Indebtedness has been paid in full in cash and
all commitments in respect of such Senior Indebtedness have been terminated, the
sum of all payments in respect of the Note (including principal and interest),
together with the sum of (i) all payments made under all other Shareholder
Subordinated Notes and (ii) all payments made by Holdings and its Subsidiaries
to redeem or repurchase stock or options to purchase stock of Holdings held by
employees or former employees of Holdings and its Subsidiaries shall not exceed
at any time that amount permitted by the terms of the respective issue of Senior
Indebtedness.
(c) Holdings may not, directly or indirectly, make any payment of
any Subordinated Indebtedness and may not acquire any Subordinated Indebtedness
for cash or property until all Senior Indebtedness has been paid in full in cash
if any default or event of default under the Credit Agreement (as defined in
Section 1.07 of this Annex A) or any other issue of Senior Indebtedness is then
in existence or would result therefrom. Each holder of the Note hereby agrees
that, so long as any such default or event of default in respect of any issue of
Senior Indebtedness exists, it will not sue for, or otherwise take any action to
enforce Holdings= obligations to pay, amounts owing in respect of the Note. Each
holder of the Note understands and agrees that to the extent that clause (b) of
this Section 1.02 reduces the payment of interest and/or principal which would
otherwise be payable under the Note but for the limitations set forth in such
clause (b), or that the provisions of clause (a) or (c) of this Section 1.02
prohibits the payment of interest and/or principal under the Note, in either
case, such unpaid amount shall not constitute a payment default under the Note
and the holder of the Note may not sue for, or otherwise take action to enforce
Holdings= obligation to pay such amount, provided that such
<PAGE>
Annex to
Exhibit N
Page 2
unpaid principal or interest shall remain an obligation of Holdings to the
holder of the Note pursuant to the terms of the Note.
(d) In the event that notwithstanding the provisions of the
preceding subsections (a), (b) and (c) of this Section 1.02, Holdings shall make
any payment on account of the Subordinated Indebtedness at a time when payment
is not permitted by said subsection (a), (b) or (c), such payment shall be held
by the holder of the Note, in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of Senior Indebtedness or their
representative or the trustee under the indenture or other agreement pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application pro rata to the
payment of all Senior Indebtedness remaining unpaid to the extent necessary to
pay all Senior Indebtedness in full in cash in accordance with the terms of such
Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness. Without in any way
modifying the provisions of this Annex A or affecting the subordination effected
hereby, Holdings shall give the holder of the Note prompt written notice of any
event which would prevent payments under Section 1.02(a), (b) or (c) hereof.
Section 1.03. Subordination to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of Holdings. Upon any
distribution of assets of Holdings upon dissolution, winding up, liquidation or
reorganization of Holdings (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled
to receive payment in full in cash of all Senior Indebtedness (including,
without limitation, post-petition interest at the rate provided in the
documentation with respect to the Senior Indebtedness, whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before the holder of the Note is entitled to receive any
payment of any kind or character on account of the Subordinated Indebtedness;
(b) any payment or distributions of assets of Holdings of any kind
or character, whether in cash, property or securities to which the holder of the
Note would be entitled except for the provisions of this Annex A, shall be paid
by the liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or other trustee or agent, directly to the holders of Senior Indebtedness or
their representative or representatives, or to the trustee or trustees under any
indenture under which any instruments evidencing any such Senior Indebtedness
may have been issued, to the extent necessary to make payment in full in cash of
all Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 1.03, any payment or distribution of assets of Holdings of any kind
or character, whether in
<PAGE>
Annex to
Exhibit N
Page 3
cash, property or securities, shall be received by the holder of the Note on
account of Subordinated Indebtedness before all Senior Indebtedness is paid in
full in cash, such payment or distribution shall be received and held in trust
for and shall be paid over to the holders of the Senior Indebtedness remaining
unpaid or unprovided for or their representative or representatives, or to the
trustee or trustees under any indenture under which any instruments evidencing
any of such Senior Indebtedness may have been issued, for application to the
payment of such Senior Indebtedness until all such Senior Indebtedness shall
have been paid in full in cash, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
Without in any way modifying the provisions of this Annex A or
affecting the subordination effected hereby, Holdings shall give prompt written
notice to the holder of the Note of any dissolution, winding up, liquidation or
reorganization of Holdings (whether in bankruptcy, insolvency or receivership
proceedings or upon assignment for the benefit of creditors or otherwise).
Section 1.04. Subrogation. Subject to the prior payment in full in
cash of all Senior Indebtedness, the holder of the Note shall be subrogated to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of Holdings applicable to the Senior Indebtedness until
all amounts owing on the Note shall be paid in full, and for the purpose of such
subrogation no payments or distributions to the holders of the Senior
Indebtedness by or on behalf of Holdings or by or on behalf of the holder of the
Note by virtue of this Annex A which otherwise would have been made to the
holder of the Note shall, as between Holdings, its creditors other than the
holders of Senior Indebtedness, and the holder of the Note, be deemed to be
payment by Holdings to or on account of the Senior Indebtedness, it being
understood that the provisions of this Annex A are and are intended solely for
the purpose of defining the relative rights of the holder of the Note, on the
one hand, and the holders of the Senior Indebtedness, on the other hand.
Section 1.05. Obligation of Holdings Unconditional. Nothing
contained in this Annex A or in the Note is intended to or shall impair, as
between Holdings and the holder of the Note, the obligation of Holdings, which
is absolute and unconditional, to pay to the holder of the Note the principal of
and interest on the Note as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holder of the Note and creditors of Holdings other than the
holders of the Senior Indebtedness, nor shall anything herein or therein prevent
the holder of the Note from exercising all remedies otherwise permitted by
applicable law upon an event of default under the Note, subject to the
provisions of this Annex A and the rights, if any, under this Annex A of the
holders of Senior Indebtedness in respect of cash, property, or securities of
Holdings received upon the exercise of any such remedy. Upon any distribution of
assets of Holdings referred to in this Annex A, the holder of the Note shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the holder of the
Note, for the purpose of ascertaining the persons
<PAGE>
Annex to
Exhibit N
Page 4
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of Holdings, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Annex A.
Section 1.06. Subordination Rights Not Impaired by Acts or Omissions
of Holdings or Holders of Senior Indebtedness. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of Holdings or by any act or failure to act in good faith by any
such holder, or by any noncompliance by Holdings with the terms and provisions
of the Note, regardless of any knowledge thereof which any such holder may have
or be otherwise charged with. The holders of the Senior Indebtedness may,
without in any way affecting the obligations of the holder of the Note with
respect hereto, at any time or from time to time and in their absolute
discretion, change the manner, place or terms of payment of, change or extend
the time of payment of, or renew or alter, any Senior Indebtedness or amend,
modify, or supplement any agreement or instrument governing or evidencing such
Senior Indebtedness or any other document referred to therein, or exercise or
refrain from exercising any other of their rights under the Senior Indebtedness
including, without limitation, the waiver of default thereunder and the release
of any collateral securing such Senior Indebtedness, all without notice to or
assent from the holder of the Note.
Section 1.07. Senior Indebtedness. The term "Senior Indebtedness"
shall mean all Obligations (as defined below) (i) of Holdings under, or in
respect of, the Credit Agreement (as amended, modified, supplemented, extended,
restated, refinanced, replaced or refunded from time to time, the "Credit
Agreement"), dated as of July 1, 1999, among Holdings, Consolidated Container
Company LLC, the financial institutions from time to time party thereto, Morgan
Guaranty Trust Company of New York, as Documentation Agent, Donaldson, Lufkin &
Jenrette Securities Corporation, as Syndication Agent and Bankers Trust Company,
as Administrative Agent (as from time to time in effect, the "Credit Agreement),
and the other Credit Documents (as defined in the Credit Agreement), and any
renewal, extension, restatement, refinancing or refunding thereof, and (ii) of
Holdings under, or in respect of, any Interest Rate Protection Agreements or
Other Hedging Agreements (each as defined in the Credit Agreement). As used
herein, the term "Obligation" shall mean any principal, interest, premium,
penalties, fees, expenses, indemnities and other liabilities and obligations
payable under the documentation governing any Senior Indebtedness (including
post-petition interest of the rate provided in the documentation with respect to
such Senior Indebtedness, whether or not such interest is an allowed claim
against the debtor in any bankruptcy or similar proceeding).
<PAGE>
EXHIBIT 10.2
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 1, 1999 (as same may be amended,
amended and restated, modified or supplemented from time to time, this
"Agreement"), made by Consolidated Container Holdings LLC ("Holdings"),
Consolidated Container Company LLC (the "Borrower"), the Subsidiary Guarantors
(as defined in the Credit Agreement referred to below) and each other Subsidiary
of the Borrower that is required to execute a counterpart hereof pursuant to
Section 25 of this Agreement (the "Pledgors", and each, a "Pledgor"), and
Bankers Trust Company, not in its individual capacity but solely as Collateral
Agent (including any successor collateral agent, the "Pledgee") (x) for the
benefit of the Banks, the Issuing Bank and the Administrative Agent under, and
any other lenders from time to time party to, the Credit Agreement hereinafter
referred to (such Banks, the Issuing Bank and the Agent and other lenders, if
any, are hereinafter called the "Bank Creditors") and (y) if Bankers Trust
Company, in its individual capacity ("Bankers Trust"), any Bank or any Affiliate
of a Bank enters into one or more interest rate protection agreements or other
hedging agreements relating to the Loans (including, without limitation,
interest rate swaps, caps, floors, collars and similar agreements)
(collectively, the "Interest Rate Protection Agreements or Other Hedging
Agreements") with, or guaranteed by, any of the Pledgors, for the benefit of
Bankers Trust, any such Bank or Banks or a syndicate of financial institutions
organized by Bankers Trust or an affiliate of Bankers Trust (even if Bankers
Trust or the respective Bank subsequently ceases to be a Bank under the Credit
Agreement for any reason), so long as any such Bank or Affiliate participates in
the extension of such Interest Rate Protection Agreements or Other Hedging
Agreements and their subsequent assigns, if any (collectively, the "Interest
Rate Creditors", and the Interest Rate Creditors together with the Bank
Creditors, are hereinafter called the "Secured Creditors"). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement shall be
used herein as so defined.
W I T N E S S E T H:
WHEREAS, Holdings, the Borrower, the financial institutions from
time to time party thereto (the "Banks"), Morgan Guaranty Trust Company of New
York, as Documentation Agent, Donaldson, Lufkin & Jenrette Securities
Corporation, as Syndication Agent and Bankers Trust Company, as Administrative
Agent (together with any successor Administrative Agent, the "Administrative
Agent"), have entered into a Credit Agreement, dated as of July 1, 1999,
providing for the making of Loans to the Borrower and the issuance of, and
participation in, Letters of Credit as contemplated therein (as used herein, the
term "Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified or supplemented from time to
time, and including any successor agreement extending the maturity of, or
restructuring (including, but not limited to, the inclusion of additional
borrowers thereunder that are Subsidiaries of the Borrower and whose obligations
are guaranteed by the Guarantors thereunder or any increase in the amount
borrowed) all or any portion of the Indebtedness under such agreement or any
successor agreements);
WHEREAS, the Borrower may from time to time be party to one or more
Interest Rate Protection Agreements or Other Hedging Agreements with an Interest
Rate Creditor;
<PAGE>
2
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed
to the Secured Creditors the payment when due of all obligations and liabilities
of the Borrower under or with respect to the Credit Documents and the Interest
Rate Protection Agreements or Other Hedging Agreements which may hereinafter
arise;
WHEREAS, pursuant to a Subsidiaries Guaranty, dated as of July 1,
1999 (as amended, modified or supplemented from time to time, the "Subsidiaries
Guaranty"), each Pledgor (other than the Borrower and Holdings) has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Borrower under or with respect to the Credit
Documents and the Interest Rate Protection Agreements or Other Hedging
Agreements;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower and the issuance of, and participation in, Letters of Credit for the
account of the Borrower under the Credit Agreement that each Pledgor shall have
executed and delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor will obtain benefits from the incurrence of
Loans by the Borrower and the issuance of Letters of Credit for the account of
the Borrower under the Credit Agreement and the Borrower's entering into
Interest Rate Protection Agreements or Other Hedging Agreements and,
accordingly, desires to execute this Agreement in order to satisfy the
conditions precedent described in the preceding paragraph and to induce the
Banks to make Loans to the Borrower and participate in Letters of Credit, to
induce the Issuing Bank to issue Letters of Credit for the account of the
Borrower, and to induce the Interest Rate Creditors to enter into Interest Rate
Protection Agreements or Other Hedging Agreements with the Borrower;
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged,
each Pledgor hereby makes the following representations and warranties to
the Pledgee and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor
for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, indemnities, Fees and
interest thereon) of such Pledgor owing to the Bank Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection
with the Credit Agreement and the other Credit Documents to which such
Pledgor is a party (including all such obligations, liabilities and
indebtedness under the Guaranty to which such Pledgor is a party) and the
due performance and compliance by such Pledgor with all of the terms,
conditions and agreements contained in the Credit Agreement and such other
Credit Documents (all such obligations, liabilities and indebtedness under
this clause (i), except to the extent guaranteeing obligations of the
Borrower under Interest Rate Protection Agreements or Other Hedging
Agreements, being herein collectively called the "Credit Agreement
Obligations");
<PAGE>
3
(ii) the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, indemnities, fees and
interest thereon) of such Pledgor owing to the Interest Rate Creditors,
now existing or hereafter arising out of or in connection with any
Interest Rate Protection Agreement, whether such Interest Rate Protection
Agreement is now in existence or hereinafter arising, and the due
performance and compliance with the terms, conditions and agreements of
each such Interest Rate Protection Agreement including, in the case of
Pledgors other than the Borrower, all obligations, liabilities and
indebtedness under the Holdings Secured Guaranty and Subsidiaries Guaranty
(as applicable), in each case, in respect of the Interest Rate Protection
Agreements or Other Hedging Agreements, and the due performance and
compliance by such Pledgor with all of the terms, conditions and
agreements contained in each such Interest Rate Protection Agreement (all
such obligations, liabilities and indebtedness under this clause (ii)
being herein collectively called the "Interest Rate Obligations");
(iii) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) and/or preserve its security
interest therein;
(iv) in the event of any proceeding for the collection of the
Obligations (as defined below) or the enforcement of this Agreement, after
an Event of Default (such term, as used in this Agreement, shall mean any
Event of Default under, and as defined in, the Credit Agreement or any
payment default under any Interest Rate Protection Agreement and shall in
any event include, without limitation, any payment default (after the
expiration of any applicable grace period) on any of the Obligations (as
defined below)) shall have occurred and be continuing, the reasonable
expenses of retaking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral, or of any exercise
by the Pledgee of its rights hereunder, together with reasonable
attorneys' fees and court costs; and
(v) all amounts paid by any Indemnitee to which such Indemnitee has
the right to reimbursement under Section 11 of this Agreement.
all such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (v) of this Section 1 being collectively called the
"Obligations", it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITIONS; ANNEXES. (a) Unless otherwise defined herein, all
capitalized terms used herein and defined in the Credit Agreement shall be used
herein as therein defined. Reference to singular terms shall include the plural
and vice versa.
(b) The following capitalized terms used herein shall have the
definitions specified below:
"Administrative Agent" has the meaning set forth in the Recitals
hereto.
<PAGE>
4
"Adverse Claim" has the meaning given such term in Section
8-102(a)(1) of the UCC.
"Agreement" has the meaning set forth in the first paragraph hereof.
"Bank Creditors" has the meaning set forth in the first paragraph
hereof.
"Banks" has the meaning set forth in the Recitals hereto.
"Certificated Security" has the meaning given such term in Section
8-102(a)(4) of the UCC.
"Clearing Corporation" has the meaning given such term in Section
8-102(a)(5) of the UCC.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Accounts" means any and all accounts established and
maintained by the Pledgee in the name of any Pledgor to which Collateral may be
credited.
"Credit Agreement" has the meaning set forth in the Recitals hereto.
"Credit Agreement Obligations" has the meaning set forth in Section
1 hereof.
"Domestic Corporation" has the meaning set forth in the definition
of "Stock."
"Event of Default" has the meaning set forth in Section 1 hereof.
"Financial Asset" has the meaning given such term in Section
8-102(a)(9) of the UCC.
"Foreign Corporation" has the meaning set forth in the definition of
"Stock."
"Indemnitees" has the meaning set forth in Section 11 hereof.
"Instrument" has the meaning given such term in Section 9-105(1)(i)
of the UCC.
"Interest Rate Creditors" has the meaning set forth in the first
paragraph hereof.
"Interest Rate Obligations" has the meaning set forth in Section 1
hereof.
"Interest Rate Protection Agreements or Other Hedging Agreements"
has the meaning set forth in the first paragraph hereof.
<PAGE>
5
"Investment Property" has the meaning given such term in Section
9-115(f) of the UCC.
"Limited Liability Company Assets" means all assets, whether
tangible or intangible and whether real, personal or mixed (including, without
limitation, all limited liability company capital and interest in other limited
liability companies), at any time owned or represented by any Limited Liability
Company Interest.
"Limited Liability Company Interests" means the entire limited
liability company membership interest at any time owned by any Pledgor in any
limited liability company.
"Non-Voting Stock" means all capital stock which is not Voting
Stock.
"Notes" means (x) all intercompany notes at any time issued to each
Pledgor and (y) all other promissory notes from time to time issued to, or held
by, each Pledgor.
"Noticed Event of Default" shall mean (i) an Event of Default with
respect to the Borrower under Section 9.05 of the Credit Agreement and (ii) any
other Event of Default in respect of which the Pledgee has given the Borrower
notice that such Event of Default constitutes a "Noticed Event of Default."
"Obligations" has the meaning set forth in Section 1 hereof.
"Partnership Assets" means all assets, whether tangible or
intangible and whether real, personal or mixed (including, without limitation,
all partnership capital and interest in other partnerships), at any time owned
or represented by any Partnership Interest.
"Partnership Interest" means the entire general partnership interest
or limited partnership interest at any time owned by any Pledgor in any general
partnership or limited partnership.
"Pledged Notes" has the meaning set forth in Section 3.5 hereof.
"Pledgee" has the meaning set forth in the first paragraph hereof.
"Pledgor" has the meaning set forth in the first paragraph hereof.
"Proceeds" has the meaning given such term in Section 9-306(l) of
the UCC.
"Required Banks" has the meaning given such term in the Credit
Agreement.
"Secured Creditors" has the meaning set forth in the first paragraph
hereof.
"Secured Debt Agreements" has the meaning set forth in Section 5
hereof.
<PAGE>
6
"Securities Account" has the meaning given such term in Section
8-501(a) of the UCC.
"Securities Act" means the Securities Act of 1933, as amended, as in
effect from time to time.
"Security" and "Securities" has the meaning given such term in
Section 8-102(a)(15) of the UCC and shall in any event include all Stock and
Notes (to the extent same constitute "Securities" under Section 8-102(a)(15)).
"Security Entitlement" has the meaning given such term in Section
8-102(a)(17) of the UCC.
"Stock" means (x) with respect to corporations incorporated under
the laws of the United States or any State or territory thereof (each a
"Domestic Corporation"), all of the issued and outstanding shares of capital
stock of any corporation at any time owned by any Pledgor of any Domestic
Corporation and (y) with respect to corporations not Domestic Corporations (each
a "Foreign Corporation"), all of the issued and outstanding shares of capital
stock at any time owned by any Pledgor of any Foreign Corporation.
"Termination Date" has the meaning set forth in Section 19 hereof.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York from time to time; provided that all references herein to specific
sections or subsections of the UCC are references to such sections or
subsections, as the case may be, of the Uniform Commercial Code as in effect in
the State of New York on the date hereof.
"Uncertificated Security" has the meaning given such term in Section
8-102(a)(18) of the UCC.
"Voting Stock" means all classes of capital stock of any Foreign
Corporation entitled to vote.
3. PLEDGE OF SECURITY INTEREST, ETC.
3.1 Pledge. To secure the Obligations now or hereafter owed or to be
performed by such Pledgor, each Pledgor does hereby grant, pledge and assign to
the Pledgee for the benefit of the Secured Creditors, and does hereby create a
continuing security interest (subject to those Liens permitted to exist with
respect to the Collateral pursuant to the terms of all Secured Debt Agreements
then in effect) in favor of the Pledgee for the benefit of the Secured Creditors
in, all of the right, title and interest in and to the following, whether now
existing or hereafter from time to time acquired (collectively, the
"Collateral"):
(a) each of the Collateral Accounts (to the extent a security
interest therein is not created pursuant to the Security Agreement),
including any and all assets of whatever type or kind deposited by such
Pledgor in such Collateral Account, whether now owned
<PAGE>
7
or hereafter acquired, existing or arising, including, without limitation,
all Financial Assets, Investment Property, moneys, checks, drafts,
Instruments, Securities or interests therein of any type or nature
deposited or required by the Credit Agreement or any other Secured Debt
Agreement to be deposited in such Collateral Account, and all investments
and all certificates and other Instruments (including depository receipts,
if any) from time to time representing or evidencing the same, and all
dividends, interest, distributions, cash and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing;
(b) all Stock of such Pledgor from time to time;
(c) all Limited Liability Company Interests of such Pledgor from
time to time and all of its right, title and interest in each limited liability
company to which each such interest relates, whether now existing or hereafter
acquired, including, without limitation:
(A) all the capital thereof and its interest in all profits,
losses, Limited Liability Company Assets and other distributions to
which such Pledgor shall at any time be entitled in respect of such
Limited Liability Company Interests;
(B) all other payments due or to become due to such Pledgor in
respect of Limited Liability Company Interests, whether under any
limited liability company agreement or otherwise, whether as
contractual obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority,
options, security interests, liens and remedies, if any, under any
limited liability company agreement or operating agreement, or at
law or otherwise in respect of such Limited Liability Company
Interests;
(D) all present and future claims, if any, of such Pledgor
against any such limited liability company for moneys loaned or
advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any limited liability
company agreement or operating agreement or at law to exercise and
enforce every right, power, remedy, authority, option and privilege
of such Pledgor relating to such Limited Liability Company
Interests, including any power to terminate, cancel or modify any
limited liability company agreement or operating agreement, to
execute any instruments and to take any and all other action on
behalf of and in the name of any of such Pledgor in respect of such
Limited Liability Company Interests and any such limited liability
company, to make determinations, to exercise any election
(including, but not limited to, election of remedies) or option or
to give or receive any notice, consent, amendment, waiver or
approval, together with full power and authority to demand, receive,
enforce, collect or receipt for any of the foregoing or for any
Limited Liability Company Asset, to enforce or
<PAGE>
8
execute any checks, or other instruments or orders, to file any
claims and to take any action in connection with any of the
foregoing; and
(F) all other property hereafter delivered in substitution for
or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at
any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof;
(d) all Partnership Interests of such Pledgor from time to time and
all of its right, title and interest in each partnership to which each
such interest relates, whether now existing or hereafter acquired,
including, without limitation:
(A) all the capital thereof and its interest in all profits,
losses, Partnership Assets and other distributions to which such
Pledgor shall at any time be entitled in respect of such Partnership
Interests;
(B) all other payments due or to become due to such Pledgor in
respect of Partnership Interests, whether under any partnership
agreement or otherwise, whether as contractual obligations, damages,
insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority,
options, security interests, liens and remedies, if any, under any
partnership agreement or operating agreement, or at law or otherwise
in respect of such Partnership Interests;
(D) all present and future claims, if any, of such Pledgor
against any such partnership for moneys loaned or advanced, for
services rendered or otherwise;
(E) all of such Pledgor's rights under any partnership
agreement or operating agreement or at law to exercise and enforce
every right, power, remedy, authority, option and privilege of such
Pledgor relating to such Partnership Interests, including any power
to terminate, cancel or modify any partnership agreement or
operating agreement, to execute any instruments and to take any and
all other action on behalf of and in the name of any of such Pledgor
in respect of such Partnership Interests and any such partnership,
to make determinations, to exercise any election (including, but not
limited to, election of remedies) or option or to give or receive
any notice, consent, amendment, waiver or approval, together with
full power and authority to demand, receive, enforce, collect or
receipt for any of the foregoing or for any Partnership Asset, to
enforce or execute any checks, or other instruments or orders, to
file any claims and to take any action in connection with any of the
foregoing (with all of the foregoing rights only to be exercisable
upon the occurrence and during the continuation of an Event of
Default); and
<PAGE>
9
(F) all other property hereafter delivered in substitution for
or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at
any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof;
(e) all Security Entitlements of such Pledgor from time to time in
any and all of the foregoing;
(f) all Financial Assets and Investment Property of such Pledgor
from time to time;
(g) all Notes and other debt securities constituting Indebtedness
permitted by Section 8.05(i), (ii), (iii) and (xiii); and
(h) all Proceeds of and all products (including interest, dividends,
distributions and other earnings) any and all of the foregoing;
provided that the Collateral shall not include (i) more that 65% of the
Stock of any Foreign Corporation, (ii) to the extent that applicable law
requires that a Subsidiary of the Pledgor issue directors' qualifying
shares, such qualifying shares, (iii) Cash Equivalents or (iv) Equity
Interests in Persons which are not Subsidiaries to the extent that the
Pledgor is contractually restricted from pledging such Equity Interests
owned by it.
3.2 Procedures. (a) To the extent that any Pledgor at any time or
from time to time owns, acquires or obtains any right, title or interest in any
Collateral, such Collateral shall automatically (and without the taking of any
action by the respective Pledgor) be pledged pursuant to Section 3.1 of this
Agreement and, in addition thereto, such Pledgor shall (to the extent provided
below) take the following actions as set forth below (as promptly as practicable
and, in any event, within 10 days after it obtains such Collateral) for the
benefit of the Pledgee and the Secured Creditors:
(i) with respect to a Certificated Security (other than a
Certificated Security credited on the books of a Clearing Corporation) or
any Note, the respective Pledgor shall physically deliver such
Certificated Security or Note to the Pledgee, indorsed to the Pledgee or
indorsed in blank;
(ii) with respect to an Uncertificated Security (other than an
Uncertificated Security credited on the books of a Clearing Corporation),
the respective Pledgor shall cause the issuer of such Uncertificated
Security to duly authorize and execute, and deliver to the Pledgee, an
agreement for the benefit of the Pledgee and the Secured Creditors
substantially in the form of Annex G hereto (appropriately completed to
the reasonable satisfaction of the Pledgee and with such modifications, if
any, as shall be reasonably satisfactory to the Pledgee) pursuant to which
such issuer agrees to comply with any and all instructions originated by
the Pledgee without further consent by the registered owner and not to
comply with instructions regarding such Uncertificated Security (and any
<PAGE>
10
Partnership Interests and Limited Liability Company Interests issued by
such issuer) originated by any other Person other than a court of
competent jurisdiction (provided that the Pledgee agrees with each Pledgor
which executes any such agreement that it shall not give any instructions
to any issuer pursuant to any such agreement Uncertificated Security
except upon the instruction of such Pledgor unless a Noticed Event of
Default has occurred and is continuing);
(iii) with respect to a Certificated Security, Uncertificated
Security, Partnership Interest or Limited Liability Company Interest
credited on the books of a Clearing Corporation (including a Federal
Reserve Bank, Participants Trust Company or The Depository Trust Company),
the respective Pledgor shall promptly notify the Pledgee thereof and shall
promptly take all actions required (i) to comply with the applicable rules
of such Clearing Corporation and (ii) to perfect the security interest of
the Pledgee under applicable law (including, in any event, under Sections
9-115 (4)(a) and (b), 9-115 (1)(e) and 8-106 (d) of the UCC). The Pledgor
further agrees to take such actions as the Pledgee reasonably deems
necessary or desirable to effect the foregoing;
(iv) with respect to a Partnership Interest or a Limited Liability
Company Interest (other than a Partnership Interest or Limited Liability
Interest credited on the books of a Clearing Corporation), (1) if such
Partnership Interest or Limited Liability Company Interest is represented
by a certificate, the procedure set forth in Section 3.2(a)(i), with
respect to such interest and (2) if such Partnership Interest or Limited
Liability Company Interest is not represented by a certificate, the
procedure set forth in Section 3.2(a)(ii) with respect to such interest if
it is an Uncertificated Security;
(v) with respect to any Note, physical delivery of such Note to the
Pledgee, indorsed to the Pledgee or indorsed in blank; and
(vi) with respect to cash, to the extent not otherwise provided in
the Security Agreement, only when a Noticed Event of Default has occurred
and is continuing (i) establishment by the Pledgee of a cash account in
the name of such Pledgor over which the Pledgee shall have exclusive and
absolute control and dominion (and no withdrawals or transfers may be made
therefrom by any Person except with the prior written consent of the
Pledgee) and (ii) deposit of such cash in such cash account.
(b) In addition to the actions required to be taken pursuant to
proceeding Section 3.2(a), each Pledgor shall take the following additional
actions with respect to the Securities and Collateral (as defined below):
(i) with respect to all Collateral of such Pledgor whereby or with
respect to which the Pledgee may obtain "control" thereof within the
meaning of Section 8-106 of the UCC (or under any provision of the UCC as
same may be amended or supplemented from time to time, or under the laws
of any relevant State other than the State of New York), the respective
Pledgor shall take all actions as may be requested from time to time by
the Pledgee so that "control" of such Collateral is obtained and at all
times held by the Pledgee; and
<PAGE>
11
(ii) each Pledgor shall from time to time cause appropriate
financing statements (on Form UCC-1 or other appropriate form) under the
Uniform Commercial Code as in effect in the various relevant States, on
form covering all Collateral hereunder (with the form of such financing
statements to be satisfactory to the Pledgee), to be filed in the relevant
filing offices so that at all times the Pledgee has a security interest in
all Investment Property and other Collateral which is perfected by the
filing of such financing statements (in each case to the maximum extent
perfection by filing may be obtained under the laws of the relevant
States, including, without limitation, Section 9-115(4)(b) of the UCC).
3.3 Subsequently Acquired Collateral. If any Pledgor shall acquire
(by purchase, stock dividend or otherwise) any additional Collateral at any time
or from time to time after the date hereof, such Collateral shall automatically
(and without any further action being required to be taken) be subject to the
pledge and security interests created pursuant to Section 3.1 and, furthermore,
the Pledgor will promptly thereafter take (or cause to be taken) all action with
respect to such Collateral in accordance with the procedures set forth in
Section 3.2, and will promptly thereafter deliver to the Pledgee (i) a
certificate executed by a principal executive officer of such Pledgor describing
such Collateral and certifying that the same has been duly pledged in favor of
the Pledgee (for the benefit of the Secured Creditors) hereunder and (ii)
supplements to Annexes A through F hereto as are necessary to cause such annexes
to be complete and accurate at such time. Without limiting the foregoing, each
Pledgor shall be required to pledge hereunder any shares of stock at any time
and from time to time after the date hereof acquired by such Pledgor of any
Foreign Corporation, provided that no Pledgor (to the extent that it is the
Borrower or a Domestic Subsidiary of the Borrower) shall be required at any time
to pledge hereunder more than 65% of the Stock of any Foreign Corporation.
3.4 Transfer Taxes. Each pledge of Collateral under Section 3.1 or
Section 3.3 shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.
3.5 Definition of Pledged Notes. All Notes at any time pledged or
required to be pledged hereunder are hereinafter called the "Pledged Notes".
3.6 Certain Representations and Warranties Regarding the Collateral.
Each Pledgor represents and warrants that on the date hereof (i) each Subsidiary
of such Pledgor, and the direct ownership thereof, is listed in Annex A hereto;
(ii) the Stock held by such Pledgor consists of the number and type of shares of
the stock of the corporations as described in Annex B hereto; (iii) such Stock
constitutes that percentage of the issued and outstanding capital stock of the
issuing corporation as is set forth in Annex B hereto; (iv) the Notes held by
such Pledgor consist of the promissory notes described in Annex C hereto where
such Pledgor is listed as the lender; (v) the Limited Liability Company
Interests held by such Pledgor consist of the number and type of interests of
the Persons described in Annex D hereto; (vi) each such Limited Liability
Company Interest constitutes that percentage of the issued and outstanding
equity interest of the issuing Person as set forth in Annex D hereto; (vii) the
Partnership Interests held by such Pledgor consist of the number and type of
interests of the Persons described in Annex E hereto; (viii) each such
Partnership Interest constitutes that percentage or portion of the entire
partnership
<PAGE>
12
interest of the Partnership as set forth in Annex E hereto; (ix) the Pledgor has
complied with the respective procedure set forth in Section 3.2(a) with respect
to each item of Collateral described in Annexes A through E hereto; and (x) on
the date hereof, such Pledgor owns no other Stock, Notes, Limited Liability
Company Interests or Partnership Interests.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Collateral, which may be held (in the discretion of
the Pledgee) in the name of the relevant Pledgor, endorsed or assigned in blank
or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there
shall have occurred and be continuing a Noticed Event of Default, each Pledgor
shall be entitled to exercise all voting rights attaching to any and all
Collateral owned by it, and to give consents, waivers or ratifications in
respect thereof provided that no vote shall be cast or any consent, waiver or
ratification given or any action taken which would violate, result in breach of
any covenant contained in, or be inconsistent with, any of the terms of this
Agreement, the Credit Agreement, any other Credit Document or any Interest Rate
Protection Agreement (collectively, the "Secured Debt Agreements"), or which
would have the effect of impairing the value of the Collateral, the position or
interests of the Pledgee or any Secured Creditor therein. All such rights of a
Pledgor to vote and to give consents, waivers and ratifications shall cease in
case a Noticed Event of Default shall occur and be continuing and Section 7
hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until a Noticed
Event of Default shall have occurred and be continuing, all cash dividends, cash
distributions, cash Proceeds and other cash amounts payable in respect of the
Collateral shall be paid to the respective Pledgor. Subject to Section 3.2
hereof, the Pledgee shall be entitled to receive directly, and to retain as part
of the Collateral:
(i) all other or additional Stock, Notes, Limited Liability Company
Interests, Partnership Interests, Instruments or other Securities or
property (including, but not limited to, cash dividends other than as set
forth above) paid or distributed by way of dividend or otherwise in
respect of the Collateral;
(ii) all other or additional Stock, Notes, Limited Liability Company
Interests, Partnership Interests, Instruments or other Securities or
property (including, but not limited to, cash) paid or distributed in
respect of the Collateral by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement; and
(iii) all other or additional Stock, Notes, Limited Liability
Company Interests, Partnership Interests, Instruments or other Securities
or property (including, but not limited to, cash) which may be paid in
respect of the Collateral by reason of any consolidation, merger, exchange
of stock, conveyance of assets, liquidation or similar corporate
reorganization.
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13
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive the proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. Furthermore, the foregoing
provisions of this Section 6 shall not apply to dividends or distributions made
in connection with the Transaction contemplated by Sections 9.02 of the Credit
Agreement, provided that such transactions are consummated in accordance with
the applicable terms and conditions set forth in the Credit Agreement. All
dividends, distributions or other payments which are received by the respective
Pledgor contrary to the provisions of this Section 6 or Section 7 shall be
received in trust for the benefit of the Pledgee, shall be segregated from other
property or funds of such Pledgor and shall be forthwith paid over to the
Pledgee as Collateral in the same form as so received (with any necessary
endorsement).
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT OR CERTAIN DEFAULTS. In
case a Noticed Event of Default shall have occurred and be continuing, the
Pledgee shall be entitled to exercise all of the rights, powers and remedies
(whether vested in it by this Agreement or by any other Secured Debt Agreement
or by law) for the protection and enforcement of its rights in respect of the
Collateral, including, without limitation, all the rights and remedies of a
secured party upon default under the Uniform Commercial Code of the State of New
York, and the Pledgee shall be entitled, without limitation, to exercise any or
all of the following rights, which each Pledgor hereby agrees to be commercially
reasonable:
(i) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 to such Pledgor;
(ii) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect
upon any Pledged Note (including, without limitation, to make any demand
for payment thereon);
(iv) to vote all or any part of the Collateral (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (each Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution to do
so);
(v) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time
or place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of
credit risk, and for such price or prices and on such terms as the Pledgee
in its absolute discretion may determine; provided that at least 10 days'
notice of the time and place of any such sale shall be given to such
Pledgor. The Pledgee shall not be obligated to make such sale of
Collateral regardless of whether any such notice of sale has theretofore
been given. Each purchaser
<PAGE>
14
at any such sale shall hold the property so sold absolutely free from any
claim or right on the part of each Pledgor, and each Pledgor hereby waives
and releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, all rights, if any, of marshalling the Collateral and any other
security for the Obligations or otherwise, and all rights, if any, of stay
and/or appraisal which it now has or may at any time in the future have
under rule of law or statute now existing or hereafter enacted. At any
such sale, unless prohibited by applicable law, the Pledgee on behalf of
all Secured Creditors (or certain of them) may bid for and purchase (by
bidding in Obligations or otherwise) all or any part of the Collateral so
sold free from any such right or equity of redemption. Neither the Pledgee
nor any Secured Creditor shall be liable for failure to collect or realize
upon any or all of the Collateral or for any delay in so doing nor shall
any of them be under any obligation to take any action whatsoever with
regard thereto; and
(vi) to set-off any and all Collateral against any and all
Obligations, and to withdraw any and all cash or other Collateral from any
and all Collateral Accounts and to apply such cash and other Collateral to
the payment of any and all Obligations;
provided that, upon the occurrence of a Default under Section 9.05 of the Credit
Agreement, the Pledgee may exercise the rights specified in clause (i) above.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement, or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or any other Secured Debt Agreement or now or hereafter existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any Secured Creditor of all
such other rights, powers or remedies, and no failure or delay on the part of
the Pledgee or any Secured Creditor to exercise any such right, power or remedy
shall operate as a waiver thereof. Unless otherwise required by the Credit
Documents, no notice to or demand on any Pledgor in any case shall entitle such
Pledgor to any other or further notice or demand in similar other circumstances
or constitute a waiver of any of the rights of the Pledgee or any Secured
Creditor to any other or further action in any circumstances without demand or
notice. The Secured Creditors agree that this Agreement may be enforced only by
the action of the Pledgee, acting upon the instructions of the Required Banks
(or, after the date on which all Credit Agreement Obligations have been paid in
full, the holders of at least a majority of the Interest Rate Obligations) and
that no other Secured Creditor shall have any right individually to seek to
enforce or to enforce this Agreement or to realize upon the security to be
granted hereby, it being understood and agreed that such rights and remedies may
be exercised by the Pledgee or the holders of at least a majority of the
Interest Rate Obligations, as the case may be, for the benefit of the Secured
Creditors upon the terms of this Agreement and the other Credit Documents.
9. APPLICATION OF PROCEEDS. All moneys collected by the Pledgee upon
any sale or other disposition of the Collateral pursuant to the terms of this
Agreement,
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15
together with all other moneys received by the Pledgee hereunder, shall be
applied to the payment of the Obligations in the manner provided in Section 7.4
of the Security Agreement.
(a) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency between the amount
of proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee, each Secured Creditor and their and
their affiliates' respective successors, assigns, employees, agents and servants
(individually an "Indemnitee", and collectively, the "Indemnitees") from and
against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, and (ii) to
reimburse each Indemnitee for all costs and expenses, including reasonable
attorneys' fees, in each case arising out of or resulting from this Agreement or
the exercise by any Indemnitee of any right or remedy granted to it hereunder or
under any other Secured Debt Agreement (but excluding any claims, demands,
losses, judgments and liabilities (including liabilities for penalties) or
expenses of whatsoever kind or nature to the extent incurred or arising by
reason of gross negligence or willful misconduct of such Indemnitee). In no
event shall any Indemnitee hereunder be liable, in the absence of gross
negligence or willful misconduct on its part, for any matter or thing in
connection with this Agreement other than to account for monies or other
property actually received by it in accordance with the terms hereof. If and to
the extent that the obligations of any Pledgor under this Section 11 are
unenforceable for any reason, each Pledgor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law. The indemnity obligations of each Pledgor
contained in this Section 11 shall continue in full force and effect
notwithstanding the full payment of all the Notes issued under the Credit
Agreement, the termination of all Interest Rate Protection Agreements or Other
Hedging Agreements and Letters of Credit, and the payment of all other
Obligations and notwithstanding the discharge thereof.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) Each Pledgor agrees
that it will join with the Pledgee in executing and, at such Pledgor's own
expense, file and refile under the Uniform Commercial Code such financing
statements, continuation statements and other documents in such offices as the
Pledgee (acting on its own or on the instructions of the Required Banks) may
reasonably deem necessary or appropriate and wherever required or permitted by
law in order to perfect and preserve the Pledgee's security interest in the
Collateral hereunder and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the signature of such Pledgor where permitted by law, and agrees to do
such further acts and things and to execute and
<PAGE>
16
deliver to the Pledgee such additional conveyances, assignments, agreements and
instruments as the Pledgee may reasonably require or deem advisable to carry
into effect the purposes of this Agreement or to further assure and confirm unto
the Pledgee its rights, powers and remedies hereunder or thereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time after the occurrence
and during the continuance of a Noticed Event of Default, in the Pledgee's
discretion to take any action and to execute any instrument which the Pledgee
may deem necessary or advisable to accomplish the purposes of this Agreement.
13. THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the obligations
of the Pledgee as holder of the Collateral and interests therein and with
respect to the disposition thereof, and otherwise under this Agreement, are only
those expressly set forth in this Agreement. The Pledgee shall act hereunder on
the terms and conditions set forth herein and in Section 12 of the Credit
Agreement.
14. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except in accordance
with the terms of this Agreement and the Credit Documents).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. (a)
Each Pledgor represents, warrants and covenants that:
(i) it is the legal, beneficial and record owner of, and has good
and marketable title to, all Collateral and that it has sufficient
interest in all Collateral in which a security interest is purported to be
created hereunder for such security interest to attach (subject, in each
case, to no pledge, lien, mortgage, hypothecation, security interest,
charge, option, Adverse Claim or other encumbrance whatsoever, except the
liens and security interests created by this Agreement or the Security
Agreement and Permitted Liens);
(ii) it has full corporate and limited liability company power,
authority and legal right to pledge all the Collateral pledged by it
pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and
delivered by such Pledgor and constitutes a legal, valid and binding
obligation of such Pledgor enforceable against such Pledgor in accordance
with its terms, subject to the effects of bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (regardless of whether considered in proceedings in equity or
at law) and an implied covenant of good faith and fair dealing;
<PAGE>
17
(iv) no consent of any other party (including, without limitation,
any stockholder or creditor of such Pledgor or any of their Subsidiaries)
and no consent, license, permit, approval or authorization of, exemption
by, notice or report to, or registration, filing or declaration with, any
governmental authority is required to be obtained by such Pledgor in
connection with (a) the execution, delivery or performance of this
Agreement, (b) the validity or enforceability of this Agreement (except as
set forth in clause (iii) above), (c) the perfection or enforceability of
the Pledgee's security interest in the Collateral or (d) except for
compliance with or as may be required by applicable securities laws, the
exercise by the Pledgee of any of its rights or remedies provided herein
except those (A) which have been obtained or made prior to the Initial
Borrowing Date, (B) the absence of which, either individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect on either (x) the business, operations, property, assets,
liabilities or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole or (y) the rights or remedies of the Banks
or the Administrative Agent or on the ability of Holdings or any of its
Subsidiaries to perform their respective obligations hereunder and under
the other Documents to which they are, or will be, a party or (C) for
filings and recordings required to perfect the security interests created
under the Security Documents, which filings and recordings will be made
within 10 Business Days after the Initial Borrowing Date;
(v) the execution, delivery or performance by such Pledgor of this
Agreement, nor compliance by it with the terms and provisions hereof, (i)
will contravene any provision of any applicable law, statute, rule or
regulation or any applicable order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with, or result
in any breach of any of the terms, covenants, conditions or provisions of,
or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (except pursuant to this
Agreement) upon any of the properties or assets of such Pledgor or any of
its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement or loan agreement, or any other material
agreement, contract or instrument, to which such Pledgor or any of its
Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of
the certificate of incorporation or by-laws or other organizational
documents, as applicable, of such Pledgor or any of its Subsidiaries;
(vi) all of the Collateral (consisting of Stock, Notes, Limited
Liability Company Interests or Partnership Interests) has been duly and
validly issued, is fully paid and non-assessable and is subject to no
options to purchase or similar rights; and
(vii) the pledge, collateral assignment and delivery to the Pledgee
of the Collateral consisting of certificated securities pursuant to this
Agreement creates a valid and perfected first priority security interest
in such Securities, and the proceeds thereof, subject to no prior Lien or
encumbrance or to any agreement purporting to grant to any third party a
Lien or encumbrance on the property or assets of such Pledgor which would
include the Securities (other than Permitted Liens) and the Pledgee is
entitled to all the rights, priorities and benefits afforded by the UCC or
other relevant law as enacted in any relevant jurisdiction to perfect
security interests in respect of such Collateral; and
<PAGE>
18
(viii) "control" (as defined in Section 8-106 of the UCC) has been
obtained by the Pledgee over all Collateral consisting of Securities
(including Notes which are Securities) with respect to which such
"control" may be obtained pursuant to Section 8-106 of the UCC.
(b) Each Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Securities and the
proceeds thereof against the claims and demands of all persons whomsoever; and
each Pledgor covenants and agrees that it will have like title to and right to
pledge any other property at any time hereafter pledged to the Pledgee as
Collateral hereunder and will likewise defend the right thereto and security
interest therein of the Pledgee and the Secured Creditors.
(c) Each Pledgor covenants and agrees that it will take no action
which would violate any of the terms of any Secured Debt Agreement.
16. CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive office of
each Pledgor is located at the address specified in Annex F hereto. Each Pledgor
will not move its chief executive office except to such new location as such
Pledgor may establish in accordance with the last sentence of this Section 16.
The originals of all documents in the possession of such Pledgor evidencing all
Collateral, including but not limited to all Limited Liability Company Interests
and Partnership Interests, and the only original books of account and records of
the Pledgor relating thereto are, and will continue to be, kept at such chief
executive office at the location specified in Annex F hereto, or at such new
locations as the Pledgor may establish in accordance with the last sentence of
this Section 16. All Limited Liability Company Interests and Partnership
Interests are, and will continue to be, maintained at, and controlled and
directed (including, without limitation, for general accounting purposes) from,
such chief executive office location specified in Annex F hereto, or such new
locations as the Pledgor may establish in accordance with the last sentence of
this Section 16. No Pledgor shall establish a new location for such offices
until (i) it shall have given to the Collateral Agent not less than 15 days'
prior written notice of its intention so to do, clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may reasonably request and (ii) with respect to such new
location, it shall have taken all action, satisfactory to the Collateral Agent,
to maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect. Promptly after establishing a new location for such offices in
accordance with the immediately preceding sentence, the respective Pledgor shall
deliver to the Pledgee a supplement to Annex F hereto so as to cause such Annex
F hereto to be complete and accurate.
17. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever (other than termination of this Agreement pursuant to
Section 19 hereof), including, without limitation:
(i) any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from any Secured Debt Agreement
(other than this Agreement
<PAGE>
19
in accordance with its terms), or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof;
(ii) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of any such agreement or instrument or this
Agreement (other than a waiver, consent or extension with respect to this
Agreement in accordance with its terms);
(iii) any furnishing of any additional security to the Pledgee or
its assignee or any acceptance thereof or any release of any security by
the Pledgee or its assignee;
(iv) any limitation on any party's liability or obligations under
any such instrument or agreement or any invalidity or unenforceability, in
whole or in part, of any such instrument or agreement or any term thereof;
or
(v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
any Pledgor or any Subsidiary of any Pledgor, or any action taken with
respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not such Pledgor shall have notice or
knowledge of any of the foregoing.
18. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the Pledgee
a written request or requests that such Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any part of the Collateral consisting of
Securities, Limited Liability Company Interests or Partnership Interests, such
Pledgor as soon as practicable and at its expense will use its best efforts to
cause such registration to be effected (and be kept effective) and will use its
best efforts to cause such qualification and compliance to be effected (and be
kept effective) as may be so requested and as would permit or facilitate the
sale and distribution of such Collateral consisting of Securities, Limited
Liability Company Interests or Partnership Interests, including, without
limitation, registration under the Securities Act of 1933, as then in effect (or
any similar statute then in effect), appropriate qualifications under applicable
blue sky or other state securities laws and appropriate compliance with any
other governmental requirements; provided, that the Pledgee shall furnish to
such Pledgor such information regarding the Pledgee as such Pledgor may request
in writing and as shall be required in connection with any such registration,
qualification or compliance. Each Pledgor will cause the Pledgee to be kept
reasonably advised in writing as to the progress of each such registration,
qualification or compliance and as to the completion thereof, will furnish to
the Pledgee such number of prospectuses, offering circulars and other documents
incident thereto as the Pledgee from time to time may reasonably request, and
will indemnify, to the extent permitted by law, the Pledgee and all other
Secured Creditors participating in the distribution of such Collateral
consisting of Securities, Limited Liability Company Interests or Partnership
Interests against all claims, losses, damages and liabilities caused by any
untrue statement (or alleged untrue statement) of a material fact contained
therein (or in any related registration statement, notification or the like) or
by any omission (or alleged omission) to state therein (or in any related
registration statement, notification or the like) a material fact required to be
stated therein or necessary to make the statements therein not
<PAGE>
20
misleading, except insofar as the same may have been caused by an untrue
statement or omission based upon information furnished in writing to such
Pledgor by the Pledgee expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Collateral consisting of Securities,
Limited Liability Company Interests or Partnership Interests pursuant to Section
7 hereof, and such Collateral or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Securities Act of 1933,
as then in effect, the Pledgee may, in its sole and absolute discretion, sell
such Collateral or part thereof by private sale in such manner and under such
circumstances as the Pledgee may deem necessary or advisable in order that such
sale may legally be effected without such registration. Without limiting the
generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion: (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Collateral or
part thereof shall have been filed under such Securities Act; (ii) may approach
and negotiate with a single possible purchaser to effect such sale; and (iii)
may restrict such sale to a purchaser who will represent and agree that such
purchaser is purchasing for its own account, for investment, and not with a view
to the distribution or sale of such Collateral or part thereof. In the event of
any such sale, the Pledgee shall incur no responsibility or liability for
selling all or any part of the Collateral at a price which the Pledgee, in its
sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might be realized if the sale were deferred until the registration as aforesaid.
19. TERMINATION; RELEASE. (a) On the Termination Date (as defined
below), this Agreement shall terminate (provided that all indemnities set forth
herein including, without limitation, in Section 11 hereof shall survive any
such termination) and the Pledgee, at the request and expense of the respective
Pledgor, will execute and deliver to such Pledgor a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement
(including, without limitation, UCC termination statements and instruments of
satisfaction, discharge and/or reconveyance), and will duly assign, transfer and
deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Pledgee and
as has not theretofore been sold or otherwise applied or released pursuant to
this Agreement, together with any moneys at the time held by the Pledgee or any
of its sub-agents hereunder and, with respect to any Collateral consisting of an
Uncertificated Security (other than an Uncertificated Security credited on the
books of a Clearing Corporation), a Partnership Interest or a Limited Liability
Company Interest, a termination of the agreement relating thereto executed and
delivered by the issuer of such Uncertificated Security pursuant to Section
3.2(a)(ii) hereof or by the respective partnership or limited liability company
pursuant to Section 3.2(a)(iv) hereof. As used in this Agreement, "Termination
Date" shall mean the date upon which the Total Commitments and all Interest Rate
Protection Agreements or Other Hedging Agreements have been terminated, no
Letter of Credit or Note is outstanding (and all Loans have been paid in full),
all Letters of Credit have been terminated, and all other Obligations then due
and payable have been paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed of in connection with a sale or disposition permitted by the
Credit Agreement or is otherwise
<PAGE>
21
released at the direction of the Required Banks (or all the Banks if required by
Section 13.12 of the Credit Agreement), and the proceeds of such sale or sales
or from such release are applied in accordance with the terms of the Credit
Agreement to the extent required to be so applied, the Pledgee, at the request
and expense of the respective Pledgor will duly assign, transfer and deliver to
such Pledgor (without recourse and without any representation or warranty) such
of the Collateral as is then being (or has been) so sold or released and as may
be in possession of the Pledgee and has not theretofore been released pursuant
to this Agreement.
(c) At any time that any Pledgor desires that Collateral be released
as provided in the foregoing Section 19(a) or (b), it shall deliver to the
Pledgee a certificate signed by a principal executive officer of such Pledgor
stating that the release of the respective Collateral is permitted pursuant to
Section 19(a) or (b). The Pledgee shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it as permitted
by this Section 19.
(d) The Pledgee shall have no liability whatsoever to any Secured
Creditor as the result of any release of Collateral by it in accordance with
this Section 19.
20. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
(i) if to any Pledgor, at its address set forth opposite its
signature below;
(ii) if to the Pledgee, at:
Bankers Trust Company
130 Liberty Street
New York, NY 10006
Tel: (212) 250-5175
Fax: (212) 250-7218
(iii) if to any Bank (other than the Pledgee), at such address as
such Bank shall have specified in the Credit Agreement;
(iv) if to any Interest Rate Creditor, at such address as such
Interest Rate Creditor shall have specified in writing to the Borrower and
the Pledgee;
or at such address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
21. THE PLEDGEE. The Pledgee will hold, directly or indirectly in
accordance with this Agreement, all items of the Collateral at any time received
by it under this Agreement. It is expressly understood and agreed that the
obligations of the Pledgee with respect to the Collateral, interests therein and
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in the UCC and this Agreement.
<PAGE>
22
22. WAIVER; AMENDMENT. Except as contemplated in Section 25 hereof,
none of the terms and conditions of this Agreement may be changed, waived,
discharged or terminated in any manner whatsoever unless such change, waiver,
discharge or termination is in writing duly signed by each Pledgor to be bound
thereby and the Pledgee (with the consent of the Required Banks or, to the
extent required by Section 13.12 of the Credit Agreement, all of the Banks),
provided, however, that no such change, waiver, modification or variance shall
be made to Section 9 hereof or this Section 22 without the consent of each
Secured Creditor adversely affected thereby, provided further that any change,
waiver, modification or variance affecting the rights and benefits of a single
Class (as defined below) of Secured Creditors (and not all Secured Creditors in
a like or similar manner) shall require the written consent of the Requisite
Creditors of such Class of Secured Creditors. For the purpose of this Agreement,
the term "Class" shall mean each class of Secured Creditors, i.e., whether (x)
the Bank Creditors as holders of the Credit Agreement Obligations, or (y) the
Interest Rate Creditors as holders of the Interest Rate Obligations. For the
purpose of this Agreement, the term "Requisite Creditors" of any Class shall
mean each of (x) with respect to each of the Credit Agreement Obligations, the
Required Banks and (y) with respect to the Interest Rate Obligations, the
holders of at least a majority of all obligations outstanding from time to time
under the Interest Rate Protection Agreements or
23. MISCELLANEOUS. This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect,
subject to release and/or termination as set forth in Section 19, (ii) be
binding upon each Pledgor, its successors and assigns; provided, however, that
no Pledgor shall assign any of its rights or obligations hereunder without the
prior written consent of the Pledgee (with the prior written consent of the
Required Banks or to the extent required by Section 13.12 of the Credit
Agreement, all of the Banks), and (iii) inure, together with the rights and
remedies of the Pledgee hereunder, to the benefit of the Pledgee, the Secured
Creditors and their respective successors, transferees and assigns. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. The headings of the several sections and subsections in this
Agreement are for purposes of reference only and shall not limit or define the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument. In the event that any provision of this Agreement shall prove to
be invalid or unenforceable, such provision shall be deemed to be severable from
the other provisions of this Agreement which shall remain binding on all parties
hereto.
24. WAIVER OF JURY TRIAL. Each Pledgor hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this agreement or the transactions contemplated hereby.
25. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become a Pledgor hereunder by executing a counterpart hereof and
delivering the same to the Pledgee.
26. RECOURSE. This Agreement is made with full recourse to the
Pledgors and pursuant to and upon all the representations, warranties, covenants
and agreements on the
<PAGE>
23
part of the Pledgors contained herein and in the other Secured Debt Agreements
and otherwise in writing in connection herewith or therewith.
27. LIMITED OBLIGATIONS. It is the desire and intent of each Pledgor
and the Secured Creditors that this Agreement shall be enforced against each
Pledgor to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. Notwithstanding
anything to the contrary contained herein, in furtherance of the foregoing, it
is noted that the obligations of each Pledgor constituting a Subsidiary
Guarantor have been limited as provided in the Subsidiaries Guaranty.
28. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER. (a)
Nothing herein shall be construed to make the Pledgee or any other Secured
Creditor liable as a member of any limited liability company or partnership and
neither the Pledgee nor any other Secured Creditor by virtue of this Agreement
or otherwise (except as referred to in the following sentence) shall have any of
the duties, obligations or liabilities of a member of any limited liability
company or partnership. The parties hereto expressly agree that this Agreement
shall not be construed as creating a partnership or joint venture among the
Pledgee, any other Secured Creditor and/or any Pledgor.
(b) The Pledgee, by accepting this Agreement, did not intend to
become a member of any limited liability company or partnership or otherwise be
deemed to be a co-venturer with respect to any Pledgor or any limited liability
company or partnership either before or after an Event of Default shall have
occurred. The Pledgee shall have only those powers set forth herein and the
Secured Creditors shall assume none of the duties, obligations or liabilities of
a member of any limited liability company or partnership or any Pledgor.
(c) The Pledgee and the other Secured Creditors shall not be
obligated to perform or discharge any obligation of any Pledgor as a result of
the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Pledgee or any other Secured Creditor to appear in or
defend any action or proceeding relating to the Collateral to which it is not a
party, or to take any action hereunder or thereunder, or to expend any money or
incur any expenses or perform or discharge any obligation, duty or liability
under the Collateral.
<PAGE>
24
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
ADDRESS: CONSOLIDATED CONTAINER HOLDINGS LLC
2515 McKinney Avenue
Suite 850, Lock Box 14 By: /s/ Steven M. Silver
Dallas, Texas 75201 ----------------------------------------
Name: Steven M. Silver
Telephone No.: (214) 303-3400 Title: Vice President
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
ADDRESS: CONSOLIDATED CONTAINER COMPANY LLC,
2515 McKinney Avenue as a Pledgor
Suite 850, Lock Box 14
Dallas, Texas 75201 By: /s/ Steven M. Silver
----------------------------------------
Telephone No.: (214) 303-3400 Name: Steven M. Silver
Facsimile No.: (214) 303-3499 Title: Vice President
Attention: Timothy Brasher
ADDRESS: REID PLASTICS GROUP LLC,
as a Pledgor
2515 McKinney Avenue
Suite 850, Lock Box 14 By: /s/ Steven M. Silver
Dallas, Texas 75201 ----------------------------------------
Name: Steven M. Silver
Telephone No.: (214) 303-3400 Title: Vice President
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
ADDRESS: CONSOLIDATED CONTAINER CAPITAL, INC.
2515 McKinney Avenue as a Pledgor
Suite 850, Lock Box 14
Dallas, Texas 75201 By: /s/ Steven M. Silver
----------------------------------------
Telephone No.: (214) 303-3400 Name: Steven M. Silver
Facsimile No.: (214) 303-3499 Title: Vice President
Attention: Timothy Brasher
<PAGE>
25
ADDRESS: PLASTIC CONTAINERS LLC,
as a Pledgor
2515 McKinney Avenue
Suite 850, Lock Box 14 By: /s/ Steven M. Silver
Dallas, Texas 75201 ----------------------------------------
Name: Steven M. Silver
Telephone No.: (214) 303-3400 Title: Vice President
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
ADDRESS: CONTINENTAL PLASTIC CONTAINERS LLC,
as a Pledgor
2515 McKinney Avenue
Suite 850, Lock Box 14 By: /s/ Steven M. Silver
Dallas, Texas 75201 ----------------------------------------
Name: Steven M. Silver
Telephone No.: (214) 303-3400 Title: Vice President
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
ADDRESS: CONTINENTAL CARIBBEAN CONTAINERS, INC.,
2515 McKinney Avenue as a Pledgor
Suite 850, Lock Box 14
Dallas, Texas 75201 By: /s/ Steven M. Silver
----------------------------------------
Telephone No.: (214) 303-3400 Name: Steven M. Silver
Facsimile No.: (214) 303-3499 Title: Vice President
Attention: Timothy Brasher
<PAGE>
26
Accepted and Agreed to:
BANKERS TRUST COMPANY
as Pledgee
By: /s/ Patricia Hogan
- ------------------------------------
Name: Patricia Hogan
Title: Principal
<PAGE>
ANNEX A
TO
PLEDGE AGREEMENT
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Jurisdiction of
Corporation Owned by Percentage Owned Incorporation
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reid Plastics Group LLC Consolidated Container Company LLC 100% Delaware
- ---------------------------------------------------------------------------------------------------------------------
Consolidated Container Capital, Inc. Consolidated Container Company LLC 100% Delaware
- ---------------------------------------------------------------------------------------------------------------------
Plastic Containers LLC Consolidated Container Company LLC 100% Delaware
- ---------------------------------------------------------------------------------------------------------------------
Reid Mexico, S.A. de C.V.* Reid Plastics Group LLC 51% Mexico
- ---------------------------------------------------------------------------------------------------------------------
Reid Canada, Inc. Reid Plastics Group LLC 100% Ontario, Canada
- ---------------------------------------------------------------------------------------------------------------------
Stewart/Walker Plastics, Ltd. Reid Plastics Group LLC 100% British Columbia,
Canada
- ---------------------------------------------------------------------------------------------------------------------
Master Plastics, Inc. Stewart/Walker Plastics, Ltd. 100% Alberta, Canada
- ---------------------------------------------------------------------------------------------------------------------
Continental Plastic Containers LLC Plastic Containers LLC 100% Delaware
- ---------------------------------------------------------------------------------------------------------------------
Continental Carribean Containers, Inc. Plastic Containers LLC 100% Delaware
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Stock not being pledged pursuant to Pledge Agreement
<PAGE>
ANNEX B
TO
PLEDGE AGREEMENT
LIST OF STOCK
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Type
of Number of Certificate Percentage
Name of Issuing Corporation Shares Shares No. Owned
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consolidated Container Common N/A N/A 100% Uncertificated
Capital, Inc. Stock
- ---------------------------------------------------------------------------------------------------------------------
Reid Mexico, S.A. de C.V. Common 25,500 n/a 51% Not being pledged
Stock,
Class A
- ---------------------------------------------------------------------------------------------------------------------
Reid Canada, Inc. Common 157,700 C-6 100% 66-2/3% pledged
Stock
- ---------------------------------------------------------------------------------------------------------------------
Master Plastics, Inc. Common 100 100% 66-2/3% pledged
Stock
- ---------------------------------------------------------------------------------------------------------------------
Continental Carribean Common 100 5 100%
Containers, Inc. Stock
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ANNEX C
TO
PLEDGE AGREEMENT
ANNEX C TO PLEDGE AGREEMENT
LIST OF NOTES
None
<PAGE>
ANNEX D
TO
PLEDGE AGREEMENT
LIST OF LIMITED LIABILITY COMPANY INTERESTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Name of Issuing Corporation Percentage Owned
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consolidated Container Company LLC 100%
- ---------------------------------------------------------------------------------------------------------------------
Reid Plastics Group LLC 100%
- ---------------------------------------------------------------------------------------------------------------------
Plastic Containers LLC 100%
- ---------------------------------------------------------------------------------------------------------------------
Stewart/Walker Plastics, Ltd. 100% 65% to be pledged
- ---------------------------------------------------------------------------------------------------------------------
Continental Plastic Containers LLC 100%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ANNEX E
TO
PLEDGE AGREEMENT
LIST OF PARTNERSHIP INTERESTS
None
<PAGE>
ANNEX F
TO
PLEDGE AGREEMENT
LIST OF CHIEF EXECUTIVE OFFICES
Consolidated Container Holdings LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Consolidated Container Company LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Consolidated Container Capital, Inc.
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Reid Plastics Group LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Plastic Containers LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Continental Plastic Containers LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Continental Carribean Containers, Inc.
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
<PAGE>
ANNEX G
TO
PLEDGE AGREEMENT
Form of Agreement Regarding Uncertificated Securities, Limited Liability
Company Interests and Partnership Interests
AGREEMENT (as amended, modified or supplemented from time to time,
this "Agreement"), dated as of _________ __, _____, among each of the
undersigned pledgors (each a "Pledgor" and, collectively, the "Pledgors"),
__________, not in its individual capacity but solely as Collateral Agent (the
"Pledgee"), and __________, as the issuer of the Uncertificated Securities,
Limited Liability Company Interests and/or Partnership Interests (each as
defined below) (the "Issuer").
W I T N E S S E T H:
WHEREAS, each Pledgor and the Pledgee are entering into Pledge
Agreement, dated as of June ___, 1999 (as amended, amended and restated,
modified or supplemented from time to time, the "Pledge Agreement"), under
which, among other things, in order to secure the payment of the Obligations (as
defined in the Pledge Agreement), each Pledgor will pledge to the Pledgee for
the benefit of the Secured Creditors (as defined in the Pledge Agreement), and
grant a security interest in favor of the Pledgee for the benefit of the Secured
Creditors in, all of the right, title and interest of such Pledgor in and to any
and all (1) "uncertificated securities" (as defined in Section 8-102(a)(18) of
the Uniform Commercial Code, as adopted in the State of New York)
("Uncertificated Securities"), (2) Partnership Interests (as defined in the
Pledge Agreement) and (3) Limited Liability Company Interests (as defined in the
Pledge Agreement), in each case issued from time to time by the Issuer, whether
now existing or hereafter from time to time acquired by such Pledgor (with all
of such Uncertificated Securities, Partnership Interests and Limited Liability
Company Interests being herein collectively called the "Issuer Pledged
Interests"); and
WHEREAS, each Pledgor desires the Issuer to enter into this
Agreement in order to perfect the security interest of the Pledgee under the
Pledge Agreement in the Issuer Pledged Interests, to vest in the Pledgee control
of the Issuer Pledge Interests and to provide for the rights of the parties
under this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Each Pledgor hereby irrevocably authorizes and directs the
Issuer, and the Issuer hereby agrees, to comply with any and all instructions
and orders originated by the Pledgee (and its successors and assigns) regarding
any and all of the Issuer Pledged Interests without the further consent by the
registered owner (including the respective Pledgor), and not to comply with any
instructions or orders regarding any or all of the Issuer Pledged Interests
originated by any person or entity other than the Pledgee (and its successors
and assigns) or a court of competent jurisdiction.
<PAGE>
2
2. The Issuer hereby certifies that (i) no notice of any security
interest, lien or other encumbrance or claim affecting the Issuer Pledged
Interests (other than the security interest of the Pledgee) has been received by
it, and (ii) the security interest of the Pledgee in the Issuer Pledged
Interests has been registered in the books and records of the Issuer.
3. The Issuer hereby represents and warrants that (i) the pledge by
the Pledgors of, and the granting by the Pledgors of a security interest in, the
Issuer Pledged Interests to the Pledgee, for the benefit of the Secured
Creditors, does not violate the charter, by-laws, partnership agreement,
membership agreement or any other agreement governing the Issuer or the Issuer
Pledged Interests, and (ii) if the Issuer is a corporation, the Issuer Pledged
Interests are fully paid and nonassessable.
4. All notices, statements of accounts, reports, prospectuses,
financial statements and other communications to be sent to any Pledgor by the
Issuer in respect of the Issuer will also be sent to the Pledgee at the
following address:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Patsy Hogan
Tel: (212) 250-5175
Fax: (212) 250-7218
5. Except as expressly provided otherwise in Section 4, all notices,
instructions, orders and communications hereunder shall be sent or delivered by
mail, telex, telecopy or overnight courier service and all such notices and
communications shall, when mailed, telexed, telecopied or sent by overnight
courier, be effective when deposited in the mails or delivered to the overnight
courier, prepaid and properly addressed for delivery on such or the next
Business Day, or sent by telex or telecopier, except that notices and
communications to the Pledgee shall not be effective until received by the
Pledgee. All notices and other communications shall be in writing and addressed
as follows:
(a) if to any Pledgor, at:
Consolidated Container Company, LLC
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201
Attention: Timothy Brasher
Telephone No.: (214) 303-3400
Telecopier No.: (214) 303-3499
<PAGE>
3
(b) if to the Pledgee, at:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Patsy Hogan
Tel: (212) 250-5175
Fax: (212) 250-7218
(c) if to the Issuer, at:
Attention: ________________________
Telephone No.:_____________________
Telecopier No.:____________________
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, "Business Day" means any day other than a Saturday, Sunday, or other
day on which banks in New York are authorized to remain closed.
6. This Agreement shall be binding upon the successors and assigns
of each Pledgor and the Issuer and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one instrument. In the event that any provision of
this Agreement shall prove to be invalid or unenforceable, such provision shall
be deemed to be severable from the other provisions of this Agreement which
shall remain binding on all parties hereto. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever except in writing signed by the Pledgee, the Issuer and any Pledgor
which at such time owns any Issuer Pledged Interests.
7. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
<PAGE>
4
IN WITNESS WHEREOF, each Pledgor, the Pledgee and the Issuer have
caused this Agreement to be executed by their duly elected officers duly
authorized as of the date first above written.
2515 McKinney Avenue CONSOLIDATED CONTAINER COMPANY LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Holdings LLC,
as its Sole Member and Manager
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499 By: ____________________________________
Attention: Timothy Brasher Name:
Title:
2515 McKinney Avenue REID PLASTICS GROUP LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Company LLC,
as its Sole Member and Manager
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499 By: Consolidated Container Holdings LLC,
Attention: Timothy Brasher as its Sole Member and Manager
By: ________________________________
Name:
Title:
2515 McKinney Avenue CONSOLIDATED CONTAINER CAPITAL, INC.
Suite 850, Lock Box 14
Dallas, Texas 75201 By: ____________________________________
Name:
Telephone No.: (214) 303-3400 Title:
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
<PAGE>
5
2515 McKinney Avenue PLASTIC CONTAINERS LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Company LLC
Telephone No.: (214) 303-3400 By: Consolidated Container Holdings LLC,
Facsimile No.: (214) 303-3499 as its Sole Member and Manager
Attention: Timothy Brasher
By: ____________________________________
Name:
Title:
2515 McKinney Avenue CONTINENTAL PLASTIC CONTAINERS LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Plastic Containers LLC, as its Sole
Member and Manager
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499 By: Consolidated Container Company LLC,
Attention: Timothy Brasher as its Sole Member and Manager
By: Consolidated Container Holdings LLC,
as its Sole Member and Manager
By: ____________________________________
Name:
Title:
2515 McKinney Avenue CONTINENTAL CARIBBEAN CONTAINERS, INC.
Suite 850, Lock Box 14
Dallas, Texas 75201 By: ____________________________________
Name:
Telephone No.: (214) 303-3400 Title:
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
<PAGE>
6
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Collateral Agent and Pledgee
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
<PAGE>
EXHIBIT 10.3
================================================================================
SECURITY AGREEMENT
among
CONSOLIDATED CONTAINER HOLDINGS LLC,
CONSOLIDATED CONTAINER COMPANY LLC,
VARIOUS SUBSIDIARIES,
and
BANKERS TRUST COMPANY
as Collateral Agent
Dated as of July 1, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
SECURITY INTERESTS....................................................2
1.1 Grant of Security Interests..................................2
1.2 Power of Attorney............................................2
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.....................2
2.1 Necessary Filings............................................2
2.2 No Liens.....................................................3
2.3 Other Financing Statements...................................3
2.4 Chief Executive Office; Records..............................3
2.5 Location of Inventory and Equipment..........................4
2.6 Trade Names; Change of Name..................................4
2.7 Recourse.....................................................5
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS.............................5
3.1 Additional Representations and Warranties....................5
3.2 Maintenance of Records.......................................5
3.3 Modification of Terms; etc...................................5
3.4 Collection...................................................6
3.5 Direction to Account Debtors; etc............................6
3.6 Instruments..................................................6
3.7 Further Actions..............................................6
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS..............................7
4.1 Additional Representations and Warranties....................7
4.2 Licenses and Assignments.....................................7
4.3 Infringements................................................7
4.4 Preservation of Marks........................................7
4.5 Maintenance of Registration..................................8
4.6 Future Registered Marks......................................8
4.7 Remedies.....................................................8
-i-
<PAGE>
ARTICLE V
SPECIAL PROVISIONS CONCERNING
TRADE SECRET RIGHTS, PATENTS AND COPYRIGHTS...........................9
5.1 Additional Representations and Warranties....................9
5.2 Licenses and Assignments.....................................9
5.3 Infringements................................................9
5.4 Maintenance of Patents or Copyrights.........................9
5.5 Prosecution of Patent or Copyright Application...............9
5.6 Other Patents and Copyrights................................10
5.7 Remedies....................................................10
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL.................................10
6.1 Protection of Collateral Agent's Security...................10
6.2 Further Actions.............................................11
6.3 Financing Statements........................................11
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT.........................11
7.1 Remedies; Obtaining the Collateral Upon Default.............11
7.2 Remedies; Disposition of the Collateral.....................13
7.3 Waiver of Claims............................................13
7.4 Application of Proceeds.....................................14
7.5 Remedies Cumulative.........................................15
7.6 Discontinuance of Proceedings...............................16
ARTICLE VIII
INDEMNITY............................................................16
8.1 Indemnity...................................................16
8.2 Indemnity Obligations Secured by Collateral; Survival.......17
ARTICLE IX
DEFINITIONS..........................................................17
ARTICLE X
MISCELLANEOUS........................................................22
10.1 Notices.....................................................22
10.2 Waiver; Amendment...........................................23
10.3 Obligations Absolute........................................24
10.4 Successors and Assigns......................................24
10.5 Headings Descriptive........................................24
10.6 Severability................................................24
10.7 Governing Law...............................................25
-ii-
<PAGE>
10.8 Assignors' Duties...........................................25
10.9 Termination; Release........................................25
10.10 Collateral Agent............................................26
10.11 Counterparts................................................26
10.12 Additional Assignors........................................26
ANNEX A Schedule of Chief Executive Offices; Record Locations
ANNEX B Schedule of Equipment and Inventory Locations
ANNEX C Schedule of Trade and Fictitious Names
ANNEX D Schedule of Marks
ANNEX E Schedule of Patents and Patent Applications
ANNEX F Schedule of Copyrights and Copyright Applications
ANNEX G Assignment of Security Interest in United States Trademarks
ANNEX H Assignment of Security Interest in United States Patents
-iii-
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 1, 1999, among each of the
undersigned (each, an "Assignor" and, together with any other entity that
becomes a party hereto pursuant to Section 10.12 hereof, collectively, the
"Assignors") and BANKERS TRUST COMPANY, as Collateral Agent (the "Collateral
Agent") for the Secured Creditors (as defined below). Capitalized terms used
herein shall have the meaning specified in Article IX herein or, if not defined
therein, as specified in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, Consolidated Container Holdings LLC ("Holdings"),
Consolidated Container Company LLC (the "Borrower"), the financial institutions
from time to time party thereto (the "Banks"), Morgan Guaranty Trust Company of
New York, as Documentation Agent, Donaldson, Lufkin & Jenrette Securities
Corporation, as Syndication Agent and Bankers Trust Company, as Administrative
Agent (the "Administrative Agent"), (the Administrative Agent, the Banks and the
Collateral Agent, collectively, the "Bank Creditors") have entered into a Credit
Agreement, dated as of July 1, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement") providing for the making of
Loans and the issuance or creation of, and participation in, Letters of Credit
as contemplated therein;
WHEREAS, the Borrower may from time to time be party to one or more
Interest Rate Protection Agreements or Other Hedging Agreements with a Bank or
an affiliate of a Bank (each such Bank or affiliate, even if the respective Bank
subsequently ceases to be a Bank under the Credit Agreement for any reason,
together with such Bank's or affiliate's successors and assigns, collectively,
the "Interest Rate Creditors", and together with the Bank Creditors, the
"Secured Creditors");
WHEREAS, pursuant to the Guaranty contained in the Credit Agreement
(the "Holdings Guaranty"), Holdings has guaranteed to the Secured Creditors the
payment when due of all obligations and liabilities of the Borrower under or
with respect to the Credit Documents and the Interest Rate Protection Agreements
or Other Hedging Agreements which may hereinafter arise;
WHEREAS, pursuant to the Subsidiary Guaranty dated as of even date
herewith (as amended, modified or supplemented from time to time, the
"Subsidiary Guaranty"), each Assignor (other than Holdings and the Borrower) has
jointly and severally guaranteed to the Secured Creditors the payment when due
of the Guaranteed Obligations (as and to the extent defined in the Subsidiary
Guaranty);
WHEREAS, it is a condition precedent to the making of Loans and the
issuance and participation in, Letters of Credit under the Credit Agreement that
each Assignor shall have executed and delivered to the Collateral Agent this
Agreement; and
WHEREAS, each Assignor desires to execute this Agreement to satisfy
the condition described in the preceding paragraph;
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NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties and hereby
covenants and agrees as follows:
ARTICLE I
SECURITY INTERESTS
Grant of Security Interests. As security for the prompt and complete
payment and performance when due of all of its Obligations, each Assignor does
hereby grant to the Collateral Agent for the ratable benefit of the Secured
Creditors, a continuing security interest in, all of the right, title and
interest of such Assignor in, to and under all of the following, whether now
existing or hereafter from time to time acquired: (i) each and every Receivable,
(ii) all Contracts, together with all Contract Rights arising thereunder, (iii)
all Inventory, (iv) all Equipment, (v) all Marks, together with the
registrations and right to all renewals thereof, and the goodwill of the
business of such Assignor symbolized by the Marks, (vi) the Cash Collateral
Account if established for such Assignor and all moneys securities and
instruments deposited or required to be deposited in such Cash Collateral
Account, (vii) all Patents and Copyrights and all reissues, renewals or
extensions thereof, (viii) all computer programs of such Assignor and all
intellectual property rights therein and all other proprietary information of
such Assignor, including, but not limited to, Trade Secret Rights, (ix) all
insurance policies, (x) all other Goods, General Intangibles, Chattel Paper,
Documents and Instruments (other than the Pledged Securities), and (xi) all
Proceeds and products of any and all of the foregoing (all of the above
collectively, the "Collateral").
1.1 Power of Attorney. Each Assignor hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of a Noticed Event of Default
(in the name of such Assignor or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all moneys and claims for moneys due
or to become due to such Assignor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be necessary or advisable in the premises, which
appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1 Necessary Filings. All filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the security
interest granted by such Assignor to the Collateral Agent hereby in respect of
all the Collateral have been accomplished or shall be accomplished within ten
days of the Initial Borrowing Date (or, in the case of property acquired after
the Initial Borrowing Date, within ten days after the acquisition thereof) and
the security interest granted to the Collateral Agent pursuant to this Agreement
in and to all the Collateral constitutes or will constitute, upon satisfaction
of such filings, registrations and recordings, a
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perfected security interest therein superior and prior to the rights of all
other Persons therein (other than any such rights pursuant to Permitted Liens)
and subject to no other Liens (other than Permitted Liens) and is entitled to
all the rights, priorities and benefits afforded by the Uniform Commercial Code
or other relevant law as enacted in any relevant jurisdiction to perfected
security interests.
No Liens. Such Assignor is, and as to Collateral acquired by it from
time to time after the date hereof such Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any Person (other than Permitted Liens), and such Assignor
shall defend the Collateral against all claims and demands of all Persons at any
time claiming the same or any interest therein (other than in connection with
Permitted Liens) adverse to the Collateral Agent.
2.2 Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens or otherwise approved by the Collateral Agent) and so long as
the Total Commitment has not been terminated or any Note remains unpaid or any
Letter of Credit remains outstanding or any of the Obligations remain unpaid or
any Interest Rate Protection Agreement remains in effect, such Assignor will not
execute or authorize to be filed in any public office any financing statement
(or similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security
interests granted hereby by such Assignor or as otherwise permitted by the
Credit Agreement.
2.3 Chief Executive Office; Records. As of the date hereof, the
chief executive office of such Assignor is located at the address or addresses
indicated on Annex A hereto. Such Assignor will not move its chief executive
office except to such new location as such Assignor may establish in accordance
with the last sentence of this Section 2.4. The original records and books of
account of such Assignor evidencing all Receivables and Contract Rights and
Trade Secret Rights of such Assignor are, and will continue to be, kept at such
chief executive office and/or one or more of the locations shown on Annex A, or
at such new locations as such Assignor may establish in accordance with the last
sentence of this Section 2.4. All Receivables and Contract Rights and Trade
Secret Rights of such Assignor are, and will continue to be, maintained at, and
controlled and directed (including, without limitation, for general accounting
purposes) from, the office locations described above, or such new locations as
such Assignor may establish in accordance with the last sentence of this Section
2.4. Such Assignor shall not establish new locations for such chief executive
offices until (i) it shall have given to the Collateral Agent not less than 15
days' prior written notice (or such lesser notice as shall be acceptable to the
Collateral Agent) of its intention to do so, clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, and (ii) with respect to such new
location, it shall have taken all action, reasonably satisfactory to the
Collateral Agent, to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.4 Location of Inventory and Equipment. All Inventory and Equipment
held on the date hereof by each Assignor is located at one of the locations
shown on Annex B attached hereto, is in transit between such locations, or is in
transit to customers. Each Assignor agrees
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that all Inventory and Equipment now held or subsequently acquired by it shall
be kept at (or shall be in transport to or from) any one of the locations shown
on Annex B hereto, such new location as such Assignor may establish in
accordance with the last sentence of this Section 2.5 or such other locations to
the extent such Assignor (and the Assignors taken as a whole) remain in
compliance with this Section 2.5. Each Assignor may establish a new location for
Inventory and Equipment only if (i) it shall have given to the Collateral Agent
not less than 15 days' prior written notice of its intention so to do, clearly
describing such new location and providing such other information in connection
therewith as the Collateral Agent may reasonably request, and (ii) with respect
to such new location, such Assignor shall have taken all action reasonably
satisfactory to the Collateral Agent to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby at all times
fully perfected and in full force and effect.
2.5 Trade Names; Change of Name. As of the date hereof, such
Assignor does not have or operate in any jurisdiction under, or in the preceding
5 year period has not had or has not operated in any jurisdiction under, any
trade names, fictitious names or other names (including, without limitation, any
names of divisions or operations) except its legal name and such other trade,
fictitious or other names as are listed on Annex C hereto. Such Assignor has
only operated under each name set forth in Annex C in the jurisdiction or
jurisdictions set forth opposite each such name on Annex C. Such Assignor shall
not change its legal name or assume or operate in any jurisdiction under any
trade, fictitious or other name except those names listed on Annex C hereto in
the jurisdictions listed with respect to such names and new names (including,
without limitation, any names of divisions or operations) and/or jurisdictions
established in accordance with the last sentence of this Section 2.6. Such
Assignor shall not assume or operate in any jurisdiction under any new trade,
fictitious or other name or operate under any existing name in any additional
jurisdiction until (i) it shall have given to the Collateral Agent not less than
15 days' prior written notice of its intention so to do, clearly describing such
new name and/or jurisdiction and, in the case of a new name, the jurisdictions
in which such new name shall be used and providing such other information in
connection therewith as the Collateral Agent may reasonably request, (ii) with
respect to such new name and/or new jurisdiction, it shall have taken all
action, reasonably satisfactory to the Collateral Agent, to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect, (iii)
at the request of the Collateral Agent, it shall have furnished an opinion of
counsel reasonably acceptable to the Collateral Agent as to the continued
perfection of the security interest granted hereby, which opinions shall be
deemed acceptable to the Collateral Agent if substantially similar to the
perfection opinions given in the legal opinions on the Initial Borrowing Date,
and (iv) the Collateral Agent shall have received evidence that all other
actions (including, without limitation, the payment of all filing fees and
taxes, if any, payable in connection with such filings) have been taken, in
order to perfect (and maintain the perfection and priority of) the first
priority security interest granted hereby.
2.6 Recourse. This Agreement is made with full recourse to such
Assignor and pursuant to and upon all the warranties, representations,
covenants, and agreements on the part of such Assignor contained herein, in the
Interest Rate Protection Agreements and otherwise in writing in connection
herewith or therewith.
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ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1 Additional Representations and Warranties. As of the time when
each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all material records, papers
and documents relating thereto (if any) are genuine and in all material respects
what they purport to be, and that all papers and documents (if any) relating
thereto (i) will be the only original writings evidencing and embodying such
obligation of the account debtor named therein (other than copies created for
general accounting purposes) and (ii) will, to the knowledge of such Assignor,
evidence true and valid obligations of the account debtor named therein.
3.2 Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense satisfactory and complete records of its Receivables
and Contracts, and such Assignor will make the same available to the Collateral
Agent for inspection, at such Assignor's own cost and expense, at any and all
reasonable times upon reasonable prior notice (or at any time upon Noticed Event
of Default) to such Assignor. If the Collateral Agent so directs, upon the
occurrence and during the continuance of an Event of Default, such Assignor
shall legend, in form and manner reasonably satisfactory to the Collateral
Agent, the Receivables and Contracts, as well as books, records and documents of
such Assignor evidencing or pertaining to such Receivables with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.
3.3 Modification of Terms; etc. No Assignor shall rescind or cancel
any indebtedness evidenced by any Receivable or under any Contract, or modify
any term thereof or make any adjustment with respect thereto, or extend or renew
the same, or compromise or settle any material dispute, claim, suit or legal
proceeding relating thereto, or sell any Receivable or Contract, or interest
therein, in any manner which could reasonably be expected to adversely affect
the value thereof, without the prior written consent of the Collateral Agent,
except (i) as permitted by Section 3.4 hereof and (ii) in accordance with such
Assignor's reasonable business practices. Each Assignor will duly fulfill all
obligations on its part to be fulfilled under or in connection with all material
Receivables and Contracts and will do nothing to impair the rights of the
Collateral Agent in the Receivables or Contracts.
3.4 Collection. Each Assignor shall endeavor in accordance with
reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable or Contract,
and apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Receivable or under such Contract, except that,
so long as no Event of Default is then in existence in respect of which the
Collateral Agent has given notice that this exception is no longer applicable,
any Assignor may allow in the ordinary course of business as adjustments to
amounts owing under its Receivables and Contracts (i) an extension or renewal of
the time or times of payment, or settlement for less than the total unpaid
balance, which such Assignor finds appropriate in accordance with sound business
judgment and (ii) a refund or credit due as a result of returned or damaged
merchandise or improperly
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performed services. The reasonable costs and expenses (including, without
limitation, attorneys' fees) of collection, whether incurred by any Assignor or
the Collateral Agent, shall be borne by such Assignor.
3.5 Direction to Account Debtors; etc. Upon the occurrence and
during the continuance of an Event of Default, and if the Collateral Agent so
directs any Assignor, to the extent permitted by applicable law, such Assignor
agrees (x) to cause all payments on account of the Receivables and Contracts to
be made directly to the Cash Collateral Account, (y) that the Collateral Agent
may, at its option, directly notify the obligors with respect to any Receivables
and/or under any Contracts to make payments with respect thereto as provided in
preceding clause (x) and (z) that the Collateral Agent may enforce collection of
any Receivables or Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as the Assignor. The
Collateral Agent may apply any or all amounts then in, or thereafter deposited
in, the Cash Collateral Account in the manner provided in Section 7.4 of this
Agreement. The reasonable costs and expenses (including reasonable attorneys'
fees) of collection, whether incurred by any Assignor or the Collateral Agent,
shall be borne by such Assignor. The Collateral Agent shall deliver a copy of
each notice referred to in the preceding clause (y) to the relevant Assignor;
provided that, the failure of the Collateral Agent to so notify such Assignor
shall not affect the effectiveness of such notice or the other rights of the
Collateral Agent created by this Section 3.5.
3.6 Instruments. If any Assignor owns or acquires any Instrument,
such Assignor will within 10 Business Days notify the Collateral Agent thereof,
and upon request by the Collateral Agent promptly deliver such Instrument (other
than checks payable to any Assignor and processed in the ordinary course of
business) to the Collateral Agent appropriately endorsed to the order of the
Collateral Agent as further security hereunder.
3.7 Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require to give effect to the purposes of this Agreement.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1 Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of the Patent and
Trademark Office registrations, and applications for registrations, of the Marks
listed in Annex D, Part I attached hereto and that Annex D, Part I lists all the
United States Patent and Trademark Office, or the equivalent office thereof in
any foreign country, registrations and applications for registrations, of the
Marks that such Assignor now owns or uses in connection with its business. Each
Assignor represents and warrants that except with respect to those licensed
marks set forth in Annex D, Part I, it owns, is licensed to use or otherwise has
the right to use all material Marks that it uses. Each Assignor further warrants
that it is aware of no third party claim that any aspect of such Assignor's
present or contemplated business operations infringes or will infringe any
material Mark. Except as set
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forth on Annex D, Part II, each Assignor represents and warrants that it is the
true and lawful owner of or otherwise has the right to use all U.S. trademark
registrations and applications listed in Annex D, Part I hereto and that said
registrations are valid, subsisting, have not been cancelled and that such
Assignor is not aware of any third-party claim that any of said registrations or
applications for registration with respect to a Mark is invalid or unenforceable
or is not aware that there is any reason that any of said registrations or
applications for registration with respect to a Mark is invalid or
unenforceable. Each Assignor hereby grants to the Collateral Agent an absolute
power of attorney to sign, upon the occurrence and during the continuance of a
Noticed Event of Default, any document which may be required by the United
States Patent and Trademark Office in order to effect an absolute assignment of
all right, title and interest in each Mark owned by an Assignor, and record the
same.
4.2 Licenses and Assignments. Subject to the provisions of Sections
4.4 and 4.5, each Assignor hereby agrees not to divest itself of any right under
a Mark other than in the ordinary course of business absent prior written
approval of the Collateral Agent.
4.3 Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who may be infringing or otherwise violating in any material respect
any of such Assignor's rights in and to any Mark material to the operation of
its business, or with respect to any party claiming that such Assignor's use of
any Mark material to the operation of its business violates in any material
respect any property right of that party. Each Assignor further agrees, to
prosecute diligently any Person infringing any Mark owned by such Assignor and
material to the operation of the business in a manner consistent with its past
practice and in accordance with reasonable business practices.
4.4 Preservation of Marks. Each Assignor agrees to use or license
the use of its Marks in interstate commerce during the time in which this
Agreement is in effect, sufficiently to preserve such Marks as trademarks or
service marks registered under the laws of the United States or the relevant
foreign jurisdiction; provided, that no Assignor shall be obligated to preserve
any Mark in the event such Assignor determines, in its reasonable business
judgment, that the preservation of such Mark is no longer necessary in the
conduct of its business.
4.5 Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required to maintain trademark
registrations, including but not limited to affidavits of use and applications
for renewals of registration in the United States Patent and Trademark Office or
equivalent governmental agency in any foreign jurisdiction for all of its Marks
(excluding unregistered Marks), and shall pay all fees and disbursements in
connection therewith, and shall not abandon any such filing of affidavit of use
or any such application of renewal prior to the exhaustion of all administrative
and judicial remedies without prior written consent of the Collateral Agent;
provided, that no Assignor shall be obligated to maintain any Mark or prosecute
any such application for registration in the event that such Assignor
determines, in its reasonable business judgment, that such application is no
longer necessary in the conduct of its business.
4.6 Future Registered Marks. If any Mark registration issues
hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office or equivalent
governmental agency in any foreign jurisdiction, within
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thirty (30) days of receipt of such registration such Assignor shall deliver a
copy of such registration certificate, and a confirmatory grant of security in
such Mark to the Collateral Agent hereunder, the form of such confirmatory grant
to be substantially the same as the form hereof.
4.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks, together with all
trademark rights and rights of protection to the same, vested, in which event
such rights, title and interest shall immediately vest, in the Collateral Agent
for the benefit of the Secured Creditors pursuant to a trademark security
agreement in form and substance satisfactory to the Collateral Agent, executed
by such Assignor and filed, pursuant to which all of such Assignor's rights,
title and interest in and to the Marks are assigned to the Collateral Agent for
the benefit of the Secured Creditors; (ii) take and use or sell the Marks and
the goodwill of such Assignor's business symbolized by the Marks and the right
to carry on the business and use the assets of such Assignor in connection with
which the Marks have been used; and (iii) direct such Assignor to refrain, in
which event such Assignor shall refrain, from using the Marks in any manner
whatsoever, directly or indirectly, and, if requested by the Collateral Agent,
change such Assignor's corporate name to eliminate therefrom any use of any Mark
and execute such other and further documents that the Collateral Agent may
request to further confirm this and to transfer ownership of the Marks and
registrations and any pending trademark application in the United States Patent
and Trademark Office or any equivalent governmental agency or office in any
foreign jurisdiction to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
TRADE SECRET RIGHTS, PATENTS AND COPYRIGHTS
5.1 Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner or licensee of all
rights in (i) all Trade Secret Rights, (ii) the Patents of such Assignor listed
in Annex E attached hereto and that said Patents constitute all the patents and
applications for patents that such Assignor now owns and (iii) the Copyrights of
such Assignor listed in Annex F attached hereto and that said Copyrights
constitute all the registered copyrights and applications for copyright
registrations that such Assignor now owns. Each Assignor further warrants that
it is aware of no third party claim that any aspect of such Assignor's present
or contemplated business operations infringes or will infringe any material
patent or any material copyright or that such Assignor has misappropriated any
material Trade Secret Rights.
5.2 Licenses and Assignments. Subject to the provisions of Sections
5.4 and 5.5, each Assignor hereby agrees not to divest itself of any right under
a Patent or Copyright other than in the ordinary course of business absent prior
written approval of the Collateral Agent.
5.3 Infringements. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement or other
violation of such Assignor's rights in any Patent or Copyright, in each case
material to its business, or with respect to any claim that the practice of any
Patent or the use of any Copyright, in each case material to its business,
violates in any
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material respect any property right of a third party or with respect to any
misappropriation of any Trade Secret Right material to its business or any claim
that the practice of any Trade Secret Right material to its business violates
any property right of a third party. To the extent consistent with its past
practice and in accordance with reasonable business practices, each Assignor
further agrees, to prosecute diligently any Person infringing any Patent or
Copyright owned by such Assignor or any Person misappropriating any Trade Secret
Right in each case if such patent, copyright or Trade Secret Right is material
to its business.
5.4 Maintenance of Patents or Copyrights. At its own expense, each
Assignor shall make timely payment of all post-issuance fees required to
maintain in force rights under each of its Patents and Copyrights; provided,
that no Assignor shall be obligated to maintain any Patent in the event such
Assignor determines, in its reasonable business judgment, that the maintenance
of such Patent is no longer necessary in the conduct of its business.
5.5 Prosecution of Patent or Copyright Application. At its own
expense, each Assignor shall diligently prosecute all applications for (i)
Patents of such Assignor listed on Annex E hereto and (ii) Copyrights listed on
Annex F hereto, and, in each case, shall not abandon any such application prior
to exhaustion of all administrative and judicial remedies, absent written
consent of the Collateral Agent, provided that no Assignor shall be obligated to
maintain any Patent or Copyright in the event such Assignor reasonably
determines it is no longer necessary in the conduct of its business.
5.6 Other Patents and Copyrights. Within thirty (30) days of the
acquisition or issuance of a Patent or Copyright registration, or of filing of
an application for a Patent or Copyright registration, the relevant Assignor
shall deliver to the Collateral Agent a copy of said Patent or Copyright
registration, as the case may be, with a confirmatory grant of security as to
such Patent or Copyright, as the case may be hereunder, the form of such
confirmatory grant to be substantially the same as the form hereof; provided,
that no Assignor shall be obligated to prosecute any application in the event
such Assignor determines, in its reasonable business judgment, that such
application is no longer necessary in the conduct of its business.
5.7 Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the relevant Assignor take any or
all of the following actions: (i) declare the entire right, title and interest
of such Assignor in each of the Patents and Copyrights vested, in which event
such right, title and interest shall immediately vest in the Collateral Agent
for the benefit of the Secured Creditors, pursuant to a patent security
agreement or copyright security agreement, as the case may be, in form and
substance satisfactory to the Collateral Agent, executed by such Assignor and
filed on the date hereof, pursuant to which all of such Assignor's right, title,
and interest to such Patents and Copyrights are assigned to the Collateral Agent
for the benefit of the Secured Creditors; (ii) take and practice, use or sell
the Patents and Copyrights; (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such other
and further documents as the Collateral Agent may request further to confirm
this and to transfer ownership of the Patents and Copyrights to the Collateral
Agent for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
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6.1 Protection of Collateral Agent's Security. Each Assignor will at
all times keep its Inventory and Equipment insured in favor of the Collateral
Agent, at its own expense, to the extent required by the Credit Agreement;
copies of all policies or certificates with respect to such insurance (i) shall
be endorsed to the Collateral Agent's reasonable satisfaction for the benefit of
the Collateral Agent (including, without limitation, by naming the Collateral
Agent as additional insured or additional loss payee) and (ii) shall state that
such insurance policies shall not be cancelled or materially revised without at
least 30 days' (or at least 10 days' in the case of nonpayment of premium) prior
written notice thereof by the insurer to the Collateral Agent. If any Assignor
shall fail to insure such Inventory or Equipment to the extent required by the
Credit Agreement, or if any Assignor shall fail to so endorse copies of all
policies or certificates with respect thereto, the Collateral Agent shall have
the right (but shall be under no obligation), upon prior written notice to such
Assignor, to procure such insurance and such Assignor agrees to reimburse the
Collateral Agent for all reasonable costs and expenses of procuring such
insurance. Except as otherwise provided in the Credit Agreement, the Collateral
Agent shall apply any proceeds of such insurance required after an Event of
Default in accordance with Section 7.4 (it being understood that so long as no
Event of Default has occurred and is continuing, the Collateral Agent will
release any interest it has in the proceeds of any casualty insurance to the
Assignors for the repair or replacement of the asset damaged). Each Assignor
assumes all liability and responsibility in connection with the Collateral
acquired by it and the liability of such Assignor to pay its Obligations shall
in no way be affected or diminished by reason of the fact that such Collateral
may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable
to such Assignor.
6.2 Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
6.3 Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form acceptable to
the Collateral Agent, as the Collateral Agent may from time to time reasonably
request or as are reasonably necessary or desirable in the reasonable opinion of
the Collateral Agent to establish and maintain a valid, enforceable, first
priority perfected security interest in the Collateral (subject to the Permitted
Liens) as provided herein and the other rights and security contemplated hereby
all in accordance with the Uniform Commercial Code as enacted in any and all
relevant jurisdictions or any other relevant law. Each Assignor will pay any
applicable filing fees, recordation taxes and related expenses. Each Assignor
hereby authorizes the Collateral Agent to file any such financing statements
without the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
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7.1 Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if a Noticed Event of Default shall have occurred and be
continuing, then and in every such case, subject to any mandatory requirements
of applicable law then in effect, the Collateral Agent, in addition to any
rights now or hereafter existing under applicable law, shall have all rights as
a secured creditor under the Uniform Commercial Code in all relevant
jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument
or other obligation (including, without limitation, the Receivables and
the Contracts) constituting the Collateral to make any payment required by
the terms of such instrument or agreement directly to the Collateral
Agent;
(iii) withdraw all moneys, securities and other instruments in the
Cash Collateral Account for application to the Obligations in accordance
with Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate, or direct such Assignor to
sell, assign or otherwise liquidate, any or all of the Collateral or any
part thereof in accordance with Section 7.2 hereof, and take possession of
the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing such Assignor in writing to deliver the same to the Collateral
Agent at any place or places reasonably designated by the Collateral
Agent, in which event such Assignor shall at its own expense:
(A) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there delivered to
the Collateral Agent,
(B) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action by
the Collateral Agent as provided in Section 7.2, and
(C) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good
condition; and
(vi) license or sublicense whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for
such term and on such conditions and in such manner as the Collateral
Agent shall in its sole judgment determine;
it being understood that such Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction,
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the Collateral Agent shall be entitled to a decree requiring specific
performance by such Assignor of said obligation. The Secured Creditors agree
that this Agreement may be enforced only by the action of the Administrative
Agent or the Collateral Agent, in each case acting upon the instructions of the
Required Banks (or, after the date on which all Credit Document Obligations have
been paid in full, the holders of at least the majority of the outstanding
Interest Rate Protection or Other Hedging Obligations, to the extent same remain
outstanding) and that no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Agreement or to realize upon
the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agent or the
Collateral Agent or the holders of at least a majority of the outstanding
Interest Rate Protection or Other Hedging Obligations, as the case maybe, for
the benefit of the Secured Creditors upon the terms of this Agreement.
7.2 Remedies; Disposition of the Collateral. Upon the occurrence and
continuance of a Noticed Event of Default, any Collateral repossessed by the
Collateral Agent under or pursuant to Section 7.1 and any other Collateral
whether or not so repossessed by the Collateral Agent, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an entirety,
and without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Collateral Agent may, in compliance with any
mandatory requirements of applicable law, determine to be commercially
reasonable. Any of the Collateral may be sold, leased or otherwise disposed of,
in the condition in which the same existed when taken by the Collateral Agent or
after any overhaul or repair which the Collateral Agent shall determine to be
commercially reasonable. Any such disposition which shall be a private sale or
other private proceedings permitted by such requirements shall be made upon not
less than ten (10) days' written notice to the relevant Assignor specifying the
time at which such disposition is to be made and the intended sale price or
other consideration therefor, and shall be subject, for the ten (10) days after
the giving of such notice, to the right of the relevant Assignor or any nominee
of such Assignor to acquire the Collateral involved at a price or for such other
consideration at least equal to the intended sale price or other consideration
so specified. Any such disposition which shall be a public sale permitted by
such requirements shall be made upon not less than ten (10) days' written notice
to the relevant Assignor specifying the time and place of such sale and, in the
absence of applicable requirements of law, shall be by public auction (which
may, at the Collateral Agent's option, be subject to reserve), after publication
of notice of such auction not less than 10 days prior thereto in two newspapers
in general circulation in the City of New York. To the extent permitted by any
such requirement of law, the Collateral Agent on behalf of the Secured Creditors
(or certain of them) may bid for and become the purchaser (by bidding in the
Obligations or otherwise) of the Collateral or any item thereof, offered for
sale in accordance with this Section without accountability to the relevant
Assignor (except to the extent of surplus money received as provided in Section
7.4). If, under mandatory requirements of applicable law, the Collateral Agent
shall be required to make disposition of the Collateral within a period of time
which does not permit the giving of notice to the relevant Assignor as
hereinabove specified, the Collateral Agent need give such Assignor only such
notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law.
7.3 Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF
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ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE
AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH
ASSIGNOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE
UNITED STATES OR OF ANY STATE, and such Assignor hereby further waives, to the
extent permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or wilful misconduct;
(ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral hereunder shall operate to divest all right, title, interest,
claim and demand, either at law or in equity, of the relevant Assignor therein
and thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
7.4 Application of Proceeds. (a) All moneys collected by the
Collateral Agent (or, to the extent the Pledge Agreement or the Mortgages
require proceeds of collateral thereunder to be applied in accordance with the
provisions of this Agreement, the Pledgee or Mortgagee thereunder) upon any sale
or other disposition of the Collateral hereunder, together with all other moneys
received by the Collateral Agent hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing to the Collateral
Agent or Pledgee resulting from their acting as Collateral Agent or
Pledgee, respectively;
(ii) second, to the extent proceeds remain after the application
pursuant to preceding clause (i), an amount equal to the outstanding
Obligations to the Secured Creditors shall be paid to the Secured
Creditors as provided in Section 7.4(d) with each Secured Creditor
receiving an amount equal to its outstanding Obligations or, if the
proceeds are insufficient to pay in full all such Obligations, its Pro
Rata Share of the amount remaining to be distributed to be applied, with
respect to the Credit Document Obligations, firstly to the payment of
interest in respect of the unpaid principal amount of Loans outstanding,
secondly to the payment of principal of Loans outstanding, then to the
other Credit Document Obligations; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii) to the relevant Assignor
or, to the extent directed by such
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Assignor or a court of competent jurisdiction, to whomever may be lawfully
entitled to receive such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount, the
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then outstanding amount of the relevant Obligations owed such Secured
Creditor and the denominator of which is the then outstanding amount of all
Obligations.
(c) All payments required to be made to the (i) Bank Creditors
hereunder shall be made to the Agent for the account of the respective Bank
Creditors and (ii) Interest Rate Creditors hereunder shall be made to the paying
agent under the applicable Interest Rate Protection Agreement or Other Hedging
Agreement or, in the case of Interest Rate Protection Agreements or Other
Hedging Agreements without a paying agent, directly to the applicable Other
Creditor.
(d) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent for a determination (which the Administrative Agent agrees
to provide upon request to the Collateral Agent) of the outstanding Credit
Document Obligations and (ii) upon any Other Creditor for a determination (which
each Other Creditor agrees to provide upon request to the Collateral Agent) of
the outstanding Interest Rate Protection or Other Hedging Obligations owed to
such Other Creditor. Unless it has actual knowledge (including by way of written
notice from a Secured Creditor) to the contrary, the Administrative Agent under
the Credit Agreement, in furnishing information pursuant to the preceding
sentence, and the Collateral Agent, in acting hereunder, shall be entitled to
assume that (x) no Credit Document Obligations other than principal, interest
and regularly accruing fees are owing to any Bank Creditor and (y) no Interest
Rate Protection Agreements or Interest Rate Protection or Other Hedging
Obligations with respect thereto are in existence.
(e) It is understood that each Assignor shall remain liable to the
extent of any deficiency between (x) the amount of the Obligations for which it
is liable directly or as a Guarantor that are satisfied with proceeds of the
Collateral and (y) the aggregate outstanding amount of such Obligations.
7.5 Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, any
Interest Rate Protection Agreement or Other Hedging Agreement or the other
Credit Documents or now or hereafter existing at law or in equity, or by statute
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Collateral Agent. All
such rights, powers and remedies shall be cumulative and the exercise or the
beginning of exercise of one shall not be deemed a waiver of the right to
exercise of any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. In the event that the Collateral Agent shall bring any suit to enforce
any of its rights hereunder and shall be entitled to
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judgment, then in such suit the Collateral Agent may recover expenses, including
attorneys' fees, and the amounts thereof shall be included in such judgment.
7.6 Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted (except to the
extent of a determination adverse to the Collateral Agent in such a proceeding).
ARTICLE VIII
INDEMNITY
8.1 Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each Secured Creditor and
its and its affiliates' respective successors, permitted assigns, employees,
agents and servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
suits, judgments and any and all costs and expenses (including reasonable
attorneys' fees and expenses) (for the purposes of this Section 8.1 the
foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any Interest Rate Protection
Agreement or Other Hedging Agreement, any other Credit Document or the documents
executed in connection herewith and therewith or in any other way connected with
the enforcement of any of the terms of, or the preservation of any rights
hereunder or thereunder, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the laws of any
country, state or other governmental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person (including any
Indemnitee), or property damage), or contract claim; provided that no Indemnitee
shall be indemnified pursuant to this Section 8.1(a) for expenses, losses,
damages or liabilities to the extent caused by the gross negligence or wilful
misconduct of such Indemnitee. Each Assignor agrees that upon written notice by
any Indemnitee of the assertion of such a liability, obligation, loss, damage,
penalty, claim, demand, action, judgment or suit, such Assignor shall assume
full responsibility for the defense thereof. Each Indemnitee agrees to use its
reasonable efforts to promptly notify such Assignor of any such assertion of
which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a), each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for (if the Collateral Agent shall have incurred fees, costs or expenses
because such Assignor shall have failed to comply with its obligations under
this Agreement or any Credit Document), any and all reasonable fees, costs and
expenses of whatever kind or nature incurred in connection with the creation,
preservation or protection of the Collateral Agent's Liens on, and security
interest in, the Collateral, including,
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without limitation, all fees and taxes in connection with the recording or
filing of instruments and documents in public offices, payment or discharge of
any taxes or Liens upon or in respect of the Collateral, premiums for insurance
with respect to the Collateral and all other reasonable fees, costs and expenses
in connection with protecting, maintaining or preserving the Collateral and the
Collateral Agent's interest therein, whether through judicial proceedings or
otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b)
hereof, each Assignor jointly and severally agrees to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any material misrepresentation by an Assignor in this Agreement, or in
any statement or writing contemplated by or made or delivered pursuant to or in
connection with this Agreement.
(d) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, each Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements or Other Hedging Agreements and the payment of all of the
other Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified unless
the context otherwise requires. Such definitions shall be equally applicable to
the singular and plural forms of the terms defined.
"Administrative Agent" shall have the meaning provided in the first
WHEREAS clause of this Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning specified in the first paragraph
of this Agreement.
"Banks" shall have the meaning provided in the first WHEREAS clause
of this Agreement.
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"Bank Creditor" shall have the meaning provided in the first WHEREAS
clause of this Agreement.
"Borrower" shall have the meaning provided in the first WHEREAS
clause of this Agreement.
"Business Day" means any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law to close.
"Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with, and in the sole dominion and control of, the
Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Class" shall have the meaning provided in Section 10.2.
"Collateral" shall have the meaning provided in Section 1.1(a).
"Collateral Agent" shall have the meaning specified in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of an Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between an Assignor and one or
more additional parties (including, without limitation, any Interest Rate
Protection Agreement and related documents entered into in connection therewith)
to the extent the grant by an Assignor of a security interest pursuant to this
Agreement in its right, title and interest in any such contract is not
prohibited by such contract without the consent of any other party thereto or
would not give any other party to such contract the right to terminate its
obligations thereunder; provided, that the foregoing limitation shall not
affect, limit, restrict or impair the grant by an Assignor of a security
interest pursuant to this Agreement in any account or any money or other amounts
due or to become due under any such contract, agreement, instrument or
indenture.
"Copyrights" shall mean any United States or foreign copyright owned
by any Assignor now or hereafter, including any registration of any copyrights,
in the United States Copyright Office or the equivalent thereof in any foreign
country, as well as any application for a United States or foreign copyright
registration now or hereafter made with the United States Copyright Office or
the equivalent thereof in any foreign jurisdiction by any Assignor.
"Credit Agreement" shall have the meaning provided in the first
WHEREAS clause of this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
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"Documents" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Equipment" shall mean any "equipment," as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, fixtures now
or hereafter owned by such Assignor and any and all additions, substitutions and
replacements of any of the foregoing, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto but excluding Equipment constituting vehicles and Equipment to
the extent it is subject to a Permitted Lien and the terms of the Indebtedness
securing such Permitted Liens prohibits assignment or granting of a security
interest in such Assignor's rights and obligations thereunder.
"Event of Default" shall mean any Event of Default under the Credit
Agreement or any payment default, after any applicable grace period, under any
Interest Rate Protection Agreement.
"General Intangibles" shall have the meaning assigned that term
under the Uniform Commercial Code as in effect on the date hereof in the State
of New York but excluding these General Intangibles to the extent the terms
thereof expressly prohibit the assignment of, or the granting of a security
interest in, such Assignor's rights and obligations thereunder.
"Goods" shall have the meaning assigned that term under the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1.
"Instrument" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Interest Rate Creditors" shall have the meaning provided in the
preamble to this Agreement.
"Interest Rate Protection or Other Hedging Obligations" shall have
the meaning provided in the definition of "Obligations" in this Article IX.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through
work-in-process to finished goods -- and all products and proceeds of whatever
sort and wherever located and any portion thereof which may be returned,
rejected, reclaimed or repossessed by the Collateral Agent from any Assignor's
customers, and shall specifically include all "inventory" as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by any Assignor.
"Marks" shall mean all right, title and interest in and to any
United States or foreign trademarks, service marks and trade names now held or
hereafter acquired by any
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Assignor, including any registration or application for registration of any
trademarks and service marks now held or hereafter acquired by an Assignor,
which are registered in the United States Patent and Trademark Office or the
equivalent thereof in any State of the United States or in any foreign country,
as well as any unregistered marks used by any Assignor, and any trade dress
including logos, designs, company names, business names, fictitious business
names and other business identifiers used by any Assignor in the United States
or any foreign country.
"Noticed Event of Default" shall mean (i) an Event of Default with
respect to the Borrower under Section 9.05 of the Credit Agreement and (ii) any
other Event of Default in respect of which the Collateral Agent has given the
Borrower notice that such Event of Default constitutes a "Noticed Event of
Default."
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and indebtedness (including, without limitation, indemnities, fees
and interest thereon) of the Borrower and each Assignor owing to the Bank
Creditors, now existing or hereafter incurred under, arising out of or in
connection with any Credit Document and the due performance and compliance by
the Borrower and each Assignor with the terms of each such Credit Document,
including, without limitation, in the case of (x) Holdings, all obligations
under the Holdings Guaranty and (y) each Subsidiary Guarantor, all obligations
under the Subsidiary Guaranty (other than those in respect of Interest Rate
Protection Agreements and Other Hedging Agreements) (all such obligations and
indebtedness under this clause (i), except to the extent consisting of
obligations or indebtedness with respect to Interest Rate Protection Agreements,
being herein collectively called the "Credit Document Obligations"); (ii) the
full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations and indebtedness (including,
without limitation, indemnities, fees and interest thereon) of the Borrower and
each Assignor owing to the Interest Rate Creditors now existing or hereafter
incurred under, arising out of or in connection with any Interest Rate
Protection Agreement or Other Hedging Agreement including, without limitation,
in the case of (x) Holdings, all obligations under the Holdings Guaranty and (y)
each Subsidiary Guarantor, all obligations under the Subsidiary Guaranty, in
each case in respect of Interest Rate Protection Agreements or Other Hedging
Agreements (all such obligations and indebtedness under this clause (ii) being
herein collectively called the "Interest Rate Protection or Other Hedging
Obligations"); (iii) any and all sums advanced by the Collateral Agent in order
to preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities referred to in clauses (i), (ii) and
(iii) above, after an Event of Default shall have occurred and be continuing,
the reasonable expenses of re-taking, holding, preparing for sale or lease,
selling or otherwise disposing of or realizing on the Collateral, or of any
exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs; and (v) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 8.1 of this Agreement.
"Patents" shall mean any United States or foreign patent to which
any Assignor now or hereafter has title and any divisions or continuations
thereof, as well as any application for a United States or foreign patent now or
hereafter made by such Assignor.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of the
date hereof, among the Borrower, the other pledgors party thereto and the
Collateral Agent, as Pledgee.
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"Pledgee" shall have the meaning provided in the Pledge Agreement.
"Proceeds" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect in the State of New York on the date hereof
or under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Agent or an Assignor from time to time with respect to
any of the Collateral, (ii) any and all payments (in any form whatsoever) made
or due and payable to an Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b)
of this Agreement.
"Receivables" shall mean any "account" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for goods
sold or leased or services performed by such Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by such Assignor to secure
the foregoing, (b) all of any Assignor's right, title and interest in and to any
goods or services, the sale of which gave rise thereto, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, (d) all
powers of attorney for the execution of any evidence of indebtedness or security
or other writing in connection therewith, (e) all books, records, ledger cards,
and invoices relating thereto, (f) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(g) all credit information, reports and memoranda relating thereto and (h) all
other writings related in any way to the foregoing.
"Requisite Creditors" shall have the meaning provided in Section
10.2 of this Agreement.
"Secured Creditors" shall have the meaning provided in the second
WHEREAS clause of this Agreement.
"Interest Rate Protection Agreements" shall have the meaning
provided in the second WHEREAS clause of this Agreement.
"Trade Secret Rights" shall mean the rights of an Assignor in any
Trade Secret it holds.
"Trade Secrets" means any secretly held existing engineering and
other data, information, production procedures and other know-how relating to
the design, manufacture,
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<PAGE>
assembly, installation, use, operation, marketing, sale and servicing of any
products or business of an Assignor worldwide whether written or not written.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed:
(i) if to any Assignor, at its address contained in the Credit
Agreement (for the Borrower) or the Subsidiary Guaranty (for the other
Assignors);
(ii) if to the Collateral Agent, at:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attn.: Patsy Hogan
Tel: (212) 250-5175
Fax: (212) 250-7218
(iii) if to any Bank, at such address as such Bank shall have
specified in the Credit Agreement;
(iv) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to the Assignors and the
Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
10.2 Waiver; Amendment. (a) None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Collateral Agent (with the consent of the
Required Banks or, to the extent required by Section 13.12 of the Credit
Agreement, all of the Banks) and each Assignor affected thereby (it being
understood that the addition or release of any Assignor hereunder shall not
constitute a change, waiver, modification or variance affecting any Assignor
other than the Borrower and the Assignor so added or released) provided that (i)
no such change, waiver, modification or variance shall be made to Section 7.4 or
this Section 10.2(a) without the consent of each Secured Creditor adversely
affected thereby, and (ii) any change, waiver, modification or variance
affecting the rights and benefits of a single Class of Secured Creditors (and
not all Secured Creditors in a like or similar manner) shall require the written
consent of the Requisite Creditors of such Class of Secured Creditors. For the
purpose of this Agreement, the term "Class" shall mean each class of Secured
Creditors, i.e., whether (x) the Bank Creditors as holders of the Credit
Document Obligations or (y) the Interest Rate Creditors as holders of the
Interest Rate Protection or Other Hedging Obligations. For the purpose of this
Agreement, the
-21-
<PAGE>
term "Requisite Creditors" of any Class shall mean each of (x) with respect to
the Credit Document Obligations, the Required Banks and (y) with respect to the
Interest Rate Protection or Other Hedging Obligations, the holders of at least a
majority of all obligations outstanding from time to time under the Interest
Rate Protection Agreements and Other Hedging Agreements.
(b) No delay on the part of the Collateral Agent in exercising any
of its rights, remedies, powers and privileges hereunder or partial or single
exercise thereof, shall constitute a waiver thereof. No notice to or demand on
any Assignor shall constitute a waiver of any of the rights of the Collateral
Agent to any other or further action without notice or demand to the extent such
action is permitted to be taken by the Collateral Agent without notice or demand
under the terms of this Agreement.
10.3 Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, composition,
arrangement, adjustment, readjustment, dissolution, liquidation or other like
proceeding relating to any Assignor or any Subsidiary of any Assignor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not such Assignor shall have
notice or knowledge of any of the foregoing; (b) any exercise or non-exercise,
or any waiver, consent, extension, or indulgence of, or other action or inaction
under or in respect of any such agreement or instrument or this Agreement (other
than a waiver, consent or extension with respect to this Agreement in accordance
with its terms) any right, remedy, power or privilege under or in respect of
this Agreement or any other Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement except as specifically set forth in a
waiver granted pursuant to the restrictions of Section 10.2 hereof; or (c) any
renewal, extension, amendment or modification of, or addition or supplement to
or deletion from any other Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement or any security for any of the Obligations
(other than this Agreement in accordance with its terms), or any other
instrument or agreement referred to therein, or any assignment or transfer of
any thereof; whether or not any Assignor shall have notice or knowledge of any
of the foregoing; (d) any furnishing of any additional security to the
Collateral Agent or its assignee or any acceptance thereof or any release of any
security by the Collateral Agent or its assignee; (e) any limitation on any
party's liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof.. The rights and remedies of the Collateral Agent
herein provided are cumulative and not exclusive of any rights or remedies which
the Collateral Agent would otherwise have.
10.4 Successors and Assigns. This Agreement shall be binding upon
each Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and its successors and assigns. All agreements, statements,
representations and warranties made by such Assignor herein or in any
certificate or other instrument delivered by each Assignor or on its behalf
under this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement, the
other Credit Documents and the Interest Rate Protection Agreements and Other
Hedging Agreements regardless of any investigation made by the Secured Creditors
on their behalf.
10.5 Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
-22-
<PAGE>
10.6 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.7 Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the
law of the State of New York.
10.8 Assignors' Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of any Assignor under or with
respect to any Collateral.
10.9 Termination; Release. (a) After the termination of the Total
Commitment and all Interest Rate Protection Agreements and Other Hedging
Agreements, when no Note or Letter of Credit is outstanding and when all Loans
and other Obligations have been paid in full, this Agreement shall terminate
(provided that all indemnities set forth herein including, without limitation,
in Section 8.1 hereof shall survive such termination), and the Collateral Agent,
at the request and expense of the relevant Assignor, will execute and deliver to
such Assignor a proper instrument or instruments (including Uniform Commercial
Code termination statements on form UCC-3) acknowledging the satisfaction and
termination of this Agreement, and will duly assign, transfer and deliver to
such Assignor (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Collateral Agent and as has
not theretofore been sold or otherwise applied or released pursuant to this
Agreement.
(b) So long as no payment default on any of the Obligations is in
existence or would exist after the application of proceeds as provided below,
the Collateral Agent shall, at the request of the relevant Assignor, release any
or all of the Collateral, provided that (x) such release is permitted by the
terms of the Credit Agreement (it being agreed for such purposes that a release
will be deemed "permitted by the terms of the Credit Agreement" if the proposed
transaction constitutes an exception to Section 8.02 of the Credit Agreement) or
otherwise has been approved in writing by the Required Banks or all of the
Banks, if so required under the Credit Agreement and (y) the proceeds of such
Collateral are applied as required pursuant to the Credit Agreement or any
consent or waiver with respect thereto.
(c) At any time that the relevant Assignor desires that the
Collateral Agent take any action to give effect to any release of Collateral
pursuant to the foregoing Section 10.9(b), it shall deliver to the Collateral
Agent a certificate signed by an authorized officer describing the Collateral to
be sold and the relevant provision of Section 8.02 of the Credit Agreement on
which it is relying to make such sale. In the event that any part of the
Collateral is released as provided in the preceding paragraph (b), the
Collateral Agent, at the request and expense of such Assignor, will duly release
such Collateral and assign, transfer and deliver to such Assignor or its
designee (without recourse and without any representation or warranty) such of
the Collateral as is then being (or has been) so sold and as may be in the
possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement. The Collateral Agent shall have no
-23-
<PAGE>
liability whatsoever to any Secured Creditor as the result of any release of
Collateral by it as permitted by this Section 10.9. Upon any release of
Collateral pursuant to Section 10.9(a) or (b), none of the Secured Creditors
shall have any continuing right or interest in such Collateral, or the proceeds
thereof.
10.10 Collateral Agent. The Collateral Agent will hold in accordance
with this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed by the parties hereto and each
Secured Creditor, by accepting the benefits of this Agreement, acknowledges and
agrees that the obligations of the Collateral Agent as the holder of the
Collateral and interests therein and with respect to the disposition thereof,
and otherwise under this Agreement, are only those expressly set forth in this
Agreement. The Collateral Agent shall act hereunder on the terms and conditions
set forth in Section 11 of the Credit Agreement.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Collateral Agent.
10.12 Additional Assignors. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall become an
Assignor hereunder by executing a counterpart hereof and delivering the same to
the Collateral Agent.
* * *
-24-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
ADDRESS: CONSOLIDATED CONTAINER HOLDINGS
LLC
2515 McKinney Avenue
Suite 850, Lock Box 14 By: /s/ Steven M. Silver
Dallas, Texas 75201 -------------------------------
Name: Steven M. Silver
Telephone No.: (214) 303-3400 Title: Vice President
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
CONSOLIDATED CONTAINER COMPANY
2515 McKinney Avenue LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: /s/ Steven M. Silver
-------------------------------
Name: Steven M. Silver
Title: Vice President
ADDRESS: REID PLASTICS GROUP LLC
2515 McKinney Avenue By: Consolidated Container Company
Suite 850, Lock Box 14 LLC, as its Member and Manager
Dallas, Texas 75201
By: Consolidated Container Holdings
Telephone No.: (214) 303-3400 LLC, as its Member and Manager
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher By: /s/ Steven M. Silver
-------------------------------
Name: Steven M. Silver
Title: Vice President
-25-
<PAGE>
ADDRESS: CONSOLIDATED CONTAINER CAPITAL, INC.
2515 McKinney Avenue
Suite 850, Lock Box 14 By: /s/ Steven M. Silver
Dallas, Texas 75201 -------------------------------
Name: Steven M. Silver
Telephone No.: (214) 303-3400 Title: Vice President
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
ADDRESS: PLASTIC CONTAINERS LLC
2515 McKinney Avenue By: Consolidated Container Company LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Holdings
LLC, as its Sole Member and Manager
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499 By: /s/ Steven M. Silver
Attention: Timothy Brasher -------------------------------
Name: Steven M. Silver
Title: Vice President
ADDRESS: CONTINENTAL PLASTIC CONTAINERS LLC
2515 McKinney Avenue
Suite 850, Lock Box 14 By: Plastic Container LLC, as its Sole
Dallas, Texas 75201 Member and Manager
Telephone No.: (214) 303-3400 By: Consolidated Container Company LLC,
Facsimile No.: (214) 303-3499 as its Sole Member and Manager
Attention: Timothy Brasher
By: Consolidated Container Holdings LLC,
as its Sole Member and Manager
By: /s/ Steven M. Silver
-------------------------------
Name: Steven M. Silver
Title: Vice President
-26-
<PAGE>
ADDRESS: CONTINENTAL CARIBBEAN CONTAINERS,
INC.
2515 McKinney Avenue
Suite 850, Lock Box 14 By: /s/ Steven M. Silver
Dallas, Texas 75201 -------------------------------
Name: Steven M. Silver
Title: Steven M. Silver
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
-27-
<PAGE>
Acknowledged And Agreed:
BANKERS TRUST COMPANY,
as Collateral Agent
By: /s/ Patricia Hogan
----------------------------------
Name: Patricia Hogan
Title: Principal
-28-
<PAGE>
ANNEX A
TO
SECURITY AGREEMENT
LIST OF CHIEF EXECUTIVE OFFICES
Consolidated Container Holdings LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Consolidated Container Company LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Consolidated Container Capital, Inc.
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Reid Plastics Group LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Plastic Containers LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Continental Plastic Containers LLC
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
Continental Carribean Containers, Inc.
2515 Mc Kinney Avenue
Suite 850
Dallas, Texas 75201
-29-
<PAGE>
ANNEX B
TO
SECURITY AGREEMENT
SCHEDULE OF EQUIPMENT AND INVENTORY LOCATIONS
A. REID:
Alabama
306 Industrial Park N, Demopolis (Marengo), Alabama 36732
701 East Jackson Street, P.O. Drawer 1247, Demopolis (Marengo), Alabama
36732
Arizona
4239 N. 39th Avenue, Phoenix (Maricopa), Arizona 85019
4245 N. 39th Avenue, Phoenix (Maricopa), Arizona 85019
California
75 W. Valpico Road, Tracy (San Joaquin), California 95376
211 N. Willow Avenue, City of Industry/La Puente (Los Angeles),
California 91746
1201 E. Cerritos Avenue, Anaheim, California 92805
7300 Bolsa Avenue, Westminster, California 92683
5772 Jurupa Street, Ontario, California 91761
1070 Samuelson Street, City of Industry (Los Angeles), California 91748
17851 E. Railroad Street, Industry, California 91748
30020 Ahern Street, Union City, California 94587 (actual address is
2931 Faber Street, Union City, California 94587)
21700 E. Copley Dr., Diamond Bar, California 91765
Connecticut
731 Main Street Building B2, Monroe, Connecticut 06468
Florida
4961 Distribution Drive, Tampa, Florida 33605
Illinois
7122 W. 62nd Street, Chicago, Illinois 60638 (actual address is 6155
So. Harlem Avenue, Chicago, Illinois 60638)
<PAGE>
2
New Jersey
473 Mundet Place, Hillside, New Jersey 07205
New Mexico
800 20th Street NW, Albuquerque (Bernalillo), New Mexico 87104
Pennsylvania
1600-B Comet Drive, Lancaster, Pennsylvania 17601
Avenue B., Buncher Industrial District, Leetsdale, Pennsylvania
15056-1309
Texas
4525 Joseph Hardin Drive, Dallas, Texas 75236-1915
27815-A Highway Blvd., Katy, Texas 77494
Washington
6545 S. Glacier Place, Talkily, Washington 98188
4525 Fruit Valley Road, Vancouver (Clark), Washington 98660
GATE Warehouse No. 14, Port of Vancouver, Washington 98660
Canada
9200 Van Horn Way, Richmond, British Columbia, Canada V6X 1W3
1393 Border Street, Unit 8, Winnipeg, Manitoba, Canada R3H ON1
2679 Slough Street, Mississauga, Ontario L4T 1G2
Mexico
Av. Guillermo Gonzalez Camarena, No. 17, Parque Industrial Cuamatla,
Cuautitlan, Izealli, Estado de Mexico, C.P 54730
-2-
<PAGE>
3
B. SUIZA:
Arkansas
1234 North 7th Street, W. Memphis, Arkansas, 72303
5111 Rogers Avenue, Fort Smith, Arkansas, 72903
California
5000 Fulton Dr., Fairfield (Solano), California, 94585
1217 E. St. Gertrude Pl., Santa Ana, (Orange), California, 92707
1216 Madera Way, P.O. Box 7843, Riverside, California, 92503
Connecticut
3 Watrous Street, E. Hampton, Connecticut, 06424
4 Market Circle, Windsor, Connecticut, 06095
90 Pleasant Street, New Britain, Connecticut, 06051
401 Merritt, Norwalk, Connecticut 06853
433 Park Street, New Britain, CT
731 Main Street, Building 2, Monroe, CT
Florida
4330 20th Street, Zephyrhills, Florida, 33540
4711 34th Street North, St. Petersburg, Florida, 33714
5800 N.W. 74th Avenue, Miami, Florida, 33166
5200 Region Court, Lakeland, Florida, 33815
5225 Region Court, Lakeland, Florida, 33815
Georgia
155 King Mill Road, McDounough, Georgia, 30253
400 Indeco Dr., Suite A, Atlanta, Georgia, 30336
Illinois
2355 Touhy Avenue, Elk Grove, Illinois, 60007
2375 Touhy Avenue, Elk Grove, Illinois, 60007
2425 Touhy Avenue, Elk Grove, Illinois, 60007
2727 E. Higgins Rd., Elk Grove, Illinois, 60007
1300 NW Avenue, W. Chicago, Illinois, 60185
1400 NW Avenue, W. Chicago, Illinois, 60185
1201 West Lincoln, P.O. Box 626, Caseyville, Illinois, 62232
-3-
<PAGE>
4
Kansas
2600 E 4th P.O. Box 429, Hutchinson, Kansas, 67504-0429
11725 W. 85th Street, Lenexa, Kansas, 66214
Kentucky
6300 Strawberry Lane, Louisville (Jefferson), Kentucky, 40214
Louisiana
2410 Gordon Avenue, Monroe, Louisiana, 71202
303 Frontage Road, I-55, Kentwood, Louisiana, 70444
Massachusetts
1199 W. Central Street, Franklin, Massachusetts, 02038
626 Lynn Way, Lynn, Massachusetts, 01905
1 D'Angelo Drive, Marlborough, Massachusetts, 01752
1201 W. Central Street, Franklin, Massachusetts, 02038
Maryland
7100 E. Baltimore St., Baltimore, (Baltimore -Independent City),
Maryland, 21224
Maine
P.O. Box 576, (off Route 122), Poland Springs, Maine, 04274
Nebraska
8420 West Dodge Road, Omaha, Nebraska 68114
New Hampshire
New Hampshire Route 111, Hampstead (Rockingham), New Hampshire, 03841
New Jersey
Rt. 130, Cumberland Blvd., Burlington, New Jersey, 08016
26 Slater Drive, Elizabeth (Union), New Jersey, 07206
4 Pleasant Hill Road, Cranbury (Middlesex), New Jersey, 08512
170 Circle Drive North, Piscataway, New Jersey 08854
1402 Pleasant Hill, Monroe, NJ
-4-
<PAGE>
5
New York
18 Champeney Terrace, Rochester Monroe, New York, 14605
504 3rd Ave. Extension, Rensselaer, New York, 12144
14 Hall Street, Batavia, New York, 14020
268 North Union Street, Rochester, New York 14605
200 Public Marketing Building, Rochester, New York 14609
North Carolina
2030 East Market Street, Greensboro, North Carolina, 27401
Ohio
95 W. Cresentville Rd., Springdale, Ohio, 45246
1917 Joyce Avenue, Columbus, Ohio, 43228
4015 Executive Park Drive, #226, Cincinnati, Ohio 45241
Mostelter & Kemper Roads, Cincinnati, Ohio 45241
435 Roush Road, Lima, Ohio 45801
Pennsylvania
405 Nestles Way, Breinigsville, Pennsylvania, 18031
P.O. Box 147, Kelton, Pennsylvania, 19346
6831 Ruppsville Road, Allentown, Pennsylvania, 18106
910 Seventh Avenue, Berwick (Columbia), Pennsylvania, 18603
15 Mineral Street, Oil City (Venango), Pennsylvania, 16301
15 Lightner Road, York, Pennsylvania, 17404
601 Seldon Avenue, Verona, Pennsylvania, 15147
Grove Street, South Croton Ave, P.O. Box 230, New Castle, Pennsylvania,
16103
1600-B Cloister Drive, Lancaster, Pennsylvania, 17601
Jennersville Industrial Building, Penn Township, Pennsylvania 15632
Texas
3405 Roy Orr Blvd., Grand Prairie, Texas, 75050
900 E Semond, P.O. Box 932, Conroe, Texas, 77305
6831 Silsbee Road, Houston, Texas, 77033
5651 Gateway Freeway, Ft. Worth, Texas, 76178
4201 Hwy 75 S.,Sherman, Texas, 75090
2515 Mc Kinney Avenue, Suite 850, Dallas, Texas, 75201
7198 Mykawa Street, Houston, Texas 77033
7300 Mykawa Street, Houston, Texas 77033
654 East North Belt, Houston, Texas 77060
2502 I-North, Woodlands, Texas 77380
-5-
<PAGE>
6
Virginia
1505 Robinwood Lane, P.O. Box 4754, Richmond, Virginia, 23220
8258 Richford Road, Mechanicville, Virginia
West Virginia
2800 Congo Road, Newell, West Virginia, 26050
Puerto Rico
Avenida Parque Central 1000, Parque Industrial Bairoa,Caguas,
Puerto Rico, 00725
-6-
<PAGE>
7
ANNEX C
TO
SECURITY AGREEMENT
SCHEDULE OF TRADE AND FICTITIOUS NAMES
1. REID:
Juice Tree
Crystal Clear
Fast Flow
Propak California
Propak California Company
Stewart Walker Plastics
Stewart Walker Company
Reid Plastics
2. Consolidated Container Company LLC:
Quality Containers
double r enterprises, a division of Franklin Plastics, Inc.
California Plastics
Contech Connecticut
Contech New Hampshire New Jersey Plastics, Inc.
Contech New Jersey North Carolina Plastics, Inc.
Florence Plastics Richmond Container, Inc.
Fort Worth Plastics Sherman Plastics, Inc.
Texas State Plastics Vanguard Manufacturing, Inc.
Gulf Coast Plastics
Miami Plastics
Monroe Plastics
Hartford Plastics
Kansas State Plastics
Ocean Park Plastics
West Central Plastics
New York Plastics
Double RR New Castle
Double RR Verona
Liquitane Batavia
Liquitane Rochester
Liquitane Berwick
Ohio State Container
Allentown Plastics
Atlanta Container, Inc.
Chester County Container Corporation
First Capital Plastics, Inc.
Franklin Plastics, Inc.
Illinois Plastics, Inc.
-7-
<PAGE>
8
Kentwood Plastics, Inc.
Maine Plastics, Inc.
Marlborough Plastics, Inc.
Middlesex Plastics, Inc.
-8-
<PAGE>
9
ANNEX D
TO
SECURITY AGREEMENT
SCHEDULE OF MARKS
REID PLASTICS GROUP LLC
REGISTERED TRADEMARKS
DOMESTIC
<TABLE>
<CAPTION>
DOCKET REGISTERED REGISTERED TITLE EXPIRES
# # DATE ----- -------
------ ---------- ----------
<S> <C> <C> <C> <C>
135/58 943,092 09-19-72 VALVE AND DESIGN 09-19-92
151/83 1,121,793 07-10-79 FAST FLOW 07-10-99
151/84 1,110,051 12-26-78 FF 12-26-98
153/157 1,148,958 03-24-81 AQUALITE 03-24-2001
153/158 1,228,506 02-22-83 CRADLE-KRATE 02-22-2003
155/79 1,160,058 07-07-81 6-PAK 07-07-2001
155/80 1,160,057 07-07-81 SUPER SIX 07-07-2001
163/64 1,294,331 09-11-84 GO WITH THE FLOW 09-11-2004
163/105 1,292,890 09-04-84 CRADLE-KLIP 09-04-2004
163/106 1,336,692 05-21-85 SANI-SEAL
163/107 1,292,059 08-28-84 EZ-FAST FLOW
163/108 1,307,920 12-04-84 TRI-AIR
167/29 1,346,243 07-02-85 AQUATOTE 07-02-2005
167/030 1,336,693 05-21-85 TOP-CAP
175/134 1,579,954 01-30-90 VALVE (design only) 01-30-2000
221/016 1,669,487 12-24-91 CRYSTAL CLEAR
(Assigned to Reid 6-13-95)
TM9,541 10-26-90 CRYSTAL AND DESIGN
(Registered in NJ)
1,331,704 3-11-59 US "JUICE TREE" DESIGN Cancelled on
TRADEMARK 11/19/91
</TABLE>
-9-
<PAGE>
2
REID PLASTICS GROUP LLC
REGISTERED TRADEMARKS
FOREIGN
<TABLE>
<CAPTION>
REGISTRATION REGISTRATION RENEWAL
DOCKET # APPLICANT COUNTRY MARK NO. DATE DATE
- -------- --------- ------- ---- --- ---- ----
<S> <C> <C> <C> <C> <C> <C>
153/157 Reid Plastics, Inc. Canada AQUALITE 392093 12-20-91 12-20-06
153/157 Reid Plastics, Inc. Colombia AQUALITE 206692 03-18-98 03-18-08
153/157 Reid Plastics, Inc. Great AQUALITE A142805 11-29-91 07-19-07
Britain
175/134 Reid Valve Co. Inc. Indonesia VALVE 245631 02-01-89 02-01-99
175/134 Reid Valve Co., Inc. Japan VALVE 2391900 03-31-92 03-31-02
175/134 Reid Valve Co., Inc. Malaysia VALVE
175/134 Reid Valve Co., Inc. Thailand VALVE 118001 08-10-88 10-06-97
175/134 Reid Valve Co., Inc. Turkey VALVE 102518 08-26-88 08-26-07
175/134 Reid Valve Co., Inc. Germany VALVE 1125040 07-19-88 08-31-07
175/134-1 Reid Valve Co., Inc. China P.R. VALVE 334392 12-29-88 12-29-98
175/134-1 Reid Valve Co., Inc. Mexico VALVE 357542 12-29-88
175/134-1 Reid Valve Co., Inc. Taiwan VALVE 398216 04-15-88 04-15-98
175/134-2 Reid Valve Co., Inc. China P.R. VALVE
175/134-2 Reid Valve Co., Inc. Mexico VALVE 368628 10-20-89
175/134-3 Reid Valve Co., Inc. Mexico VALVE 351826 01-25-89
175/134-4 Reid Valve Co., Inc. Mexico VALVE 352254 09-08-88
175/134-5 Reid Valve Co., Inc. Great VALVE 1319867 11-16-90
Britain
175/134-6 Reid Valve Co., Inc. Singapore VALVE 1497 03-23-90 03-31-05
221/016 Reid Plastics, Inc. Colombia CRYSTAL
CLEAR
</TABLE>
-2-
<PAGE>
3
JUICE TREE
REGISTERED TRADEMARKS
REGISTERED
REGISTERED # DATE TRADEMARK EXPIRES
- ------------ ---- --------- -------
-3-
<PAGE>
PART II Infringement of Intellectual Property
Dean Foods Company On February 12, 1999, Dean Foods Company notified RPI of
an alleged trademark infringement caused by the
manufacture of bottles for Shamrock Foods Company. It
was the position of Dean Foods Company that Shamrock's
use of bottles produced by RPI infringes and dilutes
Dean's trade identity rights and that RPI is
contributing to Shamrock's violations of Dean's rights
by manufacturing the bottles. The letter was a
clarification that Dean's was not waiving any potential
claims against RPI for the volition of Dean's trademark
rights and that Dean's award of a new supply contract to
RPI should not be interpreted as a waiver of Dean's
rights to proceed against RPI as a contributory
infringer. Shamrock has offered to indemnify RPI from
damages in connection with Dean's claim. RPI has at this
time in its possession an indemnity agreement executed
by Shamrock Foods Company (Indemnity Agreement between
Shamrock Foods Company and RPI). Management is currently
evaluating whether to execute this agreement.
-4-
<PAGE>
ANNEX E
TO
SECURITY AGREEMENT
SCHEDULE OF PATENTS AND PATENT APPLICATIONS
REID PLASTICS GROUP LLC
PATENTS AND APPLICATIONS
FOREIGN
<TABLE>
<CAPTION>
PATENT # ISSUE DATE
OR OR FIRST
DOCKET# COUNTRY SERIAL # FILING DATE TITLE INVENTOR EXPIRES
- ------- ------- -------- ----------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C>
181/273 Canada 63522 06-20-89 Design for a Bottle Carl D. Frahm 06-20-99
195/224 Mexico 7346 10-27-94 Bottle with Handle Joseph B. Rokus et 08-20-08
al.
203/035 Mexico 7347 10-27-94 Bottle with Handle Joseph B. Rokus 08-20-08
203/036 Canada 75765 02-23-95 Bottle with Handle Joseph B. Rokus 02-23-05
203/036 Canada 75766 02-23-95 Bottle with Handle Joseph B. Rokus 02-23-05
203/036 Mexico 7345 10-27-94 Bottle with Handle Joseph B. Rokus 08-20-08
204/097 Canada 2153696 08-14-94 Bottle Valve Bernard Strong
Assembly
With Security Seal
204/097 China P.R. 94191161.6 04-03-97 Bottle Valve Bernard Strong 11-14-14
Assembly
With Security Seal
204/097 Mexico 952346 05-25-95 Bottle Valve Bernard Strong
Assembly
With Security Seal
205/281 Canada 75966 03-16-95 Bottle Phyllis A. Rokus 03-16-05
205/281 Mexico 8222 04-25-96 Bottle Phyllis A. Rokus 10-11-09
216/273 Canada 81115 06-27-97 Bottle Joseph B. Rokus 06-27-07
216/273 Mexico 9048 10-09-97 Bottle Joseph B. Rokus 04-19-11
221/094 Canada 83537 04-03-98 Bottle Joseph B. Rokus 04-03-08
221/094 Mexico 970322 03-25-97 Bottle Joseph B. Rokus
</TABLE>
-1-
<PAGE>
2
REID PLASTICS GROUP LLC
ISSUED PATENTS
<TABLE>
<CAPTION>
PATENT ISSUE
OR OR
DOCKET SERIAL FILING FIRST
# # DATE TITLE INVENTOR EXPIRES
------ ------ ------ ----- -------- -------
<S> <C> <C> <C> <C> <C>
135/051 3,802,595 04-09-74 Bottled Water Cradle Case Construction Carl E. Frahm Expired
Shirley E. Frahm 04-09-91
142/203 D-238,754 02-10-76 Design for Water Bottle of 5-Gallon Carl E. Frahm Expired
Capacity for Use in Water Dispenser 02-10-90
145/162 4,015,741 04-05-77 Collapsible Carrying Case Carl E. Frahm 04-05-94
145/255 3,974,863 08-17-76 Valved Water Container W/seal (Olla) Carl E. Frahm et al. 08-17-93
145/256 3,966,093 06-29-76 Valved Water Container W/seal (Olla) Carl E. Frahm et al. 06-29-93
146/131 D-243928 04-05-77 Design for Water Bottle of 5-gallon Carl E. Frahm et al. 04-05-91
Capacity for Use in Water Dispenser
146/133 D-241,841 10-12-76 Design for Valve for Use in Carl E. Frahm Expired
Water Dispensers Shirley E. Frahm 10-12-90
146/134 4,015,632 04-05-77 Valve Construction Carl E. Frahm et al. 04-05-94
148/188 4,029,209 06-14-77 Stackable Carrying Case Carl E. Frahm et al. 06-14-94
150/208 4,074,986 02-21-78 Valved Water Container W/seal (Olla) Carl E. Frahm 02-21-94
151/085 4,181,243 01-01-80 Device for Filtering Beverages Carl E. Frahm et al. 01-01-97
151/103 4,143,784 03-13-79 Water Bottle & its Storage Case Carl E. Frahm et al. 03-13-96
(Old#1) (Change to #8 (D-326,608)
156/003 D-262521 01-05-82 (Design) Water Bottle or Similar Article Carl E. Frahm et al. 01-05-96
157/297 D-262522 01-05-82 (Design) Water Bottle or Similar Article Carl E. Frahm 01-05-96
159/225 4,416,383 11-22-83 Closure and Sealing Device Machine Carl E. Frahm 11-22-2000
166/128 D-286219 10-14-86 (Design) Bottle Case Carl E. Frahm et al. 10-14-2000
171/284 D-296420 06-28-88 (Design) New, Original & Ornamental Carl E. Frahm et al. 06-28-2002
Design for a Bottle 2.5 Gallon
171/285 4,693,400 09-15-87 Extendable Nestable Dispensing Apparatus Carl E. Frahm et al. 09-15-2004
173/008 D-299,697 02-07-89 (Design) New, Original & Ornamental Carl E. Frahm 02-07-2003
Design for a Bottle
179/261 5,002,199 03-26-91 Stackable Bottle (6 Gallon) Carl E. Frahm et al. 03-06-2008
181/273 D-311329 10-16-90 (Design) 6-gallon Octagonal Bottle Carl E. Frahm 10-16-2004
183/061 D-326,051 05-12-92 (Design) for a Bottle (#5) Carl E. Frahm 05-12-2006
</TABLE>
-2-
<PAGE>
3
<TABLE>
<CAPTION>
PATENT ISSUE
OR OR
DOCKET SERIAL FILING FIRST
# # DATE TITLE INVENTOR EXPIRES
------ ------ ------ ----- -------- -------
<S> <C> <C> <C> <C> <C>
183/062 D-326,608 06-02-92 (Design) for a Bottle (#8) Carl E. Frahm 05-12-2006
191/296 D-304,999 12-12-89 Design for a Bottle Case Richard L. Platte, Sr. 12-12-2003
195/224 D-339,067 09-07-93 (Design) 5-gallon Bottle B. Joseph Rokus et al. 09-07-2007
w/Handle (Mex.&U.S.)
203/035 D- 02-14-95 Two Gallon Bottle B. Joseph Rokus 02-14-2009
355,367* w/Handle (Mex/U.S.) Squat
203/036 D- 08-08-95 Three Gallon Bottle B. Joseph Rokus 08-08-2009
361,039* w/Handle (Mex/U.S.)
Tall, Skinny (Same Diameter
as 5 Gallon)
205/281 D-361,720 03-16-95 Two Gallon Aqua Vend Bottle Phyllis A. Rokus 10-11-2009
04-25-96 Canada & 10-11-2009
08-29-95 Mexico Richard Rendon 10-11-2009
U.S.
5,133,469 07-28-92 Stackable Bottle Ron Mehta
216/273 D-374,824 10-22-96 2.5 Gallon Dispenser Pak Bottle B. Joseph Rokus et al. 10-22-2010
217/183 5,762,317 6-09-98 Child Resistant Valve Button Shirley R. Frahm 5-6-2016
&
Carl E. Frahm
221/094 D-401,859 12-01-98 Bottle (Grupo Seser) B. Joseph Rokus 9-26-2016
D-353,367 12-31-94 Male Connector for Surface Mounting Kiyoshi Sato 12-13-2011
4,181,143 1-1-80 Valve Assembly and Coupler Therefor Merton R. Fallon expired
D-325,608 4-21-92 Exercise Chair Don D. Anderson 4-21-2009
D-325,051 3-31-92 Guide for Carrying Out Word Games Ralph E. Dean 3-31-2009
3,926,322 12-16-75 Apparatus for Removing Containers from Billy Joe Scott
Packages
SN 09-06-94 Bottle Carrier Device
08/302,225
replaces
08/044,270
SN 03-15-94 Bottle Carrier Device (Design)
23/019,939
SN 11-03-93 Bottle Valve Assembly W/security Seal
08/151,725
</TABLE>
- --------
* Canada combines Doc. #203/035 & 203/036 into one patent Doc. #203/036
-3-
<PAGE>
4
<TABLE>
<CAPTION>
PATENT ISSUE
OR OR
DOCKET SERIAL FILING FIRST
# # DATE TITLE INVENTOR EXPIRES
--- -- ---- ----- -------- -------
<S> <C> <C> <C> <C> <C>
185/020 4,962,872 10-16-90 CONTAINER CLOSURE DEVICE- BERNARD 10/16/07
ROTARY VALVE STRONG
200/126 D360,362 03-15-94 BOTTLE CARRIER DEVICE (Design) BERNARD
STRONG
204/097 5,445,298 11-03-93 BOTTLE VALVE ASSEMBLY BERNARD
W/SECURITY SEAL STRONG
209/159 5,441,320 09-06-94 BOTTLE CARRIER DEVICE BERNARD
STRONG
213/097 5,570,818 11-05-96 VALVE ASSEMBLY W/SECURITY BERNARD
SEAL STRONG
4924770 5-15-90 PORTABLE, AUTOMATIC JUICE ASSIGNED TO Expired
EXTRACTION MACHINE JUICE TREE because of
failure to
pay
maintenance
fee
</TABLE>
-4-
<PAGE>
5
Claims of Infringement
Continental Plastic
Containers LLC Continental Plastic Containers LLC may be subject to a
renewed counterclaim by Owens Illinois, Inc. with
respect to Case 95C4670 in the U.S. District Court for
the Northern District of Illinois, in which Owens
Illinois alleged infringement of a composition patent,
owned by Owens Illinois and said to be infringed by the
composition of plastic bottles of Continental Plastic
Containers LLC Counsel to Owens Illinois has indicated
that it is interested in discussing settlement terms
with Suiza Packaging with respect to the claim. These
potential settlement talks follow the issuance of a
"Notice of Intent to Issue Reexamination Certificate" by
the U.S. Patent Office which withdrew the U.S. PTO's
previous rejections of the patent. Suiza Packaging has
been advised that a formal Certificate of Re-examination
may be issued in the near future.
-5-
<PAGE>
ANNEX F
TO
SECURITY AGREEMENT
SCHEDULE OF COPYRIGHTS AND
COPYRIGHT APPLICATIONS
None
-6-
<PAGE>
7
CONTINENTAL PLASTIC CONTAINERS LLC
ISSUED UNITED STATES PATENTS AND DESIGN APPLICATIONS
I. ISSUED UNITED STATES PATENTS
<TABLE>
<CAPTION>
File No. Inventor Patent No. Title Issue Date
<S> <C> <C> <C> <C>
(1) C37 99 Roth 3,923,190 Plastic Containers Having 12/02/75
EXPIRED Improved Physical Properties
Fabricated from a Composite Billet
(2) C37-96 Szatkowski 3,943,212 Method for Sinter Molding Plastic 03/09/76
EXPIRED Articles
(3) C37-97 Hexel 3,944,124 Plastic Containers 03/16/76
EXPIRED
(4) C31 -16a Szatkowski 3,947,165 Apparatus for Making Tubular 03/30/76
EXPIRED Containers
(5) C37-18 Nutting 4,005,966 Blow Molding Machine 02/01/77
EXPIRED
(6) C37-95 Erlandson et al. 4,009,234 Method for High Speed Sinter 02/22/77
EXPIRED Molding
(7) C37-98 Jones 4,014,723 Composite Containers 03/29/77
EXPIRED
(8) C37-17 Hellmer 4,080,146 Segmented Blow Molds 03/21/78
EXPIRED
(9) C37-100 Boni 4,102,974 Polyolefin Containers Having 07/25/78
Improved Gas Barrier Properties
(10) C37-20 Cary 4,119,394 Apparatus for Forming an End 10/10/78
Finish on a Hollow Article
(11) C37-99a Roth 4,120,932 Method of Fabricating Plastic 10/17/78
Containers Having Reduced Gas
Permeability from a Composite
Billet
(12) C37-103 Vrcelj 4,122,147 Method of Making Multilayer 10/24/78
Containers
(13) C37-101 Gordon 4,150,747 Composite Can 04/24/79
(14)C37-102 Cornell 4,151,136 Acid Reactable Inorganic Mineral 04/24/79
Fillers Having Improved
Compatibility with Polyolefin
Resins
(15)C37-19 Kinsley 4,178,146 Mold Having Cutter Means 12/11/79
</TABLE>
-7-
<PAGE>
8
<TABLE>
<CAPTION>
File No. Inventor Patent No. Title Issue Date
<S> <C> <C> <C> <C>
(16)C37-107 Miller 4,206,628 Press with Hydraulic Load 06/10/80
Transferring Mechanism
(17) C37-105 Miller 4,210,013 Press with Load Transfer 07/01/80
Mechanism
(18) C37-106 Cornell 4,210,573 Polyilefin Containers Having 07/01/80
Improved Gas Barrier Properties
(19) C37-108 Miller 4,212,185 Hydraulic Press System 07/15/80
(20) C37-109 Miller 4,258,562 Press Structure Having Shiftable 03/31/81
Stop
(21) C37-104 Beaver Des. 258,802 Bottle or Similar Article 04/07/81
EXPIRED
(22) C37-24 Hellmer 4,355,967 Label Applying Device 10/26/82
(23) C37-23 Hellmer 4,359,314 Transfer Device for Applying 11/16/82
Labels to Blow Molds
(24) C37 26 Hellmer et al. 4,397,625 In-Mold Labeller 08/09/83
(25) C37-111 Hekal 4,407,429 Cap for and in Combination with a 10/04/83
Container
(26) C37-110 Turner 4,443,401 Apparatus for and Method of 04/17/84
Thermoforming Plastic Cans
(27) C37-47 Bartimes et al. 4,479,644 In-Mold Labeller 10/30/84
(28) C37-112 Ross 4,498,854 In-Mod Labeller-Dual Parison 02/12/85
(29) C37-28 Szajna 4,502,607 Bulge Resistant Bottle Bottom 03/05/85
(30) C37-45 Walter 4,516,684 Resealable Closure 05/14/85
(31) C37 113 Hekal 4,536,425 Method for Preparing Polar 08/20/85
Thermoplastic Resin Compositions
Having Improved Gas Barrier
Properties
(32) C37-42 Blomquist et al. 4,540,460 Slew control Mounting Device for 09/10/85
Label Magazine
(33) C37-44 Szajna et al. 4,565,516 Mold for Large Capacity 01/21/86
Containers
(34) C37-46 Szajna 4,566,509 Closure Unit Including Measuring 01/28/86
Cup
(35) C37-35 Beaver et al. Des. 282,433 Container Body for Liquids and the 02/04/86
Like
</TABLE>
-8-
<PAGE>
9
<TABLE>
<CAPTION>
File No. Inventor Patent No. Title Issue Date
<S> <C> <C> <C> <C>
(36) C37-30 Beaver et al. Des. 282,631 Container Body for Liquids and 02/18/86
the Like
(37) C37-31 Beaver et al. Des. 282,632 Container Body for Liquids and the 02/18/86
Like
(38) C37-38 Beaver et al. Des. 282,633 Container Body for Liquids and the 02/18/86
Like
(39) C37-36 Beaver et al. Des. 282,634 Container Body for Liquids and the 02/18/86
Like
(40) C37-39 Beaver et al. Des. 282,635 Container Body for Liquids and the 02/18/86
Like
(41) C37-40 Beaver et al. Des. 282,636 Container Body for Liquids and the 02/18/86
Like
(42) C37-41 Beaver et al. Des. 282,637 Container Body for Liquids and the 02/18/86
Like
(43) C37-32 Beaver et al. Des. 282,638 Container Body for Liquids and 02/18/86
the Like
(44) C37-33 Beaver et al. Des. 282,639 Container Body for Liquids and 02/18/86
the Like
(45) C37-34 Beaver et al. Des. 282,640 Container Body for Liquids and 02/18/86
the Like
(46) C37-37 Beaver et al. Des. 282,641 Container Body for Liquids and 02/18/86
the Like
(47) C37-114 Hellmer et al. 4,605,368 Swivel Hose Connection and 08/12/86
Adjustable Mounting of Support
Member for Cam Follower and
Swivels
(48) C37-51 Hellmer 4,626,190 Retention Mechanism for a Split 12/02/86
Mold Carrier and Cam for
Actuating the Same
(49) C37-27 Bartimes et al. 4,637,600 Label Separator 01/20/87
(50) C37-22 Windstrup et al. 4,650,412 Blow Molding Machine 03/17/87
(51) C37-48 Conrad Des. 290,228 Bottle or the Like 06/09/87
(52) C37-49 Conrad Des. 293,210 Bottle or the Like 12/15/87
(53) C37-65 Dezio et al 4,756,857 Process of Applying a Top Element 07/12/88
to a Container Utilizing a Hot Melt
Material
</TABLE>
-9-
<PAGE>
10
<TABLE>
<CAPTION>
File No. Inventor Patent No. Title Issue Date
<S> <C> <C> <C> <C>
(54) C37-55 Beaver Des. 301,306 Container Body for Liquids and the 05/30/89
Like
(55) C37-53 Beaver Des. 303,628 Container Body for Liquids and the 09/26/89
Like
(56) C37-63 Guss et al. 4,863,071 Pump and Container Assembly 10/05/89
(57) C37-43 Blomquist 4,878,823 Apparatus for Applying a Label for 11/07/89
an Open Mold Half
(58) C37-56 Beaver Des. 304,423 Container Body for Liquids or the 11/07/89
Like
(59) C37-115 Beaver Des. 309,100 Container Body for Liquids or the 07/10/90
Like
(60) C37-64 Chemler Des. 309,259 Container Body for Liquids or the 07/17/90
Like
(61) C37-67 Magly 4,948,001 Interrupted Threads on a Plastic 08/14/90
Bottle Finish
(62) C37-60 Colby 4,986,466 Box and Blank for Forming Same 01/22/91
(63) C37-59 Weissenstein et al. 4,990,382 Plastic Container with Glass-Like 02/05/91
Appearance, Parison for and
Method of Making Same
(64) C37-52 Hellmer et al. 4,991,695 Hydraulic Brake System for a 02/12/91
Large Rotating Mass
(65) C37-75 Bloomquist 5,192,007 Valve Assembly for Inverted 03/09/93
Dispensing from a Container With
a Pump
(66) C37-74 Bartimes et al. 5,198,247 In-Mold Labellers for a Dual 03/30/93
Cavity Mold
(67) C37-70 Bartimes et al. 5,215,694 Method of Forming a Container 06/01/93
with Dripless Spout
(68) C37-72 Bartimes 5,246,146 Pump Replacement Assembly 09/21/93
(69) C37-70a Bartimes et al. 5,330,083 Container with Dripless Spout and 07/19/94
Method of Forming Same
(70) C37-93 Beaver et al. Des. 352,905 Juice Container 11/29/94
(71) C37-94 Beaver Des. 353,542 Exterior Surface of a Sidewall for a 12/20/94
Container
(72) C37-116 Foss et al. 5,392,950 Plastic Container with a 02/28/95
Completely Sealed Handle
</TABLE>
-10-
<PAGE>
11
<TABLE>
<CAPTION>
File No. Inventor Patent No. Title Issue Date
<S> <C> <C> <C> <C>
(73) C37-131 Beaver Des. 357,631 Exterior Surface of a Container 04/25/95
Sidewall
(74) C37-119 Beaver Des. 358,992 Exterior Surface of a Container 06/06/95
Sidewall
(75) C37-132 Beaver Des. 359,689 Exterior Surface of a Container 06/27/95
Sidewall
(76) C37-92 Beaver Des. 370,850 Exterior Surface of a Container 06/18/96
Sidewall
(77) C37-140 Beaver Des. 376,100 Tube Dispenser 12/03/96
(78) C37-146 Beaver Des. 378,274 Partial Exterior Surface of a 03/04/97
Container Sidewall
(79) C37-150 Beaver Des. 379,308 Exterior Surface of a Container 05/20/97
Sidewall
(80) C37-160 Beaver Des. 379,590 Exterior Surface of a Container 06/03/97
Sidewall
(81) C37-149 Beaver Des. 382,204 Exterior Surface of a Container 08/12/97
Sidewall
(82) C37-151 Beaver Des. 383,391 Exterior Surface of a Container 09/09/97
Sidewall
(83) C37-141 Beaver Des. 386,679 Container 11/25/97
(84) C37-129 Fehn 5,693,283 Container with Recycled Plastic 12/02/97
(85) C37-151a Beaver Des. 387,669 Exterior Surface of a Container 12/16/97
Sidewall
(86) C37-125 Beaver 5,702,033 Adjoined Dual Tube Dispenser 12/30/97
(87) C37-157 Fehn 5,814,383 Containers with Improved Crease- 09/29/98
Crack Resistance
(88) Beck 4,550,043 Preform with internal barrier and 10/29/85
internal layer of high thermal
stability and products made from
the same
</TABLE>
II. UNITED STATES DESIGN PATENT APPLICATIONS
-11-
<PAGE>
12
<TABLE>
<CAPTION>
File No. Inventor Patent No. Title Issue Date
<S> <C> <C> <C> <C>
(89) C37-144 Fehn Partial Exterior Surface of a 12/21/95
Container Sidewall
(90) C37-154 Beaver Exterior Surface of a Container 12/21/95
Sidewall
</TABLE>
o Lease and License Agreement by and between CAP SNAP CO., a
California corporation and Franklin Plastics, Inc., dated September
24, 1996.
o License Agreement by and between CPCI and Toyo Saken Kaisha dated
March 1, 1995.
o Rostan Acquisition Corp. holds U.S. Patent Number Des. 304,906
regarding a 24-oz. syrup container filed 10/24/86, effective for a
term of 14 years.
-12-
<PAGE>
13
Agreement Regarding Securities, Limited Liability
Company Interests and Partnership Interests
AGREEMENT (as amended, modified or supplemented from time to time, this
"Agreement"), dated as of July 1, 1999, among each of the undersigned pledgers
(each a "Pledgor" and, collectively, the "Pledgors"), Bankers Trust Company, not
in its individual capacity but solely as Collateral Agent (the "Pledgee"), and
Consolidated Container Company LLC, as the issuer of the Uncertificated
Securities, Limited Liability Company Interests and/or Partnership Interests
(each as defined below) (the "Issuer").
W I T N E S S E T H:
WHEREAS, each Pledgor and the Pledgee are entering into Pledge Agreement,
dated as of July 1, 1999 (as amended, amended and restated, modified or
supplemented from time to time, the "Pledge Agreement"), under which, among
other things, in order to secure the payment of the Obligations (as defined in
the Pledge Agreement), each Pledgor will pledge to the Pledgee for the benefit
of the Secured Creditors (as defined in the Pledge Agreement), and grant a
security interest in favor of the Pledgee for the benefit of the Secured
Creditors in, all of the right, title and interest of such Pledgor in and to any
and all (1) Uncertificated securities" (as defined in Section 8-102(a)(18) of
the Uniform Commercial Code, as adopted in the State of New York)
("Uncertificated Securities"), (2) Partnership Interests (as defined in the
Pledge Agreement) and (3) Limited Liability Company Interests (as defined in the
Pledge Agreement), in each case issued from time to time by the Issuer, whether
now existing or hereafter from time to time acquired by such Pledgor (with all
of such Uncertificated Securities, Partnership Interests and Limited Liability
Company Interests being herein collectively called the "Issuer Pledged
Interests"); and
WHEREAS, each Pledgor desires the Issuer to enter into this Agreement in
order to perfect the security interest of the Pledgee under the Pledge Agreement
in the Issuer Pledged Interests, to vest in the Pledgee control of the Issuer
Pledge Interests and to provide for the rights of the parties under this
Agreement;
NOW THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Each Pledgor hereby irrevocably authorizes and directs the Issuer, and
the Issuer hereby agrees, to comply with any and all instructions and orders
originated by the Pledgee (and its successors and assigns) regarding any and all
of the Issuer Pledged Interests without the further consent by the registered
owner (including the respective Pledgor), and not to comply with any
instructions or orders regarding any or all of the Issuer Pledged Interests
originated by
-13-
<PAGE>
14
any person or entity other than the Pledgee (and its successors and assigns) or
a court of competent jurisdiction.
2. The Issuer hereby certifies that (it) no notice of any security
interest, lien or other encumbrance or claim affecting the Issuer Pledged
Interests (other than the security interest of the Pledgee) has been received by
it, and (ii) the security interest of the Pledgee in the Issuer Pledged
Interests has been registered in the books and records of the Issuer.
3. The Issuer hereby represents and warrants that (i) the pledge by the
Pledgors of, and the granting by the Pledgors of a security interest in, the
Issuer Pledged Interests to the Pledgee, for the benefit of the Secured
Creditors, does not violate the charter, by-laws, partnership agreement,
membership agreement or any other agreement governing the Issuer or the Issuer
Pledged Interests, and (ii) if the Issuer is a corporation, the Issuer Pledged
Interests are fully paid and nonassessable.
4. All notices, statements of accounts, reports, prospectuses, financial
statements and other communications to be sent to any Pledgor by the Issuer in
respect of the Issuer will also be sent to the Pledgee at the following address:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention Patsy Hogan
Tel: (212) 250-5175
Fax: (212) 250-7218
5. Except as expressly provided otherwise in Section 4, all notices,
instructions, orders and communications hereunder shall be sent or delivered by
mail, telex, telecopy or overnight courier service and all such notices and
communications shall, when mailed, telexed, telecopied or sent by overnight
courier, be effective when deposited in the mails or delivered to the overnight
courier, prepaid and properly addressed for delivery on such or the next
Business Day, or sent by telex or telecopier, except that notices and
communications to the Pledgee shall not be effective until received by the
Pledgee. All notices and other communications shall be in writing and addressed
as follows:
(a) if to any Pledgor, at:
Consolidated Container Company, LLC
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201
Attention: Timothy Brasher
Telephone No.: (214) 303-3400
Telecopier No.: (214) 303-3499
-14-
<PAGE>
15
(b) if to the Pledgee, at:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Patsy Hogan
Tel: (212) 250-5175
Fax: (212) 250-7218
(c) if to the Issuer, at:
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201
Attention: Timothy Brasher
Telephone No.: (214) 303-3400
Telecopier No.: (214) 303-3499
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, "Business Day" means any day other than a Saturday, Sunday, or other
day on which banks in New York are authorized to remain closed.
6. This Agreement shall be binding upon the successors and assigns of each
Pledgor and the Issuer and shall inure to the benefit of and be enforceable by
the Pledgee and its successors and assigns. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall constitute one instrument. In the event that any provision of this
Agreement shall prove to be invalid or unenforceable, such provision shall be
deemed to be severable from the other provisions of this Agreement which shall
remain binding on all parties hereto. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
except in writing signed by the Pledgee, the Issuer and any Pledgor which at
such time owns any Issuer Pledged Interests.
7. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
-15-
<PAGE>
16
IN WITNESS WHEREOF, each Pledgor, the Pledgee and the Issuer have
caused this Agreement to be executed by their duly elected oficers duly
authorized as of the date first above written.
ADDRESS: CONSOLIDATED CONTAINER COMPANY
LLC
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201 By:
------------------------------------
Name:
Telephone No.: (214) 303-3400 Title:
Facsimile No.: (214) 303-3499
Attention: Timoty Brasher
2515 McKinney Avenue By: Consolidated Container Holdings LLC,
Suite 850, Lock Box 14 as its Sole Member and Manager
Dallas, Texas 75201
Telephone No.: (214) 303-3400 By:
Facsimile No.: (214) 303-3499 ------------------------------------
Attention: Timothy Brasher Name:
Title:
ADDRESS: REID PLASTICS GROUP LLC
2515 McKinney Avenue By: Consolidated Container Company LLC,
Suite 850, Lock Box 14 as its Sole Member and Manager
Dallas, Texas 75201
By: Consolidated Container Holdings LLC,
Telephone No.: (214) 303-3400 as its Sole Member and Manager
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
By:
-------------------------------------
Name:
Title:
-16-
<PAGE>
17
ADDRESS: CONSOLIDATED CONTAINER CAPITAL,
INC.
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201 By:
------------------------------------
Name:
Telephone No.: (214) 303-3400 Title:
Facsimile No.: (214) 303-3499
Attention: Timoty Brasher
ADDRESS: PLASTIC CONTAINERS LLC
2515 McKinney Avenue By: Consolidated Container Company LLC,
Suite 850, Lock Box 14 as its Sole Member and Manager
Dallas, Texas 75201
By: Consolidated Container Holdings LLC,
as its Sole Member and Manager
Telephone No.: (214) 303-3400 By:
Facsimile No.: (214) 303-3499 ------------------------------------
Attention: Timothy Brasher Name:
Title:
ADDRESS: CONTINENTAL PLASTIC CONTAINERS
LLC
2515 McKinney Avenue
Suite 850, Lock Box 14 By: Plastic Containers LLC,
Dallas, Texas 75201 as its Sole Member and Manager
Telephone No.: (214) 303-3400 By: Consolidated Container Company LLC,
Facsimile No.: (214) 303-3499 as its Sole Member and Manager
Attention: Timothy Brasher
By: Consolidated Container Company LLC,
as its Sole Member and Manager
By:
-------------------------------------
Name:
Title:
-17-
<PAGE>
18
ADDRESS: CONSOLIDATED CARIBBEAN
CONTAINERS, INC.
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201
By:
Telephone No.: (214) 303-3400 ------------------------------------
Facsimile No.: (214) 303-3499 Name:
Attention: Timothy Brasher Title:
ADDRESS: CONSOLIDATED CONTAINER COMPANY LLC,
as Issuer
2515 McKinney Avenue
Suite 850, Lock Box 14 By: Consolidated Container Company LLC,
Dallas, Texas 75201 as its Sole Member and Manager
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499 By:
Attention: Timothy Brasher -------------------------------------
Name:
Title:
-18-
<PAGE>
19
BANKERS TRUST COMPANY, not in
its individual capacity but solely as
Collateral Agent and Pledgee
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
-19-
<PAGE>
25
ANNEX G
TO
SECURITY AGREEMENT
ASSIGNMENT OF SECURITY INTEREST IN UNITED STATES
TRADEMARKS
FOR GOOD AND VALUABLE CONSIDERATION, the sufficiency and receipt of which
are hereby acknowledged, [_________________], a [State] [corporation/limited
liability company] (the"Assignor") with principal offices at , hereby assigns
and grants to BANKERS TRUST COMPANY, as Collateral Agent, with principal offices
at 130 Liberty Street, New York, New York 10006 (the "Assignee"), a security
interest in (i) all of Assignor's right, title and interest in and to Assignor's
trademarks, trademark registrations, and trademark applications more
particularly set forth on Schedule A attached hereto (the "Marks"), and all
renewals thereof, together with (ii) all Proceeds (as such term is defined in
the Security Agreement referred to below) of the Marks, (iii) the goodwill of
the business(es) with which the Marks are associated and (iv) all causes of
action arising prior to or after the date hereof for infringement of any of the
Marks or unfair competition regarding the same.
This ASSIGNMENT OF SECURITY INTEREST is made to secure the satisfactory
performance and payment of all the Obligations of the Assignor, as such term is
defined in the Security Agreement among the Assignor, the other assignors from
time to time party thereto and the Assignee, dated as of July 1, 1999 (as
amended from time to time, the "Security Agreement") and shall be effective as
of the date of the Security Agreement. Upon the termination of the Security
Agreement pursuant to Section 10.9(a) of the Security Agreement, the Assignee
shall, upon satisfaction, execute, acknowledge, and deliver to the Assignor an
instrument in writing releasing the security interest in the Marks acquired
under this Assignment of Security Interest.
-25-
<PAGE>
26
This Assignment of Security Interest has been granted in conjunction with
the security interest granted to Assignee under the Security Agreement. The
rights and remedies of the Assignee with respect to the security interest
granted herein are without prejudice to, and are in addition to those set forth
in the Security Agreement, all terms and provisions of which are incorporated
herein by reference. In the event that any provisions of this Assignment of
Security Interest are deemed to conflict with the Security Agreement, the
provisions of the Security Agreement shall govern.
* * *
-26-
<PAGE>
27
IN WITNESS WHEREOF, the undersigned have executed this Assignment of
Security Interest as of the day of June, 1999.
[_____________________________]
as Assignor
By:
------------------------------
Name:
Title:
-27-
<PAGE>
28
BANKERS TRUST COMPANY,
as Assignee
By:
-------------------------------
Name:
Title:
-28-
<PAGE>
31
STATE OF NEW YORK )
) ss. :
COUNTY OF NEW YORK )
On this __ day of June, 1999, before me personally came ________________
who, being duly sworn, did depose and say that he is
_____________________________ of [____________________] that he is authorized to
execute the foregoing Assignment of Security Interest on behalf of said
[corporation/limited liability company] and that he did so by authority of the
Board of Directors of said [corporation/limited liability company].
__________________________
Notary Public
-31-
<PAGE>
32
STATE OF NEW YORK )
) ss. :
COUNTY OF NEW YORK )
On this __ day of June, 1999, before me personally came ________________
who, being duly sworn, did depose and say that he is
_____________________________ of Bankers Trust Company, that he is authorized to
execute the foregoing Assignment of Security Interest on behalf of said
[corporation/limited liability company] and that he did so by authority of the
Board of Directors of said [corporation/limited liability company].
__________________________
Notary Public
-32-
<PAGE>
33
TRADEMARKS
Trademark Registration/Serial Number Registration/Filing Date
--------- -------------------------- ------------------------
[To be provided by the Borrower]
-33-
<PAGE>
34
ANNEX H
TO
SECURITY AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which are
hereby acknowledged, [______________] a [State] [corporation] [limited liability
company] ("the Assignor") having its chief executive office at 2515 McKinney
Avenue, Suite 850, Lock Box 14, Dallas, Texas 75201, hereby assigns and grants
to BANKERS TRUST COMPANY, as Collateral Agent, with principal offices at 130
Liberty Street, New York, New York 10006 (the "Assignee"), a security interest
in all of the Assignor's rights, title and interest in and to the United States
patents and patent applications (the "Patents") set forth on Schedule A attached
hereto, in each case together with (ii) all Proceeds (as such term is defined in
the Security Agreement referred to below) and products of the Patents, (iii) all
causes of action arising prior to or after the date hereof for infringement of
any of the Patents or unfair competition regarding the same.
THIS ASSIGNMENT OF SECURITY INTEREST is made to secure the satisfactory
performance and payment of all the Obligations of the Assignor, as such term is
defined in the Security Agreement among the Assignor, the other assignors from
time to time party thereto and the Assignee, dated as of July 1, 1999 (as
amended from time to time, the "Security Agreement"). Upon termination of the
Security Agreement pursuant to Section 10 9(a) thereof, the Assignee shall, upon
such satisfaction, execute, acknowledge, and deliver to the Assignor an
instrument in writing releasing the security interest in the Patents acquired
under this Assignment.
-34-
<PAGE>
35
This Assignment has been granted in conjunction with the security interest
granted to the Assignee under the Security Agreement. The rights and remedies of
the Assignee with respect to the security interest granted herein are without
prejudice to, and are in addition to those set forth in the Security Agreement,
all terms and provisions of which are incorporated herein by reference. In the
event that any provisions of this Assignment are deemed to conflict with the
Security Agreement, the provisions of the Security Agreement shall govern.
* * *
-35-
<PAGE>
36
IN WITNESS WHEREOF, the undersigned have exxecuted this Assignment of
Security Interest as of the first day of July, 1999.
[______________________________________]
as Assignor
By:
------------------------------------
Name:
Title:
-36-
<PAGE>
37
BANKERS TRUST COMPANY
as Assignee
By:
--------------------------------------
Name:
Title:
-37-
<PAGE>
39
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of July, 1999, before me personally came ________________
who, being by me duly sworn, did state as follows: that [s]he is
_______________________, that [s]he is authorized to execute the foregoing
Assignment on behalf of said corporation and that [s]he did so by authority of
the Board of Directors of said corporation.
_____________________
Notary Public
-39-
<PAGE>
40
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of July, 1999, before me personally came _______________
who, being by me duly sworn, did state as follows: that [s]he is
_______________________ of Bankers Trust Company, that [s]he is authorized to
execute the foregoing Assignment on behalf of said corporation and that [s]he
did so by authority of the Board of Directors of said corporation.
__________________
Notary Public
-40-
<PAGE>
41
SCHEDULE A
U.S. PATENTS
NAME OF PATENT ISSUE
PATENT NUMBER DATE
------ ------ ----
-41-
<PAGE>
EXHIBIT 10.4
SUBSIDIARY GUARANTY
GUARANTY, dated as of July 1, 1999, made by each of the
undersigned (each a "Guarantor" and collectively, the "Guarantors"). Except as
otherwise defined herein, terms used herein and defined in the Credit Agreement
(as hereinafter defined) shall be used herein as so defined.
W I T N E S S E T H:
WHEREAS, Consolidated Container Holdings LLC, a limited
liability company organized and existing under the laws of the State of Delaware
("Holdings"), Consolidated Container Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware and a
Wholly-Owned Subsidiary of Holdings (the "Borrower"), various financial
institutions from time to time party thereto (the "Banks"), Morgan Guaranty
Trust Company of New York, as Documentation Agent, Donaldson, Lufkin & Jenrette
Securities Corporation, as Syndication Agent and Bankers Trust Company, as
Administrative Agent (the "Administrative Agent"), have entered into a Credit
Agreement, dated as of July 1, 1999 (as modified, supplemented or amended from
time to time, the "Credit Agreement"), providing for the making of Loans to the
Borrower and the issuance of, and participation in, Letters of Credit issued for
the account of the Borrower as contemplated therein (the Banks and the
Administrative Agent being herein called the "Bank Creditors");
WHEREAS, the Borrower may from time to time be party to one or
more Interest Rate Agreements or Other Hedging Agreements, with a Bank or an
affiliate of a Bank (each such Bank or affiliate, even if the respective Bank
subsequently ceases to be a Bank under the Credit Agreement for any reason,
together with such Bank's or affiliate's successors and assigns, collectively,
the "Other Creditors," and together with the Bank Creditors, are herein called
the "Creditors");
WHEREAS, each Guarantor is a direct or indirect Subsidiary of
the Borrower;
WHEREAS, it is a condition to the making of Loans and the
issuance of, and participation in, Letters of Credit under the Credit Agreement
and to the Other Creditors entering into the Interest Rate Agreements that each
Guarantor shall have executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the
incurrence of Loans by the Borrower and the issuance of Letters of Credit for
the account of the Borrower under the Credit Agreement and the entering into of
the Interest Rate Agreements and, accordingly, desires to execute this Guaranty
in order to satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor
<PAGE>
2
hereby makes the following representations and warranties to the Creditors and
hereby covenants and agrees with each Creditor as follows:
1. Each Guarantor irrevocably and unconditionally, and jointly
and severally, guarantees (i) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of (x) the principal of and
interest on the Notes issued by, and Loans made to, the Borrower under the
Credit Agreement and all reimbursement obligations and Unpaid Drawings with
respect to Letters of Credit issued under the Credit Agreement, and (y) all
other obligations and indebtedness (including, without limitation, indemnities,
Fees and interest thereon) of the Borrower and other Credit Parties owing to the
Bank Creditors now existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement and the other Credit Documents and the due
performance and compliance by the Borrower and other Credit Parties with the
terms, conditions and agreements contained in the Credit Documents (all such
principal, interest, obligations and liabilities being herein collectively
referred to as the "Credit Document Obligations") and (ii) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations and indebtedness (including, without limitation, indemnities,
fees and interest thereon) owing by the Borrower to the Other Creditors under
any Interest Rate Agreement or Other Hedging Agreements, whether such Interest
Rate Agreement or Other Hedging Agreement is now in existence or hereafter
arising, and the due performance and compliance by the Borrower with the terms,
conditions and agreements contained therein (all such obligations and
indebtedness being herein collectively called the "Interest Rate Protection or
Other Hedging Obligations"; and together with the Credit Document Obligations
are herein collectively called the "Guaranteed Obligations"). Each Guarantor
understands, agrees and confirms that the Creditors may enforce this Guaranty up
to the full amount of the Guaranteed Obligations against such Guarantor without
proceeding against the Borrower, against any security for the Guaranteed
Obligations, against any other Guarantor, or against any other guarantor under
any other guaranty covering the Guaranteed Obligations. This Guaranty shall
constitute a guaranty of payment and not of collection. All payments by each
Guarantor under this Guaranty shall be made on the same basis as payments by the
Borrower under Sections 4.03 and 4.04 of the Credit Agreement.
2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations of the Borrower to the Creditors whether or not due or
payable by the Borrower upon the occurrence in respect of the Borrower of any of
the events specified in Section 9.05 of the Credit Agreement, and
unconditionally and irrevocably, jointly and severally, promises to pay such
Guaranteed Obligations to the Creditors, or order, on demand, in lawful money of
the United States.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the indebtedness of the
Borrower whether executed by such Guarantor, any other Guarantor, any other
guarantor or by any other party, and the liability of such Guarantor hereunder
shall not be affected or impaired by: (i) any direction as to application of
payment by the Borrower; (ii) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
indebtedness of the Borrower; (iii) any payment on or in reduction of any such
other guaranty or undertaking; (iv) any dissolution, termination or increase,
decrease or change in personnel by the Borrower; or (v) any payment made to any
Creditor
<PAGE>
3
on the indebtedness which any Creditor repays the Borrower pursuant to court
order in any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and each Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.
4. The obligations of each Guarantor hereunder are independent
of the obligations of any other Guarantor, any other guarantor or the Borrower,
and a separate action or actions may be brought and prosecuted against each
Guarantor whether or not action is brought against any other Guarantor, any
other guarantor or the Borrower, and whether or not any other Guarantor, any
other guarantor or the Borrower be joined in any such action or actions. Each
Guarantor waives, to the fullest extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
taken by the Agent or any other Creditors against, and any other notice to, any
party liable thereon (including such Guarantor or any other Guarantor or
guarantor).
6. Except as provided in any Credit Document, Interest Rate
Agreement, Other Hedging Agreement or any of the instruments or agreements
referred to therein, any Creditor may at any time and from time to time without
the consent of, or notice to, any Guarantor, without incurring liability to any
Guarantor as a result thereof, without impairing or releasing the obligations of
any Guarantor hereunder, upon or without any terms or conditions and in whole or
in part (and each Guarantor hereby irrevocably waives any defenses it may now or
hereafter have in any way relating to any and all of the following):
(i) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations, any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the guaranty
herein made shall apply to the Guaranteed Obligations as so changed,
extended, renewed or altered;
(ii) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including
any of those hereunder) incurred directly or indirectly in respect
thereof or hereof, and/or any offset thereagainst;
(iii) exercise or refrain from exercising any rights against
the Borrower, any Guarantor or others or otherwise act or refrain
from acting;
(iv) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect
<PAGE>
4
thereof or hereof, and may subordinate the payment of all or any
part thereof to the payment of any liability (whether due or not) of
the Borrower to creditors of the Borrower;
(v) subject to the terms of the Credit Agreement, apply any
sums by whomsoever paid or howsoever realized to any liability or
liabilities of the Borrower to the Creditors regardless of what
liabilities of the Borrower remain unpaid;
(vi) consent to or waive any breach of, or any act, omission
or default under, any of the Interest Rate Agreements, Other Hedging
Agreements or any of the Credit Documents or any of the instruments
or agreements referred to therein, or otherwise amend, modify or
supplement any of the Interest Rate Agreements, Other Hedging
Agreements or any of the Credit Documents or any of such other
instruments or agreements; and/or
(vii) act or fail to act in any manner referred to in this
Guaranty which may deprive any Guarantor of its right to subrogation
against the Borrower to recover full indemnity for any payments made
pursuant to this Guaranty.
7. No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full of the Guaranteed
Obligations.
8. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of any Creditor in exercising any right, power or privilege hereunder and
no course of dealing between any Guarantor and any Creditor shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any Guarantor
in any case shall entitle such Guarantor to any other further notice or demand
in similar or other circumstances or constitute a waiver of the rights of any
Creditor to any other or further action in any circumstances without notice or
demand.
9. Any indebtedness of the Borrower now or hereafter held by
any Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such indebtedness of the Borrower to any Guarantor, if the
Administrative Agent, during the continuance of an Event of Default has
occurred, so requests, shall be collected, enforced and received by such
Guarantor as trustee for the Creditors and be paid over to the Creditors on
account of the indebtedness of the Borrower to the Creditors, but without
affecting or impairing in any manner the liability of such Guarantor under the
other provisions of this Guaranty. Prior to the transfer by such Guarantor of
any note or negotiable instrument evidencing any indebtedness of the Borrower to
such Guarantor, such Guarantor shall mark such note or negotiable instrument
with a legend that the same is subject to this subordination. Without limiting
the generality of the foregoing, each Guarantor hereby agrees with
<PAGE>
5
the Creditors that it will not exercise any right of subrogation which it may at
any time otherwise have as a result of this Guaranty (whether contractual, under
Section 509 of the Bankruptcy Code, or otherwise) until all Obligations have
been paid in full in cash.
10. (a) Each Guarantor waives any right (except as shall be
required by applicable statute and cannot be waived) to require the Creditors to
(i) proceed against the Borrower, any other Guarantor, any other guarantor or
any other party, (ii) proceed against or exhaust any security held from the
Borrower, any other Guarantor, any other guarantor or any other party or (iii)
pursue any other remedy in the Creditors' power whatsoever. Each Guarantor
waives any defense based on or arising out of any defense of the Borrower, any
other Guarantor, any other guarantor or any other party other than payment in
full of the Guaranteed Obligations, including without limitation any defense
based on or arising out of the disability of the Borrower, any other Guarantor,
any other guarantor or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower other than payment in full of the
Guaranteed Obligations. The Creditors may, at their election, foreclose on any
security held by the Administrative Agent, the Collateral Agent or the other
Creditors by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Creditors may have against the Borrower or any other party, or any security,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Guaranteed Obligations have been paid in
full. Each Guarantor waives any defense arising out of any such election by the
Creditors, even though such election operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of such Guarantor
against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
(c) Guarantor hereby acknowledges and affirms that it
understands that to the extent the Guaranteed Obligations are secured by real
property located in the State of California, Guarantor shall be liable for the
full amount of the liability hereunder notwithstanding foreclosure on such real
property by trustee sale or any other reason impairing the Guarantor's or any
secured creditors' right to proceed against the Borrower or any other guarantor
of the Guaranteed Obligations.
(d) Guarantor hereby waives, to the fullest extent permitted
by applicable law, all rights and benefits under Sections 580a, 580b, 580d and
726 of the California Code of Civil Procedure. Guarantor hereby further waives,
to the fullest extent permitted by applicable law,
<PAGE>
6
without limiting the generality of the foregoing or any other provision hereof,
all rights and benefits which might otherwise be available to Guarantor under
Sections 2809, 2810, 2815, 2819, 2821, 2839, 2845, 2848, 2849, 2850, 2899 and
3433 of the California Civil Code.
(e) Guarantor waives its rights of subrogation and
reimbursement and any other rights and defenses available to Guarantor by reason
of Sections 2787 to 2855, inclusive, of the California Civil Code, including,
without limitation, (1) any defenses Guarantor may have to this Subsidiary
Guaranty by reason of an election of remedies by the Secured Creditors (as
defined in the Deed of Trust) and (2) any rights or defenses Guarantor may have
by reason of protection afforded to the Borrower pursuant to the antideficiency
or other laws of California limiting or discharging the Borrower's indebtedness,
including, without limitation, Section 580a, 580b, 580d or 726 of the California
Code of Civil Procedure. In furtherance of such provisions, Guarantor hereby
waives all rights and defenses arising out of an election of remedies by the
Secured Creditors, even though that election or remedies, such as a nonjudicial
foreclosure destroys Guarantor's rights of subrogation and reimbursement against
the Borrower by the operation of Section 580d of the California Code of Civil
Procedure or otherwise.
Guarantor warrants and agrees that each of the waivers set
forth above is made with full knowledge of its significance and consequences and
that if any of such waivers are determined to be contrary to any applicable law
or public policy, such waivers shall be effective only to the maximum extent
permitted by law.
11. In order to induce the Banks to make Loans to the
Borrower, and to issue, and participate in, Letters of Credit for the account of
the Borrower, pursuant to the Credit Agreement and to induce the Other Creditors
to execute, deliver and perform the Interest Rate Protection and Other Hedging
Agreements, each Guarantor hereby represents, warrants and covenants that:
(i) Such Guarantor (x) is a duly organized and validly
existing corporation or limited liability company in good standing
under the laws of the jurisdiction of its incorporation, (y) has the
corporate or limited liability company power and authority to own
its property and assets and to transact the business in which it is
engaged and presently proposes to engage and (z) is duly qualified
and is authorized to do business and is in good standing in each
jurisdiction where the ownership, leasing or operation of property
or the conduct of its business requires such qualification except
for failures to be so qualified which, in the aggregate, could not
be expected to have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of such
Guarantor or of such Guarantor and its Subsidiaries taken as a
whole.
(ii) Such Guarantor has the corporate or limited liability
company power to execute, deliver and perform the terms and
provisions of this Guaranty and has taken all necessary corporate or
limited liability company action to authorize the execution,
delivery and performance by it of this Guaranty. Such Guarantor has
duly executed and delivered this Guaranty, and this Guaranty
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, reorganization,
<PAGE>
7
fraudulent conveyance, moratorium or similar laws relating to or
affecting creditors' rights generally, general equitable principles
(regardless of whether considered in proceedings in equity or at
law) and an implied covenant of good faith and fair dealing.
(iii) Neither the execution, delivery or performance by such
Guarantor of this Guaranty, nor compliance by it with the terms and
provisions hereof, (x) will contravene any provision of any law,
statute, rule or regulation or any order, writ, injunction or decree
of any court or governmental instrumentality, (y) will conflict with
or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose)
any Lien (except pursuant to the Security Documents) upon any of the
property or assets of such Guarantor pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other agreement, contract or instrument to which
such Guarantor is a party or by which it or any of its property or
assets is bound or to which it may be subject or (z) will violate
any provision of the certificate of incorporation or by-laws or
other organizational documents, as applicable, of such Guarantor or
any of its Subsidiaries.
(iv) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as
have been obtained or made prior to the Initial Borrowing Date and
are in full force and effect), or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, (x) the execution,
delivery and performance of this Guaranty or (y) the legality,
validity, binding effect or enforceability of this Guaranty except
those (A) which have been obtained or made prior to the Initial
Borrowing Date, (B) the absence of which, either individually or in
the aggregate, could not reasonably be expected to have a material
adverse effect on either (x) the business, operations, property,
assets, liabilities or condition (financial or otherwise) of
Holdings and its Subsidiaries taken as a whole or (y) the rights or
remedies of the Banks or the Administrative Agent or on the ability
of Holdings or any of its Subsidiaries to perform their respective
obligations hereunder and under the other Documents to which they
are, or will be, a party or (C) for filings and recordings required
to perfect the security interests created under the Security
Documents, which filings and recordings will be made within 10
Business Days after the Initial Borrowing Date.
(v) There are no actions, suits or proceedings pending or, to
the best knowledge of any Guarantor, threatened (y) with respect to
this Guaranty or (z) that could reasonably be expected to have a
material and adverse effect on the business, assets, liabilities,
operations, properties or condition (financial or otherwise) of such
Holdings and its Subsidiaries taken as a whole.
12. Each Guarantor covenants and agrees that on and after the
date hereof and until the Total Commitment has terminated, no Letter of Credit
or Note is outstanding and all Guaranteed Obligations have been paid in full,
such Guarantor will comply with the provisions of Sections 7 and 8 of the Credit
Agreement, to the extent such Sections apply to such Guarantors.
<PAGE>
8
13. Each Guarantor hereby jointly and severally agrees to pay
all reasonable out-of-pocket costs and expenses of each Creditor in connection
with the enforcement of this Guaranty and the protection of such Creditor's
rights hereunder, and in connection with any amendment, waiver or consent
relating hereto (including, without limitation, the reasonable fees and
disbursements of counsel (including in-house counsel) employed by any of the
Creditors).
14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns.
15. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated in any manner whatsoever unless in
writing duly signed by the Administrative Agent (with, except as provided in
Section 13.12 of the Credit Agreement, the consent of the Required Banks) and
each Guarantor directly affected thereby (it being understood that the release
or addition of any Guarantor hereunder shall not constitute a change or waiver
affecting any Guarantor other than the Guarantor so released or added);
PROVIDED, HOWEVER, that any change, waiver, modification or variance affecting
the rights and benefits of a single Class (as defined below) of Creditors (and
not all Creditors in a like or similar manner) shall require the written consent
of the Requisite Creditors (as defined below) of such Class of Creditors. For
the purpose of this Guaranty, the term "Class" shall mean each class of
Creditors, I.E., whether (x) the Bank Creditors as holders of the Credit
Document Obligations or (y) the Other Creditors as holders of the Interest Rate
Protection or Other Hedging Obligations. For the purpose of this Guaranty, the
term "Requisite Creditors" of any Class shall mean each of (x) with respect to
the Credit Document Obligations, the Required Banks (or all of the Banks if so
required under the Credit Agreement) and (y) with respect to the Interest Rate
Protection or Other Hedging Obligations, the holders of at least a majority of
all obligations outstanding from time to time under the Interest Rate Agreements
and Other Hedging Agreements.
16. Each Guarantor acknowledges that an executed (or
conformed) copy of the Credit Agreement has been made available to its principal
executive officers and such officers are familiar with its contents.
17. (a) In addition to any rights now or hereafter granted
under applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" under, and as defined in, the Credit
Agreement or any payment default (after giving effect to any grace period
applicable thereto) under any Interest Rate Agreement or Other Hedging Agreement
and shall in any event, include without limitation any payment default on any of
the Guaranteed Obligations after giving effect to any grace period applicable
thereto), each Creditor is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any
Guarantor or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Creditor
(including, without limitation, by branches and agencies of such Creditor
wherever located) to or for the credit or the account of such Guarantor, against
and on account of the obligations and liabilities of such Guarantor to such
Creditor under this Guaranty, irrespective of whether or not such
<PAGE>
9
Creditor shall have made any demand hereunder and although said obligations,
liabilities, deposits or claims, or any of them, shall be contingent or
unmatured. Each Creditor agrees to notify any such Guarantor promptly of any
such set-off, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application.
(b) Each Guarantor understands that if all or any part of the
Guaranteed Obligations is secured by real property, such Guarantor shall be
liable for the full amount of its liability hereunder notwithstanding
foreclosure on such real property by trustee sale or any other reason impairing
such Guarantor's or any Secured Creditors' right to proceed against any
Guarantor or any Subsidiary of such Guarantor.
18. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of any Bank Creditor, as provided in the Credit
Agreement, (ii) in the case of any Guarantor, at its address set forth opposite
its signature below, and (iii) in the case of any Other Creditor, as provided in
the Security Agreement; or in any case at such other address as any of the
Persons listed above may hereafter notify the others in writing.
19. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (b) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon it, notwithstanding any revocation hereof or the
cancellation of any Note or any Interest Rate Agreement, Other Hedging Agreement
or other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
20. Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by the Borrower or other Persons
liable in respect of the Guaranteed Obligations (including any Guarantor), with
respect to any of the Guaranteed Obligations shall, if the statute of
limitations in favor of any Guarantor against any Creditor shall have commenced
to run, toll the running of such statute of limitations, and if the period of
such statute of limitations shall have expired, prevent the operation of such
statue of limitations.
21. (A) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to this
Guaranty may be brought in the Courts of the State of New York or of the United
States for the Southern District of New York, and, by execution and delivery of
this Guaranty, each Guarantor hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the exclusive
jurisdiction of the aforesaid courts. Each Guarantor
<PAGE>
10
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to each Guarantor at
its address set forth opposite its signatures below, such service to become
effective 30 days after such mailing. Nothing herein shall affect the right of
any of the Creditors under this guaranty to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
any Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Guaranty or any other credit document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
22. It is the desire and intent of each Guarantor and the
Creditors that this Guaranty shall be enforced against each Guarantor to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought If, however, and to the extent, that
the obligations of any Guarantor under this Guaranty shall be adjudicated to be
invalid or unenforceable for any reason (including, without limitation, because
of any applicable state or federal law relating to fraudulent conveyances or
transfers), then the amount of the Guaranteed Obligations of such Guarantor (but
not the Guaranteed Obligations of any other Guarantor unless such other
Guarantor or Guarantors are individually subject to the circumstances covered by
this Section 22) shall be deemed to be reduced and the affected Guarantor shall
pay the maximum amount of the Guaranteed Obligations which would be permissible
under applicable law without causing such Guarantor's obligations hereunder to
be so invalidated.
23. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
24. In the event that all of the capital stock of one or more
Guarantors is sold in connection with a sale permitted by the Credit Agreement
and the proceeds of such sale or sales are applied in accordance with the
provisions of the Credit Agreement, to the extent applicable, each Guarantor (x)
all of the capital stock of which is so sold or (y) which is a Subsidiary of a
Guarantor all of the capital stock of which is so sold, shall be released from
this Guaranty and this Guaranty shall, as to each such Guarantor or Guarantors,
terminate, and have no further force or effect.
25. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
<PAGE>
11
26. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense.
27. The Creditors agree that this Guaranty may be enforced
only by the action of the Administrative Agent, in each case acting upon the
instructions of the Required Banks (or, after the date on which all Credit
Document Obligations have been paid in full, the holders of at least a majority
of the outstanding Other Obligations) and that no other Creditor shall have any
right individually to seek to enforce or to enforce this Guaranty or to realize
upon the security to be granted by the Security Documents, it being understood
and agreed that such rights and remedies may be exercised by the Administrative
Agent or the Collateral Agent or the holders of at least a majority of the
outstanding Other Obligations, as the case may be, for the benefit of the
Creditors upon the terms of this Guaranty and the Security Documents. The
Creditors further agree that this Guaranty may not be enforced against any
director, officer, employee, or stockholder of any Guarantor (except to the
extent such stockholder is also a Guarantor hereunder).
28. It is understood and agreed that any Subsidiary of the
Borrower that is required to execute a counterpart of this Guaranty after the
date hereof pursuant to the Credit Agreement shall automatically become a
Guarantor hereunder by executing a counterpart hereof and delivering the same to
the Administrative Agent.
* * *
<PAGE>
12
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.
ADDRESS: REID PLASTICS GROUP LLC
2515 McKinney Avenue By: Consolidated Container Company LLC, as
Suite 850, Lock Box 14 its Sole Member and Manager
Dallas, Texas 75201
By: Consolidated Container Holdings LLC, as
Telephone No.: (214) 303-3400 its Sole Member and Manager
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher By: /s/ Steven M. Silver
---------------------------------------
Name: Steven M. Silver
Title: Vice President
ADDRESS: CONSOLIDATED CONTAINER CAPITAL, INC.
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201 By: /s/ Steven M. Silver
---------------------------------------
Name: Steven M. Silver
Telephone No.: (214) 303-3400 Title: Vice President
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
ADDRESS: PLASTIC CONTAINERS LLC
2515 McKinney Avenue By: Consolidated Container Company LLC
Suite 850, Lock Box 14
Dallas, Texas 75201 By: Consolidated Container Holdings LLC, as
its Sole Member and Manager
Telephone No.: (214) 303-3400
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher By: /s/ Steven M. Silver
---------------------------------------
Name: Steven M. Silver
Title: Vice President
<PAGE>
13
ADDRESS: CONTINENTAL PLASTIC CONTAINERS LLC
2515 McKinney Avenue By: Plastic Containers LLC, as its Sole
Suite 850, Lock Box 14 Member and Manager
Dallas, Texas 75201
By: Consolidated Container Company LLC, as
Telephone No.: (214) 303-3400 its Sole Member and Manager
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher By: Consolidated Container Holdings LLC, as
its Sole Member and Manager
By: /s/ Steven M. Silver
---------------------------------------
Name: Steven M. Silver
Title: Vice President
ADDRESS: CONTINENTAL CARIBBEAN CONTAINERS, INC.
2515 McKinney Avenue
Suite 850, Lock Box 14
Dallas, Texas 75201 By: /s/ Steven M. Silver
---------------------------------------
Name: Steven M. Silver
Telephone No.: (214) 303-3400 Title: Vice President
Facsimile No.: (214) 303-3499
Attention: Timothy Brasher
<PAGE>
14
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Administrative Agent for the Banks
By: /s/ Patricia Hogan
------------------------------------
Name: Patricia Hogan
Title: Title
<PAGE>
EXHIBIT 10.6
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (the "Agreement"), is made this 1st
day of July, 1999 ("Effective Date"), between Continental Can Company, Inc., a
Delaware corporation ("Licensor") and Consolidated Container Holdings LLC, a
Delaware limited liability company, and Consolidated Container Company LLC, a
Delaware limited liability (collectively, "Licensee").
WITNESSETH:
WHEREAS, Licensor and Licensee are parties, together with certain
subsidiaries of Licensor, Vestar Packaging LLC, and Reid Plastics Holdings,
Inc., and its subsidiaries, to the Contribution and Merger Agreement dated as of
April 29, 1999 (the "Contribution Agreement"); and
WHEREAS, Licensor owns the Trademarks (as defined below) and has the
right to use the Trademarks in connection with the conduct of Licensor's
business; and
WHEREAS, Licensor is willing to grant to Licensee the right to use
the Trademarks upon the terms and conditions hereinafter set forth; and
WHEREAS, pursuant to the Contribution Agreement, Licensor and
Licensee have agreed to enter into this Agreement; and
NOW THEREFORE, in consideration of the premises, the promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Licensor and Licensee hereby
agree as follows:
<PAGE>
2
1. Definitions.
(a) "Business" shall mean the Plastics Operations, as such term is
defined in the Limited Liability Company Agreement of Consolidated Container
Holdings LLC.
(b) "Territory" shall mean the United States.
(c) "Trademarks" shall mean the names and marks listed on Schedule A
(attached hereto).
Any capitalized terms not defined in this Agreement shall have the
respective meanings given them in the Contribution Agreement.
2. License Grant.
(a) Licensor hereby grants to Licensee a non-exclusive right and
license to use the Trademarks in the Territory in connection with the Business.
(b) This license shall be royalty free until such time as the Suiza
Parties' aggregate membership interest is less than 10% of all such membership
interests in Licensee, at which time Licensee shall pay Licensor an annual
royalty of $100,000.00 for the continued right and license to use the
Trademarks. Such payment shall be due and payable within 30 days following the
date on which the Suiza Parties' aggregate membership interest becomes less than
10%.
(c) The Trademarks are and shall remain the property of Licensor,
subject to the license granted under this Agreement.
(d) Licensee shall have the right to assign or sublicense its rights
under this Agreement by obtaining Licensor's prior written consent, which
consent shall not be unreasonably withheld, provided, however, that Licensor's
consent shall not be required with
<PAGE>
3
respect to any assignment or sublicense to an entity under the control of the
Licensee or to a wholly-owned subsidiary of the Licensee.
(e) This Agreement shall become effective on the Effective Date.
This Agreement shall remain effective until the parties shall agree otherwise
("Term").
(f) All rights not herein granted to Licensee are reserved to
Licensor.
3. Quality Control.
(a) Licensee agrees to use the Trademarks in good faith and in a
dignified manner, in a manner consistent with Licensor's high standards of, and
reputation for, quality, in a manner consistent with Licensee's own current
standards for quality and in accordance with good trademark practice wherever
the Trademarks are used. Licensee further agrees that all of its products and
services shall maintain such quality standards so as to maintain the reputation
and goodwill of the Trademarks. Licensee agrees to provide, upon the reasonable
request of Licensor, but in no event more often than every six (6) months,
representative samples of products and services sold by Licensee and
advertising, marketing, promotional, sales and packaging materials is used in
connection therewith, so that Licensor can verify that adequate quality
standards are being maintained.
4. Enforcement.
(a) Each party shall promptly notify the other of any infringement
of the Trademarks of which it becomes aware.
(b) With respect to the Business in the Territory, and in the
absence of any agreement to the contrary, Licensor, in its discretion, shall
take reasonable actions to address any infringement of the Trademarks. Licensor
shall bear all expenses connected with the foregoing.
<PAGE>
4
Upon Licensor's reasonable request and at Licensor's expense, Licensee shall
join any action for infringement filed to protect the Trademarks.
(c) Absent any further agreement between the parties, any recovery
as a result of such action shall belong solely to the Licensor.
5. Representations, Warranties and Covenants.
(a) Licensor represents and warrants that it is has the right to
grant the rights and licenses granted hereunder with respect to the Trademarks.
(b) Licensee agrees to cooperate with any effort by Licensor to
register and/or maintain the Trademarks.
6. Indemnification.
(a) By Licensee. Licensee agrees to defend, indemnify and hold
harmless Licensor and its officers, directors, employees and agents ("Licensor
Parties") against all liabilities, losses, damages, claims, costs, interests,
judgments, fines, amounts paid in settlement and expenses (including reasonable
attorneys' fees and litigation expenses) ("Losses") incurred by any Licensor
Party arising from or relating to any Action by a third party relating to any
use of the Trademarks by Licensee that is not authorized by this Agreement.
(b) By Licensor. Licensor agrees to defend, indemnify, and hold
harmless Licensee and its officers, directors, employees and agents ("Licensee
Parties") against all Losses (including attorneys' fees) incurred by any
Licensee party arising from or relating to any Action by a third party relating
to Licensee's authorized use of the Trademarks pursuant to this Agreement.
(c) Indemnification Procedures. The indemnification procedures set
forth in Article 12 of the Contribution Agreement are incorporated by reference
hereby.
<PAGE>
5
7. General Provisions.
(a) Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the Trademarks and
supersedes and terminates all other prior commitments, arrangements, or
understandings, both oral and written between the parties with respect to the
Trademarks.
(b) Modification. This Agreement may not be modified or amended
except by an instrument in writing executed by each of the parties.
(c) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns.
(d) Compliance with Laws. In the performance of this Agreement, both
Parties shall comply in all material respects with all applicable laws, rules
and regulations.
(e) Governing Law. This Agreement shall be construed in accordance
with the rights of the parties, and it shall be governed by the laws of the
State of Delaware applicable to contracts entered into and to be performed in
the State of Delaware.
(f) Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt), or (c)
when received by the addressee, if sent by a nationally recognized overnight
delivery service, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
<PAGE>
6
- --------------------------------------------------------------------------------
Licensee:
Consolidated Container Holdings LLC
Consolidated Container Company LLC
- --------------------------------------------------------------------------------
with a copy to:
Vestar Packaging LLC Simpson Thacher & Bartlett
1225 Seventeenth Street, Suite 1660 425 Lexington Avenue
Denver, Colorado 80202 New York, New York 10017
Attention: John R. Woodard Attention: Peter J. Gordon
Telecopy: (303)292-6639 Telecopy: (212) 455-2502
- --------------------------------------------------------------------------------
Licensor:
Continental Can Company, Inc. with a copy to:
c/o Suiza Foods Corporation
2515 McKinney Avenue, Suite 1200 Hughes & Luce, L.L.P.
Dallas, Texas 75201 1717 Main Street, Suite 2800
Attention: President and General Counsel Dallas, Texas 75201
Telecopy: (214) 303-3400 Telecopy: (214) 939-5849
- --------------------------------------------------------------------------------
(g) Related Company. Licensee shall be considered a "related
company" to Licensor under the U.S. Lanham Act such that any and all goodwill
arising from Licensee's use of the Trademarks shall inure solely to the benefit
of the Licensor.
(h) Maintenance. Licensor agrees that it will maintain any
registrations it has or later obtains with respect to the Trademarks and pay any
and all costs, expense and fees related thereto.
(i) Waiver. None of the provisions of this Agreement shall be deemed
to have been waived by any act or acquiescence on the part of either party,
their agents or employees, and the provisions of this Agreement may be waived
only by instruments in writing signed by an authorized officer of the respective
party. No waiver of any provision of this
<PAGE>
7
Agreement shall constitute a waiver of any other provision or of the same
provision on another occasion.
(j) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
(k) Authority. Each individual signing this Agreement on behalf of a
corporate party hereto personally warrants that he is properly authorized in
writing as an agent or officer of that corporate party to do so.
(l) No Relationship. This Agreement does not create, and shall not
be construed as creating, any relationship of agency, partnership, or employment
between the parties hereto. Licensor and Licensee enter into this Agreement as,
and shall remain, independent parties. Neither party shall have the right or
authority to assume, create, or enlarge any obligation or commitment on behalf
of the other and shall not represent itself as having the authority to bind the
other in any manner.
<PAGE>
8
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first set forth above.
CONTINENTAL CAN COMPANY, INC.
By: /s/ William Estes
------------------------------------
Name: William Estes
Title: President
CONSOLIDATED CONTAINER HOLDINGS LLC
By: /s/ Michelle P. Goolsby
------------------------------------
Name: Michelle P. Goolsby
Title: Vice President and Secretary
CONSOLIDATED CONTAINER COMPANY LLC
By: Consolidated Container Holdings LLC, a Delaware
limited liability company, its sole manager
By: /s/ Michelle P. Goolsby
------------------------------------
Name: Michelle P. Goolsby
Title: Vice President and Secretary
<PAGE>
9
EXHIBIT A
- --------------------------------------------------------------------------------
MARK REG. NO. DATE CLASS/GOODS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CCC CONTINENTAL CAN 1,863,491 11/22/94 7 - Packaging machines
COMPANY and Design and slicing machines
- --------------------------------------------------------------------------------
CCC and Design 674,373 2/24/59 16 - Paperboard and
corrugated paperboard boxes
- --------------------------------------------------------------------------------
CCC and Design 673,697 2/10/59 21 - Plastic containers,
such as bottles and the like
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 10.7
MANAGEMENT AGREEMENT
This Agreement is made as of this 29th day of April, 1999, among
Consolidated Container Holdings LLC, a Delaware limited liability company
("Holdings"), Consolidated Container Company LLC, a Delaware limited liability
company and a wholly owned subsidiary of Holdings (the "Company"), and Vestar
Capital Partners, a New York general partnership ("Vestar").
WHEREAS, Vestar, by and through its officers, employees, agents,
representatives and affiliates, has expertise in the areas of corporate
management, finance, investment, acquisitions and other matters relating to the
business of Holdings and the Company and their subsidiaries; and
WHEREAS, Holdings and the Company desire to avail themselves, for
the term of this Agreement, of the expertise of Vestar in the aforesaid areas,
in which they acknowledge the expertise of Vestar.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions herein set forth, the parties hereto agree as follows:
1. Appointment. Holdings and the Company hereby appoint Vestar to
render the advisory and consulting services described in Paragraph 2 hereof
commencing upon the effective time (the "Effective Time") of the transactions
provided for in the Contribution and Merger Agreement, dated as of April 29,
1999 (the "Merger Agreement"), among Suiza Foods Corporation, Holdings, the
Company, Franklin Plastics, Inc., the Suiza Companies identified therein, Vestar
Packaging LLC, Reid Plastics Holdings, Inc. and the Reid Companies identified
therein.
2. Services. Vestar hereby agrees that commencing upon the Effective
Time it shall render to Holdings and the Company (and their subsidiaries) by and
through such of Vestar's officers, employees, agents, representatives and
affiliates as Vestar, in its sole discretion, shall designate from time to time,
advisory and consulting services in relation to the affairs of Holdings and the
Company (and their subsidiaries) in connection with strategic financial
planning, and other services not referred to in the next sentence, including,
without limitation, advisory and consulting services in relation to the
selection, supervision and retention of independent auditors, the selection,
retention and supervision of outside legal counsel, and the selection, retention
and supervision of investment bankers or other financial advisors or
consultants. It is expressly agreed that the services to be performed hereunder
shall not include (x) investment banking or other financial advisory services
rendered by any of Vestar and its affiliates to any of Holdings and the Company
(and their subsidiaries) after the Effective Time in connection with
acquisitions, divestitures, refinancings, restructurings and similar
transactions by any of Holdings and the Company (and their subsidiaries) or (y)
full or part-time employment by any of Holdings and the Company (and their
subsidiaries) of any employee or partner of any of
<PAGE>
2
Vestar and its affiliates, in each case, for which Vestar and its affiliates
shall be entitled to receive additional compensation.
3. Fees. (a) In consideration of the services contemplated by
Paragraph 2, subject to the provisions of Paragraph 6, Holdings and the Company
and their successors hereby, jointly and severally, agree to pay to Vestar an
aggregate per annum advisory fee (the "Fee") equal to the greater of (i)
$500,000 and (ii) an amount per annum equal to 0.42% of the prior year's EBITDA
(as defined below), commencing at the Effective Time. The Fee shall be payable
semi-annually in advance on June 30 and December 31 of each year (based on
clause (i) above in 1999 and thereafter based on the greater of clause (i) above
and 0.42% of the prior year's EBITDA), with an adjustment of the Fee for any
fiscal year payable promptly following the determination of EBITDA for such
fiscal year or on termination of this Agreement. The semi-annual Fee payments
shall be non-refundable (except for any adjustment as described above). For the
purposes of this Agreement, the term "EBITDA" shall mean, for any period, the
sum, for Holdings and the Company and their subsidiaries on a consolidated
basis, without duplication in accordance with generally accepted accounting
principles, of the following: (i) net income (before giving effect to the
payment of the Fee), plus (ii) income taxes, interest expense, depreciation and
amortization, to the extent deducted in calculating net income, plus (iii) any
Unusual Items (as defined below) of loss included in calculating net income,
minus (iv) any Unusual Items of income included in calculating net income, as
reflected in or determined from the consolidated audited financial statements of
Holdings and the Company and their subsidiaries. For the purposes of this
Agreement, the term "Unusual Items" of income or loss shall mean any
extraordinary items of income or loss, any nonoperating gains or losses
resulting from the sale of assets, any merger or acquisition expenses and any
restructuring charges, all as reflected in or determined from the consolidated
audited financial statements of Holdings and the Company and their subsidiaries.
(b) Holdings and the Company and their successors also agree,
jointly and severally, to pay Vestar at the Effective Time a transaction fee
equal to $5 million plus all of its Out-of-Pocket Expenses (as defined in
Section 4) incurred by Vestar and it affiliates prior to the Effective Time for
services rendered by Vestar in connection with the consummation of the Offer and
the Merger referred to in the Merger Agreement.
4. Reimbursements. In addition to the Fee, Holdings and the Company
and their successors hereby agree, jointly and severally, at the direction of
Vestar, to pay directly or reimburse Vestar for its reasonable Out-of-Pocket
Expenses incurred after the Effective Time in connection with the services
provided for in Paragraph 2 hereof. For the purposes of this Agreement, the term
"Out-of-Pocket Expenses" shall mean the amounts paid by or on behalf of Vestar
in connection with the services contemplated hereby, including reasonable (i)
fees and disbursements of any independent professionals and organizations,
including independent auditors and outside legal counsel, investment bankers or
other financial advisors or consultants, (ii) costs of any outside services or
independent contractors, such as financial printers, couriers, business
publications or similar services and (iii) transportation, per diem, telephone
calls, word processing and any similar expenses. All reimbursements for
Out-of-Pocket Expenses shall be
<PAGE>
3
made promptly upon or as soon as practicable after presentation by Vestar of the
statement in connection therewith.
5. Indemnification. Holdings and the Company and their successors
hereby agree, jointly and severally, to indemnify and hold harmless Vestar and
its affiliates and their respective parties, officers, directors, employees,
agents, representatives, stockholders and partners (each being an "Indemnified
Party") from and against any and all losses, claims, damages and liabilities of
whatever kind or nature, joint or several, absolute, contingent or
consequential, to which such Indemnified Party may become subject under any
applicable federal or state law, or any claim made by any third party, or
otherwise, to the extent they relate to or arise out of the services
contemplated by this Agreement or the engagement of Vestar pursuant to, and the
performance by Vestar of the services contemplated by, this Agreement. Holdings
and the Company and their successors hereby agree, jointly and severally, to
reimburse any Indemnified Party for all reasonable costs and expenses (including
reasonable attorneys' fees and expenses) as they are incurred in connection with
the investigation of, preparation for or defense of any pending or threatened
claim for which the Indemnified Party would be entitled to indemnification under
the terms of the previous sentence, or any action or proceeding arising
therefrom, whether or not such Indemnified Party is a party hereto. None of
Holdings or the Company or their successors will be liable under the foregoing
indemnification provision to the extent that any loss, claim, damage, liability,
cost or expense is determined by a court, in a final judgment from which no
further appeal may be taken, to have resulted primarily from the gross
negligence or willful misconduct of Vestar.
6. Term. This Agreement shall be in effect on the date hereof and
continue until the earlier of (i) such time as Vestar Packaging LLC, Vestar
Capital Partners III, L.P., a Delaware limited partnership, the members thereof,
the partners therein and the respective affiliates thereof, hold, in the
aggregate, less than 25% of the Units (including Converted Units (as defined in
Holdings' Limited Liability Company Agreement)) and (ii) the consummation of an
Initial Public Offering (as defined in Holdings' Limited Liability Company
Agreement). The provisions of Paragraphs 4, 5, 7 and 8 and the obligations of
Holdings and the Company to pay Fees accrued during the term of this Agreement
pursuant to Section 3 shall survive the termination of this Agreement.
7. Permissible Activities. Subject to all applicable provisions of
New York law that impose fiduciary duties upon Vestar or its partners or
affiliates, and subject to its duties under Holdings' Limited Liability Company
Agreement, nothing herein shall in any way preclude Vestar or its partners,
officers, employees or affiliates from engaging in any business activities or
from performing services for its or their own account or for the account of
others, including for companies that may be in competition with the business
conducted by Holdings and the Company and their subsidiaries.
8. General. (a) No amendment or waiver of any provision of this
Agreement, or consent to any departure by either party from any such provision,
shall in any event be effective unless the same shall be in writing and signed
by the parties to this Agreement and then
<PAGE>
4
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) Any and all notices hereunder shall, in the absence of
receipted hand delivery, be deemed duly given when mailed, if the same shall be
sent by registered or certified mail, return receipt requested, and the mailing
date shall be deemed the date from which all time periods pertaining to a date
of notice shall run. Notices shall be addressed to the parties at the following
addresses:
If to Vestar: Vestar Capital Partners
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202
Attention: James P. Kelley
If to Holdings or the Company:
In care of Consolidated Container Company LLC
2515 McKinney Avenue
Suite 1200
Dallas, Texas 75201
Attention: William Estes
In any case,
with a copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Peter J. Gordon
(c) This Agreement shall constitute the entire Agreement
between the parties with respect to the subject matter hereof, and shall
supersede all previous oral and written (and all contemporaneous oral)
negotiations, commitments, agreements and understandings relating hereto.
(d) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE PARTIES TO
THIS AGREEMENT HEREBY AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND STATE COURTS LOCATED IN THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. This Agreement shall
inure to the benefit of, and be binding upon, Vestar, the Indemnified Parties,
Holdings, the Company and their respective successors and assigns.
<PAGE>
5
(e) This Agreement may be executed in two or more
counterparts, and by different parties on separate counterparts, each set of
counterparts showing execution by all parties shall be deemed an original, but
all of which shall constitute one and the same instrument.
(f) The waiver by any party of any breach of this Agreement
shall not operate as or be construed to be a waiver by such party of any
subsequent breach.
<PAGE>
6
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers or agents as set forth
below.
VESTAR CAPITAL PARTNERS
By its General Partner: Vestar
Management Corporation II
By: /s/ James P. Kelley
---------------------------------------
Name: James P. Kelley
Title: Managing Director
CONSOLIDATED CONTAINER HOLDINGS LLC
By: /s/ Steven M. Silver
---------------------------------------
Name: Steven M. Silver
Title: Vice President
CONSOLIDATED CONTAINER COMPANY LLC
By: /s/ Steven M. Silver
---------------------------------------
Name: Steven M. Silver
Title: Vice President
<PAGE>
EXHIBIT 10.8
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT ("Agreement") is entered into as of
July 2, 1999, by and among Suiza Foods Corporation, a Delaware corporation
("Suiza"), Consolidated Container Holdings LLC, a Delaware limited liability
company ("CCH"), and Consolidated Container Company LLC, a Delaware limited
liability company and wholly-owned subsidiary of CCH ("CCC") (CCH and CCC are,
collectively, the "Consolidated Parents").
RECITALS
Suiza and certain of its affiliates, Vestar Packaging LLC ("Vestar"), a
Delaware limited liability company, and Reid Plastics Holdings, Inc. ("Reid
Holdings"), a Delaware corporation, certain of Vestar's and Reid Holdings'
affiliates, and the Consolidated Parents are parties to a Contribution and
Merger Agreement, dated April 29, 1999 (the "Merger Agreement"), pursuant to
which Suiza has, as of the date hereof, contributed certain of its plastics
operations (the "Contributed Plastics Operations") to the Consolidated Parents
in exchange for a 49% outstanding equity ownership in CCH and certain other
consideration.
Suiza, by itself and through certain of its affiliates that are not part
of the Contributed Plastics Operations (the "Remaining Affiliates") (Suiza and
the Remaining Affiliates, collectively, the "Suiza Service Providers"), have
previously provided certain services to the Contributed Plastics Operations, and
CCH, CCC and certain of their wholly-owned subsidiaries (CCH, CCC and such
wholly-owned subsidiaries are, collectively, the "Companies"), desire to
continue to obtain these services.
THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Suiza, CCH and CCC agree as follows:
1. Term of Agreement. The term of this Agreement will commence as of the
date hereof (the "Effective Date") and will continue after such date, unless
otherwise terminated in accordance with the provisions of this Agreement, until
December 31, 1999; provided, however, that this Agreement will continue in
effect with respect to (i) the Services (as defined below) identified in Item 5
of Annex A and (ii) the obligations set forth in Section 8 below until the
insurance policies, performance guarantees and letters of credit referred to
therein are replaced and the Suiza Service Providers are released from their
obligations with respect thereto.
2. Transition Services. Suiza will, and Suiza will cause such of the
Remaining Affiliates as it reasonably deems appropriate to, provide to the
Companies the transition services described on Annex A to this Agreement (the
"Services") in the manner which and to the extent that the Suiza Service
Providers have historically provided the Services to the Contributed Plastics
Operations prior to the Effective Date.
<PAGE>
3. Performance of Services. During the term of this Agreement, Suiza will,
and will cause such of the Remaining Affiliates as it reasonably deems
appropriate to, provide the Services to the Companies on the same basis and at
the same level of quality as the Services were being provided prior to the
Effective Date, except as otherwise specified on Annex A. The Companies will be
entitled to the same level of priority in connection with the performance of the
Services, including the same level of access to Suiza Service Providers
personnel and other resources required to utilize the Services, as was afforded
in connection with the Contributed Plastics Operations prior to the Effective
Date. If any dispute over the nature, quality or scope of Services provided to
the Company arises, the prior practice of the Suiza Service Providers will be
final and binding.
4. Companies Provided Information. The Companies will provide the Suiza
Service Providers any information required to be provided to the Suiza Service
Providers in connection with the performance of the Services in a manner
consistent with the practices of the Contributed Plastics Operations prior to
the Effective Date, except as set forth on Annex A to this Agreement.
5. Payment for Services. CCC and CCH will pay, or cause one of the other
Companies to pay, Suiza for each of the Services provided to the Companies by
the Suiza Service Providers in accordance with the applicable charges, cost
allocations and resource rates specified in Annex A.
6. Time of Payment. Suiza will, from time to time, as is reasonably
determined by Suiza, but not more frequently than monthly, invoice CCC for the
Services previously provided to the Companies by the Suiza Service Providers.
Each such invoice will reflect, in reasonable detail, the nature and quality of
the Services rendered during the preceding period. CCH and CCC will pay all
portions of each such invoice within 15 days after receipt.
7. Termination. Upon 30 days prior written notice to Suiza, CCH or CCC may
terminate this Agreement or any one or more of the Services designated in such
notice, each such termination to be effective as of the date specified by CCH or
CCC in such notice; provided, however, that the Suiza Service Providers will not
be obligated thereafter to provide such terminated Services and CCH or CCC will
remain liable for such Services until the effective date of termination thereof;
provided, further however, that neither CCH nor CCC may terminate this
Agreement, or any Services, as such relates to CCH's and CCC's obligations
related to the Services specified in Item 5 of Annex A and Section 8 below.
Termination of this Agreement or any one or more of the Services by either CCH
or CCC under this Section 7 will be binding upon all of the Companies. In the
event that Suiza materially or repeatedly defaults in the performance of any of
its duties or obligations under this Agreement and fails to cure such default
within 10 days after written notice of such default is given by the Consolidated
Parents, the Consolidated Parents may terminate this Agreement by giving Suiza
written notice of termination, such termination to be effective as of the date
specified in such notice; provided, however, that the Consolidated Parents may
not terminate this Agreement as it relates to their obligations related to
Section 8 below and the Services specified in Item 5 of Annex A. Likewise, in
the event that either of the Consolidated Parents materially or repeatedly
defaults in the performance of any of their duties or obligations under this
Agreement and fails to cure such default within 10 days after written notice of
such default is given by Suiza, Suiza may terminate this Agreement by
2
<PAGE>
giving the Consolidated Parents written notice of such termination, such
termination to be effective as of the date specified in such notice and binding
upon both of the Consolidated Parents; provided, however, that Suiza may
continue to enforce this Agreement to the extent necessary to reimburse it for
expenses related to the Services specified in Item 5 of Annex A to the extent
Suiza continues to provide such Services. Upon termination of this Agreement for
any reason, the Suiza Services Providers will promptly return to the
Consolidated Parents all papers, materials and other properties of the Companies
then in the Suiza Service Providers' possession that were obtained pursuant to
this Agreement and the Companies will promptly return to the Suiza Service
Providers all papers, materials and other properties of the Suiza Service
Providers then in the Companies' possession that were obtained pursuant to this
Agreement.
8. Release of Guarantees, Etc. The Consolidated Parents agree to use their
commercially reasonable efforts, upon request of Suiza, to cause any insurance
policies, performance or payment guarantees, bonds or letters of credit entered
into or obtained by Suiza or its Remaining Affiliates on behalf of the
Contributed Plastics Operations to be released as soon as practicable following
the date hereof (if and to the extent not released prior to the date hereof).
9. Disclaimer. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE
CONTRARY, NO WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, ARE MADE
WITH RESPECT TO THE SERVICES INCLUDING, WITHOUT LIMITATION, (A) ANY IMPLIED OR
EXPRESSED WARRANTY OF MERCHANTABILITY, (B) ANY IMPLIED OR EXPRESSED WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, (C) ANY RIGHTS OF ANY OF THE COMPANIES UNDER
APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, OR (D) ANY CLAIM BY
ANY OF THE COMPANIES FOR DAMAGES BECAUSE OF DEFECTS (OTHER THAN THOSE CAUSED BY
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE SUIZA SERVICE PROVIDERS),
WHETHER KNOWN OR UNKNOWN, WITH RESPECT TO SUCH SERVICES. In accordance with the
foregoing, effective as of the Effective Date, the Consolidated Parents, on
behalf of themselves, their successors and assigns, and any other person or
entity covered by any fire and extended coverage, general public liability,
worker's compensation or other property or liability policy carried by the
Consolidated Parents, hereby waive each and every claim for recovery against any
of the Suiza Service Providers for any and all loss or damage to any of the
Consolidated Parents or any personal property or other property arising from or
relating to, in whole or in part, the Services, other than any such loss or
damage caused by the gross negligence or willful misconduct of the Suiza Service
Providers. Similarly, effective as of the Effective Date, the Consolidated
Parents will cause each of the Companies, on behalf of the Companies, the
Companies' successors and assigns, and any other person or entity covered by any
fire and extended coverage, general public liability, worker's compensation or
other property or liability policy carried by such Companies, to waive each and
every claim for recovery against any of the Suiza Service Providers for any and
all loss or damage to any of the Companies or any personal property or other
property arising from or relating to, in whole or in part, the Services, other
than any such loss or damage caused by the gross negligence or willful
misconduct of the Suiza Service Providers. No party to this Agreement will have
any liability for lost profits or goodwill or any consequential, incidental,
exemplary, punitive, special, indirect or similar damages for any breach of its
obligations under
3
<PAGE>
this Agreement, even if Suiza, or any of the Suiza Services Providers, has been
advised of the possibility of such damages.
10. Use of the Services. The Services will be provided only with respect
to the Contributed Plastics Operations. The Companies will use the Services only
in accordance with applicable federal, state and local laws and regulations, and
in accordance with the reasonable conditions, rules, regulations and
specifications that may be set forth in any manuals, materials, documents or
instructions in existence on the Effective Date and furnished by the Suiza
Service Providers to the Companies. Suiza may take all actions, including
termination of any particular Service, that it reasonably believes to be
necessary to assure compliance with applicable laws, regulations or tariffs. No
party to this Agreement, or any affiliate of any party of this Agreement, will
acquire any property or other right, claim or interest, including any patent
right or copyright interest, in any of the systems, processes, equipment,
computer programs or information of another party to this Agreement, or any
affiliate of another party to this Agreement, by virtue of this Agreement.
11. Miscellaneous.
(a) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all of which
will be considered one and the same instrument.
(b) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Texas without reference to the choice
of law principles thereof.
(c) Entire Agreement. This Agreement and the agreements and other
documents referred to in this Agreement contain the entire agreement between the
parties and supersede all prior agreements, arrangements and understandings
relating to the subject matter hereof and thereof. There are no written or oral
agreements, understandings, representations or warranties between the parties
other than those set forth or referred to in this Agreement.
(d) Force Majeure. None of the parties to this Agreement shall be liable
to any other party to this Agreement other than with respect to obligations
hereunder to pay money when due to any failure or delay in performance of its
obligations under this Agreement because of circumstances beyond its control
including, but not limited to acts of God, flood, fire, riot, accident, strikes
or work stoppages for any reason, embargo, inability to obtain phone lines,
government action (including enactment of any laws, ordinances, regulations or
the like which restrict or prohibit the providing of the Services contemplated
by this Agreement) and other causes beyond its control whether or not of the
same class or kind as specifically named above (each a "Force Majeure Event").
If any party is unable to substantially perform its obligations hereunder (other
than obligations to pay money when due) for any of the reasons described in this
Section 10(d), the obligations of such party shall be suspended for the
duration, and to the extent of, such Force Majeure Event, provided that the
affected party shall promptly notify the other party of its inability to so
perform, the steps it plans to take to rectify or mitigate such inability and
the anticipated length of such inability.
4
<PAGE>
(e) Amendment and Modification. This Agreement may be amended or modified
and any rights under this Agreement may be waived only by a written instrument
executed by the party against which enforcement of such amendment, modification
or waiver is sought. This Agreement will not be deemed to be amended or modified
or any rights under this Agreement waived by any course of conduct, and no
waiver will be deemed a continuing waiver or a waiver of any provision of this
Agreement not expressly waived, regardless of similarity to any waived
provision.
(f) Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it will be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement will be
deemed valid and enforceable to the full extent possible.
(g) Notices. All notices hereunder will be deemed given if in writing and
delivered personally or sent by facsimile or by registered or certified mail
(return receipt requested) to the parties at the following address (or at such
other addresses as is specified by like notice):
(i) If to Suiza:
2515 McKinney Avenue, Suite 1200
Dallas, Texas 75201 Attn:
Michelle P. Goolsby
Facsimile: 214-303-3851
(ii) If to CCH:
2515 McKinney Avenue, Suite 850
Dallas, Texas 75201
Attn: Tim Brasher
Facsimile: 214-303-1829
(iii) If to CCC:
2515 McKinney Avenue, Suite 850
Dallas, Texas 75201
Attn: Tim Brasher
Facsimile: 214-303-1829
(h) Successors and Assigns; Assignment: This Agreement will be binding
upon and inure to the benefit of the parties hereto and their permitted
successors and assigns. No party to this Agreement may assign or delegate, by
operation of law or otherwise, its rights or obligations to any other person or
entity without the written consent of the other parties to this Agreement;
provided, however, that Suiza may assign any of its rights and delegate any of
its duties under this Agreement to any direct or indirect wholly-owned
subsidiary.
5
<PAGE>
(i) Relationship of Parties. The relationship between Suiza and the
Consolidated Parents, as it relates to this Agreement, is that of independent
contractors. Nothing in this Agreement will be deemed to constitute any of the
Companies as the agent, partner or employee of any of the Suiza Service
Providers or any of the Suiza Service Providers as the agent, partner or
employee of any of the Companies. Further, this Agreement will not confer on any
party any right to act for or in the name of any other party.
(j) Confidentiality. Suiza and the Consolidated Parents agree to use all
reasonable efforts to, and to cause their affiliates, employees, agents and
representatives to, hold in confidence and not to disclose to any person or
entity or use for any purpose any Confidential Information except as is
reasonably necessary to carry out or enforce the terms of this Agreement. For
the purposes of this Section 10(j), "Confidential Information" means all
information obtained by Suiza or any of the Companies pursuant to this Agreement
except for any such information (i) that is generally available in the public
domain other than by breach of this Section 10(j), (ii) as is made available to
any of the Suiza Service Providers or any of the Companies by a person or entity
not bound by a confidentiality agreement with Suiza or any of the Companies, as
the case may be, or (iii) as is required to be disclosed by legal process of any
sort. A party to this Agreement will be deemed not to have breached its
obligation under this Section 10(j) to the extent that it exercises the same
degree of care with Confidential Information of another party to this Agreement
as it exercises with respect to its own Confidential Information.
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties as of the day first above written.
SUIZA FOODS CORPORATION
By: /s/ Michelle P. Goolsby
------------------------------------------
Name: Michelle P. Goolsby
Title: Executive Vice President and
General Counsel
CONSOLIDATED CONTAINER HOLDINGS LLC
By: /s/ Steven M. Silver
------------------------------------------
Name: Steven M. Silver
Title: Vice President
CONSOLIDATED CONTAINER COMPANY LLC
By: /s/ Steven M. Silver
------------------------------------------
Name: Steven M. Silver
Title: Vice President
6
<PAGE>
ANNEX A
- --------------------------------------------------------------------------------
Description of Service Fee or Charges for Service
- ---------------------- --------------------------
- --------------------------------------------------------------------------------
1. Medical Insurance Coverage for 1. Suiza's actual allocable cost
officers and employees located based on actual number of
in Dallas, TX officers and employees
- --------------------------------------------------------------------------------
2. Execu Care Coverage 2. Suiza's actual out of pocket
claims paid
- --------------------------------------------------------------------------------
3. Telephone Service to Corporate 3. Suiza's actual allocable cost
Headquarters (based on total telephone
services costs allocated per
capita)
- --------------------------------------------------------------------------------
4. Computer Services (Garelick) 4. $17,000 per month for the months
of July and August 1999, $34,000
per month for the month of
September 1999, and $50,000 per
month for the months of October,
November and December 1999,
provided, however, that should
these computer services be used
by any of the Consolidated
Plastics Operations for only
part of any such month and not
be used thereafter, the fee for
that month shall be pro-rated
based on the amount of days
during that month in which such
computer services were used.
- --------------------------------------------------------------------------------
5. Payment under insurance 5. The Contributed Plastics
policies, performance or payment Operations' allocable share of
guarantees, bonds or letters of actual payments made by the
credit (including, but not Suiza Service Providers in
limited to, guarantees of connection with such policies,
General Electric Capital performance or payment
Corporation equipment leases and guarantees, bonds and letters of
workers compensation policies credit. The allocable share of
and claims) on behalf of the the Contributed Plastics
Contributed Plastics Operations Operations shall include, but is
and their employees by any of not limited to, (i) all sums
the Suiza Service Providers or owing to General Electric
their insurers, banks or other Capital corporation and its
lending sources successors and assigns under
guarantees of leases of
equipment utilized by the
Contributed Plastics Operations,
(ii) all sums owing to insurers
or issuers of letters of credit
that relate to employees of the
Contributed Plastics Operations
and, (iii) until a more accurate
allocation can be made, twenty
percent (20%) of the fees and
expenses charged by issuers of
letters of credit relating to
the Contributed Plastics
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
Description of Service Fee or Charges for Service
- ---------------------- --------------------------
- --------------------------------------------------------------------------------
Operations' workers compensation
policies to maintain the
effectiveness of such letters of
credit.
- --------------------------------------------------------------------------------
6. Four (4) Vehicles 6. No charge, unless such vehicles
are not relinquished to the
Suiza Service Providers within
thirty (30) days after the
Effective Date of this
Agreement, then the charge will
be the fair market value of each
vehicle not so relinquished.
- --------------------------------------------------------------------------------
7. Electricity Payments. Applicable 7. West Central - $100,000 per month;
until the earlier of December New York Plastics - $30,000 per month;
31, 1999 or until the listed Florence Plastics $35,000 per month;
Contributed Plastics Operations Ocean Park Plastics $20,000 per month
have their own electric meters
in place.
- --------------------------------------------------------------------------------
8. Office space and rent payments 8. Actual cost of rent and other
for Suite 850 at 2515 McKinney payments under the lease
Avenue, Dallas, Texas which are agreement for Suite 850.
currently billed by the landlord
to Suiza Packaging.
- --------------------------------------------------------------------------------
9. Certain employee benefits paid 9. The Companies will reimburse the
for by Suiza GTL, LLC for Suiza Service Providers for the
employees of Ocean Park actual cost of such employee
Plastics. benefits.
- --------------------------------------------------------------------------------
8
<PAGE>
EXHIBIT 10.9(a)
CONSOLIDATED CONTAINER HOLDINGS LLC
1999 UNIT OPTION PLAN
1. PURPOSE OF THE PLAN. This Plan shall be known as the Consolidated
Container Holdings LLC 1999 Unit Option Plan. The purposes of the Plan are (i)
to attract and retain the best available personnel for positions of substantial
responsibility and (ii) to provide incentives to such personnel to promote the
success of the business of Consolidated Container Holdings LLC and its
subsidiaries.
2. DEFINITIONS. As used herein, the following definitions shall apply:
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITTEE" means the committee described in SECTION 17 that
administers the Plan.
"COMPANY" means Consolidated Container Holdings LLC, a Delaware limited
liability company.
"CONSULTANT" means any individual who renders services to the Company
or any of its Subsidiaries as a consultant or other type of independent
contractor.
"DATE OF GRANT" means the date on which an Option is granted pursuant
to this Plan or, if the Committee so determines, the date specified by the
Committee as the date the award is to be effective.
"EMPLOYEE" means any officer or other key employee of the Company or
one of its Subsidiaries.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means, with respect to a Unit, the fair market
value of such Unit as determined by the Committee, in its sole discretion. In
making such determination, the Committee may, but shall not be obligated to,
commission and rely upon an independent appraisal of Units.
"LLC AGREEMENT" means that certain Limited Liability Company Agreement
of the Company, dated as of July 1, 1999, by and among Franklin Plastics, Inc.,
Plastic Container Holdings, Inc., Reid Plastics Holdings, Inc., Vestar
Packaging, LLC, and other parties, as such agreement may be amended from time to
time.
"OPTION" means an option to purchase Units granted pursuant to SECTION
6 of this Plan.
"OPTIONEE" means any Employee who receives an Option.
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"PARTICIPANT" means any Employee or Consultant who receives an Option
pursuant to this Plan.
"PLAN" means the Consolidated Container Holdings LLC 1999 Unit Option
Plan, as amended from time to time.
"REDEMPTION AGREEMENT" means a Special Unit Acquisition, Ownership and
Redemption Agreement, the form of which is attached hereto as EXHIBIT A.
"RULE 16B-3" means Rule 16b-3 of the rules and regulations under the
Exchange Act, as Rule 16b-3 may be amended from time to time, and any successor
provisions to Rule 16b-3 under the Exchange Act.
"SUBSIDIARY" means any now existing or hereinafter organized or
acquired entity of which more than fifty percent (50%) of the ownership
interests therein are owned or controlled directly or indirectly by the Company
or through one or more Subsidiaries of the Company.
"UNIT" means an interest of a member of the Company, as such term is
defined in the LLC Agreement.
3. TERM OF PLAN. The Plan has been adopted by the Management Committee
of the Company effective as of July 1, 1999. The Plan shall continue in effect
until terminated pursuant to SECTION 18.
4. UNITS SUBJECT TO THE PLAN. Except as otherwise provided in SECTION
17 hereof, the aggregate number of Units issuable upon the exercise of Options
pursuant to this Plan shall be _________. If an Option should expire or become
unexercisable for any reason without having been exercised in full, then the
Units that were subject thereto shall, unless the Plan shall have terminated,
become immediately available for the grant of additional Options under this
Plan, subject to the limitations and adjustments set forth above. In addition,
for purposes of calculating the aggregate number of Units that may be issued
under this Plan, only the net Units issued (including the Units, if any,
withheld for tax withholding requirements) shall be counted when Units are used
as full or partial payment for Units issued upon exercise of an Option. Units
tendered by a Participant as payment for Units issued upon such exercise shall
be available for reissuance under the Plan.
5. ELIGIBILITY. Options may be granted under SECTION 6 of the Plan to
such Employees or Consultants as may be determined by the Committee. Subject to
the limitations and qualifications set forth in this Plan, the Committee shall
also determine the number of Options to be granted, the number of Units subject
to each Option grant, the exercise price or prices of Units subject to each
Option, the vesting and exercise period of each Option, whether an Option may be
exercised as to less than all of the Units subject thereto, and such other terms
and conditions of each Option as are consistent with the provisions of this
Plan.
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6. GRANT OF OPTIONS. The Committee shall determine the number of Units
to be offered from time to time pursuant to Options granted hereunder and shall
grant Options under the Plan. The grant of Options shall be evidenced by Option
agreements containing such terms and provisions as are approved by the Committee
and executed on behalf of the Company by an appropriate officer.
7. TIME OF GRANT OF OPTIONS. The date of grant of an Option under the
Plan shall be the date on which the Committee awards the Option or, if the
Committee so determines, the date specified by the Committee as the date the
award is to be effective. Notice of the grant shall be given to each Participant
to whom an Option is granted promptly after the date of such grant.
8. PRICE. The exercise price for each Unit subject to an Option (the
"EXERCISE PRICE") granted pursuant to SECTION 6 of the Plan shall be determined
by the Committee at the Date of Grant.
9. VESTING. Each Option award under the Plan shall vest or be subject
to forfeiture in accordance with the provisions set forth in the applicable
Option agreement. The Committee may, but shall not be required to, permit
acceleration of vesting or termination of forfeiture provisions upon any sale of
the Company or similar transaction.
10. EXERCISE. A Participant may pay the Exercise Price of the Units as
to which an Option is being exercised by the delivery of (a) cash, (b) check or
(c) at the Committee's option, any other consideration that the Committee
determines is consistent with the Plan's purpose and applicable law.
11. WITHHOLDING OF TAXES. The Committee shall make such provisions and
take such steps as it may deem necessary or appropriate for the withholding of
any taxes that the Company is required by any law or regulation of any
governmental authority to withhold in connection with any Option including, but
not limited to requiring the Optionee to pay to the Company, in cash, an amount
sufficient to cover the Company's withholding obligations.
12. CONDITIONS UPON ISSUANCE OF UNITS.
(a) The Company shall not be obligated to sell or issue any
Units upon the exercise of any Option granted under the Plan unless the issuance
and delivery of Units comply with all provisions of applicable federal and state
securities laws.
(b) As a condition to the exercise of an Option, the Company
may require the person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of applicable federal and state securities laws.
(c) The Company shall not be liable for refusing to sell or
issue any Units covered by any Option if the Company cannot obtain authority
from the appropriate regulatory bodies
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deemed by the Company to be necessary to sell or issue such Units in compliance
with all applicable federal and state securities laws. In addition, the Company
shall have no obligation to any Participant, express or implied, to list,
register or otherwise qualify the Units covered by any Option.
(d) No Participant will be, or will be deemed to be, a holder
of any Units subject to an Option unless and until such Participant has
exercised his or her Option and paid the purchase price for the subject Units.
13. RESTRICTIONS ON TRANSFER.
(a) Options issued pursuant to the Plan shall be
nontransferable except by will or the laws of descent and distribution, and may
only be exercisable during the Participant's lifetime only by the Participant.
(b) Subject to Sections 11.5 and 11.6 of the LLC Agreement,
and notwithstanding any provision of the LLC Agreement (except for Section 11.2
of the LLC Agreement), Units issued pursuant to the Plan shall be
nontransferable except by will or the laws of descent and distribution.
14. COMPANY PURCHASE OPTION. No Units shall be issued with respect to
the exercise of any Option unless the Optionee has executed and delivered to the
Company a Redemption Agreement and become a party to the LLC Agreement.
15. MODIFICATION OF PLAN AND OPTIONS.
(a) The Committee or the Company may from time to time and at
any time alter, amend, suspend, discontinue or terminate this Plan.
(b) At any time and from time to time, the Committee may
execute an instrument providing for modification, extension or renewal of any
outstanding Option, provided that no such modification, extension or renewal
shall impair the Option without the consent of the holder of the Option.
16. EFFECT OF CHANGE IN UNITS SUBJECT TO THE PLAN. In the event that
each of the Units shall be changed into or exchanged for a different number or
kind of equity interest of the Company or of another entity (whether by reason
of merger, consolidation, recapitalization, reclassification, split-up,
combination or otherwise), or in the event a Unit split or a dividend (other
than a dividend paid in respect of federal, state or other taxes) payment
occurs, then the Committee may take any action it deems advisable, including
without limitation, deciding to (a) substitute for each Unit then subject to
Options or available for Options the number and kind of units or shares of
interest into which each outstanding Unit shall be so changed or exchanged, or
the number of Units as is equitably required in the event of a Unit split,
together with an appropriate adjustment of the Exercise Price, or (b) cancel all
such Options as of the effective
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date of any merger, consolidation, recapitalization, reclassification, split-up
or combination by giving written notice to each holder thereof or his personal
representatives of its intention to do so and (i) by permitting the exercise of
all such Options, without regard to determinations of periods or installments of
exercisability during the fifteen (15) day period immediately preceding such
effective date or (ii) making a cash payment equal to the excess of the Fair
Market Value over the Exercise Price, multiplied by the number of Units subject
to all such Options.
17. ADMINISTRATION. The Plan shall be administered by a committee
appointed by the Company (the group responsible for administering the Plan is
referred to as the "COMMITTEE"). Option agreements, in the form as approved by
the Committee, and containing such terms and conditions consistent with the
provisions of this Plan as are determined by the Committee, may be executed on
behalf of the Company by any person designated by the Committee. The Committee
shall have complete authority to construe, interpret and administer the
provisions of this Plan and the provisions of the Option agreements granted
hereunder; to prescribe, amend and rescind rules and regulations pertaining to
this Plan; to suspend, discontinue or terminate this Plan; and to make all other
determinations necessary or deemed advisable in the administration of the Plan.
The determinations, interpretations and constructions made by the Committee
shall be final and conclusive. No member of the Committee shall be liable for
any action taken, or failed to be taken, made in good faith relating to the Plan
or any award thereunder, and the members of the Committee shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including attorneys' fees) arising therefrom to the fullest
extent permitted by law.
18. CONTINUED EMPLOYMENT NOT PRESUMED. Nothing in this Plan or any
document describing it nor the grant of any Option shall give any Participant
the right to continue in the employment of the Company or affect the right of
the Company to terminate the employment of any such person with or without
cause.
19. GOVERNING LAW. THE PLAN SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF
DELAWARE APPLICABLE TO CONTRACTS ENTERED INTO AND TO BE PERFORMED IN THE STATE
OF DELAWARE.
20. SEVERABILITY OF PROVISIONS. If any provision of this Plan is
determined to be invalid, illegal or unenforceable, such invalidity, illegality
or unenforceability shall not affect the remaining provisions of the Plan, but
such invalid, illegal or unenforceable provision shall be fully severable, and
the Plan shall be construed and enforced as if such provision had never been
inserted herein.
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EXHIBIT 10.9(b)
CONSOLIDATED CONTAINER HOLDINGS LLC
UNIT OPTION AGREEMENT
THIS AGREEMENT (the "AGREEMENT"), effective as of July 1, 1999, is
made and entered into by and between Consolidated Container Holdings
LLC, a Delaware limited liability company (the "COMPANY"),
and ___________ (the "PARTICIPANT").
W I T N E S S E T H:
WHEREAS, the Company has implemented the Consolidated Container
Holdings LLC 1999 Unit Option Plan (the "PLAN"), which provides for the grant of
options to selected officers, key employees, and consultants of the Company or
its Subsidiaries to purchase Units of the Company;
WHEREAS, the committee that administers the Plan (the "COMMITTEE") has
selected the Participant to participate in the Plan and has awarded the Unit
option herein described (the "OPTION") to the Participant; and
WHEREAS, the parties hereto desire to evidence in writing the terms and
conditions of the Option.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, and as an inducement to the
Participant to continue as an employee of the Company or its Subsidiary and/or
to promote the success of the business of the Company and its Subsidiaries, the
parties hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Participant, upon
the terms and subject to the conditions, limitations and restrictions set forth
in the Plan and in this Agreement, the Option to acquire __________ Units, at an
exercise price per Unit of $____, effective as of the date of this Agreement
(the "AWARD DATE"). The Participant hereby accepts the Option from the Company.
2. VESTING. Twenty (20) percent of the Units subject to the Option
shall vest on each anniversary of the Award Date while the Participant is
employed (or if the Participant dies or suffers a disability while employed, as
of the anniversary next following such death or disability); PROVIDED, HOWEVER,
the Option shall immediately vest in full as to all Units subject hereto upon
any Sale of the Company; PROVIDED, FURTHER, that the Option shall also vest up
to such number of Units subject hereto as are necessary to permit the
Participant to participate in any sale of Units in which the Participant is
permitted or required to sell pursuant to Section 11.5 or 11.6 of the LLC
Agreement. A "SALE OF THE COMPANY" shall occur if the Company engages in a
merger, consolidation, recapitalization, reorganization or sale, lease or
transfer of all or substantially all of the Company's assets and (i) the Company
and its members and affiliates immediately before such transaction beneficially
own, immediately after or as a result of such transaction, equity securities of
the surviving or acquiring entity or such entity's parent entity (the
"ACQUIROR")
<PAGE>
possessing less of the voting power of the Acquiror or such entity's parent
entity than another shareholder or member and (ii) the Company and its members
and affiliates immediately before such transaction have fewer representatives on
the Board of the Acquirer than another shareholder or member, provided that a
Sale of the Company shall not be deemed to occur upon any public offering or
series of such offerings of securities of the Company or its affiliates that
results in any such change in beneficial ownership.
3. EXERCISE. In order to exercise the Option with respect to any vested
Units hereunder, the Participant shall provide written notice to the Company at
its principal executive office. At the time of exercise, the Participant shall
pay to the Company the Option price per Unit set forth in SECTION 1 times the
number of vested Units as to which the Option is being exercised. The
Participant shall make such payment by delivering (a) cash or (b) a check or (c)
at the Committee's option, any other consideration that the Committee determines
is consistent with the Plan and applicable law. If the Option is exercised in
full, the Participant shall surrender this Agreement to the Company for
cancellation. If the Option is exercised in part, the Participant shall
surrender this Agreement to the Company so that the Company may make appropriate
notation hereon or cancel this Agreement and issue a new agreement representing
the unexercised portion of the Option.
Prior to acquiring any of the Units pursuant to the Option, the
Participant shall execute and deliver the Special Unit Acquisition, Ownership
and Redemption Agreement attached as EXHIBIT A to the Plan and the LLC
Agreement.
4. WHO MAY EXERCISE. The Option shall be exercisable during the
lifetime of the Participant only by the Participant. To the extent exercisable
after the Participant's death, the Option shall be exercised only by the
Participant's representatives, executors, successors or beneficiaries.
5. EXPIRATION OF OPTION. The Option shall expire, and shall not be
exercisable with respect to any vested Units hereunder as to which the Option
has not been exercised, on the 10th anniversary of the Award Date, whether or
not the Participant continues to be employed with the Company or its
Subsidiaries; PROVIDED, HOWEVER, that (a) if the Participant is terminated for
dishonesty or other acts detrimental to the interests of the Company or its
Subsidiaries, or for willful and continuing failure to perform his or her
duties, the Committee may, by written notice to the Participant, immediately
terminate the Option or (b) if the Participant's employment is terminated by the
Company for any reason (other than as set forth in subsection (a), above) or by
the Participant for any reason and, thereafter, the Participant Competes (as
hereinafter defined) with the Company or its Subsidiaries, the Option shall
expire at the end of the sixth month following the date on which the Participant
begins to Compete with the Company or its Subsidiaries or the date on which the
Participant solicit's such employees to leave the employ of the Company or its
Subsidiaries. The Option shall expire, and shall not be exercisable, with
respect to any unvested Units hereunder and with respect to any Units as to
which the Exercise Price exceeds the Fair Market Value (determined as of the
date of such termination), immediately upon the termination of the Participant's
employment with the Company for any reason or when the Participant ceases to be
a Director of the Company for any reason.
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For purposes of this Section 5, the term "Compete" shall mean, directly
or indirectly (i) to be engaged in or have financial interest (other than an
ownership position of less than 5% in any company whose share are publicly
traded or any non-voting non-convertible debt securities in any company) in any
business which directly competes with the business of the Company or any of its
Subsidiaries or (ii) to solicit or offer employment to any person who has been
employed by the Company or any of its Subsidiaries at any time during the 12
months immediately preceding such solicitation.
6. TAX WITHHOLDING. Any provision of this Agreement to the contrary
notwithstanding, the Company may take such steps as it deems necessary or
desirable for the withholding of any taxes that it is required by law or
regulation of any governmental authority, federal, state or local, domestic or
foreign, to withhold in connection with any of the Units subject hereto.
7. TRANSFER OF OPTION. The Participant shall not, directly or
indirectly, sell, transfer, pledge, encumber or hypothecate ("TRANSFER") the
Option or the rights and privileges pertaining thereto other than by will or the
laws of descent and distribution. Any permitted transferee to whom the
Participant shall Transfer the Option pursuant to this Section 7 shall agree to
be bound by this Agreement. The Option is not liable for or subject to, in whole
or in part, the debts, contracts, liabilities or torts of the Participant, nor
shall it be subject to garnishment, attachment, execution, levy or other legal
or equitable process.
8. CERTAIN LEGAL RESTRICTIONS. The Company shall not be obligated to
sell or issue any Units upon the exercise of the Option or otherwise unless the
issuance and delivery of such Units shall comply with all relevant provisions of
law and other legal requirements including, without limitation, any applicable
federal or state securities laws. As a condition to the exercise of the Option
or the sale by the Company of any additional Units to the Participant, the
Company may require the Participant to make such representations and warranties
as may be necessary to assure the availability of an exemption from the
registration requirements of applicable federal or state securities laws. The
Company shall not be liable for refusing to sell or issue any Units if the
Company cannot obtain authority from the appropriate regulatory bodies deemed by
the Company to be necessary to lawfully sell or issue such Units. In addition,
the Company shall have no obligation to the Participant, express or implied, to
list, register or otherwise qualify any of the Participant's Units. The Units
issued upon the exercise of the Option may not be transferred except in
accordance with applicable federal or state securities laws. At the Company's
option, the certificate evidencing Units issued to the Participant may be
legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE APPLICABLE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED OR PLEDGED EXCEPT IN COMPLIANCE WITH THE
REQUIREMENTS OF SUCH ACT AND THE APPLICABLE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION.
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9. PLAN INCORPORATED. The Participant accepts the Option herein subject
to all the provisions of the Plan, which are incorporated herein, including the
provisions that authorize the Committee to administer and interpret and make
adjustments pursuant to the Plan and that provide that the Committee's
decisions, determinations and interpretations with respect to the Plan are final
and conclusive on all persons affected thereby. Except as otherwise set forth in
this Agreement, terms defined in the Plan have the same meanings herein.
10. MISCELLANEOUS. (a) The granting of the Option herein shall impose
no obligation upon the Participant to exercise the Option or any part thereof.
Nothing herein contained shall affect the right of the Company to terminate the
Participant at any time, with or without cause, or shall be deemed to create any
rights to employment on the part of the Participant.
(b) The rights and obligations arising under this Agreement
are not intended to and do not affect the employment relationship or
other relationship that otherwise exists between the Company and the
Participant, whether such employment relationship is at will or defined
by an employment contract, or otherwise.
(c) Neither the Participant nor any person claiming under or
through the Participant shall be or shall have any of the rights or
privileges of a member of the Company in respect of any of the Units
issuable upon the exercise of the Option herein unless and until such
Units shall have been issued and delivered to the Participant or such
Participant's agent.
(d) Any notice to be given to the Company under the terms of
this Agreement or any delivery of the Option herein to the Company
shall be addressed to the Company at its principal executive offices,
and any notice to be given to the Participant shall be addressed to the
Participant at the address set forth beneath his or her signature
hereto, or at such other address for a party as such party may
hereafter designate in writing to the other. Any such notice shall be
deemed to have been duly given if mailed, postage prepaid, addressed as
aforesaid.
(e) Subject to the limitations herein on the transferability
by the Participant of the Option and any Units, this Agreement shall be
binding upon and inure to the benefit of the representatives,
executors, successors or beneficiaries of the parties hereto.
(f) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE
OF DELAWARE APPLICABLE TO CONTRACTS ENTERED INTO AND TO BE PERFORMED IN
THE STATE OF DELAWARE.
(g) If any provision of this Agreement is declared or found to
be illegal, unenforceable or void, in whole or in part, then the
parties shall be relieved of all obligations arising under such
provision, but only to the extent that it is illegal, unenforceable or
void, it being the intent and agreement of the parties that this
Agreement shall be deemed amended by modifying such provision to the
extent necessary to make it legal and enforceable while preserving its
intent or, if that is not possible, by substituting therefor another
provision that is legal and enforceable and achieves the same
objectives.
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(h) All section titles and captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement, and in no
way shall define, limit, extend or describe the scope or intent of any
provisions of this Agreement.
(i) The parties shall execute all documents, provide all
information, and take or refrain from taking all actions as may be
necessary or appropriate to achieve the purpose of this Agreement.
(j) This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements and understandings pertaining thereto.
(k) No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach
thereof shall constitute waiver of any such breach or any other
covenant, duty, agreement or condition.
(l) This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all the
parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart.
(m) At any time and from time to time the Committee may
execute an instrument providing for modification, extension, or renewal
of any outstanding option, provided that no such modification,
extension or renewal shall impair the option in any respect without the
consent of the holder of the option. Except as provided in the
preceding sentence, no supplement, modification or amendment of this
Agreement or waiver of any provision of this Agreement shall be binding
unless executed in writing by all parties to this Agreement. No waiver
of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement
(regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
(n) In addition to all other rights or remedies available at
law or in equity, the Company shall be entitled to injunctive and other
equitable relief to prevent or enjoin any violation of the provisions
of this Agreement.
(o) The Participant's spouse joins this Agreement for the
purpose of agreeing to and accepting the terms of this Agreement and to
bind any community property interest he or she has or may have in the
Option, any vested portion or any unvested portion of the Option, any
Units acquired upon exercise of the Option and any other Units held by
the Participant.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
COMPANY:
Consolidated Container Holdings LLC
By:
--------------------------------------
By:
--------------------------------------
Name:
-----------------------------
Title:
----------------------------
PARTICIPANT:
-----------------------------------------
Name:
------------------------------------
Address:
---------------------------------
--------------------------------------
--------------------------------------
PARTICIPANT'S SPOUSE:
-----------------------------------------
Name:
------------------------------------
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EXHIBIT 10.9(c)
THE UNITS DISCUSSED HEREIN HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
CERTAIN STATES AND ARE BEING ISSUED IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS. NEITHER THE UNITS NOR ANY
INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION UNDER THE ACT AND UNDER ANY APPLICABLE STATE
SECURITIES LAWS UNLESS PURSUANT TO EXEMPTIONS THEREFROM. ADDITIONAL RESTRICTIONS
ON TRANSFER OF THE UNITS ARE SET FORTH IN THE LIMITED LIABILITY COMPANY
AGREEMENT. THE UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THE COMPANY. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
SPECIAL UNIT ACQUISITION, OWNERSHIP AND REDEMPTION AGREEMENT
This Special Unit Acquisition, Ownership and Redemption Agreement (this
"AGREEMENT") is entered into as of the date set forth on the signature page to
this Agreement by and between Consolidated Container Holdings LLC, a Delaware
limited liability company (the "LLC"), and the individual identified on the
signature page to this Agreement ("SERVICE PROVIDER"). Capitalized terms not
otherwise defined herein shall have the meanings accorded to such terms in the
Limited Liability Company Agreement of Consolidated Container Holdings LLC,
dated as of July 1, 1999 (the "LLC AGREEMENT") or, if not defined in the LLC
Agreement, the Plan (defined below).
W I T N E S S E T H:
WHEREAS, the LLC was formed pursuant to the LLC Agreement;
WHEREAS, Service Provider provides (or will provide) services, as an
employee, to the LLC;
WHEREAS, the LLC desires to sell to Service Provider the interest in
the LLC (the "UNITS") pursuant to the exercise of an option held by Service
Provider under the Consolidated Container Holdings LLC 1999 Unit Option Plan
(the "PLAN"), subject to the terms and conditions of this Agreement; and
WHEREAS, Service Provider desires to acquire the Units specified in
connection with Service Provider's exercise of an option under the Plan, subject
to the terms and conditions of this Agreement.
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NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the receipt and adequacy of which all the parties to this Agreement
acknowledge, the parties mutually agree as follows:
GRANT OF INTEREST
1. Subject to the terms and conditions of this Agreement, the LLC
hereby sells to Service Provider as of the Effective Date the Units (including
Units subject to an option (an "Option")) identified as being owned by Service
Provider on EXHIBIT B hereto (collectively, the "INTEREST").
REDEMPTION OF THE INTEREST
2. Service Provider hereby agrees and acknowledges that his or her
Interest shall be subject to the following terms and conditions:
(a) TERMINATION FOR CAUSE. At any time after a Termination for
Cause (as hereinafter defined) has occurred, the LLC may purchase the Units for
the lesser of (i) Service Provider's Capital Account with respect to the Units
as of the Election Date (as hereinafter defined) and (ii) the Fair Market Value
(as hereinafter defined) of the Units on the Election Date. In addition, all of
the Service Provider's outstanding Options shall terminate immediately without
payment therefor.
(b) TERMINATION OTHER THAN FOR CAUSE. At any time after a
Termination Event (as hereinafter defined) has occurred, the LLC may purchase
(i) the Units for a price equal to the Fair Market Value of the Units on the
Election Date and (ii) all vested Options whose exercise price is less than the
Fair Market Value of the Units on the Election Date for a price equal to (A) the
Fair Market Value of the Units on the Election Date LESS (B) the exercise price
of such Options. In addition, all of the Service Provider's outstanding Options
that are unvested or whose exercise price is greater than the Fair Market Value
of the Units on the Election Date shall terminate without payment therefor.
(c) METHOD OF EXERCISE OF REDEMPTION RIGHT. The Partnership
may make an election pursuant to this SECTION 2 to purchase the Interest by
delivering written notice of such election to Service Provider. Delivery may be
made by courier, regular U.S. mail, overnight delivery, or telecopy, and shall
be effective on the date of delivery to Service Provider.
(d) DEFINITIONS. The "ELECTION DATE" shall mean the date the
LLC elects to purchase all or any portion of the Interest. The "FAIR MARKET
VALUE" of the Interest as of any date (the "VALUATION DATE") shall be equal to,
prior to a Public Offering, the fair market value thereof, disregarding any
discount for minority interest or marketability of the Interest and assuming the
prior conversion, exercise or exchange of all outstanding securities convertible
into Units ("UNIT EQUIVALENTS") as determined within six (6) months of the
Valuation Date by the Board of Directors in its sole discretion (the "BOARD
DETERMINATION"); PROVIDED, that if the Board Determination is in excess of
$250,000 in the aggregate for all Units being valued and if the Service Provider
disagrees, in good faith, with the Board Determination, the Service Provider
shall promptly notify the LLC of such disagreement, in which event an
independent appraiser,
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accountant or investment banking firm (the "APPRAISER") selected by mutual
agreement of the Service Provider and the Board of Directors of the LLC shall
make a determination of the fair market value thereof, disregarding any discount
for minority interest or marketability of the Interest and assuming the prior
conversion, exercise or exchange of all outstanding Unit Equivalents (the
"APPRAISER DETERMINATION"), and if the Appraiser Determination is (i) not at
least 110% of the Board Determination, "FAIR MARKET VALUE" shall be the Board
Determination and the Service Provider shall pay the cost of such Appraiser
Determination or (ii) 110% of the Board Determination or greater, "FAIR MARKET
VALUE" shall be the Appraiser Determination and the LLC shall pay the cost of
such Appraiser Determination. Subsequent to an Initial Public Offering (as
defined in the LLC Agreement), the term "FAIR MARKET VALUE" shall mean the price
per share equal to the average of the last sales price of the Class A Common
Stock, par value $.01 per share ("COMMON STOCK"), of Reid Plastics Holdings,
Inc., or any successor thereto (the "COMPANY") on the last thirty trading days
prior to the Valuation Date (the "REPURCHASE CALCULATION PERIOD") on each
exchange on which the Common Stock may at the time be listed or, if there shall
have been no sales on any of such exchanges during the Repurchase Calculation
Period, the average of the closing bid and asked prices on each such exchange on
each day during the Repurchase Calculation Period or, if there are no such bid
and asked prices during the Repurchase Calculation Period on the next preceding
date when such bid and asked prices occurred or, if the Common Stock shall not
be so listed, the average of the closing sales prices as reported by Nasdaq
during the Repurchase Calculation Period in the over-the-counter market. A
"TERMINATION FOR CAUSE" means a circumstance with respect to which the LLC or
any Subsidiary terminates the Service Provider's employment for "CAUSE", as such
term is defined in the Service Provider's employment agreement or, if no such
agreement exists, or such term is not defined in the employment agreement,
"Cause" shall mean the following the Service Provider's (i) willful and
intentional misconduct or gross negligence in the performance of, or willful
neglect of, the Service Provider's duties, which has caused demonstrable and
serious injury (monetary or otherwise) to the LLC or (ii) conviction of, or plea
of nolo contendere to, a felony. A "TERMINATION EVENT" means a circumstance with
respect to which Service Provider is no longer an employee of or consultant to
the LLC or any Subsidiary for any reason (other than a Termination for Cause),
including, without limitation, voluntary retirement by the Service Provider,
termination by the LLC without Cause, termination due to disability or voluntary
termination by the Service Provider.
COOPERATION IN EFFECTING TRANSFER TO PARTNERSHIP
3. Service Provider acknowledges and agrees that upon the transfer of
the Interest, Service Provider shall promptly execute, perform and deliver any
and all documents, forms and agreements requested by the LLC to reflect the
assignment, transfer and redemption of the Interest by the Service Provider to
the LLC.
SERVICE PROVIDER REPRESENTATIONS AND WARRANTIES
4. Service Provider hereby represents and warrants to the LLC as
follows:
(a) (i)Service Provider has been furnished prior to the date
hereof a copy of the LLC Agreement or a photocopy counterpart
thereof, (ii) the LLC has made available to the Service
Provider the opportunity to ask questions of, receive answers
and to
3
<PAGE>
obtain any additional information necessary to verify the
accuracy of the information set forth in the LLC Agreement and
all attachments and amendments thereto, and Service Provider
has received all such requested information from the LLC
concerning the terms and conditions of the LLC Agreement, and
(iii) Service Provider has such knowledge and experience in
financial and business matters that he is capable of
evaluating the merits and risks of owning the Interest.
(b) Service Provider has received no representations or warranties
from LLC, any member of the LLC or their employees or agents,
or any other person and, in accepting the Interest, Service
Provider is relying solely on the information contained in the
LLC Agreement.
(c) Service Provider recognizes that the potential reward from
owning the Interest is speculative and that any obtaining of
money pursuant to the Interest involves a high degree of
uncertainty.
(d) Service Provider has adequate net worth and means of providing
for his current needs and possible personal contingencies, and
has no need, and anticipates no need in the foreseeable
future, to sell the Interest which he hereby acquires.
(e) Service Provider acknowledges that it has been advised that
the interests in the LLC have not been registered under the
Securities Act of 1933, as amended, or under any state
securities law or regulation.
(f) The Interest which Service Provider hereby accepts will be
acquired for his own account for investment and not for the
benefit of any other person or with a view toward resale or
redistribution, and Service Provider does not now have any
reason to anticipate any change in his circumstances or other
particular occasion or event which would cause him to sell his
Interest.
(g) Service Provider acknowledges that there are substantial
restrictions on the transferability of the Interest. Since the
Interest is not, will not be, and Service Provider has no
right to require that it be, registered under the Securities
Act of 1933, as amended, or any other applicable state
securities laws, the Interest may not be, and Service Provider
agrees that it shall not be, sold unless such sale is exempt
from such registration under the Securities Act of 1933, as
amended, and any other applicable state securities laws or
regulations and unless the other requirements set forth in the
LLC Agreement are met, and the Service Provider recognizes
that the Interest must otherwise be held indefinitely and the
Service Provider must continue to bear the economic risk of
the investment in the Interest. Service Provider further
acknowledges that the LLC is under no obligation to aid him or
her in obtaining any exemption from any registration
requirements and that the Interest is completely
non-transferable. The Service Provider acknowledges that there
is not an existing public or other market for the Interest and
there can be no assurance that he will be able to sell or
dispose of his Interest, even if the transfer of such interest
is otherwise allowed pursuant to this Agreement or the LLC
Agreement.
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<PAGE>
(h) In the event that Service Provider resides in a jurisdiction
which requires any legend to be placed on the LLC Agreement in
addition to the legend existing thereon, Service Provider
consents to the placement of such legend on such document.
(i) The Service Provider is competent to and has sufficient
capacity to enter into and perform his obligations under this
Agreement. This Agreement has been duly executed and delivered
by the Service Provider. Assuming the due execution and
delivery hereof by the other parties thereto, this Agreement
is enforceable against the Service Provider in accordance with
its terms.
(j) Service Provider understands the meaning and legal
consequences of the representations and warranties of Service
Provider contained in this SECTION 4. Service Provider further
understands that the LLC and its respective members,
principals and officers will rely upon such representations
and warranties in connection with their execution and
performance of this Agreement. In this connection, Service
Provider hereby agrees to indemnify and hold the LLC and their
respective principals, officers, affiliates, employees and
agents harmless from and against all losses, claims, damages,
expenses or liabilities resulting or arising from the
inaccuracy, the incompleteness or a breach by Service Provider
of any such representation or warranty. All representations
and warranties of Service Provider contained in this Agreement
shall survive the execution of this Agreement.
(k) Service Provider acknowledges that he will not be deemed to
have made any capital contributions to the LLC by virtue of
his services to the LLC.
(l) Service Provider acknowledges that, as an entity formed (for
federal income tax purposes) as a partnership, the LLC will
not pay federal income taxes, but each member (including
Service Provider) of the LLC will be required to report his
share (whether or not distributed) of the income, gains,
losses, deductions and credits of the character specified in
Section 702 of the Internal Revenue Code of 1986, as amended
("CODE"). Service Provider acknowledges that he understands
that the LLC may not be able to distribute cash to provide for
such taxes. Thus, it is possible that Service Provider as a
member of the LLC could incur income tax liabilities
attributable to the LLC without receiving from the LLC
sufficient cash distributions with which to pay such tax
liabilities.
(m) In addition to the federal income tax consequences described
above, Service Provider acknowledges that certain states in
which the LLC may own property will impose an income tax on
that portion of an individual member's distributive share of
LLC net income, as adjusted, attributable to that state in
excess of certain allowable pro-rated deductions and/or
personal exemptions (or credits). Service Provider
acknowledges that both the substantive features of state and
local taxes, income taxes and the filing requirements will
vary and that the LLC may also be required to withhold state
taxes from distributions to Service Provider in some
instances.
5
<PAGE>
CERTIFICATE OF NONFOREIGN STATUS
5. Service Provider shall complete and execute EXHIBIT A to this
Agreement with respect to his nonforeign status.
COVENANTS OF SERVICE PROVIDER
6. Service Provider hereby acknowledges and agrees that Service
Provider, as the owner of the Interest, has executed a counterpart of the LLC
Agreement and therefore is bound by and subject to the terms of the LLC
Agreement. Service Provider covenants and agrees to abide by the terms of the
LLC Agreement as in effect from time to time.
POWER OF ATTORNEY
7. Service Provider does hereby irrevocably constitute and appoint the
chief financial officer of the LLC with full power of substitution as his true
and lawful agent and attorney-in-fact, in Service Provider's name and stead to
execute, acknowledge, deliver, swear to and/or file the LLC Agreement and all
such other instruments as are described in the LLC Agreement. The power of
attorney granted hereby shall be deemed to be coupled with an interest and shall
be irrevocable and survive the death, dissolution, disability, bankruptcy or
legal incapacity of Service Provider and shall extend to Service Provider's
heirs, successors and assigns.
MISCELLANEOUS
8. The address of Service Provider for all purposes shall be the
address set forth on the signature page of this Agreement or such other address
of which the LLC has received written notice.
9. All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions of this
Agreement.
10. The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purpose of this Agreement.
11. This Agreement shall be binding upon and inure to the benefit of
the parties and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
12. This Agreement constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
13. No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
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<PAGE>
14. This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties,
notwithstanding that all the parties are not signatories to the original or the
same counterpart.
15. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS ENTERED INTO AND TO BE PERFORMED IN THE STATE OF
DELAWARE.
16. If any provision of this Agreement is or becomes invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not be affected thereby.
17. For purposes of this Agreement, the terms "CONTROLLING" and
"CONTROL" with respect to an entity means the power, directly or indirectly,
either to direct or cause the direction of the management policies of such
entity, whether through the ownership of voting securities or equity interest,
by contract or otherwise.
18. Any provision of this Agreement to the contrary notwithstanding,
the LLC may take such steps as it may deem necessary or desirable for the
withholding of any taxes which it is required by law or regulation of any
governmental authority, federal, state or local, domestic or foreign, to
withhold in connection with the Interest granted hereto.
19. If Service Provider shall ever become legally divorced, then in
connection with the property settlement that occurs with respect to such
divorce, Service Provider and his spouse ("SPOUSE") shall each use his or her
best efforts to convince the court to award 100% of the Interest to Service
Provider. If the court awards any portion of the Interest to Spouse, Service
Provider shall purchase and/or otherwise acquire from Spouse, for Liquidation
Value (defined below), all of Spouse's interest (if any) in the Interest, and
Spouse agrees to cooperate in transferring to Service Provider such legal,
economic and other rights in the Interest. If Service Provider fails to purchase
and/or otherwise acquire such rights, then the LLC shall have the right to
acquire from Spouse, for Liquidation Value, all of Spouse's interest in the
Interest. If the LLC does not acquire Spouse's interest in the Interest, Spouse
shall be treated only as an assignee of an interest in the LLC, and shall not be
treated as a substitute member, and shall merely have a right to receive
allocations of, profit, loss and other items of income, gain or deduction and
credit, and the rights to distributions. Spouse is executing this Agreement
solely to evidence her consent and agreement to take such actions as may be
necessary to comply with this SECTION 19. If Service Provider should ever become
divorced and then remarry during the term of this Agreement, Service Provider
covenants and agrees that Service Provider will cause his spouse to execute a
counterpart to this Agreement solely to evidence such spouse's consent and
agreement to take such actions as may be necessary to comply with this SECTION
19. The term "LIQUIDATION VALUE" with respect to the Interest (or an economic
interest in any portion of the Interest) means the amount the owner would
receive under the terms of the LLC Agreement if the LLC sold its assets for Fair
Market Value, discharged all of its liabilities, and distributed the remaining
proceeds to the Partners pursuant to Article XII of the LLC Agreement.
20. Nothing contained in this Agreement shall be deemed to obligate the
LLC or any subsidiary of the LLC to employ the Service Provider in any capacity
whatsoever or to prohibit
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<PAGE>
or restrict the Company (or any such subsidiary) from terminating the
employment, if any, of the Service Provider at any time or for any reason
whatsoever, with or without cause.
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IN WITNESS WHEREOF, this Agreement is executed as of ______________,
1999.
LLC:
CONSOLIDATED CONTAINER HOLDINGS
LLC, a Delaware limited liability company
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
SERVICE PROVIDER:
-----------------------------------------
Name:
------------------------------------
Address:
---------------------------------
---------------------------------
Tax Identification Number
(Social Security Number):
-----------------------------------------
SERVICE PROVIDER'S SPOUSE:
__________________ is executing this Agreement solely to evidence her consent
and agreement to take such actions as may be necessary to comply with SECTION 19
of this Agreement.
- ----------------------
Name:
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<PAGE>
EXHIBIT 10.10(a)
CONSOLIDATED CONTAINER HOLDINGS LLC
REPLACEMENT UNITS OPTION PLAN
FOR OPTIONS ISSUED PURSUANT TO THE
FRANKLIN PLASTICS, INC.
1998 STOCK OPTION PLAN
RECITALS
WHEREAS, Consolidated Container Holdings LLC, a Delaware limited
liability company (the "Company") will acquire the assets and operations of
Franklin Plastics, Inc., a Delaware corporation ("Franklin") and its
subsidiaries pursuant to that certain Contribution and Merger Agreement dated as
of April 29, 1999, by and among Suiza Foods Corporation, Franklin, the Suiza
companies identified therein, Vestar Packaging LLC, Reid Plastics Holdings,
Inc., the Reid companies identified therein, the Company and its subsidiaries
identified therein (the "Merger Agreement");
WHEREAS, pursuant to the Merger Agreement and the transactions
contemplated thereby, the plastics packaging operations of Franklin will be
contributed or merged with and into the Company, and the Company shall, after
the consummation of such transactions, succeed to the business of Franklin and
be the new employer of certain former employees of Franklin;
WHEREAS, the Franklin 1998 Stock Option Plan (the "Franklin Plan") was
previously adopted by the Franklin's Board of Directors, providing for the grant
of stock options to certain selected officers and key employees of Franklin or
its subsidiaries with respect to shares of common stock, $.01 par value, of
Franklin (the "Franklin Common Stock"), and options to purchase Franklin Common
Stock were previously issued to participants pursuant to certain Stock Option
Agreements (the "Prior Option Agreements") by and between Franklin and selected
officers and key employees of Franklin (the "Participants") and pursuant to the
Franklin Plan;
WHEREAS, the Board of Franklin and the Management Committee of the
Company wish for the Participants to continue to enjoy the rights and benefits
contained in the Prior Option Agreements, and to convert the non-qualified stock
options to purchase Franklin Common Stock described in the Prior Option
Agreements to replacement non-qualified options to purchase Units as described
herein (the "Replacement Options"), such conversion to be effective as of the
date of closing of the transactions contemplated by the Merger Agreement (the
"Closing");
WHEREAS, the Management Committee has deemed it in the best interests
of the Company to adopt this Replacement Units Option Plan (this "Replacement
Plan") to attract and retain the executive officers and key employees to whom
the Prior Stock Options were issued pursuant to the Franklin Plan and to provide
for the continuation of options described in the Prior Stock Options as
converted to Replacement Options;
WHEREAS, the Company wishes to terminate the Prior Option Agreements
effective as of the date of the Closing;
<PAGE>
2
WHEREAS, Franklin has agreed that upon the exercise of any Replacement
Option or portion thereof, the number of Units held by Franklin shall be reduced
on the books and records of the Company by the number of Units into which such
Replacement Option or portion was exercised so that the Percentage Interests of
the Other Members of the Company is the same as it was prior to such exercise.
NOW, THEREFORE, in consideration of the foregoing, the terms of the
Replacement Plan are as follows:
1. PURPOSE OF THE REPLACEMENT PLAN. This Replacement Plan shall be
known as the Consolidated Container Holdings LLC Replacement Units Option Plan.
The purpose of the Replacement Plan is to attract and retain the selected
executive officers and key employees of Franklin to whom Franklin Options were
previously issued and to provide incentives to such personnel to promote the
success of the business of the Company and its subsidiaries.
The options granted under this Replacement Plan are intended to be
non-qualified stock options under applicable tax laws and are not to be
characterized as incentive stock options under such laws.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(b) "Company" has the meaning set forth in paragraph 1 of the
Recitals.
(c) "Date of Grant" means the date of the Closing, on which
the Replacement Options granted pursuant to this Plan will become effective.
(d) "Employee" means any officer or other key employee of the
Company or one of its Subsidiaries, including any Management Committee member
who is also an officer or key employee of the Company or one of its
Subsidiaries.
(e) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(f) "Fair Market Value" means the closing sale price (or
average of the quoted closing bid and asked prices if there is no closing sale
price reported) of the Units on the date specified, as reported by the principal
national stock exchange or automated trading system on which the Units are then
listed. If there is no reported price information for the Units, "Fair Market
Value" as of any date means the fair market value of each Unit determined in
good faith by the Management Committee, as follows: (i) during the first quarter
of each year, the Management Committee will establish a list of publicly traded
packaging industry companies reasonably comparable with the Company and its
Subsidiaries on the basis of, among other things, lines of business and growth
profile (the "Comparable Companies"); (ii) the Management Committee will
determine, based on publicly available information, the weighted average
multiple of operating income for the 12 full months preceding the date of such
valuation for the
<PAGE>
3
Comparable Companies, based on the market value of all outstanding equity and
all indebtedness for borrowed money of the Comparable Companies (the "Index
Multiple"); and (iii) the Fair Market Value of each Unit will equal (A) the sum
of (1) the Index Multiple multiplied by the Plastics Operating Income for the 12
full calendar months preceding such date, minus (2) the aggregate liquidation
preference of the Company's outstanding preferred units as of the date of
determination, if any, minus (3) the aggregate indebtedness for borrowed money
of the Company and its Subsidiaries as of the date of determination, divided by
(B) the number of outstanding Units (determined on a fully diluted basis, using
the treasury stock method to account for unexercised options and warrants).
(g) "Management Committee" means the Management Committee of
the Company and described in the Company's Limited Liability Company Agreement,
as it may be amended from time to time.
(h) "Non-Employee Director" means an individual who is a
"non-employee director" as defined in Rule 16b-3 under the Exchange Act and also
an "outside director" within the meaning of Treasury Regulation Section
1.162-27(e)(3).
(i) "Units" means the units of the Company as described in the
Limited Liability Company Agreement of the Company, as amended from time to
time. Except as otherwise provided herein, all Units issued pursuant to the
Replacement Plan shall have the same rights as all other issued and outstanding
Units, including but not limited to voting rights, the right to dividends, if
declared and paid, and the right to pro rata distributions of the Company's
assets in the event of liquidation.
(k) "Participant" means the Employees of the Company who
receive a Replacement Option pursuant to this Plan.
(j) "Replacement Option" means an option to purchase Units
granted pursuant to SECTION 6 of this Replacement Plan.
(l) "Plastics Operating Income" means, for any specified
period, the consolidated operating income of the Company and its Subsidiaries,
determined on a pro forma basis, taking into account the operating income
associated with acquisitions effected during the relevant period, in accordance
with generally accepted accounting principles, consistently applied.
(m) "Replacement Plan" means the Consolidated Container
Holdings LLC Replacement Units Option Plan, as amended from time to time.
(n) "Subsidiary" means any now existing or hereinafter
organized or acquired company of which more than fifty percent (50%) of the
issued and outstanding voting stock or other equity interest is owned or
controlled directly or indirectly by the Company or through one or more
Subsidiaries of the Company.
<PAGE>
4
3. TERM OF REPLACEMENT PLAN. The Replacement Plan has been adopted by
the Management Committee to become effective as of the Closing of the
transactions contemplated by the Merger Agreement. The Replacement Plan shall
continue in effect until terminated pursuant to SECTION 18.
4. UNITS SUBJECT TO THE REPLACEMENT PLAN. Except as otherwise provided
in SECTION 17 hereof, the aggregate number of Units issuable upon the exercise
of Replacement Options pursuant to this Replacement Plan shall be 344,167 Units.
No Replacement Options shall be issued except for those issued to Participants
who hold Prior Option Agreements.
5. ELIGIBILITY. Replacement Options are being granted under SECTION 6
of the Replacement Plan effective as of the Closing date, only to the Employees
of the Company or its Subsidiaries who hold Prior Option Agreements.
6. GRANT OF OPTIONS. Except as provided in SECTION 18, the Management
Committee shall grant Replacement Options to the Employees and on the number of
Units as the , such grant to be effective as of the date of Closing. Replacement
Options shall be issued only to Employees who elect to surrender their Franklin
Option(s) and receive Replacement Option(s) in substitution therefor in
accordance with the terms and procedures established by Franklin for such
election and surrender. The grant of Replacement Options shall be evidenced by
Replacement Option agreements containing such terms and provisions as are
substantially the economic equivalent of the Franklin Options being replaced,
and approved by the Management Committee and executed on behalf of the Company
by an appropriate officer.
7. TIME OF GRANT OF OPTIONS. The effective date of grant of a
Replacement Option under the Replacement Plan shall be the Closing date. Notice
of the grant shall be given to each Participant to whom a Replacement Option is
granted promptly after the date of such grant.
8. PRICE. The exercise price for each Unit subject to a Replacement
Option (the "Exercise Price") shall be as set forth in each Participant's
individual Replacement Option agreement.
9. VESTING. Each Replacement Option award under the Replacement Plan
shall vest or be subject to forfeiture in accordance with the provisions set
forth in the applicable Replacement Option agreement. The Management Committee
may, but shall not be required to, permit acceleration of vesting or termination
of forfeiture provisions upon any sale of the Company or similar transaction. A
Participant's Replacement Option agreement may contain such additional
provisions with respect to vesting as the Management Committee may specify.
10. EXERCISE. A Participant may pay the Exercise Price of the Units as
to which a Replacement Option is being exercised by the delivery of cash, check,
or, at the Company's option, by the delivery of Units having a Fair Market Value
on the date immediately preceding the exercise date equal to the Exercise Price.
Upon the exercise of a Replacement Option, the initial Capital Account of the
Participant shall be equal to the exercise price paid for the Units received
upon exercise.
<PAGE>
5
If the Units to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended, any Replacement Option
granted under the Replacement Plan may be exercised by a broker-dealer acting on
behalf of an Participant if (a) the broker-dealer has received from the
Participant or the Company a fully- and duly-endorsed agreement evidencing such
Option, together with instructions signed by the Participant requesting the
Company to deliver the Units subject to such Replacement Option to the
broker-dealer on behalf of the Participant and specifying the account into which
such shares should be deposited, (b) adequate provision has been made with
respect to the payment of any withholding taxes due upon such exercise, and
(iii) the broker-dealer and the Participant have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR Part 220, or any successor provision.
11. WHEN REPLACEMENT OPTIONS MAY BE EXERCISED. No Replacement Option
shall be exercisable at any time after the expiration of ten (10) years from the
Original Award Date. This SECTION 11 only provides the outer limits of allowable
exercise dates with respect to Options; a Replacement Option agreement may
provide for a shorter duration than as specified above.
12. REPLACEMENT OPTION FINANCING. Upon the exercise of any Replacement
Option granted under the Replacement Plan, the Company may, but shall not be
required to, make financing available to the Participant for the purchase of
Units pursuant to such Replacement Option on such terms as the Management
Committee may specify.
13. WITHHOLDING OF TAXES. The Management Committee shall make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of any taxes that the Company is required by any law or regulation
of any governmental authority to withhold in connection with any Replacement
Option including, but not limited to, withholding the issuance of all or any
portion of the Units subject to such Replacement Option until the Participant
reimburses the Company for the amount it is required to withhold with respect to
such taxes, canceling any portion of such issuance in an amount sufficient to
reimburse the Company for the amount it is required to withhold or taking any
other action reasonably required to satisfy the Company's withholding
obligation.
14. CONDITIONS UPON ISSUANCE OF UNITS. The Company shall not be
obligated to sell or issue any units upon the exercise of any Replacement Option
granted under the Replacement Plan unless the issuance and delivery of units
complies with all provisions of applicable federal and state securities laws and
the requirements of any national exchange or trading system on which the Units
are then listed or traded.
As a condition to the exercise of a Replacement Option, the
Company may require the person exercising the Replacement Option to make such
representations and warranties as may be necessary to assure the availability of
an exemption from the registration requirements of applicable federal and state
securities laws.
The Company shall not be liable for refusing to sell or issue
any Units covered by any Replacement Option if the Company cannot obtain
authority from the appropriate regulatory bodies deemed by the Company to be
necessary to sell or issue such Units in compliance with all applicable federal
and state securities laws and the requirements of any national exchange or
<PAGE>
6
trading system on which the Units are then listed or traded. In addition, the
Company shall have no obligation to any Participant, express or implied, to
list, register or otherwise qualify the Units covered by any Replacement Option.
No Participant will be, or will be deemed to be, a holder of
any Units subject to a Replacement Option unless and until such Participant has
surrendered all Franklin Option(s), exercised the Replacement Option and paid
the purchase price for the subject Units. Each Replacement Option under this
Replacement Plan shall be transferable only by will, the laws of descent and
distribution or pursuant to a domestic relations order issued by a court of
competent jurisdiction; provided, however, that the Management Committee may
(but need not) permit transfer without consideration by a Participant to (a) the
spouse, children or grandchildren of the Participant ("Immediate Family
Members"), (b) a trust or trusts, or to a guardian under the Uniform Gift to
Minors Act, for the exclusive benefit of such Immediate Family Members, or (c) a
partnership or other entity in which such Immediate Family Members are the only
partners, provided that subsequent transfers of transferred Replacement Options
shall be prohibited except by will, the laws of descent and distribution or
pursuant to a domestic relations order issued by a court of competent
jurisdiction. Following transfer, any such Replacement Options shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer and the term "Participant" in the applicable Replacement Option
agreement shall be deemed to refer to the transferee; provided that any
provisions related to termination of employment set forth in the agreement and
the obligation to pay withholding taxes shall continue to apply to the
transferor.
15. RESTRICTIONS ON UNITS. Units issued pursuant to the Replacement
Plan may be subject to restrictions on transfer under applicable federal and
state securities laws. The Management Committee may impose such additional
restrictions on the ownership and transfer of Units issued pursuant to the
Replacement Plan as it deems desirable and any such restrictions shall be set
forth in any Replacement Option agreement entered into hereunder.
16. MODIFICATION OF OPTIONS. The Management Committee may, at any time
and from time to time, execute an instrument providing for modification,
extension or renewal of any outstanding Replacement Option, provided that no
such modification, extension or renewal shall impair the Replacement Option
without the consent of the holder of the Option.
17. EFFECT OF CHANGE IN UNITS SUBJECT TO THE REPLACEMENT PLAN. In the
event that each of the outstanding Units (other than Units held by dissenting
unitholders) shall be changed into or exchanged for a different number or kind
of shares of stock or other equity interests of the Company or of another
Company (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or other equity interests or
otherwise), or in the event a unit split or dividend (other than any dividend
paid in respect of federal, state or other taxes) payment occurs, then there
shall be substituted for each Unit then subject to Replacement Options the
number and kind of shares of stock or other equity interests into which each
outstanding Unit (other than Units held by dissenting unitholders) shall be so
changed or exchanged, or the number of Units as is equitably required in the
event of a Unit split or dividend, together with an appropriate adjustment of
the Exercise Price. The Management
<PAGE>
7
Committee may, but shall not be required to, provide additional anti-dilution
protection to a Participant under the terms of the Participant's Replacement
Option agreement.
18. ADMINISTRATION.
(a) The Replacement Plan shall be administered by the
Management Committee or by a committee of the Management Committee appointed by
the full Management Committee. Replacement Options may be granted under SECTION
6 only to the Employees who hold Prior Option Agreements who have been
designated by the Company, upon the surrender by such Employee of his Prior
Option Agreement under the Franklin Plan, such Replacement Option grant to be
effective at Closing, pursuant to Replacement Option agreements, in the forms as
approved by the Management Committee, and containing such terms and conditions
consistent with the provisions of this Replacement Plan and with terms
substantially the economic equivalent of the Prior Option Agreement being
replaced, may be executed on behalf of the Company by the Chairman of the
Management Committee, the President or any Vice President of the Company. The
Management Committee shall have complete authority to construe, interpret and
administer the provisions of this Replacement Plan and the provisions of the
Replacement Option agreements granted hereunder; to prescribe, amend and rescind
rules and regulations pertaining to this Replacement Plan; to suspend or
discontinue this Replacement Plan; and to make all other determinations
necessary or deemed advisable in the administration of the Replacement Plan. The
determinations, interpretations and constructions made by the Management
Committee shall be final and conclusive. No member of the Management Committee
shall be liable for any action taken, or failed to be taken, made in good faith
relating to the Replacement Plan or any award thereunder, and the members of the
Management Committee shall be entitled to indemnification and reimbursement by
the Company in respect of any claim, loss, damage or expense (including
attorneys' fees) arising therefrom to the fullest extent permitted by law.
(b) The Management Committee may, from time to time, alter,
amend, suspend, discontinue or terminate this Replacement Plan. At any time and
from time to time, the Management Committee may execute an instrument providing
for modification, extension or renewal of any outstanding Replacement Option,
provided that no such modification, extension or renewal shall impair the
Replacement Option without the consent of the holder of the Replacement Option.
(c) Subject to any applicable requirements of Rule 16b-3 or of
any national exchange or trading system on which the Units are then listed or
traded, the Management Committee may amend any provision of this Replacement
Plan in any respect in its discretion.
19. CONTINUED EMPLOYMENT NOT PRESUMED. Nothing in this Replacement Plan
or any document describing it nor the grant of any Replacement Option shall give
any Participant the right to continue in the employment of the Company or affect
the right of the Company to terminate the employment of any such person with or
without cause.
<PAGE>
8
20. GOVERNING LAW. THE REPLACEMENT PLAN SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF DELAWARE AND THE UNITED
STATES, AS APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
21. SEVERABILITY OF PROVISIONS. If any provision of this Replacement
Plan is determined to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect the remaining provisions of the
Replacement Plan, but such invalid, illegal or unenforceable provision shall be
fully severable, and the Replacement Plan shall be construed and enforced as if
such provision had never been inserted herein.
<PAGE>
EXHIBIT 10.10(b)
CONSOLIDATED CONTAINER HOLDINGS LLC
REPLACEMENT UNITS OPTION AGREEMENT
FOR OPTION ISSUED PURSUANT TO THE
FRANKLIN PLASTICS, INC.
1998 STOCK OPTION PLAN
THIS AGREEMENT (this "Agreement"), is made and entered into by and between
Consolidated Container Holdings LLC, a Delaware limited liability company (the
"Company"), and __________________ (the "Participant").
RECITALS
WHEREAS, the Company will acquire the assets and operations of Franklin
Plastics, Inc., a Delaware corporation ("Franklin") and its subsidiaries
pursuant to that certain Contribution and Merger Agreement dated as of April 29,
1999, by and among Suiza Foods Corporation, Franklin, the Suiza companies
identified therein, Vestar Packaging LLC, Reid Plastics Holdings, Inc., the Reid
companies identified therein, the Company and its subsidiaries identified
therein (the "Merger Agreement");
WHEREAS, pursuant to the Merger Agreement and the transactions contemplated
thereby, the plastics packaging operations of Franklin will be contributed or
merged with and into the Company, and the Company (or its subsidiaries) shall,
after the consummation of such transactions, succeed to the business of
Franklin, and be the new employer of certain former employees of Franklin;
WHEREAS, the Franklin 1998 Stock Option Plan (the "Franklin Plan") was
previously adopted by Franklin's Board of Directors, providing for the grant of
stock options to certain selected officers and key employees of Franklin or its
subsidiaries with respect to shares of common stock, $.01 par value, of Franklin
(the "Franklin Common Stock"), and options to purchase Franklin Common Stock
were previously issued to the Participant pursuant to that certain Stock Option
Agreement by and between Franklin and the Participant dated as of
___________________ (the "Prior Option Agreement") and pursuant to the Franklin
Plan;
WHEREAS, the Board of Franklin and the Management Committee of the Company
wish for the Participant to continue to enjoy the benefits provided by the Prior
Option Agreement, and therefore to replace the non-qualified stock option to
purchase Franklin Common Stock described in the Prior Option Agreement with a
replacement non-qualified option to purchase Units of the Company on the terms
described herein (the "Replacement Option"), such replacement to be effective as
of the date of closing of the transactions contemplated by the Merger Agreement
(the "Closing") and the Prior Option Agreement to terminate as of the Closing
Date;
WHEREAS, the Management Committee has deemed it in the best interests
of the Company to adopt, and has adopted, the Replacement Units Option Plan (the
"Replacement
<PAGE>
2
Plan") of the Company to attract and retain the executive officers and key
employees to whom stock options were previously issued pursuant to the Franklin
Plan, and to provide for the replacement of the option pursuant to the Prior
Option Agreement with the Replacement Option pursuant to this Agreement;
WHEREAS, the Participant wishes to terminate the Prior Option Agreement and
to accept in its place the Replacement Option described herein, such termination
and the Replacement Option to be effective as of the date of the Closing,
pursuant to the terms and conditions of the Replacement Plan;
WHEREAS, capitalized terms used in this Agreement and not otherwise defined
have the meanings ascribed to such terms in the Replacement Plan;
WHEREAS, the parties hereto desire to evidence in writing the terms and
conditions of the Replacement Option.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, and as an inducement to the
Participant to continue as an employee of the Company or its subsidiaries after
the Closing, and to promote the success of the business of the Company and its
subsidiaries, the parties hereby agree as follows:
1. DEFINITIONS. As used herein, the following definitions shall apply:
-----------
(a) "Appraised Value" of a Unit means the fair market value of all of the
outstanding Units divided by the number of outstanding Units, as determined by
agreement between the Company and the Participant; provided that if the Company
and the Participant cannot agree on such fair market value after 15 days, then
such fair market value will be determined by an independent appraiser,
accountant or investment bank knowledgeable in the Company's field of business
(the "Appraiser") acceptable to the Company and the Participant. If the parties
cannot agree on an Appraiser within seven days, then the Company will select one
independent appraiser, accountant or investment bank and the Participant will
select one independent appraiser, accountant or investment bank, and the two
appraisers, accountants or investment banks will select the Appraiser. The
Appraiser's appraisal of the fair market value shall be delivered within 30 days
of the selection of such Appraiser and shall be conclusive and binding on the
Company and the Participant.
(b) "Cause" means the Participant's (i) material breach of SECTION 12 of
this Agreement, (ii) willful and intentional misconduct or gross negligence in
the performance of, or willful neglect of, the Participant's duties, which has
caused demonstrable and serious injury (monetary or otherwise) to the Company,
or (iii) conviction of, or plea of nolo contendere to, a felony; provided,
however, that no act or omission shall constitute "Cause" for purposes of this
Agreement unless the Chief Executive Officer or Management Committee of the
Company provides to the Participant (a) written notice clearly and fully
describing the particular acts or omissions which the Chief Executive Officer or
Management Committee reasonably believes in good faith constitutes "Cause" and
(b) an opportunity, within thirty (30) days following his receipt of such
notice, to meet in person with the Chief Executive Officer or Management
<PAGE>
3
Committee to explain or defend the alleged acts or omissions relied upon by the
Chief Executive Officer or the Board and, to the extent practicable, to cure
such acts or omissions. Further, no act or omission shall be considered as
"willful" or "intentional" if the Participant reasonably believed such acts or
omissions were in the best interests of the Company.
(c) "Change of Control" means (1) any "person" (as such term is used in
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) other than affiliates (as that term is defined in the Exchange Act) of
any of Reid Plastics Holdings, Inc., a Delaware corporation and unitholder of
the Company, Vestar Packaging LLC, a Delaware limited liability company and
unitholder of the Company, Suiza Foods Corporation, a Delaware corporation or
Franklin Plastics, Inc., a Delaware corporation and unitholder of the Company
(collectively, the "Company Parents"), becomes the "beneficial owner" (as
determined pursuant to Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then outstanding securities;
or (2) the Company or any subsidiary of the Company shall merge with or
consolidate into any other entity other than an affiliate of the Company or one
of the Company Parents, other than a merger or consolidation which would result
in the holders of the voting securities of the Company outstanding immediately
prior thereto holding immediately thereafter securities representing more than
fifty percent (50%) of the combined voting power of the voting securities of the
Company or such surviving entity (or its ultimate parent, if applicable)
outstanding immediately after such merger or consolidation; or (3) the
unitholders of the Company approve a plan of complete liquidation of the Company
or such a plan is commenced; or (4) any merger, consolidation, sale of units or
other transaction or series of related transactions, that results in the Company
Parents, together, owning an aggregate of less than 50% of the combined voting
power of the outstanding securities of the Company, other than an underwritten
public offering for cash of the Company's securities or a distribution of the
Company's securities held by any Company Parent; or (5) any sale of all or
substantially all of the assets of the Company other than to an affiliate of the
Company or a Company Parent, unless the Company Parents, collectively, own at
least 50% of the combined voting power of the purchaser.
(d) "Confidential Information" means all information, whether oral or
written, previously or hereafter developed, acquired or used by the Company, its
subsidiaries, the Company Parents or any Subsidiary of a Company Parent, and
relating to the business of the Company, a Company Parent or any of their
subsidiaries that is not generally known to others in the Company's area of
business, including without limitation trade secrets, methods or practices
developed by the Company, the Company Parents or any of their subsidiaries,
financial results or plans, customer or client lists, personnel information,
information relating to negotiations with clients or prospective clients,
proprietary software, databases, programming or data transmission methods, or
copyrighted materials (including, without limitation, brochures, layouts,
letters, art work, copy, photographs or illustrations). It is expressly
understood that the foregoing list shall be illustrative only and is not
intended to be an exclusive or exhaustive list of "Confidential Information."
(e) "Disability" means any mental or physical impairment that prevents the
Participant from performing the essential functions of his position with or
without reasonable
<PAGE>
4
accommodation as determined by a physician mutually agreeable to the Participant
and the Company.
(f) "Fair Market Value" has the meaning assigned to such phrase in the
Replacement Plan; provided that, if (i) there is no reported price information
for the Units on a national stock exchange or automated trading system, and (ii)
within 15 days after receipt of the Management Committee's determination of Fair
Market Value in accordance with the Replacement Plan, the Participant notifies
the Company in writing that he or she believes such determination is not
consistent with the actual fair market value of the Units, then the Fair Market
Value of the Units will instead equal the Appraised Value.
(g) "Good Reason" means any of the following events occurring, without the
Participant's prior written consent specifically referring to this Agreement,
within three (3) years following a Change of Control: (A) any reduction in the
amount of the Participant's annual salary or aggregate incentive compensation
opportunities, (B) any significant reduction in the aggregate value of the
Participant's benefits as in effect from time to time (unless such reduction is
pursuant to a general change in benefits applicable to all similarly situated
employees of the Company and its affiliates), (C) the demotion of Participant
from his position as of the date of this Agreement or any significant reduction
in the nature or status of Participant's duties or responsibilities, or (D) any
material and willful breach by the Company of any provision of this Agreement or
any written employment agreement with the Participant; provided, however, that
the occurrence of any of the events described in (A), (B), (C) and (D) above
will not constitute "Good Reason" unless the Participant gives the Company
written notice, within ninety (90) calendar days after the Participant knew or
should have known of the occurrence of any of such events, that such event
constitutes Good Reason, and the Company fails to cure the event within thirty
(30) days after receipt of such notice.
2. GRANT OF REPLACEMENT OPTION. The Company hereby grants to the
Participant, upon the terms and subject to the conditions, limitations and
restrictions set forth in the Replacement Plan and in this Agreement, the
Replacement Option to acquire ________ Units, at an exercise price per Unit of
$_____________, effective as of the Closing. The Participant hereby accepts the
Replacement Option from the Company. Upon the Closing, the Prior Option
Agreement shall terminate. If the Closing does not occur, however, this
Agreement shall have no force or effect and the Prior Option Agreement shall
remain in full force and effect.
3. VESTING. The Units subject to the Replacement Option shall vest ratably
in three equal annual increments commencing on the first anniversary of the
award date of the Prior Option Agreement, which was _____________ (the "Original
Award Date"). Notwithstanding the preceding sentence, the Replacement Option
shall immediately vest in full as to all Units subject hereto upon termination
of Participant's employment by the Company at any time (other than for Cause),
upon termination of Participant's employment by Participant for Good Reason or
on account of Participant's death or Disability.
4. EXERCISE. In order to exercise the Replacement Option with respect to
any vested portion, the Participant shall provide written notice to the Company
at its principal executive office. At the time of exercise, the Participant
shall pay to the Company the exercise price per
<PAGE>
5
share set forth in SECTION 2 times the number of vested Units as to which the
Replacement Option is being exercised. The Participant shall make such payment
in cash, check or at the Company's option, by the delivery of Units having a
Fair Market Value on the date immediately preceding the exercise date equal to
the aggregate exercise price. If the Replacement Option is exercised in full,
the Participant shall surrender this Agreement to the Company for cancellation.
If the Replacement Option is exercised in part, the Participant shall surrender
this Agreement to the Company so that the Company may make appropriate notation
hereon or cancel this Agreement and issue a new agreement representing the
unexercised portion of the Replacement Option. Upon exercise of any Replacement
Option, the number of Units held by Franklin shall be reduced on the books and
records of the Company, so that the Percentage Interests of the Other Members is
the same as it was prior to such exercise and the initial Capital Account of the
Participant shall be equal to the exercise price paid upon any such exercise.
If the Units to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), the
Replacement Option may be exercised by a broker-dealer acting on behalf of the
Participant if (a) the broker-dealer has received from the Participant or the
Company a fully- and duly-endorsed agreement evidencing such option, together
with instructions signed by the Participant requesting the Company to deliver
the Units subject to such option to the broker-dealer on behalf of the
Participant and specifying the account into which such Units should be
deposited, (b) adequate provision has been made with respect to the payment of
any withholding taxes due upon such exercise, and (c) the broker-dealer and the
Participant have otherwise complied with Section 220.3(e)(4) of Regulation T, 12
CFR Part 220, or any successor provision.
5. WHO MAY EXERCISE. The Replacement Option shall be exercisable during the
lifetime of the Participant only by the Participant or any duly appointed legal
representative of the Participant (or, after his death, by the Participant's
designated beneficiaries or estate).
6. EXPIRATION OF REPLACEMENT OPTION. The Replacement Option shall expire,
and shall not be exercisable with respect to any vested portion as to which the
Replacement Option has not been exercised, on the first to occur of: (a) the
tenth anniversary of the Original Award Date; or (b) sixty (60) days after the
termination of the Participant's employment with the Company for any reason.
Subject to the terms of Section 3, the Replacement Option shall expire, with
respect to any unvested portion, immediately upon the earlier of the tenth
anniversary of the Original Award Date or termination of the Participant's
employment with the Company for any reason.
7. CALL AND PUT RIGHTS.
--------------------
(a) Immediately upon the termination of the Participant's employment with
the Company for any reason and for a period of ninety (90) days following the
date of such termination (the "Call Period"), the Company shall have the right
(the "Call Right") to purchase from the Participant, and to require the
Participant to sell all Units purchased by the Participant upon the exercise of
Replacement Options granted under the Replacement Plan (the "Purchased Units").
The Company may exercise its Call Right by providing written notice to the
Participant of such exercise (the "Call Exercise Notice") at any time during the
Call Period. The purchase
<PAGE>
6
price for the unexercised vested portion of the Participant's Replacement Option
shall be determined by multiplying the number of Units subject to the vested
portion of the Replacement Option by the difference between the Fair Market
Value of the Units on the date of the Call Exercise Notice and the Exercise
Price. The purchase price for the Purchased Units shall be determined by
multiplying the number of Purchased Units by the Fair Market Value of the Units
on the date of the Call Exercise Notice.
(b) At any time before the sale of Units to the Participant upon exercise
of the Replacement Option is registered on an effective registration statement
on Form S-8 or any successor form (the "Put Period"), the Participant shall have
the right (the "Put Right") to sell to the Company, and to require the Company
to purchase (i) any Purchased Units that have been held by the Participant for
at least six months at the time of exercise of such Put Right, and (ii) with
respect to any exercise of the Put Right that occurs during the period of sixty
(60) days following termination of Participant's employment with the Company for
any reason (other than Cause), all of the Purchased Units and all of the
unexercised vested portion of the Participant's Replacement Option. The
Participant may exercise his Put Right by providing written notice to the
Company of such exercise (the "Put Exercise Notice") at any time during the Put
Period. The purchase price for the unexercised vested portion of the
Participant's Replacement Option shall be determined by multiplying the number
of Units subject to the vested portion of the Replacement Option by the
difference between the Fair Market Value of the Units on the date of the Put
Exercise Notice and the Exercise Price. The purchase price for the Purchased
Units shall be determined by multiplying the number of Purchased Units by the
Fair Market Value of the Units on the date of the Put Exercise Notice.
If either the Call Right or the Put Right is exercised, the closing of the
purchase and sale required thereby will occur on the tenth business day
following delivery of the applicable exercise notice or, if later, on the fifth
business day following determination of the Fair Market Value. At such closing,
the Participant will deliver the original of this Replacement Option and
certificates evidencing any Purchased Units, duly endorsed for transfer, in each
case free and clear of any liens and encumbrances, and the Company will deliver
the applicable purchase price in immediately available funds. The Call Right and
the Put Right set forth in this SECTION 7 shall terminate on the date that the
Units commence trading on a national securities exchange or the NASDAQ Stock
Market.
8. TAX WITHHOLDING. Any provision of this Agreement to the contrary
notwithstanding, the Company may take such steps as it deems necessary or
desirable for the withholding of any taxes that it is required by law or
regulation of any governmental authority, federal, state or local, domestic or
foreign, to withhold in connection with any of the Units subject hereto.
9. DILUTION. In the event that each of the outstanding Units (other than
Units held by dissenting unitholders) shall be changed into or exchanged for a
different number or kind of equity interests of the Company or of another
company (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares, Units or other equity
interests, as the case may be, or otherwise), or in the event that a unit split,
unit dividend, dividend (other than a dividend paid in respect of federal, state
or other taxes) payment or "spin-
<PAGE>
7
off" of units, stock or other equity interest in a subsidiary of the Company
shall have occurred (other than any adjustment in any Capital Account that is
required to reflect either the exercise of any right to repurchase Units or any
indemnification obligation), then there shall be substituted for each Unit then
subject to Replacement Options or available for Replacement Options the number
and kind of units, shares of stock or other equity interests, as the case may
be, into which each outstanding Unit (other than units, shares or other equity
interests held by dissenting stockholders) shall be so changed or exchanged, or
the number of Units or other securities as is equitably required in the event of
a Unit split, Unit dividend or "spin-off," together with an appropriate
adjustment of the Exercise Price.
10. TRANSFER OF REPLACEMENT OPTION. Without the prior written consent of
the Company, the Participant shall not, directly or indirectly, sell, transfer,
pledge, encumber or hypothecate ("Transfer") any portion of the Replacement
Option or the rights and privileges pertaining thereto; provided, however, that
the Participant may transfer any vested portion of the Replacement Option,
without consideration, to (a) the spouse, children or grandchildren of the
Participant ("Immediate Family Members"), (b) a trust or trusts, or to a
guardian under the Uniform Gift to Minors Act, for the exclusive benefit of such
Immediate Family Members, or (c) a partnership or other entity in which such
Immediate Family Members are the only partners, provided that subsequent
transfers of transferred Replacement Options shall be prohibited except by will,
the laws of descent and distribution or pursuant to a domestic relations order
issued by a court of competent jurisdiction. In addition, the Participant shall
not, directly or indirectly, Transfer any Units acquired upon exercise of the
Replacement Option other than (i) pursuant to an effective registration
statement filed under the Act or (ii) pursuant to an exemption from the
registration requirements of the Act. Any permitted transferee to whom the
Participant shall Transfer the Replacement Option shall agree to be bound by
this Agreement, and the term "Participant" in this Agreement shall be deemed to
refer to the transferee with respect to the transferred Replacement Options,
except that the provisions hereof related to termination of employment and the
obligation to pay withholding taxes shall continue to apply to the original
Participant. Neither the Replacement Option nor the underlying Units is liable
for or subject to, in whole or in part, the debts, contracts, liabilities or
torts of the Participant, nor shall they be subject to garnishment, attachment,
execution, levy or other legal or equitable process.
11. CERTAIN LEGAL RESTRICTIONS. The Company shall not be obligated to sell
or issue any Units upon the exercise of the Replacement Option or otherwise
unless the issuance and delivery of such Units shall comply with all relevant
provisions of law and other legal requirements including, without limitation,
any applicable federal or state securities laws and the requirements of any
stock exchange upon which Units may then be listed. As a condition to the
exercise of the Replacement Option or the sale by the Company of any additional
Units to the Participant, the Company may require the Participant to make such
representations and warranties as may be necessary to assure the availability of
an exemption from the registration requirements of applicable federal or state
securities laws. The Company shall not be liable for refusing to sell or issue
any Units if the Company cannot obtain authority from the appropriate regulatory
bodies deemed by the Company to be necessary to lawfully sell or issue such
Units. In addition, the Company shall have no obligation to the Participant,
express or implied, to list, register or otherwise qualify any of the
Participant's Units. The Units issued upon the exercise of the Replacement
Option may not be transferred except in accordance with applicable federal or
<PAGE>
8
state securities laws. At the Company's option, the certificate evidencing Units
issued to the Participant may be legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE APPLICABLE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED OR PLEDGED EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT
AND THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
12. CERTAIN COVENANTS OF PARTICIPANT.
--------------------------------
(a) COVENANT NOT TO COMPETE. In consideration of the grant of the
Replacement Option to the Participant hereunder, the Participant shall not
during the term of this Agreement and for a period of two (2) years after the
termination of the Participant's employment with the Company for any reason,
directly or indirectly, engage (whether as owner, partner, unitholder, joint
venturer, manager or investor) in any business that competes, directly or
indirectly, with the Company within any territory or jurisdiction in which the
Company, its subsidiaries or affiliates are, at the time of such termination,
then conducting business (provided that the foregoing restrictions shall not
restrict the Participant from owning or acquiring one percent (1%) or less of
the outstanding voting securities of a public company), provided that the
foregoing restriction will terminate immediately if the Participant's employment
with the Company is terminated by the Company without Cause or by the
Participant for Good Reason.
(b) PROTECTION OF CONFIDENTIAL INFORMATION. The Participant agrees that he
will not at any time during or following his employment with the Company,
without the Company's prior written consent, divulge any Confidential
Information to any other person or entity or use any Confidential Information
for his own benefit. Upon termination of employment, for any reason whatsoever,
regardless of whether either party may be at fault, the Participant will return
to the Company all physical Confidential Information in the Participant's
possession.
(c) NON-SOLICITATION OF EMPLOYEES. The Participant agrees, for so long as
he remains employed by the Company and for a period of two (2) years after the
termination of the Participant's employment with the Company for any reason,
that the Participant will not, either for his own account or on behalf of any
other person or entity, solicit, suggest or request that any other person
employed by the Company or one of its affiliates leave such employment for the
purpose of becoming employed by the Participant or any other person or entity.
13. REPLACEMENT PLAN INCORPORATED. The Participant accepts the Replacement
Option subject to all the provisions of the Replacement Plan, which are
incorporated into this Agreement, including the provisions that authorize the
Management Committee to administer and interpret the Replacement Plan and which
provide that the Management Committee's decisions, determinations and
interpretations with respect to the Replacement Plan are final and conclusive on
all persons affected thereby. Except as otherwise set forth in this Agreement,
terms defined in the Replacement Plan have the same meanings herein.
<PAGE>
9
14. MISCELLANEOUS.
--------------
(a) The Replacement Option is intended to be a non-qualified option under
applicable tax laws, and it is not to be characterized or treated as an
incentive option under such laws.
(b) The granting of the Replacement Option shall impose no obligation upon
the Participant to exercise the Replacement Option or any part thereof. Nothing
contained in this Agreement shall affect the right of the Company to terminate
the Participant at any time, with or without cause, or shall be deemed to create
any rights to employment on the part of the Participant.
(c) The rights and obligations arising under this Agreement are not
intended to and do not affect the employment relationship that otherwise exists
between the Company and the Participant, whether such employment relationship is
at will or defined by an employment contract. Moreover, this Agreement is not
intended to and does not amend any existing employment contract between the
Company and the Participant; to the extent there is a conflict between this
Agreement and such an employment contract, the employment contract shall govern
and take priority.
(d) Neither the Participant nor any person claiming under or through the
Participant shall be or shall have any of the rights or privileges of a
unitholder of the Company in respect of any of the Units issuable upon the
exercise of the Replacement Option herein unless and until certificates
representing such Units shall have been issued and delivered to the Participant
or such Participant's agent.
(e) Any notice to be given to the Company under the terms of this
Agreement or any delivery of the Replacement Option to the Company shall be
addressed to the Company at its principal executive offices, and any notice to
be given to the Participant shall be addressed to the Participant at the address
set forth beneath his or her signature hereto, or at such other address for a
party as such party may hereafter designate in writing to the other. Any such
notice shall be deemed to have been duly given if mailed, postage prepaid,
addressed as aforesaid.
(f) Subject to the limitations in this Agreement on the transferability by
the Participant of the Replacement Option and any Units, this Agreement shall be
binding upon and inure to the benefit of the representatives, executors,
successors or beneficiaries of the parties hereto.
(g) THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE AND THE UNITED STATES, AS
APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
(h) If any provision of this Agreement is declared or found to be illegal,
unenforceable or void, in whole or in part, then the parties shall be relieved
of all obligations arising under such provision, but only to the extent that it
is illegal, unenforceable or void, it being the intent and agreement of the
parties that this Agreement shall be deemed amended by
<PAGE>
10
modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
(i) All section titles and captions in this Agreement are for convenience
only, shall not be deemed part of this Agreement, and in no way shall define,
limit, extend or describe the scope or intent of any provisions of this
Agreement.
(j) The parties shall execute all documents, provide all information, and
take or refrain from taking all actions as may be necessary or appropriate to
achieve the purposes of this Agreement.
(k) This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
(l) No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
(m) This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
(n) At any time and from time to time the Management Committee may execute
an instrument providing for modification, extension, or renewal of any
outstanding option, provided that no such modification, extension or renewal
shall (i) impair the Replacement Option in any respect without the consent of
the holder of the Replacement Option or (ii) conflict with the provisions of
Rule 16b-3 (if such rule is applicable). Except as provided in the preceding
sentence, no supplement, modification or amendment of this Agreement or waiver
of any provision of this Agreement shall be binding unless executed in writing
by all parties to this Agreement. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision of
this Agreement (regardless of whether similar), nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided.
(o) In addition to all other rights or remedies available at law or in
equity, the Company shall be entitled to injunctive and other equitable relief
to prevent or enjoin any violation of the provisions of this Agreement.
(p) Where applicable, any reference to the "Company" shall be deemed to
include the Company's subsidiaries or other affiliates.
<PAGE>
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CONSOLIDATED CONTAINER HOLDINGS LLC
-----------------------------
By:
Name:
Title:
PARTICIPANT:
------------------------------
Address:
Fax:
<PAGE>
EXHIBIT 10.10(C)
CONSOLIDATED CONTAINER HOLDINGS LLC
REPLACEMENT UNITS OPTION AGREEMENT
FOR OPTION ISSUED PURSUANT TO THE
FRANKLIN PLASTICS, INC.
1998 STOCK OPTION PLAN
THIS AGREEMENT (this "Agreement"), is made and entered into by and
between Consolidated Container Holdings LLC, a Delaware limited liability
company (the "Company"), and __________________ (the "Participant").
RECITALS
WHEREAS, the Company will acquire the assets and operations of Franklin
Plastics, Inc., a Delaware corporation ("Franklin") and its subsidiaries
pursuant to that certain Contribution and Merger Agreement dated as of April 29,
1999, by and among Suiza Foods Corporation, Franklin, the Suiza companies
identified therein, Vestar Packaging LLC, Reid Plastics Holdings, Inc., the Reid
companies identified therein, the Company and its subsidiaries identified
therein (the "Merger Agreement");
WHEREAS, pursuant to the Merger Agreement and the transactions
contemplated thereby, the plastics packaging operations of Franklin will be
contributed or merged with and into the Company, and the Company (or its
subsidiaries) shall, after the consummation of such transactions, succeed to the
business of Franklin, and be the new employer of certain former employees of
Franklin;
WHEREAS, the Franklin 1998 Stock Option Plan (the "Franklin Plan") was
previously adopted by Franklin's Board of Directors, providing for the grant of
stock options to certain selected officers and key employees of Franklin or its
subsidiaries with respect to shares of common stock, $.01 par value, of Franklin
(the "Franklin Common Stock"), and options to purchase Franklin Common Stock
were previously issued to the Participant pursuant to that certain Stock Option
Agreement by and between Franklin and the Participant dated as of
___________________ (the "Prior Option Agreement") and pursuant to the Franklin
Plan;
WHEREAS, the Board of Franklin and the Management Committee of the
Company wish for the Participant to continue to enjoy the benefits provided by
the Prior Option Agreement, and therefore to replace the non-qualified stock
option to purchase Franklin Common Stock described in the Prior Option Agreement
with a replacement non-qualified option to purchase Units of the Company on the
terms described herein (the "Replacement Option"), such replacement to be
effective as of the date of closing of the transactions contemplated by the
Merger Agreement (the "Closing") and the Prior Option Agreement to terminate as
of the Closing Date;
WHEREAS, the Management Committee has deemed it in the best interests
of the Company to adopt, and has adopted, the Replacement Units Option Plan (the
"Replacement
<PAGE>
2
Plan") of the Company to attract and retain the executive officers and key
employees to whom stock options were previously issued pursuant to the Franklin
Plan, and to provide for the replacement of the option pursuant to the Prior
Option Agreement with the Replacement Option pursuant to this Agreement;
WHEREAS, the Participant wishes to terminate the Prior Option Agreement
and to accept in its place the Replacement Option described herein, such
termination and the Replacement Option to be effective as of the date of the
Closing, pursuant to the terms and conditions of the Replacement Plan;
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined have the meanings ascribed to such terms in the Replacement Plan;
WHEREAS, the parties hereto desire to evidence in writing the terms and
conditions of the Replacement Option.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, and as an inducement to the
Participant to continue as an employee of the Company or its subsidiaries after
the Closing, and to promote the success of the business of the Company and its
subsidiaries, the parties hereby agree as follows:
1. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Appraised Value" of a Unit means the fair market value of
all of the outstanding Units divided by the number of outstanding Units, as
determined by agreement between the Company and the Participant; provided that
if the Company and the Participant cannot agree on such fair market value after
15 days, then such fair market value will be determined by an independent
appraiser, accountant or investment bank knowledgeable in the Company's field of
business (the "Appraiser") acceptable to the Company and the Participant. If the
parties cannot agree on an Appraiser within seven days, then the Company will
select one independent appraiser, accountant or investment bank and the
Participant will select one independent appraiser, accountant or investment
bank, and the two appraisers, accountants or investment banks will select the
Appraiser. The Appraiser's appraisal of the fair market value shall be delivered
within 30 days of the selection of such Appraiser and shall be conclusive and
binding on the Company and the Participant.
(b) "Cause" means the Participant's (i) material breach of
SECTION 12 of this Agreement, (ii) willful and intentional misconduct or gross
negligence in the performance of, or willful neglect of, the Participant's
duties, which has caused demonstrable and serious injury (monetary or otherwise)
to the Company, or (iii) conviction of, or plea of nolo contendere to, a felony;
provided, however, that no act or omission shall constitute "Cause" for purposes
of this Agreement unless the Chief Executive Officer or Management Committee of
the Company provides to the Participant (a) written notice clearly and fully
describing the particular acts or omissions which the Chief Executive Officer or
Management Committee reasonably believes in good faith constitutes "Cause" and
(b) an opportunity, within thirty (30) days following his receipt of such
notice, to meet in person with the Chief Executive Officer or Management
<PAGE>
3
Committee to explain or defend the alleged acts or omissions relied upon by the
Chief Executive Officer or the Board and, to the extent practicable, to cure
such acts or omissions. Further, no act or omission shall be considered as
"willful" or "intentional" if the Participant reasonably believed such acts or
omissions were in the best interests of the Company.
(c) "Change of Control" means (1) any "person" (as such term
is used in Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) other than affiliates (as that term is defined in the Exchange
Act) of any of Reid Plastics Holdings, Inc., a Delaware corporation and
unitholder of the Company, Vestar Packaging LLC, a Delaware limited liability
company and unitholder of the Company, Suiza Foods Corporation, a Delaware
corporation or Franklin Plastics, Inc., a Delaware corporation and unitholder of
the Company (collectively, the "Company Parents"), becomes the "beneficial
owner" (as determined pursuant to Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then outstanding securities;
or (2) the Company or any subsidiary of the Company shall merge with or
consolidate into any other entity other than an affiliate of the Company or one
of the Company Parents, other than a merger or consolidation which would result
in the holders of the voting securities of the Company outstanding immediately
prior thereto holding immediately thereafter securities representing more than
fifty percent (50%) of the combined voting power of the voting securities of the
Company or such surviving entity (or its ultimate parent, if applicable)
outstanding immediately after such merger or consolidation; or (3) the
unitholders of the Company approve a plan of complete liquidation of the Company
or such a plan is commenced; or (4) any merger, consolidation, sale of units or
other transaction or series of related transactions, that results in the Company
Parents, together, owning an aggregate of less than 50% of the combined voting
power of the outstanding securities of the Company, other than an underwritten
public offering for cash of the Company's securities or a distribution of the
Company's securities held by any Company Parent; or (5) any sale of all or
substantially all of the assets of the Company other than to an affiliate of the
Company or a Company Parent, unless the Company Parents, collectively, own at
least 50% of the combined voting power of the purchaser.
(d) "Confidential Information" means all information, whether
oral or written, previously or hereafter developed, acquired or used by the
Company, its subsidiaries, the Company Parents or any Subsidiary of a Company
Parent, and relating to the business of the Company, a Company Parent or any of
their subsidiaries that is not generally known to others in the Company's area
of business, including without limitation trade secrets, methods or practices
developed by the Company, the Company Parents or any of their subsidiaries,
financial results or plans, customer or client lists, personnel information,
information relating to negotiations with clients or prospective clients,
proprietary software, databases, programming or data transmission methods, or
copyrighted materials (including, without limitation, brochures, layouts,
letters, art work, copy, photographs or illustrations). It is expressly
understood that the foregoing list shall be illustrative only and is not
intended to be an exclusive or exhaustive list of "Confidential Information."
(e) "Disability" means any mental or physical impairment that
prevents the Participant from performing the essential functions of his position
with or without reasonable
<PAGE>
4
accommodation as determined by a physician mutually agreeable to the Participant
and the Company.
(f) "Fair Market Value" has the meaning assigned to such
phrase in the Replacement Plan; provided that, if (i) there is no reported price
information for the Units on a national stock exchange or automated trading
system, and (ii) within 15 days after receipt of the Management Committee's
determination of Fair Market Value in accordance with the Replacement Plan, the
Participant notifies the Company in writing that he or she believes such
determination is not consistent with the actual fair market value of the Units,
then the Fair Market Value of the Units will instead equal the Appraised Value.
(g) "Good Reason" means any of the following events occurring,
without the Participant's prior written consent specifically referring to this
Agreement, within three (3) years following a Change of Control: (A) any
reduction in the amount of the Participant's annual salary or aggregate
incentive compensation opportunities, (B) any significant reduction in the
aggregate value of the Participant's benefits as in effect from time to time
(unless such reduction is pursuant to a general change in benefits applicable to
all similarly situated employees of the Company and its affiliates), (C) the
demotion of Participant from his position as of the date of this Agreement or
any significant reduction in the nature or status of Participant's duties or
responsibilities, or (D) any material and willful breach by the Company of any
provision of this Agreement or any written employment agreement with the
Participant; provided, however, that the occurrence of any of the events
described in (A), (B), (C) and (D) above will not constitute "Good Reason"
unless the Participant gives the Company written notice, within ninety (90)
calendar days after the Participant knew or should have known of the occurrence
of any of such events, that such event constitutes Good Reason, and the Company
fails to cure the event within thirty (30) days after receipt of such notice.
2. GRANT OF REPLACEMENT OPTION. The Company hereby grants to the
Participant, upon the terms and subject to the conditions, limitations and
restrictions set forth in the Replacement Plan and in this Agreement, the
Replacement Option to acquire ________ Units, at an exercise price per Unit of
$_____________, effective as of the Closing. The Participant hereby accepts the
Replacement Option from the Company. Upon the Closing, the Prior Option
Agreement shall terminate. If the Closing does not occur, however, this
Agreement shall have no force or effect and the Prior Option Agreement shall
remain in full force and effect.
3. VESTING. The Units subject to the Replacement Option shall vest
ratably in three equal annual increments commencing on the first anniversary of
the award date of the Prior Option Agreement, which was _____________ (the
"Original Award Date"). Notwithstanding the preceding sentence, the Replacement
Option shall immediately vest in full as to all Units subject hereto upon the
earliest to occur of any of the following:
(i) termination of Participant's employment by the Company at any
time (other than for Cause);
(ii) termination of Participant's employment by Participant for
Good Reason or on account of Participant's death or
Disability; or
<PAGE>
5
(ii) a Change in Control.
4. EXERCISE. In order to exercise the Replacement Option with respect
to any vested portion, the Participant shall provide written notice to the
Company at its principal executive office. At the time of exercise, the
Participant shall pay to the Company the exercise price per share set forth in
SECTION 2 times the number of vested Units as to which the Replacement Option is
being exercised. The Participant shall make such payment in cash, check or at
the Company's option, by the delivery of Units having a Fair Market Value on the
date immediately preceding the exercise date equal to the aggregate exercise
price. If the Replacement Option is exercised in full, the Participant shall
surrender this Agreement to the Company for cancellation. If the Replacement
Option is exercised in part, the Participant shall surrender this Agreement to
the Company so that the Company may make appropriate notation hereon or cancel
this Agreement and issue a new agreement representing the unexercised portion of
the Replacement Option. Upon exercise of any Replacement Option, the number of
Units held by Franklin shall be reduced on the books and records of the Company,
so that the Percentage Interests of the Other Members is the same as it was
prior to such exercise and the initial Capital Account of the Participant shall
be equal to the exercise price paid upon any such exercise.
If the Units to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), the
Replacement Option may be exercised by a broker-dealer acting on behalf of the
Participant if (a) the broker-dealer has received from the Participant or the
Company a fully- and duly-endorsed agreement evidencing such option, together
with instructions signed by the Participant requesting the Company to deliver
the Units subject to such option to the broker-dealer on behalf of the
Participant and specifying the account into which such Units should be
deposited, (b) adequate provision has been made with respect to the payment of
any withholding taxes due upon such exercise, and (c) the broker-dealer and the
Participant have otherwise complied with Section 220.3(e)(4) of Regulation T, 12
CFR Part 220, or any successor provision.
5. WHO MAY EXERCISE. The Replacement Option shall be exercisable during
the lifetime of the Participant only by the Participant or any duly appointed
legal representative of the Participant (or, after his death, by the
Participant's designated beneficiaries or estate).
6. EXPIRATION OF REPLACEMENT OPTION. The Replacement Option shall
expire, and shall not be exercisable with respect to any vested portion as to
which the Replacement Option has not been exercised, on the first to occur of:
(a) the tenth anniversary of the Original Award Date; or (b) sixty (60) days
after the termination of the Participant's employment with the Company for any
reason. Except as expressly provided in Section 3(b), the Replacement Option
shall expire, with respect to any unvested portion, immediately upon the earlier
of the tenth anniversary of the Original Award Date or termination of the
Participant's employment with the Company for any reason.
7. CALL AND PUT RIGHTS.
(a) Immediately upon the termination of the Participant's
employment with the Company for any reason and for a period of ninety (90) days
following the date of such
<PAGE>
6
termination (the "Call Period"), the Company shall have the right (the "Call
Right") to purchase from the Participant, and to require the Participant to sell
all Units purchased by the Participant upon the exercise of Replacement Options
granted under the Replacement Plan (the "Purchased Units"). The Company may
exercise its Call Right by providing written notice to the Participant of such
exercise (the "Call Exercise Notice") at any time during the Call Period. The
purchase price for the unexercised vested portion of the Participant's
Replacement Option shall be determined by multiplying the number of Units
subject to the vested portion of the Replacement Option by the difference
between the Fair Market Value of the Units on the date of the Call Exercise
Notice and the Exercise Price. The purchase price for the Purchased Units shall
be determined by multiplying the number of Purchased Units by the Fair Market
Value of the Units on the date of the Call Exercise Notice.
(b) At any time before the sale of Units to the Participant
upon exercise of the Replacement Option is registered on an effective
registration statement on Form S-8 or any successor form (the "Put Period"), the
Participant shall have the right (the "Put Right") to sell to the Company, and
to require the Company to purchase with respect to any exercise of the Put Right
that occurs during the period of sixty (60) days following termination of
Participant's employment with the Company for any reason (other than Cause), all
of the Purchased Units and all of the unexercised vested portion of the
Participant's Replacement Option. The Participant may exercise his Put Right by
providing written notice to the Company of such exercise (the "Put Exercise
Notice") at any time during the Put Period. The purchase price for the
unexercised vested portion of the Participant's Replacement Option shall be
determined by multiplying the number of Units subject to the vested portion of
the Replacement Option by the difference between the Fair Market Value of the
Units on the date of the Put Exercise Notice and the Exercise Price. The
purchase price for the Purchased Units shall be determined by multiplying the
number of Purchased Units by the Fair Market Value of the Units on the date of
the Put Exercise Notice. In addition, if during the Put Period the Company
achieves a ratio of its outstanding indebtedness to its trailing twelve-month
EBITDA of 3:1, based upon its quarterly financial statements, the Participant
shall have the right to exercise his Put Right by giving notice within sixty
(60) days after receiving notice from the Company of the achievement of such
ratio that, no later than 240 days after such notice from the Company, the
Participant will exercise the Put Right as to 20 percent of the aggregate number
of Units represented by the sum of the Purchased Units and the number of Units
represented by the unexercised portion (whether vested or unvested) of the
Replacement Options; PROVIDED, HOWEVER, that the Company shall calculate any
such ratio on a pro forma basis after taking into account any significant asset
sales which have occurred prior to that date. Such Put Right may only be
exercised with respect to Purchased Units which have been owned by the
Participant for at least six (6) months and the price for such Units shall be
determined as of the date of the quarterly financial statements which were used
to determine the achievement of the above ratio.
Except as otherwise provided in the preceding paragraph, if
either the Call Right or the Put Right is exercised, the closing of the purchase
and sale required thereby will occur on the tenth business day following
delivery of the applicable exercise notice or, if later, on the fifth business
day following determination of the Fair Market Value. At such closing, the
Participant will deliver the original of this Replacement Option and
certificates evidencing any Purchased Units, duly endorsed for transfer, in each
case free and clear of any liens and encumbrances, and
<PAGE>
7
the Company will deliver the applicable purchase price in immediately available
funds. The Call Right and the Put Right set forth in this SECTION 7 shall
terminate on the date that the Units commence trading on a national securities
exchange or the NASDAQ Stock Market.
8. TAX WITHHOLDING. Any provision of this Agreement to the contrary
notwithstanding, the Company may take such steps as it deems necessary or
desirable for the withholding of any taxes that it is required by law or
regulation of any governmental authority, federal, state or local, domestic or
foreign, to withhold in connection with any of the Units subject hereto.
9. DILUTION. In the event that each of the outstanding Units (other
than Units held by dissenting unitholders) shall be changed into or exchanged
for a different number or kind of equity interests of the Company or of another
company (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares, Units or other equity
interests, as the case may be, or otherwise), or in the event that a unit split,
unit dividend, dividend (other than a dividend paid in respect of federal, state
or other taxes) payment or "spin-off" of units, stock or other equity interest
in a subsidiary of the Company shall have occurred (other than any adjustment in
any Capital Account that is required to reflect either the exercise of any right
to repurchase Units or any indemnification obligation), then there shall be
substituted for each Unit then subject to Replacement Options or available for
Replacement Options the number and kind of units, shares of stock or other
equity interests, as the case may be, into which each outstanding Unit (other
than units, shares or other equity interests held by dissenting stockholders)
shall be so changed or exchanged, or the number of Units or other securities as
is equitably required in the event of a Unit split, Unit dividend or "spin-off,"
together with an appropriate adjustment of the Exercise Price.
10. TRANSFER OF REPLACEMENT OPTION. Without the prior written consent
of the Company, the Participant shall not, directly or indirectly, sell,
transfer, pledge, encumber or hypothecate ("Transfer") any portion of the
Replacement Option or the rights and privileges pertaining thereto; provided,
however, that the Participant may transfer any vested portion of the Replacement
Option, without consideration, to (a) the spouse, children or grandchildren of
the Participant ("Immediate Family Members"), (b) a trust or trusts, or to a
guardian under the Uniform Gift to Minors Act, for the exclusive benefit of such
Immediate Family Members, or (c) a partnership or other entity in which such
Immediate Family Members are the only partners, provided that subsequent
transfers of transferred Replacement Options shall be prohibited except by will,
the laws of descent and distribution or pursuant to a domestic relations order
issued by a court of competent jurisdiction. In addition, the Participant shall
not, directly or indirectly, Transfer any Units acquired upon exercise of the
Replacement Option other than (i) pursuant to an effective registration
statement filed under the Act or (ii) pursuant to an exemption from the
registration requirements of the Act. Any permitted transferee to whom the
Participant shall Transfer the Replacement Option shall agree to be bound by
this Agreement, and the term "Participant" in this Agreement shall be deemed to
refer to the transferee with respect to the transferred Replacement Options,
except that the provisions hereof related to termination of employment and the
obligation to pay withholding taxes shall continue to apply to the original
Participant. Neither the Replacement Option nor the underlying Units is liable
for or subject to,
<PAGE>
8
in whole or in part, the debts, contracts, liabilities or torts of the
Participant, nor shall they be subject to garnishment, attachment, execution,
levy or other legal or equitable process.
11. CERTAIN LEGAL RESTRICTIONS. The Company shall not be obligated to
sell or issue any Units upon the exercise of the Replacement Option or otherwise
unless the issuance and delivery of such Units shall comply with all relevant
provisions of law and other legal requirements including, without limitation,
any applicable federal or state securities laws and the requirements of any
stock exchange upon which Units may then be listed. As a condition to the
exercise of the Replacement Option or the sale by the Company of any additional
Units to the Participant, the Company may require the Participant to make such
representations and warranties as may be necessary to assure the availability of
an exemption from the registration requirements of applicable federal or state
securities laws. The Company shall not be liable for refusing to sell or issue
any Units if the Company cannot obtain authority from the appropriate regulatory
bodies deemed by the Company to be necessary to lawfully sell or issue such
Units. In addition, the Company shall have no obligation to the Participant,
express or implied, to list, register or otherwise qualify any of the
Participant's Units. The Units issued upon the exercise of the Replacement
Option may not be transferred except in accordance with applicable federal or
state securities laws. At the Company's option, the certificate evidencing Units
issued to the Participant may be legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE APPLICABLE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED OR PLEDGED EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT
AND THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
12. CERTAIN COVENANTS OF PARTICIPANT.
(a) COVENANT NOT TO COMPETE. In consideration of the grant of
the Replacement Option to the Participant hereunder, the Participant shall not
during the term of this Agreement and for a period of two (2) years after the
termination of the Participant's employment with the Company for any reason,
directly or indirectly, engage (whether as owner, partner, unitholder, joint
venturer, manager or investor) in any business that competes, directly or
indirectly, with the Company within any territory or jurisdiction in which the
Company, its subsidiaries or affiliates are, at the time of such termination,
then conducting business (provided that the foregoing restrictions shall not
restrict the Participant from owning or acquiring one percent (1%) or less of
the outstanding voting securities of a public company), provided that the
foregoing restriction will terminate immediately if the Participant's employment
with the Company is terminated by the Company without Cause or by the
Participant for Good Reason.
(b) PROTECTION OF CONFIDENTIAL INFORMATION. The Participant
agrees that he will not at any time during or following his employment with the
Company, without the Company's prior written consent, divulge any Confidential
Information to any other person or entity or use any Confidential Information
for his own benefit. Upon termination of employment, for any
<PAGE>
9
reason whatsoever, regardless of whether either party may be at fault, the
Participant will return to the Company all physical Confidential Information in
the Participant's possession.
(c) NON-SOLICITATION OF EMPLOYEES. The Participant agrees, for
so long as he remains employed by the Company and for a period of two (2) years
after the termination of the Participant's employment with the Company for any
reason, that the Participant will not, either for his own account or on behalf
of any other person or entity, solicit, suggest or request that any other person
employed by the Company or one of its affiliates leave such employment for the
purpose of becoming employed by the Participant or any other person or entity.
13. REPLACEMENT PLAN INCORPORATED. The Participant accepts the
Replacement Option subject to all the provisions of the Replacement Plan, which
are incorporated into this Agreement, including the provisions that authorize
the Management Committee to administer and interpret the Replacement Plan and
which provide that the Management Committee's decisions, determinations and
interpretations with respect to the Replacement Plan are final and conclusive on
all persons affected thereby. Except as otherwise set forth in this Agreement,
terms defined in the Replacement Plan have the same meanings herein.
14. MISCELLANEOUS.
(a) The Replacement Option is intended to be a non-qualified
option under applicable tax laws, and it is not to be characterized or treated
as an incentive option under such laws.
(b) The granting of the Replacement Option shall impose no
obligation upon the Participant to exercise the Replacement Option or any part
thereof. Nothing contained in this Agreement shall affect the right of the
Company to terminate the Participant at any time, with or without cause, or
shall be deemed to create any rights to employment on the part of the
Participant.
(c) The rights and obligations arising under this Agreement
are not intended to and do not affect the employment relationship that otherwise
exists between the Company and the Participant, whether such employment
relationship is at will or defined by an employment contract. Moreover, this
Agreement is not intended to and does not amend any existing employment contract
between the Company and the Participant; to the extent there is a conflict
between this Agreement and such an employment contract, the employment contract
shall govern and take priority.
(d) Neither the Participant nor any person claiming under or
through the Participant shall be or shall have any of the rights or privileges
of a unitholder of the Company in respect of any of the Units issuable upon the
exercise of the Replacement Option herein unless and until certificates
representing such Units shall have been issued and delivered to the Participant
or such Participant's agent.
(e) Any notice to be given to the Company under the terms of
this Agreement or any delivery of the Replacement Option to the Company shall be
addressed to the Company at
<PAGE>
10
its principal executive offices, and any notice to be given to the Participant
shall be addressed to the Participant at the address set forth beneath his or
her signature hereto, or at such other address for a party as such party may
hereafter designate in writing to the other. Any such notice shall be deemed to
have been duly given if mailed, postage prepaid, addressed as aforesaid.
(f) Subject to the limitations in this Agreement on the
transferability by the Participant of the Replacement Option and any Units, this
Agreement shall be binding upon and inure to the benefit of the representatives,
executors, successors or beneficiaries of the parties hereto.
(g) THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE AND THE UNITED
STATES, AS APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
(h) If any provision of this Agreement is declared or found to
be illegal, unenforceable or void, in whole or in part, then the parties shall
be relieved of all obligations arising under such provision, but only to the
extent that it is illegal, unenforceable or void, it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
(i) All section titles and captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement, and in no way
shall define, limit, extend or describe the scope or intent of any provisions of
this Agreement.
(j) The parties shall execute all documents, provide all
information, and take or refrain from taking all actions as may be necessary or
appropriate to achieve the purposes of this Agreement.
(k) This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
(l) No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
(m) This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
(n) At any time and from time to time the Management Committee
may execute an instrument providing for modification, extension, or renewal of
any outstanding option, provided that no such modification, extension or renewal
shall (i) impair the Replacement
<PAGE>
11
Option in any respect without the consent of the holder of the Replacement
Option or (ii) conflict with the provisions of Rule 16b-3 (if such rule is
applicable). Except as provided in the preceding sentence, no supplement,
modification or amendment of this Agreement or waiver of any provision of this
Agreement shall be binding unless executed in writing by all parties to this
Agreement. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision of this Agreement
(regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
(o) In addition to all other rights or remedies available at
law or in equity, the Company shall be entitled to injunctive and other
equitable relief to prevent or enjoin any violation of the provisions of this
Agreement.
(p) Where applicable, any reference to the "Company" shall be
deemed to include the Company's subsidiaries or other affiliates.
<PAGE>
12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CONSOLIDATED CONTAINER HOLDINGS LLC
---------------------------------
By:
Name:
Title:
PARTICIPANT:
---------------------------------
Address:
Fax:
.<PAGE>
EXHIBIT 10.11
CONSOLIDATED CONTAINER HOLDINGS LLC
LONG TERM INCENTIVE PLAN
SECTION 1. PURPOSE. The purpose of this Consolidated Container
Holdings LLC Long Term Incentive Plan is to promote the interests of the Company
and its stockholders by (i) attracting and retaining exceptional officers and
other key employees and consultants of the Company and its Affiliates; (ii)
motivating such individuals to maximize stockholder value by awarding bonus
opportunities based upon future appreciation in the value of the Company.
SECTION 2. DEFINITIONS. As used in the Plan, the following
terms shall have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or
indirectly, is controlled by, or controls or is under common control
with, a Person and (ii) any entity in which such Person has a
significant equity interest, in either case as determined by the
Committee.
"Award" shall mean any bonus award made under Section 5 of the
Plan.
"Base Amount" shall mean the value of 2.25 percent of the
fully diluted equity of the Company determined as of the date of
Vestar's investment in the Company ($29.66/Unit), increased by the
amount of any dividends which, at any time prior to the occurrence of a
Liquidity Event (as hereinafter defined), are paid on the equity of the
Company (other than any dividends paid in respect of any federal,
state, or other taxes).
"Bonus Pool" has the meaning specified in Section 4(a).
"Closing" shall mean the date of the closing of the
transactions contemplated by the Contribution and Merger Agreement
dated as of April 29, 1999, by and among Suiza Foods Corporation,
Franklin Plastics, Inc., the Suiza companies identified therein, Vestar
Packaging LLC, Reid Plastics Holdings, Inc., the Reid companies
identified therein, the Company (as hereinafter defined), and its
subsidiaries defined therein.
"Committee" shall mean the Management Committee of the
Company.
"Company" shall mean Consolidated Container Holdings LLC,
together with any successor thereto.
<PAGE>
3
"Effective Date" shall mean July 1, 1999.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Internal Rate of Return" shall mean, as of the date of any
Liquidity Event, the annualized internal rate of return realized by
Vestar on the Base Amount.
"Liquidity Event" shall mean the first to occur of any one of
the following events: (A) the sale (by means of a stock purchase,
merger, tender or exchange offer, or any other transaction (other than
a secondary offering)) of all or substantially all of the Units of the
Company held by Vestar and its affiliates to an unaffiliated third
party, (B) the sale of all or substantially all of the assets of
Consolidated Container Holdings LLC and its affiliates to an
unaffiliated third party or (C) in connection with or following the
first sale of common stock of the Company to the public pursuant to an
effective registration statement filed under the Securities Act of
1933, as amended, which results in an active trading market in such
equity (it being understood that such an active trading market shall be
deemed to exist if, among other things, the shares of common stock of
the Company are listed on a national securities exchange or on NASDAQ)
(an "Initial Public Offering"), the sale of 50% or more of the Units of
the Company held by Vestar and its affiliates to an unaffiliated third
party in a secondary offering to the public pursuant to an effective
registration statement filed under the Securities Act of 1933, as
amended.
"Participant" shall mean any individual selected by the
Committee, after consultation with the Chief Executive Officer of the
Company, to receive an Award under the Plan.
"Payment Date" shall mean the date on which a Participant is
entitled to receive a payment in respect of an Award.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.
"Plan" shall mean this Consolidated Container Holdings LLC
Long Term Incentive Plan.
<PAGE>
4
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto and shall include the Staff thereof.
"Units" means units of the Company as defined in the Company's
operating agreement dated as of ________ __, 199_ or such other
securities of the Company into which such units shall be changed by
reason of a recapitalization, merger, consolidation, split-up,
combination, exchange of shares or other similar transaction.
"Vestar" shall mean Vestar Packaging LLC and any of its Affiliates.
SECTION 3. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. Subject
to the terms of the Plan and applicable law, and in addition to other express
powers and authorizations conferred on the Committee by the Plan, the Committee
shall have full power and authority to: (i) designate Participants; (ii)
determine the terms and conditions of any Award consistent with the provisions
of the Plan, (iii) waive any terms or conditions of an Award (including, without
limitation, accelerating or waiving any vesting conditions); (iv) interpret,
administer, reconcile any inconsistency, correct any default and/or supply any
omission in the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (v) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (vi) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan.
(b) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive, and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, and any shareholder.
(c) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award
hereunder.
SECTION 4. BONUS POOL.
<PAGE>
5
(a) Upon the occurrence of a Liquidity Event, the Committee
shall establish a bonus pool (the "Bonus Pool") the aggregate amount of which
shall be equal to the positive difference, if any, between the value of 216,802
units of the equity of the Company determined as of the date of the Liquidity
Event, on a fully diluted basis and with due regard to the consideration
received by Vestar, and the Base Amount. The amount of the Bonus Pool shall be
calculated upon the occurrence of a Liquidity Event and shall be subject to
payment pursuant to Section 5.
(b) Notwithstanding any provisions of the Plan to the
contrary, in the event that the Committee determines that any extraordinary
dividend or other distribution, recapitalization, reorganization, merger,
consolidation, issuance of warrants, sale of Company securities or other similar
corporate transaction or event affects the Company and the Internal Rate of
Return such that an adjustment is determined by the Committee in good faith to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust the manner in
which the Internal Rate of Return shall be calculated for purposes of the Plan.
SECTION 5. AWARDS
(a) GRANT AND FORM OF AWARDS. From time to time, on or prior
to the occurrence of a Liquidity Event, the Committee, in consultation with the
Company's Chief Executive Officer, may make Awards to Participants under the
Plan which shall be expressed as a right, subject to satisfaction of the terms
and conditions of the Award, to receive a stipulated percentage of the Bonus
Pool (the "Bonus Opportunity"); PROVIDED that in no event may the aggregate of
all Bonus Opportunities exceed 100% of the Bonus Pool. In the event that all or
any portion of an Award is forfeited or the total of Bonus Opportunities is less
than 100 percent, the amount of such forfeited or unawarded Awards shall
increase, on a pro rata basis, the amount otherwise payable to each Participant.
(b) EFFECT OF TERMINATION OF EMPLOYMENT. Notwithstanding any
other provision of the Plan, in the event of a Participant's termination of
employment for any reason prior to the occurrence of a Liquidity Event, the
Participant's entire Award shall be forfeited.
<PAGE>
6
(c) PAYMENT OF AWARDS. Any Award not previously forfeited by a
Participant shall be valued upon the occurrence of a Liquidity Event based upon
the amount of the Bonus Pool and the Participant's Bonus Opportunity and shall
be paid to such Participant within ninety (90) days of the date of such
Liquidity Event; PROVIDED, HOWEVER, that no Participant shall be entitled to any
payment in respect of a Liquidity Event unless the Liquidity Event produces an
Internal Rate of Return, as follows:
<TABLE>
<CAPTION>
IF LIQUIDITY EVENT OCCURS: APPLICABLE INTERNAL RATE OF
RETURN IS
<S> <C>
After the Closing but
on or before December 31, 2000 34.5%
On or after January 1, 2001 but
on or before December 31, 2001 31.9%
On or after January 1, 2002 but
on or before December 31, 2002 28.4%
On or after January 1, 2003 but
on or before December 31, 2004 24.0%
On or after January 1, 2005 22.5%
</TABLE>
(d) FORM OF PAYMENT. Payment in respect of the Awards shall be
paid in cash or in other property received by Vestar in the Liquidity Event, as
determined by the Committee.
(e) EVENTS OF DEFAULT. In the event that payment by the
Company in respect of any Award (or portion thereof) would constitute an event
of default for purposes of any Company credit facility or other indebtedness
then outstanding or would cause the Company to suffer a substantial financial
hardship, as the Committee shall in its good faith discretion determine, the
Company shall have the right to (i) delay payment in respect of such Awards
until twenty (20) days following the date on which such default or substantial
financial hardship ceases to exist and (ii) satisfy its payment obligations in
respect of such Award by delivery of a subordinated promissory note, payable
over five years and bearing interest at the prime rate of interest as in effect
at the time of the applicable Liquidity Event.
SECTION 6. AMENDMENT AND TERMINATION.
<PAGE>
7
(a) AMENDMENTS TO THE PLAN. The Committee may amend, alter,
suspend, discontinue, or terminate the Plan or any portion thereof at any time;
PROVIDED that no such amendment, alteration, suspension, discontinuation or
termination shall be made without shareholder approval if such approval is
necessary to comply with any tax or regulatory requirement applicable to the
Plan and PROVIDED, FURTHER, that any such amendment, alteration, suspension,
discontinuance or termination that would impair the rights of any Participant or
any holder or beneficiary of any Award theretofore granted shall not to that
extent be effective without the consent of the affected Participant, holder or
beneficiary.
(b) AMENDMENTS TO AWARDS. The Committee may waive any
conditions or rights under, amend any terms of, or alter, suspend, discontinue,
cancel or terminate, any Award theretofore granted, prospectively or
retroactively; provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would impair the rights of any
Participant or any holder or beneficiary of any Award theretofore granted shall
not to that extent be effective without the consent of the affected Participant,
holder or beneficiary.
SECTION 7. GENERAL PROVISIONS.
(c) NONTRANSFERABILITY. No Award may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a Participant
otherwise than by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate; provided that the designation of a beneficiary shall not constitute
an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(d) NO RIGHTS TO AWARDS. No Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants, or holders or beneficiaries of Awards.
The terms and conditions of Awards and the Committee's determinations and
interpretations with respect thereto need not be the same with respect to each
Participant (whether or not such Participants are similarly situated).
(e) WITHHOLDING. A Participant may be required to pay to the
Company or any Affiliate and the Company or any Affiliate
<PAGE>
8
shall have the right and is hereby authorized to withhold from any Award, from
any payment due or transfer made under any Award or under the Plan or from any
compensation or other amount owing to a Participant the amount (in cash,Shares,
other securities, other Awards or other property) of any applicable withholding
taxes in respect of an Award, its exercise, or any payment or transfer under an
Award or under the Plan and to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of such taxes.
(f) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not
be construed as giving a Participant the right to be retained in the employ of,
or in any consulting relationship to, the Company or any Affiliate. Further,
the Company or an Affiliate may at any time dismiss a Participant from
employment or discontinue any consulting relationship, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan or
in any Award Agreement.
(g) GOVERNING LAW. The validity, construction, and effect of
the Plan and any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State of
Delaware.
(h) SEVERABILITY. If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction, Person or Award and the remainder of the
Plan and any such Award shall remain in full force and effect.
(i) NO TRUST OR FUND CREATED. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant
or any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(j) HEADINGS. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material
<PAGE>
9
or relevant to the construction or interpretation of the Plan or any provision
thereof.
SECTION 8. TERM OF THE PLAN.
(k) EFFECTIVE DATE. The Plan shall be effective as of the
date of its approval by the Board of Directors of the Company, subject to
approval of the Company's stockholders in a manner intended to comply with
the provisions of Section 280G(b)(5) of the Code.
(b) EXPIRATION OF PLAN AND TERMINATION OF AWARDS. The Plan
shall terminate upon the consummation of a Liquidity Event, subject only to the
Company's satisfaction of its payment obligation with respect to any then
outstanding Awards.
<PAGE>
Exhibit 10.12
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), made as of July 5, 1999, by and
between CONSOLIDATED CONTAINER COMPANY LLC, a Delaware limited liability company
(the "Company"), and PETER BERNON ("Executive").
RECITALS
Executive is willing to accept employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. EMPLOYMENT.
1.1 Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the Term (as hereinafter defined) as its
Executive Vice President. In his capacity as Executive Vice President, Executive
shall, subject to Section 1.2 hereof, be in charge of resin purchasing and
acquisitions and shall report to the Company's Management Committee (the
"Committee"). Executive shall be provided with secretarial and other support
personnel and an office in Franklin, Massachusetts as are reasonably necessary
for him to carry out his duties and responsibilities hereunder.
1.2 Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment as the Company's Executive Vice President, commencing
on the date hereof, and agrees, to the best of his ability, experience and
talent, to the performance of services, duties and responsibilities in
connection therewith. Executive shall perform such duties and exercise such
powers, commensurate with his position, as the Executive Vice President of the
<PAGE>
2
Company, as the Committee shall from time to time delegate to him on such terms
and conditions and subject to such restrictions as such Committee may reasonably
from time to time impose.
1.3 Nothing in this Agreement shall require the Executive to work any
particular number of hours per week or days per year or preclude Executive, so
long as in the reasonable determination of the Committee such activities do not
materially interfere with his duties and responsibilities hereunder, from
engaging in charitable and community affairs or from engaging in any other
activity; provided, however, that during the Term, no such other activity shall
directly or indirectly involve the undertaking of any activity which Suiza is
prohibited to engage in pursuant to Section 7.7 of the Limited Liability Company
Agreement (the "LLC Agreement") of Holdings.
2. Term of Employment. Executive's term of employment under this Agreement
(the "Term") shall commence on the date hereof and, subject to the terms hereof,
shall terminate on the earlier of (i) the second anniversary of the date hereof
(the "Termination Date") or (ii) the termination of Executive's employment
pursuant to Section 6 of this Agreement; PROVIDED, HOWEVER, that any termination
of employment by Executive (other than for death or Permanent Disability) may
only be made upon 30 days prior written notice to the Company.
3. Compensation.
3.1 Salary. The Company shall pay Executive a salary (the "Salary") at the
rate of $325,000 per annum for the period commencing on the beginning of
Executive's term of employment hereunder and ending on the expiration of the
Term. The Salary shall be payable in accordance with the ordinary payroll
practices of the Company. The Salary shall be reviewed by the Committee annually
beginning in January 2000 and any increase in the Salary shall be in the
<PAGE>
3
discretion of the Committee and, as so increased, shall constitute "Salary"
hereunder. Salary may not be reduced below $325,000 per annum.
3.2 Annual Bonus. In addition to his Salary, Executive shall be eligible
to participate in the Company's annual bonus plan for executive employees (the
"Bonus Plan", and any award or payment under the Bonus Plan, the "Bonus") during
the Term and shall have a target bonus (the "Target Bonus") equal to 50% of the
Salary and a maximum bonus (the "Maximum Bonus") of 100% of Salary, in each case
based upon performance criteria for participants in the Bonus Plan determined by
the Committee in its sole discretion.
3.3 Compensation Plans and Programs. Executive shall be eligible to
participate in any compensation plan or program maintained by the Company in
which other senior executives of the Company participate on terms comparable to
those applicable to such other senior executives.
4. Employee Benefits.
4.1 Employee Benefit Programs, Plans and Practices. The Company shall
provide Executive during the Term with coverage under all employee pension and
welfare benefit programs, plans and practices (commensurate with his positions
in the Company and to the extent permitted under any employee benefit plan) in
accordance with the terms thereof, which the Company makes generally available
to its senior executives. In addition (but without duplication), during the
Term, the Company shall make available to the Executive fringe benefits which
are substantially similar to the fringe benefits made available to the Executive
by Franklin Plastics, Inc. prior to the date hereof.
<PAGE>
4
4.2 Vacation. Executive shall be entitled each year to vacation to be
taken on a basis consistent with his vacation taken prior to the date hereof
while an Employee of Franklin Plastics, Inc., at mutually convenient times,
during which time Salary shall be paid in full.
5. Expenses. Executive is authorized to incur reasonable costs and
expenses in carrying out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel and similar items related to
such duties and responsibilities. The Company will reimburse Executive for all
such expenses upon presentation by Executive from time to time of appropriately
itemized and approved (consistent with the Company's policy for its senior
executives) accounts of such expenditures.
6. Termination of Employment.
6.1 Termination Not for Cause or for Good Reason. (a) The Company may
terminate Executive's employment at any time for any reason. If Executive's
employment is terminated by the Company, other than for Cause (as defined in
Section 6.4(b) hereof) or as a result of Executive's death or Permanent
Disability (as defined in Section 6.2 hereof), or if Executive terminates his
employment for Good Reason (as defined in 6.1(c) hereof), in each case prior to
the expiration of the Term, Executive shall receive such payments and benefits,
IF ANY, under applicable plans or programs (including but not limited to those
referred to in Sections 3.3, 3.4, and 4.1 hereof), to which he is entitled
pursuant to the terms of such plans or programs as if he were an employee of the
Company through the second anniversary of the date hereof. In addition,
Executive shall be entitled to receive an amount (the "Termination Amount")
equal to the additional Salary and Target Bonus the Executive would have
received had he remained employed by the Company until the second anniversary of
the date hereof (calculated as if he would have been entitled to a bonus at the
Target Bonus level pursuant to the bonus plan for such
<PAGE>
5
period). The Salary component of the Termination Amount shall be paid in a lump
sum on the date of termination and the Target Bonus component of the Termination
Amount shall be payable as if he had remained employed by the Company through
the second anniversary of the date hereof. In addition, Executive shall be
entitled to receive a cash lump sum payment in respect of accrued but unused
vacation days (not to exceed 4 weeks of Salary) (the "Vacation Payment") and to
compensation earned but not yet paid (the "Compensation Payment") and to
continued coverage until the second anniversary of the date hereof under any
employee medical and life insurance plans in accordance with the respective
terms thereof (unless such coverage is provided by Executive's subsequent
employer).
(b) The Compensation Payment shall be paid by the Company to Executive
within 30 days after the termination of Executive's employment.
(c) For purposes of this Agreement, "Good Reason" shall mean any of the
following (without Executive's express prior written consent):
(i) (A) any reduction in the amount of the Executive's Salary, (B)
any reduction in Executive's potential Target Bonus or Maximum Bonus, or
(C) any significant reduction in the value of the Executive's benefits in
effect from time (unless in the case of this clause C, such reduction is
pursuant to a general change in the compensation or benefits applicable to
all similarly situated employees of the Company or its affiliates);
(ii) (A) the removal of the Executive from the Executive's position
as an Executive Vice President of the Company (or as Executive Vice
President of any successor to the operations of the Company) or (B) any
other significant reduction in the nature or status of the Executive's
duties or responsibilities; or
(iii) the transfer of the Executive's principal place of employment
to a metropolitan area other than Boston metropolitan area.
6.2 Permanent Disability. If the Executive suffers a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended ("Permanent Disability"), the Company or Executive may
terminate Executive's
<PAGE>
6
employment on written notice thereof, and Executive shall receive or commence
receiving, as soon as practicable:
(i) until the second anniversary of the date hereof, monthly
payments equal to the excess of (a) one-twelfth of the Salary over (b) any
amounts payable during such month pursuant to the terms of a disability
insurance policy or similar arrangement, if any;
(ii) the Compensation Payment and the Vacation Payment;
(iii) the Target Bonus in respect of the fiscal year in which his
termination occurs, prorated by a fraction, the numerator of which is the
number of days of the fiscal year until termination and the denominator of
which is 365 (the "Prorated Bonus"); and
(iv) such payments under applicable plans or programs, including but
not limited to those referred to in Sections 3.3 and 4.1 hereof, to which
he is entitled pursuant to the terms of such plans or programs.
6.3 Death. In the event of Executive's death during the Term Executive's
estate or designated beneficiaries shall receive or commence receiving, as soon
as practicable:
(i) amounts payable pursuant to the terms of a life insurance policy
or similar arrangement, if any;
(ii) the Compensation Payment and the Vacation Payment;
(iii) the Prorated Bonus; and
(iv) such payments under applicable plans or programs, including but
not limited to those referred to in Sections 3.3 and 4.1 hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant to
the terms of such plans or programs.
6.4 Voluntary Termination by Executive; Discharge for Cause. (a) The
Company shall have the right to terminate the employment of Executive for Cause.
In the event that Executive's employment is terminated by the Company for Cause,
as hereinafter defined, or by Executive other than for Good Reason or other than
as a result of the Executive's Permanent Disability or death, during the Term,
Executive shall only be entitled to receive the Compensation Payment and
Executive shall not be entitled, among other things, to the payment
<PAGE>
7
of any Bonus in respect of all or any portion of the fiscal year in which such
termination occurs. After the termination of Executive's employment under this
Section 6.4, the obligations of the Company under this Agreement to make any
further payments (except for the Compensation Payment and the Vacation Payment),
or provide any benefits specified herein, to Executive shall thereupon cease and
terminate except as otherwise required by law.
(b) As used herein, the term "Cause" shall be limited to (i) willful
misconduct by Executive in connection with his employment, (ii) continuing
refusal by Executive to perform his duties hereunder or any lawful direction of
the Committee as required under Section 1.2, after notice of any such refusal to
perform such duties or direction was given to Executive, as well as an
opportunity to cure , (iii) any breach by Executive of Section 12 of this
Agreement or any non-compete, non-solicitation or confidentiality covenant made
by the Executive to the Company, Suiza Foods Corporation ("Suiza"), Franklin
Plastics, Inc. ("Franklin"), Holdings or any of their respective subsidiaries or
(iv) the conviction of Executive for (a) any felony or (b) a misdemeanor
involving moral turpitude. Termination of Executive pursuant to this Section 6.4
shall be made by delivery to Executive of a copy of a resolution duly adopted in
good faith by the affirmative vote of not less than a majority of the Committee
members at a meeting of the Committee called and held for the purpose (after 30
days prior written notice to Executive and reasonable opportunity for Executive
to be heard before the Committee prior to such vote), finding that in the
reasonable judgment of such Committee, Executive was guilty of conduct set forth
in any of clauses (i) through (iv) above and specifying the particulars thereof.
7. Mitigation of Damages. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
<PAGE>
8
8. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Consolidated Container Company LLC
2515 McKinney Avenue
Suite 855
Dallas, TX 75201
with copies to:
James P. Kelley, Managing Director
Vestar Capital Partners
1225 Seventeenth Street, Suite 1660
Denver, CO 80202
and
Alvin H. Brown, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
To Executive:
Peter Bernon
9 Manadnock Road
Wellesley, MA 02481
with a copy to:
Charles W. Robins, Esq.
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, MA 02110
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
<PAGE>
9
9. Separability; Legal Fees. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
10. Assignment. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this Agreement
to (i) any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company, if such
successor expressly agrees to assume the obligations of the Company hereunder or
(ii) Suiza.
11. Amendment. This Agreement may only be amended by written agreement of
the parties hereto.
12. Nondisclosure of Confidential Information. (a) Executive shall not,
without the prior written consent of the Company, use, divulge, disclose or make
accessible to any other person, firm, partnership, corporation or other entity
any Confidential Information pertaining to the business of the Company, Suiza,
Franklin, Reid, Holdings or any of their respective affiliates, except (i) while
employed by the Company, in the business of and for the benefit of the Company,
or (ii) when required to do so by a court of competent jurisdiction, by any
governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order
<PAGE>
10
Executive to divulge, disclose or make accessible such information. For purposes
of this Section 12(a), "Confidential Information" shall mean non-public
information concerning the financial data, strategic business plans, product
development (or other proprietary product data), customer lists, marketing plans
and other non-public, proprietary and confidential information of the Company,
Suiza, Franklin, Reid, Holdings and all of their respective affiliates (the
"Restricted Group") or customers, that, in any case, is not otherwise available
to the public (other than by Executive's breach of the terms hereof).
(b) Executive agrees that any breach of the covenants contained in this
Section 12 would irreparably injure the Company. Accordingly, Executive agrees
that the Company may, in addition to pursuing any other remedies it may have in
law or in equity, obtain an injunction against Executive from any court having
jurisdiction over the matter restraining any further violation of this Agreement
by Executive.
13. Beneficiaries; References. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
14. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 14 are in addition to the survivorship provisions of
any other section of this Agreement.
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11
15. Governing Law and Venue. This Agreement shall be construed under and
governed by the laws of the State of Delaware applicable to contracts made and
to be performed therein and the parties hereto agree to submit themselves to the
jurisdiction of the federal and state courts of the State of Delaware for the
purpose of any suit, action or other proceeding arising out of this Agreement;
PROVIDED, HOWEVER, that in the event of the Executive's breach of the provisions
of Section 12 hereof, the Company may bring an action in any jurisdiction in
which the Company reasonably believes the Executive has breached those
provisions and the Executive agrees to submit to the courts of such
jurisdiction.
16. Effect on Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company (other than Suiza) and Executive regarding Executive's
employment. The Option Agreement, the Registration Rights Agreement and the LLC
Agreement shall remain in effect.
17. Withholding. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
<PAGE>
12
IN WITNESS WHEREOF, the parities hereto have executed this Agreement as of
the date first written above.
CONSOLIDATED CONTAINER
COMPANY LLC
By: /s/ John R. Woodard
---------------------------
Name: John R. Woodard
Title: Vice President
/s/ Peter M. Bernon
------------------------------
PETER M. BERNON
<PAGE>
Exhibit 10.13
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), made as of July 2, 1999, by and
between CONSOLIDATED CONTAINER COMPANY LLC, a Delaware limited liability company
(the "Company"), and WILLIAM ESTES ("Executive").
RECITALS
Executive is willing to accept employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the Term (as hereinafter defined) as its Chief
Executive Officer. In his capacity as Chief Executive Officer, Executive shall
report to the Company's Management Committee (the "Committee"). As Chief
Executive Officer of the Company, Executive shall have the customary powers,
responsibilities and authorities of chief executive officers of companies of the
size, type and nature of the Company, as it exists from time to time, as well as
those assigned by the Committee. Executive shall be provided with secretarial
and other support personnel and an office as are reasonably necessary for him to
carry out his duties and responsibilities hereunder.
1.2 Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment as the Company's Chief Executive Officer, commencing
on the date hereof, and agrees to devote his full working time and efforts, to
the best of his ability, experience and
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2
talent, to the performance of services, duties and responsibilities in
connection therewith. Executive shall perform such duties and exercise such
powers, commensurate with his position, as the Chief Executive Officer of the
Company, as the Committee shall from time to time delegate to him on such terms
and conditions and subject to such restrictions as such Committee may reasonably
from time to time impose.
1.3 Nothing in this Agreement shall preclude Executive, so long as in the
reasonable determination of the Committee such activities do not materially
interfere with his duties and responsibilities hereunder, from engaging in
charitable and community affairs or from serving as a member of the boards of
directors of up to two companies which are not involved in the purchase, sale,
lease, management of or other dealing in any property or the rendering of any
service purchased, sold, leased, managed, dealt in or rendered by the Company or
any affiliate.
2. Term of Employment. Executive's term of employment under this Agreement
shall commence on the date hereof and, subject to the terms hereof, shall
terminate on the earlier of (i) the fifth anniversary of the date hereof (the
"Termination Date") or (ii) the termination of Executive's employment pursuant
to Section 6 of this Agreement; PROVIDED, HOWEVER, that any termination of
employment by Executive (other than for death or Permanent Disability) may only
be made upon 90 days prior written notice to the Company; PROVIDED, FURTHER,
that this Agreement shall be automatically renewed and the term extended for
additional one-year periods commencing on the fifth anniversary of the date
hereof, and on each anniversary date thereafter, unless the Company or Executive
provides 90 days' prior written notice in accordance with Section 8 before the
end of such initial term or any such one-year renewal term (any reference to the
"Term" of this Agreement will include the initial term and any renewal thereof).
3. Compensation.
<PAGE>
3
3.1 Salary. The Company shall pay Executive a salary (the "Salary") at the
rate of $400,000 per annum for the period commencing on the beginning of
Executive's term of employment hereunder and ending on the expiration of the
Term. The Salary shall be payable in accordance with the ordinary payroll
practices of the Company. The Salary shall be reviewed by the Committee annually
beginning in January 2000 and any increase in the Salary shall be in the
discretion of the Committee and, as so increased, shall constitute "Salary"
hereunder. Salary may not be reduced below $400,000 per annum.
3.2 Annual Bonus. In addition to his Salary, Executive shall be eligible
to participate in the Company's annual bonus plan (the "Bonus Plan", and any
award or payment under the Bonus Plan, the "Bonus") during the Term and shall
have a target bonus (the "Target Bonus") equal to 50% of the Salary and a
maximum bonus (the "Maximum Bonus") of 100% of Salary, in each case based upon
performance criteria determined by the Committee in its sole discretion.
3.3 Compensation Plans and Programs. Executive shall be eligible to
participate in any compensation plan or program maintained by the Company in
which other senior executives of the Company participate on terms comparable to
those applicable to such other senior executives.
3.4 Related Agreements. On the date hereof, Executive shall also enter
into an Option Agreement (the "Option Agreement") permitting the Executive to
purchase interests in Consolidated Container Holdings, LLC ("Holdings"), a
parent of the Company, and shall become a party to the Registration Rights
Agreement (the "Registration Rights Agreement") and the Limited Liability
Company Agreement (the "LLC Agreement") of Holdings.
<PAGE>
4
3.5 Perquisites. In addition, during the Term, the Company shall reimburse
Executive for his annual membership dues in the [name of country club] at an
annual cost of up to $5,000.
4. Employee Benefits; Expenses.
4.1 Employee Benefit Programs, Plans and Practices. The Company shall
provide Executive during the Term with coverage under all employee pension and
welfare benefit programs, plans and practices (commensurate with his positions
in the Company and to the extent permitted under any employee benefit plan) in
accordance with the terms thereof, which the Company makes generally available
to its senior executives.
4.2 Vacation. Executive shall be entitled each year to vacation for a
period of four (4) weeks to be taken at mutually convenient times, during which
time Salary shall be paid in full.
4.3 EXPENSES. Executive is authorized to incur reasonable costs and
expenses in carrying out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel and similar items related to
such duties and responsibilities. The Company will reimburse Executive for all
such expenses upon presentation by Executive from time to time of appropriately
itemized and approved (consistent with the Company's policy) accounts of such
expenditures.
5. Excise Taxes. (a) Gross-Up Payment. Anything in this Agreement to the
contrary notwithstanding and except as set forth below, if it is determined that
any payment or distribution (a "payment") by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 5) including,
<PAGE>
5
without limitation, vesting of options, would be subject to the excise tax
imposed by Section 4999 of the Code, or if any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount sufficient to
pay all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment.
(b) CALCULATION OF GROSS-UP PAYMENT. Subject to the provisions of
paragraph (c) of this Section 5, all determinations required to be made under
this Section 5, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be used in arriving
at such determination, shall be made by a certified public accounting firm
selected by the Company and reasonably acceptable to the Executive (the
"Accounting Firm"), which shall be retained to provide detailed supporting
calculations both to the Company and the Executive. All fees and expenses of the
Accounting Firm shall be paid solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 5, shall be paid by the Company to the
Executive within five (5) days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which should
have been made will not have been made by the Company ("Underpayment"),
consistent with the calculations required to be made hereunder. If the Company
exhausts its remedies pursuant to paragraph (c) of this Section 5 and the
Executive
<PAGE>
6
thereafter is required to pay an Excise Tax in an amount that exceeds the
Gross-Up Payment received by the Executive the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Company to or for the benefit of the Executive.
(c) CONTESTED TAXES. The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would result in
an Underpayment. Such notification shall be given as soon as practicable but no
later than ten (10) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid or appealed. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claims as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order to effectively
contest such claim, and
(4) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or
<PAGE>
7
income tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this paragraph (c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund or to contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; PROVIDED, HOWEVER, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to the amount of the Gross-Up Payment, and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) REFUNDS. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to this Section 5, the Executive becomes entitled to
receive any refund with
<PAGE>
8
respect to such claim, the Executive shall promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto).
6. Termination of Employment.
6.1 Termination Not for Cause or for Good Reason. (a) The Company may
terminate Executive's employment at any time for any reason. If Executive's
employment is terminated by the Company, other than for Cause (as defined in
Section 6.4(b) hereof) or as a result of Executive's death or Permanent
Disability (as defined in Section 6.2 hereof), or if Executive terminates his
employment for Good Reason (as defined in 6.1(c) hereof), in each case prior to
the expiration of the Term, Executive shall receive such payments, if any, under
applicable plans or programs, including but not limited to those referred to in
Sections 3.3 and 4.1 hereof, to which he is entitled pursuant to the terms of
such plans or programs. In addition, if Executive's employment is terminated as
provided in the prior sentence prior to the second anniversary of the date
hereof, Executive shall be entitled to receive an amount (the "Termination
Amount") equal to one and one-half times the sum of the Salary and Target Bonus.
The Termination Amount, if any, shall be payable in equal monthly installments
over the eighteen month period following the termination of the Executive's
employment. In addition, Executive shall be entitled to receive a cash lump sum
payment in respect of accrued but unused vacation days (not to exceed 4 weeks of
Salary) (the "Vacation Payment") and to compensation earned but not yet paid
(the "Compensation Payment") and to continued coverage for twenty-four months
following the termination of the Executive's employment under any employee
medical, life, dental and long-term disability insurance plans in accordance
with the respective terms thereof (unless such coverage is provided by
Executive's subsequent employer).
<PAGE>
9
(b) The Compensation Payment shall be paid by the Company to Executive
within 30 days after the termination of Executive's employment.
(c) For purposes of this Agreement, "Good Reason" shall mean any of the
following (without Executive's express prior written consent):
(i) (A) any reduction in the amount of the Executive's Salary, (B)
any reduction in Executive's potential Target Bonus or Maximum Bonus, or
(C) any significant reduction in the value of the Executive's benefits in
effect from time (unless in the case of either B or C, such reduction is
pursuant to a general change in the compensation or benefits applicable to
all similarly situated employees of the Company or its affiliates);
(ii) (A) the removal of the Executive from the Executive's position
as Chief Executive Officer of the Company (or as Chief Executive Officer
of any successor to the operations of the Company) or (B) any other
significant reduction in the nature or status of the Executive's duties or
responsibilities; or
(iii) the transfer of the Executive's principal place of employment
to a metropolitan area other than that of the Executive's place of
employment immediately following the date hereof.
6.2 Permanent Disability. If the Executive suffers a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended ("Permanent Disability"), the Company or Executive may
terminate Executive's employment on written notice thereof, and Executive shall
receive or commence receiving, as soon as practicable:
(i) for 18 months following his termination of employment, monthly
payments equal to the excess of (a) one-twelfth of the Salary over (b) any
amounts payable during such month pursuant to the terms of a disability
insurance policy or similar arrangement, if any;
(ii) the Compensation Payment and the Vacation Payment;
(iii) the Target Bonus in respect of the fiscal year in which his
termination occurs, prorated by a fraction, the numerator of which is the
number of days of the fiscal year until termination and the denominator of
which is 365 (the "Prorated Bonus"); and
<PAGE>
10
(iv) such payments under applicable plans or programs, including but
not limited to those referred to in Sections 3.3 and 4.1 hereof, to which
he is entitled pursuant to the terms of such plans or programs.
6.3 Death. In the event of Executive's death during the Term Executive's
estate or designated beneficiaries shall receive or commence receiving, as soon
as practicable:
(i) amounts payable pursuant to the terms of a life insurance policy
or similar arrangement, if any;
(ii) the Compensation Payment and the Vacation Payment;
(iii) the Prorated Bonus; and
(iv) such payments under applicable plans or programs, including but
not limited to those referred to in Sections 3.3 and 4.1 hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant to
the terms of such plans or programs.
6.4 Voluntary Termination by Executive; Discharge for Cause. (a) The
Company shall have the right to terminate the employment of Executive for Cause.
In the event that Executive's employment is terminated by the Company for Cause,
as hereinafter defined, or by Executive other than for Good Reason or other than
as a result of the Executive's Permanent Disability or death, during the Term,
Executive shall only be entitled to receive the Compensation Payment and
Executive shall not be entitled, among other things, to the payment of any Bonus
in respect of all or any portion of the fiscal year in which such termination
occurs. After the termination of Executive's employment under this Section 6.4,
the obligations of the Company under this Agreement to make any further payments
(except for the Compensation Payment and the Vacation Payment), or provide any
benefits specified herein, to Executive shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i) willful
malfeasance or willful misconduct by Executive in connection with his
employment, (ii) continuing refusal by
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11
Executive to perform his duties hereunder or any lawful direction of the
Committee as required under Section 1.2, after notice of any such refusal to
perform such duties or direction was given to Executive, (iii) any breach of the
provisions of Section 12 of this Agreement by Executive or (iv) the commission
by Executive of (a) any felony or (b) a misdemeanor involving moral turpitude.
Termination of Executive pursuant to this Section 6.4 shall be made by delivery
to Executive of a copy of a resolution duly adopted in good faith by the
affirmative vote of not less than a majority of the Committee members at a
meeting of the Committee called and held for the purpose (after 30 days prior
written notice to Executive and reasonable opportunity for Executive to be heard
before the Committee prior to such vote), finding that in the reasonable
judgment of such Committee, Executive was guilty of conduct set forth in any of
clauses (i) through (iv) above and specifying the particulars thereof.
7. Mitigation of Damages. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
8. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Consolidated Container Company LLC
2515 McKinney Avenue
Suite 855
Dallas, TX 75201
with copies to:
James P. Kelley, Managing Director
Vestar Capital Partners
1225 Seventeenth Street, Suite 1660
Denver, CO 80202
<PAGE>
12
and
Alvin H. Brown, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
To Executive:
William Estes
370 Oak Trail
Double Oak, TX 75067
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
9. Separability; Legal Fees. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
10. Assignment. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this Agreement
to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock,
<PAGE>
13
assets or businesses of the Company, if such successor expressly agrees to
assume the obligations of the Company hereunder.
11. Amendment. This Agreement may only be amended by written agreement of
the parties hereto.
12. Nondisclosure of Confidential Information. (a) Executive shall not,
without the prior written consent of the Company, use, divulge, disclose or make
accessible to any other person, firm, partnership, corporation or other entity
any Confidential Information pertaining to the business of the Company, Suiza
Foods Corporation ("Suiza"), Franklin Plastics, Inc. ("Franklin"), Reid Plastics
Holdings, Inc. ("Reid"), Holdings or any of their respective affiliates, except
(i) while employed by the Company, in the business of and for the benefit of the
Company, or (ii) when required to do so by a court of competent jurisdiction, by
any governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Executive to divulge, disclose or
make accessible such information. For purposes of this Section 12(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing plans and other non-public,
proprietary and confidential information of the Company, Suiza, Franklin, Reid,
Holdings and all of their respective affiliates (the "Restricted Group") or
customers, that, in any case, is not otherwise available to the public (other
than by Executive's breach of the terms hereof).
(b) During the period of his employment hereunder and for eighteen months
thereafter, Executive agrees that, without the prior written consent of the
Company, (A) he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder,
<PAGE>
14
partner, investor, lender or employee or in any other capacity, carry on, be
engaged in or have any financial interest in, any business which is in
competition with the business of the Restricted Group and (B) he shall not, on
his own behalf or on behalf of any person, firm or company, directly or
indirectly, solicit or offer employment to any person who has been employed by
the Restricted Group at any time during the 12 months immediately preceding such
solicitation.
(c) For purposes of this Section 12, a business shall be deemed to be in
competition with the Restricted Group if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Restricted Group as a material part
of the business of the Restricted Group within the same geographic area in which
they effect such purchases, sales or dealings or renders such services. Nothing
in this Section 12 shall be construed so as to preclude Executive from investing
in any publicly or privately held company, provided Executive's beneficial
ownership of any class of such company's securities does not exceed 1% of the
outstanding securities of such class.
(d) Executive and the Company agree that this covenant not to compete is a
reasonable covenant under the circumstances, and further agree that if in the
opinion of any court of competent jurisdiction such restraint is not reasonable
in any respect, such court shall have the right, power and authority to excise
or modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
amended. Executive agrees that any breach of the covenants contained in this
Section 12 would irreparably injure the Company. Accordingly, Executive agrees
that the Company may, in addition to pursuing any other remedies it may have in
law or in equity, cease making any payments otherwise required by this Agreement
and obtain an injunction against Executive from
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15
any court having jurisdiction over the matter restraining any further violation
of this Agreement by Executive.
(e) As additional consideration for Executive's commitments pursuant to
this Section 12, the Company shall, if Executive's employment is terminated by
the Company without Cause (other than as a result of Permanent Disability or
death) or by the Executive for Good Reason, pay to the Executive an amount equal
to one and one-half times the sum of the Salary and Target Bonus in eighteen
equal monthly installments commencing during the month following the month in
which Executive's employment was terminated.
13. Beneficiaries; References. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
14. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 14 are in addition to the survivorship provisions of
any other section of this Agreement.
15. Governing Law and Venue. This Agreement shall be construed under and
governed by the laws of the State of New York applicable to contracts made and
to be performed therein and the parties hereto agree to submit themselves to the
jurisdiction of the federal and state courts of the State of New York for the
purpose of any suit, action or other proceeding
<PAGE>
16
arising out of this Agreement; PROVIDED, HOWEVER, that in the event of the
Executive's breach of the provisions of Section 12 hereof, the Company may bring
an action in any jurisdiction in which the Company believes the Executive has
breached those provisions and the Executive agrees to submit to the courts of
such jurisdiction.
16. Effect on Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive regarding Executive's employment. The Option
Agreement, the Registration Rights Agreement and the LLC Agreement shall remain
in effect.
17. Withholding. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
<PAGE>
17
IN WITNESS WHEREOF, the parities hereto have executed this Agreement as of
the date first written above.
CONSOLIDATED CONTAINER
COMPANY LLC
By: /s/ John R. Woodard
-----------------------------
Name: John R. Woodard
Title: Vice President
/s/ William Estes
-----------------------------
WILLIAM ESTES
<PAGE>
Exhibit 10.14
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), made as of July 5, 1999, by and
between CONSOLIDATED CONTAINER COMPANY LLC, a Delaware limited liability company
(the "Company"), and RONALD E. JUSTICE ("Executive").
RECITALS
Executive is willing to accept employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the Term (as hereinafter defined) as one of
its Executive Vice Presidents. In his capacity as a Executive Vice President,
Executive shall report to the Company's Chief Executive Officer (the "Chief
Executive Officer").
1.2 Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment as one of the Company's Executive Vice Presidents,
commencing on the date hereof, and agrees to devote his full working time and
efforts, to the best of his ability, experience and talent, to the performance
of services, duties and responsibilities in connection therewith. Executive
shall perform such duties and exercise such powers, commensurate with his
position, as an Executive Vice President of the Company, as the Chief Executive
Officer shall from time to time delegate to him on such terms and conditions and
subject to such restrictions as such Chief Executive Officer may reasonably from
time to time impose.
<PAGE>
2
1.3 Nothing in this Agreement shall preclude Executive, so long as in the
reasonable determination of the Company's Management Committee (the "Committee")
such activities do not materially interfere with his duties and responsibilities
hereunder, from engaging in charitable and community affairs or from serving as
a member of the boards of directors of up to two companies which are not
involved in the purchase, sale, lease, management of or other dealing in any
property or the rendering of any service purchased, sold, leased, managed, dealt
in or rendered by the Company or any affiliate.
2. Term of Employment. Executive's term of employment under this Agreement
(the "Term") shall commence on the date hereof and, subject to the terms hereof,
shall terminate on the earlier of (i) the second anniversary of the date hereof
(the "Termination Date") or (ii) the termination of Executive's employment
pursuant to Section 6 of this Agreement; PROVIDED, HOWEVER, that any termination
of employment by Executive (other than for death or Permanent Disability) may
only be made upon 60 days prior written notice to the Company.
3. Compensation.
3.1 Salary. The Company shall pay Executive a salary at the rate of
$230,000 per annum (the "Salary") for the period commencing on the beginning of
Executive's term of employment hereunder and ending on the expiration of the
Term. The Salary shall be payable in accordance with the ordinary payroll
practices of the Company. The Salary shall be reviewed by the Committee annually
beginning in January 2000 and any increase in the Salary shall be in the
discretion of the Committee and, as so increased, shall constitute "Salary"
hereunder. Salary may not be reduced below $230,000 per annum.
3.2 Annual Bonus. In addition to his Salary, Executive shall be eligible
to participate in the Company's annual bonus plan (the "Bonus Plan", and any
award or payment
<PAGE>
3
under the Bonus Plan, the "Bonus") during the Term and shall have a target bonus
(the "Target Bonus") equal to 40% of the Salary and a maximum bonus (the
"Maximum Bonus") of 80% of Salary, in each case based upon performance criteria
determined by the Committee in its sole discretion.
4. Employee Benefits; Expenses.
4.1 Employee Benefit Programs, Plans and Practices. The Company shall
provide Executive during the Term with coverage under all employee pension and
welfare benefit programs, plans and practices (commensurate with his positions
in the Company and to the extent permitted under any employee benefit plan) in
accordance with the terms thereof, which the Company makes generally available
to its senior executives.
4.2 Vacation. Executive shall be entitled each year to vacation for a
period of four (4) weeks to be taken at mutually convenient times, during which
time Salary shall be paid in full.
4.3 Expenses. Executive is authorized to incur reasonable costs and
expenses in carrying out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel and similar items related to
such duties and responsibilities. The Company will reimburse Executive for all
such expenses upon presentation by Executive from time to time of appropriately
itemized and approved (consistent with the Company's policy) accounts of such
expenditures.
5. Excise Taxes. (a) Gross-Up Payment. Anything in this Agreement to the
contrary notwithstanding and except as set forth below, if it is determined that
any payment or distribution (a "payment") by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but
<PAGE>
4
determined without regard to any additional payments required under this Section
5) including, without limitation, vesting of options, would be subject to the
excise tax imposed by Section 4999 of the Code, or if any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount sufficient to
pay all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment.
(b) Calculation of Gross-Up Payment. Subject to the provisions of
paragraph (c) of this Section 5, all determinations required to be made under
this Section 5, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be used in arriving
at such determination, shall be made by a certified public accounting firm
selected by the Company and reasonably acceptable to the Executive (the
"Accounting Firm"), which shall be retained to provide detailed supporting
calculations both to the Company and the Executive. All fees and expenses of the
Accounting Firm shall be paid solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 5, shall be paid by the Company to the
Executive within five (5) days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which should
have been made will not have been made by the Company ("Underpayment"),
consistent with the calculations required to be made hereunder. If the
<PAGE>
5
Company exhausts its remedies pursuant to paragraph (c) of this Section 5 and
the Executive thereafter is required to pay an Excise Tax in an amount that
exceeds the Gross-Up Payment received by the Executive the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) Contested Taxes. The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would result in
an Underpayment. Such notification shall be given as soon as practicable but no
later than ten (10) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid or appealed. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claims as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order to effectively
contest such claim, and
(4) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest
<PAGE>
6
and shall indemnify and hold the Executive harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this paragraph (c),
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or to contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; PROVIDED, HOWEVER, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to the amount of the Gross-Up
Payment, and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) Refunds. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to this Section 5, the Executive becomes entitled to
receive any refund with
<PAGE>
7
respect to such claim, the Executive shall promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto).
6. Termination of Employment.
6.1 Termination Not for Cause or for Good Reason. (a) The Company may
terminate Executive's employment at any time for any reason. If Executive's
employment is terminated by the Company, other than for Cause (as defined in
Section 6.4(b) hereof) or as a result of Executive's death or Permanent
Disability (as defined in Section 6.2 hereof), or if Executive terminates his
employment for Good Reason (as defined in 6.1(c) hereof), in each case prior to
the expiration of the Term, Executive shall receive such payments, if any, under
applicable plans or programs, including but not limited to those referred to in
Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans
or programs. In addition, if Executive's employment is terminated as provided in
the prior sentence during the Term, Executive shall be entitled to receive an
amount (the "Termination Amount") equal to the sum of the Salary and Target
Bonus otherwise payable over a twelve month period. The Termination Amount, if
any, shall be payable in equal monthly installments over the twenty-four month
period following the termination of the Executive's employment. In addition,
Executive shall be entitled to receive a cash lump sum payment in respect of
accrued but unused vacation days (not to exceed 4 weeks of Salary) (the
"Vacation Payment") and to compensation earned but not yet paid (the
"Compensation Payment") and to continued coverage for twenty-four months
following the termination of the Executive's employment under any employee
medical, dental, life and long-term disability insurance plans in accordance
with the respective terms thereof (unless such coverage is provided by
Executive's subsequent employer).
<PAGE>
8
(b) The Compensation Payment shall be paid by the Company to Executive
within 30 days after the termination of Executive's employment.
(c) For purposes of this Agreement, "Good Reason" shall mean any of the
following (without Executive's express prior written consent):
(i)(A) any reduction in the amount of the Executive's Salary, (B)
any reduction in Executive's potential Target Bonus or Maximum Bonus, or
(C) any significant reduction in the value of the Executive's benefits in
effect from time (unless in the case of either B or C, such reduction is
pursuant to a general change in the compensation or benefits applicable to
all similarly situated employees of the Company or its affiliates);
(ii) (A) other than in connection with a promotion, the removal of
the Executive from the Executive's position as a Executive Vice President
of the Company (or as a Executive Vice President of any successor to the
operations of the Company) or (B) any other significant reduction in the
nature or status of the Executive's duties or responsibilities; or
(iii) the transfer of the Executive's principal place of employment
to a metropolitan area other than that of the Executive's place of
employment immediately following the date hereof.
6.2 Permanent Disability. If the Executive suffers a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended ("Permanent Disability"), the Company or Executive may
terminate Executive's employment on written notice thereof, and Executive shall
receive or commence receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability policy or
similar arrangement, if any;
(ii) the Compensation Payment and the Vacation Payment;
(iii) the Target Bonus in respect of the fiscal year in which his
termination occurs, prorated by a fraction, the numerator of which is the
number of days of the fiscal year until termination and the denominator of
which is 365 (the "Prorated Bonus"); and
<PAGE>
9
(iv) such payments under applicable plans or programs, including but
not limited to those referred to in Section 4.1 hereof, to which he is
entitled pursuant to the terms of such plans or programs.
6.3 Death. In the event of Executive's death during the Term Executive's
estate or designated beneficiaries shall receive or commence receiving, as soon
as practicable:
(i) amounts payable pursuant to the terms of a life insurance policy
or similar arrangement, if any;
(ii) the Compensation Payment and the Vacation Payment;
(iii) the Prorated Bonus; and
(iv) such payments under applicable plans or programs, including but
not limited to those referred to in Section 4.1 hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant to
the terms of such plans or programs.
6.4 Voluntary Termination by Executive; Discharge for Cause. (a) The
Company shall have the right to terminate the employment of Executive for Cause.
In the event that Executive's employment is terminated by the Company for Cause,
as hereinafter defined, or by Executive other than for Good Reason or other than
as a result of the Executive's Permanent Disability or death, during the Term,
Executive shall only be entitled to receive the Compensation Payment and
Executive shall not be entitled, among other things, to the payment of any Bonus
in respect of all or any portion of the fiscal year in which such termination
occurs. After the termination of Executive's employment under this Section 6.4,
the obligations of the Company under this Agreement to make any further payments
(except for the Compensation Payment and the Vacation Payment), or provide any
benefits specified herein, to Executive shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i) willful
malfeasance or willful misconduct by Executive in connection with his
employment, (ii) continuing refusal by
<PAGE>
10
Executive to perform his duties hereunder or any lawful direction of the
Committee as required under Section 1.2, after notice of any such refusal to
perform such duties or direction was given to Executive, (iii) any breach of the
provisions of Section 12 of this Agreement by Executive or (iv) the commission
by Executive of (a) any felony or (b) a misdemeanor involving moral turpitude.
Termination of Executive pursuant to this Section 6.4 shall be made by delivery
to Executive of a copy of a resolution duly adopted in good faith by the
affirmative vote of not less than a majority of the Committee members at a
meeting of the Committee called and held for the purpose (after 30 days prior
written notice to Executive and reasonable opportunity for Executive to be heard
before the Committee prior to such vote), finding that in the reasonable
judgment of such Committee, Executive was guilty of conduct set forth in any of
clauses (i) through (iv) above and specifying the particulars thereof.
7. Mitigation of Damages. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
8. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Consolidated Container Company LLC
2515 McKinney Avenue
Suite 855
Dalla, TX 75201
<PAGE>
11
with copies to:
James P. Kelley, Managing Director
Vestar Capital Partners
1225 Seventeenth Street, Suite 1660
Denver, CO 80202
and
Alvin H. Brown, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
To Executive:
Ron Justice
5808 Southern Hills Drive
Flower Mound, Texas 75022
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
9. Separability; Legal Fees. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
10. Assignment. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
<PAGE>
12
succession) or by the Company, except that the Company may assign this Agreement
to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company, if such
successor expressly agrees to assume the obligations of the Company hereunder.
11. Amendment. This Agreement may only be amended by written agreement of
the parties hereto.
12. Nondisclosure of Confidential Information. (a) Executive shall not,
without the prior written consent of the Company, use, divulge, disclose or make
accessible to any other person, firm, partnership, corporation or other entity
any Confidential Information pertaining to the business of the Company, Suiza
Foods Corporation ("Suiza"), Franklin Plastics, Inc. ("Franklin"), Reid Plastics
Holdings, Inc. ("Reid"), Holdings or any of their respective affiliates, except
(i) while employed by the Company, in the business of and for the benefit of the
Company, or (ii) when required to do so by a court of competent jurisdiction, by
any governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Executive to divulge, disclose or
make accessible such information. For purposes of this Section 12(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing plans and other non-public,
proprietary and confidential information of the Company, Suiza, Franklin, Reid,
Holdings and all of their respective affiliates (the "Restricted Group") or
customers, that, in any case, is not otherwise available to the public (other
than by Executive's breach of the terms hereof).
<PAGE>
13
(b) During the period of his employment hereunder and for two years
thereafter, Executive agrees that, without the prior written consent of the
Company, (A) he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in or have any financial interest
in, any business which is in competition with the business of the Restricted
Group and (B) he shall not, on his own behalf or on behalf of any person, firm
or company, directly or indirectly, solicit or offer employment to any person
who has been employed by the Restricted Group at any time during the 12 months
immediately preceding such solicitation.
(c) For purposes of this Section 12, a business shall be deemed to be in
competition with the Restricted Group if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Restricted Group as a material part
of the business of the Restricted Group within the same geographic area in which
they effect such purchases, sales or dealings or renders such services. Nothing
in this Section 12 shall be construed so as to preclude Executive from investing
in any publicly or privately held company, provided Executive's beneficial
ownership of any class of such company's securities does not exceed 1% of the
outstanding securities of such class.
(d) Executive and the Company agree that this covenant not to compete is a
reasonable covenant under the circumstances, and further agree that if in the
opinion of any court of competent jurisdiction such restraint is not reasonable
in any respect, such court shall have the right, power and authority to excise
or modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
amended. Executive agrees that any breach of the covenants contained in this
Section 12 would irreparably injure the Company. Accordingly, Executive agrees
that the Company may, in
<PAGE>
14
addition to pursuing any other remedies it may have in law or in equity, cease
making any payments otherwise required by this Agreement and obtain an
injunction against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive.
(e) As additional consideration for Executive's commitments pursuant to
this Section 12, the Company, shall if Executive's employment is terminated by
the Company without Cause (other than as a result of Permanent Disability or
death) or by the Executive for Good Reason, pay to the Executive an amount equal
to the sum of the Salary and Target Bonus (otherwise payable over a twelve month
period) in twenty-four equal monthly installments commencing during the month
following the month in which Executive's employment was terminated.
13. Beneficiaries; References. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
14. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 14 are in addition to the survivorship provisions of
any other section of this Agreement.
<PAGE>
15
15. Governing Law and Venue. This Agreement shall be construed under and
governed by the laws of the State of Delaware applicable to contracts made and
to be performed therein and the parties hereto agree to submit themselves to the
jurisdiction of the federal and state courts of the State of Delaware for the
purpose of any suit, action or other proceeding arising out of this Agreement;
PROVIDED, HOWEVER, that in the event of the Executive's breach of the provisions
of Section 12 hereof, the Company may bring an action in any jurisdiction in
which the Company believes the Executive has breached those provisions and the
Executive agrees to submit to the courts of such jurisdiction.
16. Effect on Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive regarding Executive's employment. The Option
Agreement, the Registration Rights Agreement and the LLC Agreement shall remain
in effect.
17. Withholding. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
<PAGE>
16
IN WITNESS WHEREOF, the parities hereto have executed this Agreement as of
the date first written above.
CONSOLIDATED CONTAINER
COMPANY LLC
By: /s/ John R. Woodard
-------------------------------
Name: John R. Woodard
Title: Vice President
/s/ Ronald E. Justice
-------------------------------
RONALD E. JUSTICE
<PAGE>
Exhibit 10.15
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), made as of July 5, 1999, by and
between CONSOLIDATED CONTAINER COMPANY LLC, a Delaware limited liability company
(the "Company"), and HENRY CARTER ("Executive").
RECITALS
Executive is willing to accept employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the Term (as hereinafter defined) as one of
its Executive Vice Presidents. In his capacity as a Executive Vice President,
Executive shall report to the Company's Chief Executive Officer (the "Chief
Executive Officer").
1.2 Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment as one of the Company's Executive Vice Presidents,
commencing on the date hereof, and agrees to devote his full working time and
efforts, to the best of his ability, experience and talent, to the performance
of services, duties and responsibilities in connection therewith. Executive
shall perform such duties and exercise such powers, commensurate with his
position, as an Executive Vice President of the Company, as the Chief Executive
Officer shall from time to time delegate to him on such terms and conditions and
subject to such restrictions as such Chief Executive Officer may reasonably from
time to time impose.
<PAGE>
2
1.3 Nothing in this Agreement shall preclude Executive, so long as in the
reasonable determination of the Company's Management Committee (the "Committee")
such activities do not materially interfere with his duties and responsibilities
hereunder, from engaging in charitable and community affairs or from serving as
a member of the boards of directors of up to two companies which are not
involved in the purchase, sale, lease, management of or other dealing in any
property or the rendering of any service purchased, sold, leased, managed, dealt
in or rendered by the Company or any affiliate.
2. Term of Employment. Executive's term of employment under this Agreement
(the "Term") shall commence on the date hereof and, subject to the terms hereof,
shall terminate on the earlier of (i) the second anniversary of the date hereof
(the "Termination Date") or (ii) the termination of Executive's employment
pursuant to Section 6 of this Agreement; PROVIDED, HOWEVER, that any termination
of employment by Executive (other than for death or Permanent Disability) may
only be made upon 60 days prior written notice to the Company.
3. Compensation.
3.1 Salary. The Company shall pay Executive a salary at the rate of
$230,000 per annum (the "Salary") for the period commencing on the beginning of
Executive's term of employment hereunder and ending on the expiration of the
Term. The Salary shall be payable in accordance with the ordinary payroll
practices of the Company. The Salary shall be reviewed by the Committee annually
beginning in January 2000 and any increase in the Salary shall be in the
discretion of the Committee and, as so increased, shall constitute "Salary"
hereunder. Salary may not be reduced below $230,000 per annum.
3.2 Annual Bonus. In addition to his Salary, Executive shall be eligible
to participate in the Company's annual bonus plan (the "Bonus Plan", and any
award or payment
<PAGE>
3
under the Bonus Plan, the "Bonus") during the Term and shall have a target bonus
(the "Target Bonus") equal to 40% of the Salary and a maximum bonus (the
"Maximum Bonus") of 80% of Salary, in each case based upon performance criteria
determined by the Committee in its sole discretion.
4. Employee Benefits; Expenses.
4.1 Employee Benefit Programs, Plans and Practices. The Company shall
provide Executive during the Term with coverage under all employee pension and
welfare benefit programs, plans and practices (commensurate with his positions
in the Company and to the extent permitted under any employee benefit plan) in
accordance with the terms thereof, which the Company makes generally available
to its senior executives.
4.2 Vacation. Executive shall be entitled each year to vacation for a
period of four (4) weeks to be taken at mutually convenient times, during which
time Salary shall be paid in full.
4.3 EXPENSES. Executive is authorized to incur reasonable costs and
expenses in carrying out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel and similar items related to
such duties and responsibilities. The Company will reimburse Executive for all
such expenses upon presentation by Executive from time to time of appropriately
itemized and approved (consistent with the Company's policy) accounts of such
expenditures.
5. Excise Taxes. (a) Gross-Up Payment. Anything in this Agreement to the
contrary notwithstanding and except as set forth below, if it is determined that
any payment or distribution (a "payment") by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but
<PAGE>
4
determined without regard to any additional payments required under this Section
5) including, without limitation, vesting of options, would be subject to the
excise tax imposed by Section 4999 of the Code, or if any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount sufficient to
pay all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment.
(b) CALCULATION OF GROSS-UP PAYMENT. Subject to the provisions of
paragraph (c) of this Section 5, all determinations required to be made under
this Section 5, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be used in arriving
at such determination, shall be made by a certified public accounting firm
selected by the Company and reasonably acceptable to the Executive (the
"Accounting Firm"), which shall be retained to provide detailed supporting
calculations both to the Company and the Executive. All fees and expenses of the
Accounting Firm shall be paid solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 5, shall be paid by the Company to the
Executive within five (5) days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which should
have been made will not have been made by the Company ("Underpayment"),
consistent with the calculations required to be made hereunder. If the
<PAGE>
5
Company exhausts its remedies pursuant to paragraph (c) of this Section 5 and
the Executive thereafter is required to pay an Excise Tax in an amount that
exceeds the Gross-Up Payment received by the Executive the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) CONTESTED TAXES. The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would result in
an Underpayment. Such notification shall be given as soon as practicable but no
later than ten (10) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid or appealed. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claims as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order to effectively
contest such claim, and
(4) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest
<PAGE>
6
and shall indemnify and hold the Executive harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this paragraph (c),
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or to contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; PROVIDED, HOWEVER, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to the amount of the Gross-Up
Payment, and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) REFUNDS. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to this Section 5, the Executive becomes entitled to
receive any refund with
<PAGE>
7
respect to such claim, the Executive shall promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto).
6. Termination of Employment.
6.1 Termination Not for Cause or for Good Reason. (a) The Company may
terminate Executive's employment at any time for any reason. If Executive's
employment is terminated by the Company, other than for Cause (as defined in
Section 6.4(b) hereof) or as a result of Executive's death or Permanent
Disability (as defined in Section 6.2 hereof), or if Executive terminates his
employment for Good Reason (as defined in 6.1(c) hereof), in each case prior to
the expiration of the Term, Executive shall receive such payments, if any, under
applicable plans or programs, including but not limited to those referred to in
Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans
or programs. In addition, if Executive's employment is terminated as provided in
the prior sentence during the Term, Executive shall be entitled to receive an
amount (the "Termination Amount") equal to the sum of the Salary and Target
Bonus otherwise payable over a twelve month period. The Termination Amount, if
any, shall be payable in equal monthly installments over the twenty-four month
period following the termination of the Executive's employment. In addition,
Executive shall be entitled to receive a cash lump sum payment in respect of
accrued but unused vacation days (not to exceed 4 weeks of Salary) (the
"Vacation Payment") and to compensation earned but not yet paid (the
"Compensation Payment") and to continued coverage for twenty-four months
following the termination of the Executive's employment under any employee
medical, dental, life and long-term disability insurance plans in accordance
with the respective terms thereof (unless such coverage is provided by
Executive's subsequent employer).
<PAGE>
8
(b) The Compensation Payment shall be paid by the Company to Executive
within 30 days after the termination of Executive's employment.
(c) For purposes of this Agreement, "Good Reason" shall mean any of the
following (without Executive's express prior written consent):
(i) (A) any reduction in the amount of the Executive's Salary, (B)
any reduction in Executive's potential Target Bonus or Maximum Bonus, or
(C) any significant reduction in the value of the Executive's benefits in
effect from time (unless in the case of either B or C, such reduction is
pursuant to a general change in the compensation or benefits applicable to
all similarly situated employees of the Company or its affiliates);
(ii) (A) other than in connection with a promotion, the removal of
the Executive from the Executive's position as a Executive Vice President
of the Company (or as a Executive Vice President of any successor to the
operations of the Company) or (B) any other significant reduction in the
nature or status of the Executive's duties or responsibilities; or
(iii) the transfer of the Executive's principal place of employment
to a metropolitan area other than that of the Executive's place of
employment immediately following the date hereof.
6.2 Permanent Disability. If the Executive suffers a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended ("Permanent Disability"), the Company or Executive may
terminate Executive's employment on written notice thereof, and Executive shall
receive or commence receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability policy or
similar arrangement, if any;
(ii) the Compensation Payment and the Vacation Payment;
(iii) the Target Bonus in respect of the fiscal year in which his
termination occurs, prorated by a fraction, the numerator of which is the
number of days of the fiscal year until termination and the denominator of
which is 365 (the "Prorated Bonus"); and
<PAGE>
9
(iv) such payments under applicable plans or programs, including but
not limited to those referred to in Section 4.1 hereof, to which he is
entitled pursuant to the terms of such plans or programs.
6.3 Death. In the event of Executive's death during the Term Executive's
estate or designated beneficiaries shall receive or commence receiving, as soon
as practicable:
(i) amounts payable pursuant to the terms of a life insurance policy
or similar arrangement, if any;
(ii) the Compensation Payment and the Vacation Payment;
(iii) the Prorated Bonus; and
(iv) such payments under applicable plans or programs, including but
not limited to those referred to in Section 4.1 hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant to
the terms of such plans or programs.
6.4 Voluntary Termination by Executive; Discharge for Cause. (a) The
Company shall have the right to terminate the employment of Executive for Cause.
In the event that Executive's employment is terminated by the Company for Cause,
as hereinafter defined, or by Executive other than for Good Reason or other than
as a result of the Executive's Permanent Disability or death, during the Term,
Executive shall only be entitled to receive the Compensation Payment and
Executive shall not be entitled, among other things, to the payment of any Bonus
in respect of all or any portion of the fiscal year in which such termination
occurs. After the termination of Executive's employment under this Section 6.4,
the obligations of the Company under this Agreement to make any further payments
(except for the Compensation Payment and the Vacation Payment), or provide any
benefits specified herein, to Executive shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i) willful
malfeasance or willful misconduct by Executive in connection with his
employment, (ii) continuing refusal by
<PAGE>
10
Executive to perform his duties hereunder or any lawful direction of the
Committee as required under Section 1.2, after notice of any such refusal to
perform such duties or direction was given to Executive, (iii) any breach of the
provisions of Section 12 of this Agreement by Executive or (iv) the commission
by Executive of (a) any felony or (b) a misdemeanor involving moral turpitude.
Termination of Executive pursuant to this Section 6.4 shall be made by delivery
to Executive of a copy of a resolution duly adopted in good faith by the
affirmative vote of not less than a majority of the Committee members at a
meeting of the Committee called and held for the purpose (after 30 days prior
written notice to Executive and reasonable opportunity for Executive to be heard
before the Committee prior to such vote), finding that in the reasonable
judgment of such Committee, Executive was guilty of conduct set forth in any of
clauses (i) through (iv) above and specifying the particulars thereof.
7. Mitigation of Damages. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
8. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Consolidated Container Company LLC
2515 McKinney Avenue
Suite 855
Dalla, TX 75201
with copies to:
James P. Kelley, Managing Director
Vestar Capital Partners
1225 Seventeenth Street, Suite 1660
Denver, Colorado 80202
<PAGE>
11
and
Alvin H. Brown, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
To Executive:
Henry Carter
2604 Notre Dame
Plano, Texas 75093
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
9. Separability; Legal Fees. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
10. Assignment. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this Agreement
to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock,
<PAGE>
12
assets or businesses of the Company, if such successor expressly agrees to
assume the obligations of the Company hereunder.
11. Amendment. This Agreement may only be amended by written agreement of
the parties hereto.
12. Nondisclosure of Confidential Information. (a) Executive shall not,
without the prior written consent of the Company, use, divulge, disclose or make
accessible to any other person, firm, partnership, corporation or other entity
any Confidential Information pertaining to the business of the Company, Suiza
Foods Corporation ("Suiza"), Franklin Plastics, Inc. ("Franklin"), Reid Plastics
Holdings, Inc. ("Reid"), Holdings or any of their respective affiliates, except
(i) while employed by the Company, in the business of and for the benefit of the
Company, or (ii) when required to do so by a court of competent jurisdiction, by
any governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Executive to divulge, disclose or
make accessible such information. For purposes of this Section 12(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing plans and other non-public,
proprietary and confidential information of the Company, Suiza, Franklin, Reid,
Holdings and all of their respective affiliates (the "Restricted Group") or
customers, that, in any case, is not otherwise available to the public (other
than by Executive's breach of the terms hereof).
(b) During the period of his employment hereunder and for two years
thereafter, Executive agrees that, without the prior written consent of the
Company, (A) he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder,
<PAGE>
13
partner, investor, lender or employee or in any other capacity, carry on, be
engaged in or have any financial interest in, any business which is in
competition with the business of the Restricted Group and (B) he shall not, on
his own behalf or on behalf of any person, firm or company, directly or
indirectly, solicit or offer employment to any person who has been employed by
the Restricted Group at any time during the 12 months immediately preceding such
solicitation.
(c) For purposes of this Section 12, a business shall be deemed to be in
competition with the Restricted Group if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Restricted Group as a material part
of the business of the Restricted Group within the same geographic area in which
they effect such purchases, sales or dealings or renders such services. Nothing
in this Section 12 shall be construed so as to preclude Executive from investing
in any publicly or privately held company, provided Executive's beneficial
ownership of any class of such company's securities does not exceed 1% of the
outstanding securities of such class.
(d) Executive and the Company agree that this covenant not to compete is a
reasonable covenant under the circumstances, and further agree that if in the
opinion of any court of competent jurisdiction such restraint is not reasonable
in any respect, such court shall have the right, power and authority to excise
or modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
amended. Executive agrees that any breach of the covenants contained in this
Section 12 would irreparably injure the Company. Accordingly, Executive agrees
that the Company may, in addition to pursuing any other remedies it may have in
law or in equity, cease making any payments otherwise required by this Agreement
and obtain an injunction against Executive from
<PAGE>
14
any court having jurisdiction over the matter restraining any further violation
of this Agreement by Executive.
(e) As additional consideration for Executive's commitments pursuant to
this Section 12, the Company, shall if Executive's employment is terminated by
the Company without Cause (other than as a result of Permanent Disability or
death) or by the Executive for Good Reason, pay to the Executive an amount equal
to the sum of the Salary and Target Bonus (otherwise payable over a twelve month
period) in twenty-four equal monthly installments commencing during the month
following the month in which Executive's employment was terminated.
13. Beneficiaries; References. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
14. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 14 are in addition to the survivorship provisions of
any other section of this Agreement.
15. Governing Law and Venue. This Agreement shall be construed under and
governed by the laws of the State of Delaware applicable to contracts made and
to be performed therein and the parties hereto agree to submit themselves to the
jurisdiction of the federal and
<PAGE>
15
state courts of the State of Delaware for the purpose of any suit, action or
other proceeding arising out of this Agreement; PROVIDED, HOWEVER, that in the
event of the Executive's breach of the provisions of Section 12 hereof, the
Company may bring an action in any jurisdiction in which the Company believes
the Executive has breached those provisions and the Executive agrees to submit
to the courts of such jurisdiction.
16. Effect on Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive regarding Executive's employment. The Option
Agreement, the Registration Rights Agreement and the LLC Agreement shall remain
in effect.
17. Withholding. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
<PAGE>
16
IN WITNESS WHEREOF, the parities hereto have executed this Agreement as of
the date first written above.
CONSOLIDATED CONTAINER
COMPANY LLC
By: /s/ John R. Woodard
----------------------------
Name: John R. Woodard
Title: Vice President
EXECUTIVE:
/s/ Henry Carter
------------------------------
HENRY CARTER
<PAGE>
EXHIBIT 12
STATEMENT REGARDING THE COMPUTATION OF THE RATIOS OF EARNINGS TO FIXED CHARGES
------------------------------------------------------------------------------
Provided below are (i) the ratios of earnings to fixed charges for the
years ended December 31, 1994, 1995, 1996, 1997 and 1998, (ii) the pro forma
ratio of earnings to fixed charges for the year ended December 31, 1998 and
(iii) the pro forma ratio of earnings to fixed charges for the six months ended
June 30, 1999.
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1995 1996 1997
(DOLLARS IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C> <C>
Income (loss) before taxes......................... $ 944 $ `2,141 $ 2,763 $(12,634)
Fixed charges:
Interest expense............................... 1,301 3,957 4,849 8,246
1/3 of rental expenses......................... 298 821 994 1,500
Total fixed changes................................ 1,599 4,778 5,843 9,746
Ratio of earnings to fixed charges............. 1.59x 1.45x 1.47x (a)
(a) Earnings were insufficient to cover fixed charges for the year ended December 31, 1997 by $12.6 million.
DECEMBER 31, 1998
PRO FORMA ADJUSTMENTS
PRE ACQUISITION HISTORICAL
REID SUIZA PCI OTHER PRO FORMA ACQUISITION PRO FORMA
PACKAGING BUSINESSE ADJUSTMENTS AND
OFFERING
ADJUSTMENTS
(DOLLARS IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before taxes.......... $3,256.0 $19,671.0 $ 87.0 $2,687.0 $ (3,586.0) $(8,324.0) $(13,791.0)
Fixed charges:
Interest expense................ 10,497 26,847 5,039 333 4,731 4,236 51,683
1/3 of rental expenses.......... 1,761 3,867 1,911 234 (150) - 7,623
-------- --------- ------- -------- ---------- --------- ----------
Total fixed charges................. 12,258 30,714 6,950 567 4,581 4,236 59,306
-------- --------- ------- -------- ---------- --------- ----------
Pro forma Ratio of earnings
to fixed charges................ 1.27x 1.64x 1.01x 5.74x N/A N/A 1.23x
======== ========= ======= ======== ========== ========= ==========
JUNE 30, 1999
REID SUIZA ACQUISITION PRO FORMA
PACKAGING AND OFFERINGl
ADJUSTMENTS
(DOLLARS IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C> <C>
Income (loss) before taxes......................... $ 5,005 $ 16,190 $ (4,800) $16,395
Fixed changes:
Interest expense............................... 4,484 18,632 2,800 25,916
1/3 of rental expenses......................... 1,087 2,616 - 3,703
Total fixed changes................................ 5,571 21,248 2,800 29,619
------- -------- -------- -------
Pro forma ratio of earnings
to fixed charges............................... 1.90X 1.76X N/A 1.55X
======= ======== ======== =======
</TABLE>
<PAGE>
Exhibit 21
LIST OF SUBSIDIARIES OF THE REGISTRANTS
Subsidiaries of Consolidated Container Company LLC:
Reid Plastics Group LLC (Delaware)
Consolidated Container Capital, Inc. (Delaware)
Plastic Containers LLC (Delaware)
Subsidiaries of Consolidated Container Capital, Inc.:
None
Subsidiaries of Reid Plastics Group LLC:
Reid Mexico, S.A. de C.V. (Districto Federal de Mexico)
Reid Plastics (Israel) Ltd. (Israel)
Reid Canada, Inc. (Ontario, Canada)
Stewart/Walker Plastics, Ltd. (British Columbia, Canada)
Master Plastics, Inc. (Alberta, Canada)
Subsidiaries of Plastic Containers LLC:
None
Subsidiaries of Continental Plastic Containers LLC:
None
Subsidiaries of Continental Caribbean Containers, Inc.:
None
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Consolidated
Container Company LLC and Consolidated Container Capital, Inc. of Form S-4 of
our report dated May 21, 1999, on the consolidated balance sheet of Plastic
Containers, Inc. and subsidiaries as of May 29, 1998 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the period form January 1, 1998 through May 29, 1998, appearing in the
Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
DELOITTE & TOUCHE LLP
Omaha, Nebraska
September 27, 1999
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Consolidated
Container Company LLC and Consolidated Container Capital, Inc. of the
following reports:
Our report dated August 25, 1999 on the consolidated balance sheet of
Consolidated Container Company LLC at July 2, 1999.
Our report dated August 25, 1999 on the consolidated balance sheets of Reid
Plastics, Inc. as of December 31, 1997 and 1998, and the related consolidated
statements of operations and comprehensive income (loss), shareholders'
equity and cash flows for the period from January 1, 1997 through October 14,
1997 (Predecessor Period), for the period from October 15, 1997 through
December 31, 1997, for the year ended December 31, 1998, and for the six
month period ended June 30, 1999 (Successor period), and
Our report dated February 9, 1999 (April 30, 1999, as to Note 17) on the
combined balance sheets of Franklin Plastics, Inc. and subsidiaries and
Plastic Containers, Inc. and subsidiaries, collectively "Suiza Packaging" as
of December 31, 1997 and 1998 and the related combined statements of
operations, stockholders' equity and cash flows for the five-month period
from the date of acquisition of Franklin (July 31, 1997) to December 31, 1997
and the year ended December 31, 1998 and the combined statements of
operations, stockholders' equity and cash flows of the predecessor of
Franklin, Plastics Management Group, for the four-month pre-acquisition
period from April 1, 1997 to July 30, 1997, all appearing in the Prospectus,
which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
prospectus.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
DELOITTE & TOUCHE LLP
Dallas, Texas
September 27, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March, 20 1997 (as to Reid Plastics, Inc.) in the
Registration Statement (on Form S-4) and the related prospectus of
Consolidated Container Company LLC and Consolidated Container Capital, Inc.
for the registration of $185,000,000 aggregate principal amount of its
10 1/8% Senior Subordinated Notes due 2009.
/s/ Ernst & Young LLP
Woodland Hills, California
September 27, 1999
<PAGE>
EXHIBIT 23.4
CONSENT OF PRICEWATERHOUSECOOPERS LLP
We hereby consent to the use in the Registration Statement on
Form S-4 (the "Registration Statement") of Consolidated Container Company LLC
and Consolidated Container Capital, Inc. In connection with the 10 1/8%
Senior Subordinated Notes due 2009 of our report dated July 1, 1997, with
respect to the combined financial statements of Plastics Management Group,
predecessor of Sulga Packaging, and to the reference to or under the heading
"Experts" in the prospectus which is part of the Registration Statement.
/s/ PricewaterhouseCoopers LLP
--------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 27, 1999
<PAGE>
EXHIBIT 23.5
KPMG
Two Central Park Plaza
Suite 1501
Omaha, NE 68102
233 South 13th Street, Suite 1600
Lincoln, NE 68508-2041
ACCOUNTANTS' CONSENT
The Board of Directors
Consolidated Container Company LLC:
We consent to the use of our report dated February 6, 1998 relating to the
consolidated balance sheet of Plastic Containers, Inc. and subsidiaries as of
December 31, 1997 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the two-year
period ended December 31, 1997 included in the registration statement on Form
S-4 and to the reference to our firm under the heading "Experts" in the
prospectus contained in the registration statement.
/s/ KPMG LLP
-----------------------
KPMG LLP
KPMG LLP
September 27, 1999
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
Each of the undersigned, being duly authorized to act for:
(i) CONSOLIDATED CONTAINER COMPANY LLC (the "Company"), as a
member of the Management Committee of Consolidated Container
Holdings LLC ("Holdings), which is the Sole Member and Manager
of the Company;
(ii) CONSOLIDATED CONTAINER CAPITAL, INC. ("Capital" and, together
with the Company, the "Issuers"), as a member of its Board of
Directors, and;
(iii) REID PLASTICS GROUP LLC ("Reid"), as a member of the
Management Committee of Holdings, which is the Sole Member and
Manager of the Company, which is the Sole Member and Manager
of Reid;
(iv) PLASTIC CONTAINERS LLC ("Plastic Containers"), as a member of
the Management Committee of Holdings, which is the Sole Member
and Manager of the Company, which is the Sole Member and
Manager of Plastic Containers; and
(v) CONTINENTAL PLASTIC CONTAINERS LLC ("Continental"), as a
member of the Management Committee of Holdings, which is the
Sole Member and Manager of the Company, which is the Sole
Member and Manager of Plastic Containers, which is the Sole
Member and Manager of Continental; and
(vi) CONTINENTAL CARIBBEAN CONTAINERS, INC. ("Caribbean" and,
collectively with Reid, Plastic Containers and Continental,
the "Guarantors"), as a member of its Board of Directors;
in his capacity or capacities as set forth below, hereby constitutes and
appoints Timothy W. Brasher, Steven M. Silver and John R. Woodard his true and
lawful attorney and agent, to do any and all acts and things and to execute any
and all instruments which said attorney and agent may deem necessary or
desirable to enable the Issuers and one or more Guarantors, as applicable, to
comply with the Securities Act of 1933, as amended (the "Act"), and any rules,
regulations and requirements of the Securities and Exchange Commission
thereunder, in connection with the registration under the Act of the Issuers'
10 1/8% Senior Subordinated Notes due 2009 and the guarantees by the Guarantors
thereof (collectively, the "Securities") in connection with the exchange offer
relating to the Securities, including, without limitation, the power and
authority to sign the name of each of the undersigned in the capacity or
capacities indicated below to one or more registration statements to be filed
with the Securities and Exchange Commission with respect to the Securities, to
any and all amendments or supplements to any such registration statement,
whether such amendments or supplements are filed before or after the effective
date of the applicable registration statement, and to any and all instruments or
documents filed as part of or in connection with any such registration statement
or any and all amendments or supplements thereto, whether such amendments or
supplements are filed before or after the effective date of any such
registration statement; and each of the undersigned hereby ratifies and confirms
all that such attorney and agent shall do or cause to be done by virtue hereof
in connection with the foregoing.
<PAGE>
2
<TABLE>
<CAPTION>
SIGNATURE NAME OF COMPANY AND TITLE
<S> <C>
/s/ RONALD V. DAVIS CONSOLIDATED CONTAINER COMPANY LLC
--------------------------- ----------------------------------
Ronald V. Davis Chairman of the Management Committee
of Consolidated Container Holdings LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
------------------------------------
Chairman of the Board of Directors
REID PLASTICS GROUP LLC
-----------------------
Chairman of the Management Committee
of Consolidated Container Holdings LLC
PLASTIC CONTAINERS LLC
----------------------
Chairman of the Management Committee
of Consolidated Container Holdings LLC
CONTINENTAL PLASTIC CONTAINERS LLC
----------------------------------
Chairman of the Management Committee
of Consolidated Container Holdings LLC
CONTINENTAL CARIBBEAN CONTAINERS, INC.
--------------------------------------
Chairman of the Board of Directors
CONSOLIDATED CONTAINER COMPANY LLC
----------------------------------
/s/ PETER M. BERNON Vice Chairman of the Management Committee
--------------------------- of Consolidated Container Holdings LLC
Peter M. Bernon
CONSOLIDATED CONTAINER CAPITAL, INC.
------------------------------------
Vice Chairman of the Board of Directors
REID PLASTICS GROUP LLC
-----------------------
Vice Chairman of the Management Committee
of Consolidated Container Holdings LLC
PLASTIC CONTAINERS LLC
----------------------
Vice Chairman of the Management Committee
of Consolidated Container Holdings LLC
CONTINENTAL PLASTIC CONTAINERS LLC
----------------------------------
Vice Chairman of the Management Committee
of Consolidated Container Holdings LLC
CONTINENTAL CARIBBEAN CONTAINERS, INC.
--------------------------------------
Vice Chairman of the Board of Directors
<PAGE>
3
<CAPTION>
SIGNATURE NAME OF COMPANY AND TITLE
<S> <C>
/s/ B. JOSEPH ROKUS CONSOLIDATED CONTAINER COMPANY LLC
--------------------------- ----------------------------------
B. Joseph Rokus Vice Chairman of the Management Committee
of Consolidated Container Holdings LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
------------------------------------
Vice Chairman of the Board of Directors
REID PLASTICS GROUP LLC
-----------------------
Vice Chairman of the Management Committee
of Consolidated Container Holdings LLC
PLASTIC CONTAINERS LLC
----------------------
Vice Chairman of the Management Committee
of Consolidated Container Holdings LLC
CONTINENTAL PLASTIC CONTAINERS LLC
----------------------------------
Vice Chairman of the Management Committee
of Consolidated Container Holdings LLC
CONTINENTAL CARIBBEAN CONTAINERS, INC.
--------------------------------------
Vice Chairman of the Board of Directors
<PAGE>
4
<CAPTION>
SIGNATURE NAME OF COMPANY AND TITLE
<S> <C>
/s/ WILLIAM L. ESTES CONSOLIDATED CONTAINER COMPANY LLC
--------------------------- ----------------------------------
William L. Estes President, Chief Executive Officer and Manager (principal
executive officer)
CONSOLIDATED CONTAINER CAPITAL, INC.
------------------------------------
President, Chief Executive Officer and Director (principal
executive officer)
REID PLASTICS GROUP LLC
-----------------------
President, Chief Executive Officer and Manager (principal
executive officer)
PLASTIC CONTAINERS LLC
----------------------
President, Chief Executive Officer and Manager (principal
executive officer)
CONTINENTAL PLASTIC CONTAINERS LLC
----------------------------------
President, Chief Executive Officer and Manager (principal
executive officer)
CONTINENTAL CARIBBEAN CONTAINERS, INC.
--------------------------------------
President, Chief Executive Officer and Director (principal
executive officer)
<PAGE>
5
<CAPTION>
SIGNATURE NAME OF COMPANY AND TITLE
<S> <C>
/s/ TIMOTHY W. BRASHER CONSOLIDATED CONTAINER COMPANY LLC
--------------------------- ----------------------------------
Timothy W. Brasher Senior Vice President, Chief Financial Officer and Manager
(principal financial officer and principal accounting
officer)
CONSOLIDATED CONTAINER CAPITAL, INC.
------------------------------------
Senior Vice President, Chief Financial Officer and
Director (principal financial officer and
principal accounting officer)
REID PLASTICS GROUP LLC
-----------------------
Senior Vice President, Chief Financial Officer and
Manager (principal financial officer and principal
accounting officer)
PLASTIC CONTAINERS LLC
----------------------
Senior Vice President, Chief Financial Officer and
Manager (principal financial officer and principal
accounting officer)
CONTINENTAL PLASTIC CONTAINERS LLC
----------------------------------
Senior Vice President, Chief Financial Officer and
Manager (principal financial officer and principal
accounting officer)
CONTINENTAL CARIBBEAN CONTAINERS, INC.
--------------------------------------
Senior Vice President, Chief Financial Officer and
Director (principal financial officer and
principal accounting officer)
<PAGE>
6
<CAPTION>
SIGNATURE NAME OF COMPANY AND TITLE
<S> <C>
/s/ JAMES P. KELLY CONSOLIDATED CONTAINER COMPANY LLC
--------------------------- ----------------------------------
James P. Kelly Manager
CONSOLIDATED CONTAINER CAPITAL, INC.
------------------------------------
Director
REID PLASTICS GROUP LLC
-----------------------
Manager
PLASTIC CONTAINERS LLC
----------------------
Manager
CONTINENTAL PLASTIC CONTAINERS LLC
----------------------------------
Manager
CONTINENTAL CARIBBEAN CONTAINERS, INC.
--------------------------------------
Director
<PAGE>
7
<CAPTION>
SIGNATURE NAME OF COMPANY AND TITLE
<S> <C>
/s/ LEONARD LIEBERMAN CONSOLIDATED CONTAINER COMPANY LLC
--------------------------- ----------------------------------
Leonard Lieberman Manager
CONSOLIDATED CONTAINER CAPITAL, INC.
------------------------------------
Director
REID PLASTICS GROUP LLC
-----------------------
Manager
PLASTIC CONTAINERS LLC
----------------------
Manager
CONTINENTAL PLASTIC CONTAINERS LLC
----------------------------------
Manager
CONTINENTAL CARIBBEAN CONTAINERS, INC.
--------------------------------------
Director
<PAGE>
8
<CAPTION>
SIGNATURE NAME OF COMPANY AND TITLE
<S> <C>
/s/ JOHN R. WOODARD CONSOLIDATED CONTAINER COMPANY LLC
--------------------------- ----------------------------------
John R. Woodard Manager
CONSOLIDATED CONTAINER CAPITAL, INC.
------------------------------------
Director
REID PLASTICS GROUP LLC
-----------------------
Manager
PLASTIC CONTAINERS LLC
----------------------
Manager
CONTINENTAL PLASTIC CONTAINERS LLC
----------------------------------
Manager
CONTINENTAL CARIBBEAN CONTAINERS, INC.
--------------------------------------
Director
<PAGE>
9
<CAPTION>
SIGNATURE NAME OF COMPANY AND TITLE
<S> <C>
/s/ WILLIAM G. BELL CONSOLIDATED CONTAINER COMPANY LLC
--------------------------- ----------------------------------
William G. Bell Manager
CONSOLIDATED CONTAINER CAPITAL, INC.
------------------------------------
Director
REID PLASTICS GROUP LLC
-----------------------
Manager
PLASTIC CONTAINERS LLC
----------------------
Manager
CONTINENTAL PLASTIC CONTAINERS LLC
----------------------------------
Manager
CONTINENTAL CARIBBEAN CONTAINERS, INC.
--------------------------------------
Director
</TABLE>
<PAGE>
EXHIBIT 25
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
CONSOLIDATED CONTAINER COMPANY LLC
(Exact name of obligor as specified in its charter)
Delaware _____________
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
CONSOLIDATED CONTAINER CAPITAL, INC.
(Exact name of obligor as specified in its charter)
Delaware _____________
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
REID PLASTICS GROUP LLC
(Exact name of obligor as specified in its charter)
Delaware _____________
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
PLASTIC CONTAINERS LLC
(Exact name of obligor as specified in its charter)
Delaware _____________
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
CONTINENTAL PLASTIC CONTAINERS LLC
(Exact name of obligor as specified in its charter)
Delaware _____________
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
CONTINENTAL CARIBBEAN CONTAINERS, INC.
(Exact name of obligor as specified in its charter)
Delaware _____________
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2515 McKinney Avenue, Suite 850
Dallas, Texas 75201
(Address of principal executive offices) (Zip code)
----------------------
10-1/8% Senior Subordinated Notes due 2009
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
Name Address
---- -------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 3rd day of August, 1999.
THE BANK OF NEW YORK
By: /s/ REMO J. REALE
-------------------------------
Name: Remo J. Reale
Title: Assistant Vice President
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
--------------
In Thousands
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ...................... $ 4,508,742
Interest-bearing balances ............................................... 4,425,071
Securities:
Held-to-maturity securities ............................................. 836,304
Available-for-sale securities ........................................... 4,047,851
Federal funds sold and Securities purchased under agreements to resell ... 1,743,269
Loans and lease financing receivables:
Loans and leases, net of unearned income ................................ 39,349,679
LESS: Allowance for loan and lease losses ............................... 603,025
LESS: Allocated transfer risk reserve ................................... 15,906
Loans and leases, net of unearned income, allowance, and reserve ........ 38,730,748
Trading Assets ........................................................... 1,571,372
Premises and fixed assets (including capitalized leases) ................. 685,674
Other real estate owned .................................................. 10,331
Investments in unconsolidated subsidiaries and associated companies ...... 182,449
Customers' liability to this bank on acceptances outstanding ............. 1,184,822
Intangible assets ........................................................ 1,129,636
Other assets ............................................................. 2,632,309
------------
Total assets ............................................................. $ 61,688,578
============
LIABILITIES
Deposits:
In domestic offices ..................................................... $ 25,731,036
Noninterest-bearing ..................................................... 10,252,589
Interest-bearing ........................................................ 15,478,447
In foreign offices, Edge and Agreement subsidiaries, and IBFs ........... 18,756,302
Noninterest-bearing ..................................................... 111,386
Interest-bearing ........................................................ 18,644,916
Federal funds purchased and Securities sold under agreements to repurchase 3,276,362
Demand notes issued to the U.S.Treasury .................................. 230,671
Trading liabilities ...................................................... 1,554,493
Other borrowed money:
With remaining maturity of one year or less ............................. 1,154,502
With remaining maturity of more than one year through three years ....... 465
With remaining maturity of more than three years ........................ 31,080
<PAGE>
<CAPTION>
Dollar Amounts
--------------
In Thousands
<S> <C>
Bank's liability on acceptances executed and outstanding ................. 1,185,364
Subordinated notes and debentures ........................................ 1,308,000
Other liabilities ........................................................ 2,743,590
------------
Total liabilities ........................................................ 55,971,865
============
EQUITY CAPITAL
Common stock ............................................................. 1,135,284
Surplus .................................................................. 764,443
Undivided profits and capital reserves ................................... 3,807,697
Net unrealized holding gains (losses) on available-for-sale securities ... 44,106
Cumulative foreign currency translation adjustments ...................... (34,817)
------------
Total equity capital ..................................................... 5,716,713
------------
Total liabilities and equity capital ..................................... $ 61,688,578
============
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni
Alan R. Griffith Directors
Gerald L. Hassell
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CIK> 0001095531
<NAME> CONSOLIDATED CONTAINER CO. LLC
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 10,625
<SECURITIES> 8,612
<RECEIVABLES> 91,832
<ALLOWANCES> 5,439
<INVENTORY> 37,207
<CURRENT-ASSETS> 145,287
<PP&E> 295,230
<DEPRECIATION> 17,678
<TOTAL-ASSETS> 983,973
<CURRENT-LIABILITIES> 121,317
<BONDS> 565,007
0
0
<COMMON> 255,971
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 983,973
<SALES> 85,423
<TOTAL-REVENUES> 85,423
<CGS> 67,411
<TOTAL-COSTS> 76,412
<OTHER-EXPENSES> (478)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,484
<INCOME-PRETAX> 5,005
<INCOME-TAX> 2,890
<INCOME-CONTINUING> 2,365
<DISCONTINUED> 0
<EXTRAORDINARY> 1,171
<CHANGES> 0
<NET-INCOME> 1,194
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
101/8 SENIOR SUBORDINATED NOTES DUE 2009
OF
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON __________________ (THE "EXPIRATION DATE") UNLESS EXTENDED BY
CONSOLIDATED CONTAINER COMPANY LLC.
THE EXCHANGE AGENT IS:
THE BANK OF NEW YORK
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND DELIVERY:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
New York, New York 10286 Corporate Trust Service Window
Attention: Jason Larragoity Ground Level
New York, New York 10286
Attention: Jason Larragoity
BY OVERNIGHT COURIER: BY FACSIMILE:
(Eligible Institutions Only)
The Bank of New York
101 Barclay Street The Bank of New York
New York, New York 10286 Facsimile No. (212) 815-6334
Attention: Jason Larragoity CONFIRMATION BY TELEPHONE:
(212) 815-_____
FOR INFORMATION CALL:
(212) 815-_____
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE AND WITHOUT CONFIRMATION BY TELEPHONE WILL NOT
CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated
____________,1999 (the "Prospectus") of Consolidated Container Company LLC and
Consolidated Container Capital, Inc. (the "Issuers") and of Reid Plastics Group
LLC ("Reid"), Plastic Containers LLC ("Plastic Containers"), Continental Plastic
Containers LLC ("Continental") and Continental Caribbean Containers, Inc.
("Caribbean" and, together with Reid, Plastic Containers and Continental, the
"Guarantors") and this Letter of Transmittal (the "Letter of Transmittal"),
which together relate to the Issuers' offer to exchange (the "Exchange Offer")
their 10 1/8 Senior
<PAGE>
2
Subordinated Notes due 2009 (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), for each of their outstanding 10 1/8 Senior Subordinated Notes due
2009 (the "Outstanding Notes" and, together with the Exchange Notes, the
"Notes"), which were issued and sold pursuant to Rule 144A under the
Securities Act, from the holders thereof. The Outstanding Notes are
unconditionally guaranteed (the "Old Guarantees") by the Guarantors on a
senior subordinated basis, and the Exchange Notes will be unconditionally
guaranteed (the "New Guarantees") by the Guarantors on a senior subordinated
basis. Upon the terms and subject to the conditions set forth in the
Prospectus and the Letter of Transmittal, the Guarantors offer to issue the
New Guarantees with respect to all Exchange Notes issued in the Exchange
Offer in exchange for the outstanding Old Guarantees of the Outstanding Notes
for which such Exchange Notes are issued in exchange. Throughout this letter,
unless the context otherwise requires and whether so expressed or not,
references to the "Exchange Offer" include the Guarantor's offer to exchange
the New Guarantees for the Old Guarantees, references to the "Exchange Notes"
include the related New Guarantees and references to the "Outstanding Notes"
include the related Old Guarantees.
The form and terms of the Exchange Notes will be substantially
identical to the form and terms of the Outstanding Notes, except that the
Exchange Notes will be freely tradeable by virtue of their registration under
the Securities Act, will not bear legends restricting their transfer, will not
be subject to any additional obligations regarding registration under the
Securities Act and will not be subject to the special interest payments
resulting from a failure to meet certain registration obligations. The Exchange
Notes will be issued under, and entitled to the benefits of, the same indenture
that authorized the issuance of the Outstanding Notes. Consequently. Both series
will be treated as a single class of debt securities under that indenture.
Capitalized terms used but not defined herein shall have the
same meaning given them in the Prospectus.
If the undersigned has checked the appropriate boxes below and
signed this Letter of Transmittal, it has indicated the action the undersigned
desires to take with respect to the Exchange Offer.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
<PAGE>
3
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE
PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW.
List below the Outstanding Notes to which this Letter of
Transmittal relates. If the space provided below is inadequate, the certificate
numbers and aggregate principal amounts should be listed on a separate signed
schedule affixed hereto.
DESCRIPTION OF OUTSTANDING NOTES TENDERED HEREWITH
<TABLE>
<CAPTION>
AGGREGATE
PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE REPRESENTED BY PRINCIPAL
(PLEASE FILL IN) NUMBER(S)* OUTSTANDING NOTES* AMOUNT TENDERED**
<S> <C> <C> <C>
- --------------------------------------------------- ---------------------- ---------------------- ---------------------------------
- --------------------------------------------------- ---------------------- ---------------------- ---------------------------------
- --------------------------------------------------- ---------------------- ---------------------- ---------------------------------
- --------------------------------------------------- ---------------------- ---------------------- ---------------------------------
- --------------------------------------------------- ---------------------- ---------------------- ---------------------------------
- --------------------------------------------------- ---------------------- ---------------------- ---------------------------------
- --------------------------------------------------- ---------------------- ---------------------- ---------------------------------
Total
- --------------------------------------------------- ---------------------- ---------------------- ---------------------------------
</TABLE>
* NEED NOT BE COMPLETED BY BOOK-ENTRY HOLDERS.
** UNLESS OTHERWISE INDICATED, THE HOLDER WILL BE DEEMED TO HAVE TENDERED THE
FULL AGGREGATE PRINCIPAL AMOUNT REPRESENTED BY SUCH OUTSTANDING NOTES. SEE
INSTRUCTION 2 BELOW.
Holders of Outstanding Notes whose Outstanding Notes are not
immediately available or who cannot deliver all other required documents to the
Exchange Agent on or prior to the Expiration Date or who cannot complete the
procedures for book-entry transfer on a timely basis, must tender their
Outstanding Notes according to the guaranteed delivery procedures set forth in
the Prospectus.
Unless the context otherwise requires, the term "holder" for
purposes of this Letter of Transmittal means any person in whose name
Outstanding Notes are registered or any other person who has obtained a properly
completed bond power from the registered holder or any person whose Outstanding
Notes are held of record by The Depository Trust Company ("DTC").
<PAGE>
4
/ / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s):
---------------------------------------------
Name of Eligible Institution that guaranteed delivery:
--------------------
Date of execution of Notice of guaranteed delivery:
-----------------------
If delivered by Book-Entry Transfer:
Name of Tendering Institution:
-------------------------------------
Account Number:
----------------------------------------------------
Transaction Code Number:
-------------------------------------------
/ / CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO PERSON OTHER THAN THE
PERSON SIGNING THIS LETTER OF TRANSMITTAL:
Name:
--------------------------------------------------------------------
Address:
-----------------------------------------------------------------
/ / CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO AN ADDRESS DIFFERENT
FROM THAT LISTED ELSEWHERE IN THIS LETTER OF TRANSMITTAL:
Name:
---------------------------------------------------------------------
Address:
------------------------------------------------------------------
<PAGE>
5
/ / CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED OUTSTANDING NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES
AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF
ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
---------------------------------------------------------------------
Address:
------------------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes. If the undersigned is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Outstanding Notes
that were acquired as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus in connection with
any resale of such Exchange Notes. However, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. A broker-dealer may
not participate in the Exchange Offer with respect to Outstanding Notes acquired
other than as a result of market-making activities or other trading activities.
Any holder who is an "affiliate" of the Issuers or the Guarantors or who has an
arrangement or understanding with respect to the distribution of the Exchange
Notes to be acquired pursuant to the Exchange Offer, or any broker-dealer who
purchased Outstanding Notes from the Issuers to resell pursuant to Rule 144A
under the Securities Act or any other available exemption under the Securities
Act must comply with the registration and prospectus delivery requirements under
the Securities Act.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange
Offer, the undersigned hereby tenders to the Issuers the principal amount of the
Outstanding Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of all or any portion of the Outstanding Notes tendered
herewith in accordance with the terms and conditions of the Exchange Offer
(including, if the Exchange Offer is extended or amended, the terms and
conditions of any such extension or amendment), the undersigned hereby
exchanges, assigns and transfers to, or upon the order of, the Issuers all
right, title and interest in and to such Outstanding Notes as are being tendered
herewith.
The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its true and lawful agent and attorney-in-fact of the
undersigned (with full knowledge that the Exchange Agent also acts as the agent
of the Issuers, in connection with the Exchange Offer) to cause the Outstanding
Notes to be assigned, transferred and exchanged.
The undersigned represents and warrants that it has full power
and authority to tender, exchange, assign and transfer the Outstanding Notes and
to acquire Exchange Notes issuable upon the exchange of such tendered
Outstanding Notes, and that, when the same are accepted for exchange, the
Issuers will acquire good and unencumbered title to the tendered Outstanding
Notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The undersigned also warrants that it will,
upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Issuers to be necessary or desirable to complete the
exchange, assignment and transfer of the tendered Outstanding Notes or transfer
ownership of such Outstanding Notes on the account books maintained by the
book-entry transfer facility. The undersigned further agrees that acceptance of
any and all validly tendered Outstanding Notes by the Issuers and the issuance
of Exchange Notes in exchange therefor shall constitute performance in full by
the Issuers and the Guarantors of their obligations under the Registration
Rights Agreement dated July 2, 1999 among the Issuers, the Subsidiary Guarantors
listed therein and Donaldson, Lufkin & Jenrette Securities Corporation, Deutsche
Bank Securities Inc., J.P. Morgan Securities Inc. and Bear, Stearns & Co. Inc.
(the "Registration Rights Agreement") and that the Issuers and the Guarantors
shall have no further obligations or liabilities thereunder. The undersigned
will comply with its obligations under the Registration Rights Agreement. The
undersigned has read and agrees to all terms of the Exchange Offer.
The Exchange Offer is subject to certain conditions as set
forth in the Prospectus under the caption "The Exchange Offer -- Certain
Conditions to the Exchange Offer." The undersigned recognizes that as a result
of these conditions (which may be waived, in whole or in part, by the Issuers),
as more particularly set forth in the Prospectus, the Issuers may not be
required to exchange any of the Outstanding Notes tendered hereby and, in such
event, the Outstanding Notes not exchanged will be returned to the undersigned
at the address shown above, promptly following the expiration or termination of
the Exchange Offer. In addition, the Issuers may amend the Exchange Offer at any
time prior to the Expiration Date if any of the
<PAGE>
2
conditions set forth under "The Exchange Offer -- Certain Conditions to the
Exchange Offer" occur.
The undersigned understands that tenders of Outstanding Notes
pursuant to any one of the procedures described in the Prospectus and in the
instructions attached hereto will, upon the Issuers' acceptance for exchange of
such tendered Outstanding Notes, constitute a binding agreement between the
undersigned and the Issuers upon the terms and subject to the conditions of the
Exchange Offer. The undersigned recognizes that, under circumstances set forth
in the Prospectus, the Issuers may not be required to accept for exchange any of
the Outstanding Notes.
By tendering shares of Outstanding Notes and executing this
Letter of Transmittal, the undersigned represents that:
(i) Exchange Notes received in the exchange will be acquired
in the ordinary course of business of the undersigned;
(ii) the undersigned has no arrangement or understanding with
any person to participate in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such
Exchange Notes;
(iii) the undersigned is not an "affiliate" of the Issuers or
the Guarantors within the meaning of Rule 405 under the Securities Act;
and
(iv) if the undersigned or the person receiving such Exchange
Notes (whether or not such person is the undersigned) is a
broker-dealer that will receive Exchange Notes for its own account in
exchange for Outstanding Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges
that it will deliver a Prospectus in connection with any resale of such
Exchange Notes; however, by so acknowledging and by delivering a
Prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
If the undersigned is a person in the United Kingdom, the
undersigned represents that its ordinary activities involve it in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of its business.
Any holder of Outstanding Notes using the Exchange Offer to
participate in a distribution of the Exchange Notes:
(i) cannot rely on the position of the staff of the Division
of Corporation Finance Securities and Exchange Commission stated in its
interpretive letter with respect to EXXON CAPITAL HOLDINGS CORPORATION
(available April 13, 1988), MORGAN STANLEY & CO., INC. (June 5, 1991)
or similar interpretive letters; and
(ii) must comply with the registration and prospectus
requirements of the Securities Act in connection with a secondary
resale transaction.
<PAGE>
3
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Tendered Outstanding Notes may be
withdrawn at any time prior to the Expiration Date in accordance with the terms
of this Letter of Transmittal. Except as stated in the Prospectus, this tender
is irrevocable.
Certificates for all Exchange Notes delivered in exchange for
tendered Outstanding Notes and any Outstanding Notes delivered herewith but not
exchanged, and registered in the name of the undersigned, shall be delivered to
the undersigned at the address shown below the signature of the undersigned.
The undersigned, by completing the box entitled "Description
of Outstanding Notes Tendered Herewith" above and signing this letter, will be
deemed to have tendered the Outstanding Notes as set forth in such box.
<PAGE>
TENDERING HOLDER(S) SIGN HERE
(AND COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
THIS MUST BE SIGNED BY REGISTERED HOLDER(S) EXACTLY AS NAME(S)
APPEAR(S) ON CERTIFICATE(S) FOR OUTSTANDING NOTES HEREBY TENDERED OR IN WHOSE
NAME OUTSTANDING NOTES ARE REGISTERED ON THE BOOKS OF DTC OR ONE OF ITS
PARTICIPANTS, OR BY ANY PERSON(S) AUTHORIZED TO BECOME THE REGISTERED HOLDER(S)
BY ENDORSEMENTS AND DOCUMENTS TRANSMITTED HEREWITH. IF SIGNATURE IS BY A
TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A
CORPORATION OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY,
PLEASE SET FORTH THE FULL TITLE OF SUCH PERSON. SEE INSTRUCTION 3 BELOW.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Date:
------------------------------
Name(s):
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
---------------------------------------------------------
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone No.:
---------------------------------------------------
Taxpayer Identification No.:
---------------------------------------------------
<PAGE>
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTION 3 BELOW)
Authorized Signature:
----------------------------------------------------------
Dated:
--------------------------------
Name:
--------------------------------------------------------------------------
Title:
-------------------------------------------------------------------------
Name of Firm:
------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
---------------------------------------------------
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4 BELOW)
To be completed ONLY if Exchange Notes or Outstanding Notes not tendered are to
be issued in the name of someone other than the registered holder of the
Outstanding Notes whose name(s) appear(s) above.
PLEASE CHECK THE APPROPRIATE BOX.
Issue: / / Outstanding Notes not tendered to:
/ / Exchange Notes to:
Name(s):
-----------------------------------------------------------------------
Address:
----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
---------------------------------------------------
Tax Identification No.:
--------------------------------------------------------
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4 BELOW)
To be completed ONLY if Exchange Notes or Outstanding Notes not tendered are to
be sent to someone other than the registered holder of the Outstanding Notes
whose name(s) appear(s) above, or such registered holder(s) at an address other
than that shown above. PLEASE CHECK THE APPROPRIATE BOX.
Mail: / / Outstanding Notes not tendered to:
/ / Exchange Notes to:
Name(s)
------------------------------------------------------------------------
Address
------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
---------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES.
A holder of Outstanding Notes may tender the same by (i)
properly completing and signing this Letter of Transmittal or a facsimile hereof
(all references in the Prospectus to the Letter of Transmittal shall be deemed
to include a facsimile thereof) and delivering the same, together with the
certificate or certificates, if applicable, representing the Outstanding Notes
being tendered and any required signature guarantees and any other documents
required by this Letter of Transmittal, to the Exchange Agent at its address set
forth above on or prior to the Expiration Date, or (ii) complying with the
procedure for book-entry transfer described below, or (iii) complying with the
guaranteed delivery procedures described below.
Holders of Outstanding Notes may tender Outstanding Notes by
book-entry transfer by crediting the Outstanding Notes to the Exchange Agent's
account at DTC in accordance with DTC's Automated Tender Offer Program ("ATOP")
and by complying with applicable ATOP procedures with respect to the Exchange
Offer. DTC participants that are accepting the Exchange Offer should transmit
their acceptance to DTC, which will edit and verify the acceptance and execute a
book-entry delivery to the Exchange Agent's account at DTC. DTC will then send a
computer-generated message (an "Agent's Message") to the Exchange Agent for its
acceptance in which the holder of the Outstanding Notes acknowledges and agrees
to be bound by the terms of, and makes the representations and warranties
contained in, this Letter of Transmittal, the DTC participant confirms on behalf
of itself and the beneficial owners of such Outstanding Notes all provisions of
this Letter of Transmittal (including any representations and warranties)
applicable to it and such beneficial owner as fully as if it had completed the
information required herein and executed and transmitted this Letter of
Transmittal to the Exchange Agent. Delivery of the Agent's Message by DTC will
satisfy the terms of the Exchange Offer as to execution and delivery of a Letter
of Transmittal by the participant identified in the Agent's Message. DTC
participants may also accept the Exchange Offer by submitting a Notice of
Guaranteed Delivery through ATOP.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE
OUTSTANDING NOTES AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK
OF THE HOLDER, AND EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF
SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, BE USED. IN ALL CASES SUFFICIENT TIME
SHOULD BE ALLOWED TO PERMIT TIMELY DELIVERY. NO OUTSTANDING NOTES OR LETTERS OF
TRANSMITTAL SHOULD BE SENT TO THE ISSUER OR THE GUARANTORS.
Holders whose Outstanding Notes are not immediately available
or who cannot deliver their Outstanding Notes and all other required documents
to the Exchange Agent on or prior to the Expiration Date or comply with
book-entry transfer procedures on a timely basis must tender their Outstanding
Notes pursuant to the guaranteed delivery procedure set forth in the Prospectus.
Pursuant to such procedure:
<PAGE>
2
(i) such tender must be made by or through an Eligible Institution
(as defined below);
(ii) on or prior to the Expiration Date, the Exchange Agent must
have received from such Eligible Institution a letter,
telegram or facsimile transmission of a Notice of Guaranteed
Delivery (receipt confirmed by telephone and an original
delivered by guaranteed overnight courier) setting forth the
name and address of the tendering holder, the names in which
such Outstanding Notes are registered, and, if applicable,
the certificate numbers of the Outstanding Notes to be
tendered, guaranteeing that, within three New York State
Exchange trading days after the expiration date of the
Exchange Offer, this Letter of Transmittal, together with
the Outstanding Notes or a book-entry confirmation, and any
other documents required by this Letter of Transmittal will
be delivered by the eligible institution to the Exchange
Agent; and
(iii) all tendered Outstanding Notes (or a confirmation of any
book-entry transfer of such Outstanding Notes into the
Exchange Agent's account at a book-entry transfer facility) as
well as this Letter of Transmittal and all other documents
required by this Letter of Transmittal, must be received by
the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in the Prospectus.
No alternative, conditional, irregular or contingent tenders
will be accepted. All tendering holders, by execution of this Letter of
Transmittal (or facsimile thereof), shall waive any right to receive notice of
the acceptance of the Outstanding Notes for exchange.
2. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Outstanding Notes
evidenced by a submitted certificate is tendered, the tendering holder must fill
in the aggregate principal amount of Outstanding Notes tendered in the box
entitled "Description of Outstanding Notes Tendered Herewith." A newly issued
certificate for the Outstanding Notes submitted but not tendered will be sent to
such holder as soon as practicable after the Expiration Date. All Outstanding
Notes delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise clearly indicated.
If not yet accepted, a tender pursuant to the Exchange Offer
may be withdrawn prior to the Expiration Date.
To be effective with respect to the tender of Outstanding
Notes, a written notice of withdrawal must:
(i) be received by the Exchange Agent at one of the addresses for
the Exchange Agent set forth above before the Issuers notify
the Exchange Agent that they have accepted the tender of
Outstanding Notes pursuant to the Exchange Offer;
<PAGE>
3
(ii) specify the name of the person who tendered the Outstanding
Notes to be withdrawn;
(iii) identify the Outstanding Notes to be withdrawn (including the
principal amount of such Outstanding Notes, or, if
applicable, the certificate numbers shown on the particular
certificates evidencing such Outstanding Notes and the
principal amount of Outstanding Notes represented by such
certificates);
(iv) include a statement that such holder is withdrawing its
election to have such Outstanding Notes exchanged; and
(v) be signed by the holder in the same manner as the original
signature on this Letter of Transmittal (including any
required signature guarantee). The Exchange Agent will
return the properly withdrawn Outstanding Notes promptly
following receipt of notice of withdrawal. If Outstanding
Notes have been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify
the name and number of the account at the book-entry
transfer facility to be credited with the withdrawn
Outstanding Notes or otherwise comply with the book-entry
transfer facility's procedures. All questions as to the
validity of notices of withdrawals, including time of
receipt, will be determined by the Issuers, and such
determination will be final and binding on all parties.
Any Outstanding Notes so withdrawn will be deemed not to
have been validly tendered for exchange for purposes of the Exchange Offer.
Any Outstanding Notes which have been tendered for exchange but which are not
exchanged for any reason will be returned to the holder thereof without cost
to such holder (or, in the case of Outstanding Notes tendered by book-entry
transfer into the Exchange Agent's account at the book entry transfer
facility pursuant to the book-entry transfer procedures described above, such
Outstanding Notes will be credited to an account with such book-entry
transfer facility specified by the holder) as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Outstanding Notes may be retendered by following one of
the procedures described under the caption "The Exchange Offer -- Procedures
for Tendering" in the Prospectus at any time prior to the Expiration Date.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered
holder(s) of the Outstanding Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of the certificates
without alteration, enlargement or any change whatsoever.
<PAGE>
4
If any of the Outstanding Notes tendered hereby are owned
of record by two or more joint owners, all such owners must sign this Letter
of Transmittal.
If a number of Outstanding Notes registered in different
names are tendered, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal as there are different
registrations of Outstanding Notes.
When this Letter of Transmittal is signed by the registered
holder or holders (which term, for the purposes described herein, shall
include the book-entry transfer facility whose name appears on a security
listing as the owner of the Outstanding Notes) of Outstanding Notes listed
and tendered hereby, no endorsements of certificates or separate written
instruments of transfer or exchange are required.
If this Letter of Transmittal is signed by a person other
than the registered holder or holders of the Outstanding Notes listed, such
Outstanding Notes must be endorsed or accompanied by separate written
instruments of transfer or exchange in form satisfactory to the Issuers and
duly executed by the registered holder, in either case signed exactly as the
name or names of the registered holder or holders appear(s) on the
Outstanding Notes.
If this Letter of Transmittal, any certificates or separate
written instruments of transfer or exchange are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Issuers,
proper evidence satisfactory to the Issuers of their authority so to act must
be submitted.
Endorsements on certificates or signatures on separate
written instruments of transfer or exchange required by this Instruction 3
must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed
by an Eligible Institution, unless Outstanding Notes are tendered: (i) by a
holder who has not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on this Letter of Transmittal; or (ii) for
the account of an Eligible Institution. In the event that the signatures in
this Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by an eligible guarantor
institution which is a member of a firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
United States or another "eligible institution" (an "Eligible Institution")
within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended. If Outstanding Notes are registered in the name of a person other
than the signer of this Letter of Transmittal, the Outstanding Notes
surrendered for exchange must be endorsed by, or be accompanied by a written
instrument or instruments of transfer or exchange, in satisfactory form as
determined by the Issuers, in their sole discretion, duly executed by the
registered holder with the signature thereon guaranteed by an Eligible
Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
<PAGE>
5
Tendering holders should indicate, as applicable, the name
and address to which the Exchange Notes or certificates for Outstanding Notes
not exchanged are to be issued or sent, if different from the name and
address of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the tax identification number of the person
named must also be indicated. Holders tendering Outstanding Notes by
book-entry transfer may request that Outstanding Notes not exchanged be
credited to such account maintained at the book-entry transfer facility as
such holder may designate.
5. TRANSFER TAXES.
The Issuers shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Outstanding Notes to them or their
order pursuant to the Exchange Offer. If a transfer tax is imposed for any
reason other than the transfer and exchange of Outstanding Notes to the
Issuers or their order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other person)
will be payable by the tendering holder. If satisfactory evidence of payment
of such taxes or exception therefrom is not submitted herewith the amount of
such transfer taxes will be billed directly to such tendering holder.
6. WAIVER OF CONDITIONS.
The Issuers reserve the absolute right to waive, in whole
or in part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
7. MUTILATED, LOST, STOLEN OR DESTROYED SECURITIES.
Any holder whose Outstanding Notes have been mutilated,
lost, stolen or destroyed, should contact the Exchange Agent at the address
indicated below for further instructions.
8. SUBSTITUTE FORM W-9
Each holder of Outstanding Notes whose Outstanding Notes
are accepted for exchange (or other payee) is required to provide a correct
taxpayer identification number ("TIN"), generally the holder's Social
Security or federal employer identification number and certain other
information on Substitute Form W-9, which is provided under "Important Tax
Information" below, and to certify that the holder (or other payee) is not
subject to backup withholding. Failure to provide the information on the
Substitute Form W-9 may subject the holder (or other payee) to a $50 penalty
imposed by the Internal Revenue Service and 31% federal income tax backup
withholding on payments made in connection with the Outstanding Notes. The
box in Part 3 of the Substitute Form W-9 may be checked if the holder (or
other payee) has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box
<PAGE>
6
in Part 3 is checked and a TIN is not provided by the time any payment is
made in connection with the Outstanding Notes, 31% of all such payments will
be withheld until a TIN is provided.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well
as requests for additional copies of the Prospectus and this Letter of
Transmittal, may be directed to the Exchange Agent at the address and
telephone number set forth above. In addition, all questions relating to the
Exchange Offer, as well as requests for assistance or additional copies of
the Prospectus and this Letter of Transmittal, may be directed to the
Exchange Agent at the address and telephone number indicated above.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE OR
COPY THEREOF (TOGETHER WITH CERTIFICATES OF OUTSTANDING NOTES OR CONFIRMATION
OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.
<PAGE>
IMPORTANT TAX INFORMATION
Under U.S. Federal income tax law, a holder of Outstanding Notes
whose Outstanding Notes are accepted for exchange may be subject to backup
withholding unless the holder provides The Bank of New York, as Paying Agent
(the "Paying Agent"), through the Exchange Agent, with either (i) such holder's
correct taxpayer identification number ("TIN") on Substitute Form W-9 attached
hereto, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such holder of Outstanding Notes is awaiting a TIN) and that (A) the holder
of Outstanding Notes has not been notified by the Internal Revenue Service that
such holder is subject to backup withholding as a result of a failure to report
all interest or dividends or (B) the Internal Revenue Service has notified the
holder of Outstanding Notes that such holder is no longer subject to backup
withholding; or (ii) an adequate basis for exemption from backup withholding. If
such holder of Outstanding Notes is an individual, the TIN is such holder's
social security number. If the Paying Agent is not provided with the correct
TIN, the holder of Outstanding Notes may be subject to certain penalties imposed
by the Internal Revenue Service.
Certain holders of Outstanding Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. However, exempt holders of Outstanding
Notes should indicate their exempt status on Substitute Form W-9. For example, a
corporation must complete the Substitute Form W-9, providing its TIN and
indicating that it is exempt from backup withholding. In order for a foreign
individual to qualify as an exempt recipient, the holder must submit a Form W-8,
signed under penalties of perjury, attesting to that individual's exempt status.
A Form W-8 can be obtained from the Paying Agent. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
If backup withholding applies, the Paying Agent is required to
withhold 31% of any such payments made to the holder of Outstanding Notes or
other payee. Backup withholding is not an additional tax. Rather, the tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
surrendering holder of Outstanding Notes has not been issued a TIN and has
applied for a TIN or intends to apply for a TIN in the near future. If the box
in Part 3 is checked, the holder of Outstanding Notes or other payee must also
complete the Certificate of Awaiting Taxpayer Identification Number below in
order to avoid backup withholding. Notwithstanding that the box in Part 3 is
checked and the Certificate of Awaiting Taxpayer Identification Number is
completed, the Paying Agent will withhold 31% of all payments made prior to the
time a properly certified TIN is provided to the Paying Agent.
The holder of Outstanding Notes is required to give the Paying Agent
the TIN (E.G., social security number or employer identification number) of the
record owner of the Outstanding Notes. If the Outstanding Notes are in more than
one name or are not in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number for the Payee (You)
to Give the Payer.--Social security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employee identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended.
"IRS" is the Internal Revenue Service.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Give the social security number
For this type of account: of--
- -------------------------------------------------------------------------------
<S> <C> <C>
1. Individual The individual
2. Two or more individuals (joint The actual owner of the account or,
account) if combined funds, the first
individual on the account1
3. Custodian account of a minor The minor2
(Uniform Gift to Minors Act)
4. a.The usual revocable savings The grantor-trustee1
trust account (grantoris also
trustee)
b.So-called trust account that is The actual owner1
not a legal or valid trust under
state law
5. Sole proprietorship The owner3
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Give the employer identification
For this type of account: number of--
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
6. Sole proprietorship The owner3
7. A valid trust, estate, or pension The legal entity4
trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or other
tax-exempt organization account
10. Partnership The partnership
11. A broker or registered nomine The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a state or local
government, school district, or
prison) that receives agricultural
program payments
</TABLE>
- -------------------------------------------------------------------------------
1 List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
2 Circle the minor's name and furnish the minor's social security number.
3 You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
4 List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated in
the account title.)
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE
NUMBER WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
- -------------------------------------------------------------------------------
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5. Application for a Social Security Card, at the local
Social Administration office, or Form SS-4, Application for Employer
Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING PAYEES SPECIFICALLY EXEMPTED FROM
WITHHOLDING INCLUDE:
- - An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)
(7), if the account satisfies the requirements of Section 401(f)(2).
- - The United States or a state thereof, the District of Columbia, a possession
of the United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
- - An international organization or any agency or instrumentality thereof.
- - A foreign government and any political subdivision, agency or instrumentality
thereof.
- - Payees that may be exempt from backup withholding include:
- - A corporation.
- - A financial institution.
- - A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a).
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- - A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
- - A futures commission merchant registered with the Commodity Futures Trading
Commission.
- - A foreign central bank of issue.
PAYMENTS OF DIVIDENDS AND PATRONAGE DIVIDENDS GENERALLY EXEMPT FROM BACKUP
WITHHOLDING INCLUDE:
- - Payments to nonresident aliens subject to withholding under Section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
- - Section 404(k) payments made by an ESOP.
PAYMENTS OF INTEREST GENERALLY EXEMPT FROM BACKUP WITHHOLDING
INCLUDE:
- - Payments of interest on obligations issued by individuals. NOTe: You may be
subject to backup withholding if this interest is $600 or more and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- - Payments described in Section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid to you.
Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see the regulations under sections 6041, 6041A,
6042, 6044, 6045, 6049, 6050A and 6050N.
EXEMPT PAYEES DESCRIBED ABOVE MUST FILE FORM W-9 OR A SUBSTITUTE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER,
FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE
FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
PRIVACY ACT NOTICE. -- Section 6109 requires you to provide your correct
taxpayer identification number to payers, who must report the payments to the
IRS. The IRS uses the number for identification purposes and may also provide
this information to various government agencies for tax enforcement or
litigation purposes. Payers must be given the numbers whether or not recipients
are required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to payer. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and not
to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully
falsifying certifications or affirmations may subject you to criminal
penalties including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE>
2
PAYER'S NAME:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND DATING BELOW. ---------------------------
FORM W-9 Social Security Number
Department of the Treasury OR
Internal Revenue Service
------------------------------
Employer Identification Number
Payer's Request for PART 2 PART 3--
Taxpayer CERTIFICATION--Under the penalties of perjury, I certify that:
Identification (1) The number shown on this form is my correct Taxpayer
Number (TIN) Identification Number (or I am waiting for a number to / / Awaiting TIN
be issued to me), and
(2) I am not subject to backup withholding because
(a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2)
above if you have been notified by the IRS that you
are currently subject to backup withholding because of
under-reporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you were subject to backup withholding you
received another notification from the IRS that you
are no longer subject to backup withholding, do not
cross out such item (2).
SIGN HERE -> SIGNATURE
-----------------------------------------------------------------------------------
DATE
--------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER,
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING
CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld.
Signature Date , 1998
------------------------------ ----------------------
<PAGE>
Exhibit 99.2
OFFER TO EXCHANGE
NEW 10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
FOR ANY AND ALL OF THE
OUTSTANDING 10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
OF
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
, 1999
TO SECURITIES DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
Consolidated Container Company LLC (the "Company"), Consolidated Container
Capital, Inc. ("Capital" and, together with the Company, the "Issuers") are
offering (the "Exchange Offer") to exchange $1,000 in principal amount of the
Issuers' 10 1/8% Senior Subordinated Notes due 2009 (the "Exchange Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for each $1,000 in principal amount of the Issuers'
outstanding 10 1/8% Senior Subordinated Notes due 2009 (the "Outstanding
Notes"), which were issued and sold pursuant to Rule 144A under the Securities
Act. The terms of the Exchange Notes are identical in all material respects
(including principal amount, interest rate and maturity) to the terms of the
Outstanding Notes for which they may be exchanged pursuant to the Exchange
Offer, except that the Exchange Notes are freely transferable by holders
thereof, upon the terms and subject to the conditions of the enclosed
Prospectus, dated , 1999 (as the same may be amended or supplemented from time
to time, the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter
of Transmittal"). The Outstanding Notes are unconditionally guaranteed (the "Old
Guarantees") by Reid Plastics Group LLC ("Reid"), Plastic Containers LLC
("Plastic Containers"), Continental Plastic Containers LLC ("Continental") and
Continental Caribbean Containers, Inc. ("Caribbean" and, together with Reid,
Plastic Containers and Continental, the "Guarantors") on a senior subordinated
basis, and the Exchange Notes will be unconditionally guaranteed (the "New
Guarantees") by the Guarantors on a senior subordinated basis. Upon the terms
and subject to the conditions set forth in the Prospectus and the Letter of
Transmittal, the Guarantors are offering to issue the New Guarantees with
respect to all Exchange Notes issued in the Exchange Offer in exchange for the
outstanding Old Guarantees for which such Exchange Notes are issued in exchange.
Throughout this letter, unless the context otherwise requires and whether so
expressed or not, references to the "Exchange Offer" include the Guarantor's
offer to exchange the New Guarantees for the Old Guarantees, references to the
"Exchange Notes" include the related New Guarantees and references to the
"Outstanding Notes" include the related Old Guarantees. The Issuers will accept
for exchange any and all Outstanding Notes properly tendered according to the
terms of the Prospectus and the Letter of Transmittal. Consummation of the
Exchange Offer is subject to certain conditions described in the Prospectus.
WE ARE ASKING YOU TO CONTACT YOUR CLIENTS FOR WHOM YOU HOLD OUTSTANDING
NOTES REGISTERED IN YOUR NAME OR IN THE NAME OF YOUR NOMINEE OR WHO HOLD
OUTSTANDING NOTES REGISTERED IN THEIR OWN NAMES.
<PAGE>
2
The Issuers will not pay any fees or commissions to any broker or dealer
or other person for soliciting tenders of Outstanding Notes pursuant to the
Exchange Offer. You will, however, be reimbursed by the Issuers for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to your clients. The Issuers will pay all transfer taxes, if any,
applicable to the tender of Outstanding Notes to it or its order, except as
otherwise provided in the Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. A form of letter which you may send as a cover letter to accompany
the Prospectus and related materials to your clients for whose
accounts you hold Outstanding Notes registered in your name or the
name of your nominee, with space provided for obtaining the
clients' instructions with regard to the Exchange Offer.
2. The Prospectus.
3. The Letter of Transmittal for your use in connection with the tender
of Outstanding Notes and for the information of your clients.
4. A form of Notice of Guaranteed Delivery.
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Your prompt action is requested. The Exchange Offer will expire at 5:00
P.M., New York City time, on [ ], 1999, unless the Exchange Offer is extended
by the Issuers. The time at which the Exchange Offer expires is referred to as
the "Expiration Date." Tendered Outstanding Notes may be withdrawn, subject to
the procedures described in the Prospectus, at any time prior to 5:00 P.M. on
the Expiration Date.
To participate in the Exchange Offer, certificates for Outstanding Notes,
or a timely confirmation of a book-entry transfer of such Outstanding Notes into
the Exchange Agent's account at The Depository Trust Company, together with a
duly executed and properly completed Letter of Transmittal or facsimile thereof,
with any required signature guarantees, and any other required documents, must
be received by the Exchange Agent by the Expiration Date as indicated in the
Letter of Transmittal and the Prospectus.
If holders of the Outstanding Notes wish to tender, but it is
impracticable for them to forward their Outstanding Notes prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
described in the Prospectus under "The Exchange Offer -- Guaranteed Delivery
Procedures" and the Letter of Transmittal.
<PAGE>
3
Additional copies of the enclosed material may be obtained from the Exchange
Agent, The Bank of New York, by calling (800) _______________.
Very truly yours,
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE ISSUERS OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO
THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS AND
THE LETTER OF TRANSMITTAL.
<PAGE>
Exhibit 99.3
OFFER TO EXCHANGE
NEW 10 1/8% SENIOR SUBORDINATED NOTES 2009
FOR ANY AND ALL OF THE
OUTSTANDING 10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
OF
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
, 1999
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated , 1999 (as the same
may be amended or supplemented from time to time, the "Prospectus"), and a
Letter of Transmittal (the "Letter of Transmittal"), relating to the offer (the
"Exchange Offer") by Consolidated Container Company LLC (the "Company"),
Consolidated Container Capital, Inc. ("Capital" and, together with the Company,
the "Issuers") to exchange $1,000 in principal amount of the Issuers' 10 c%
Senior Subordinated Notes due 2009 (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for each $1,000 in principal amount of outstanding 10 c% Senior Subordinated
Notes due 2009 (the "Outstanding Notes"), which were issued and sold pursuant to
Rule 144A under the Securities Act, upon the terms and subject to the conditions
set forth in the Prospectus and Letter of Transmittal. The terms of the Exchange
Notes are identical in all material respects (including principal amount,
interest rate and maturity) to the terms of the Outstanding Notes for which they
may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes
are freely transferable by holders thereof (except as provided herein or in the
Prospectus) and are not subject to any covenant regarding registration under the
Securities Act. The Outstanding Notes are unconditionally guaranteed (the "Old
Guarantees") by Reid Plastics Group LLC ("Reid"), Plastic Containers LLC
("Plastic Containers"), Continental Plastic Containers LLC ("Continental") and
Continental Caribbean Containers, Inc. ("Caribbean" and, together with Reid,
Plastic Containers and Continental, the "Guarantors") on a senior subordinated
basis, and the Exchange Notes will be unconditionally guaranteed (the "New
Guarantees") by the Guarantors on a senior subordinated basis. Upon the terms
and subject to the conditions set forth in the Prospectus and the Letter of
Transmittal, the Guarantors are offering to issue the New Guarantees with
respect to all Exchange Notes issued in the Exchange Offer in exchange for the
outstanding Old Guarantees of the Outstanding Notes for which such Exchange
Notes are issued in exchange. Throughout this letter, unless the context
otherwise requires and whether so expressed or not, references to the "Exchange
Offer" include the Guarantor's offer to exchange the New Guarantees for the Old
Guarantees, references to the "Exchange Notes" include the related New
Guarantees and references to the "Outstanding Notes" include the related Old
Guarantees. The Issuers will accept for exchange any and all Outstanding Notes
properly tendered according to the terms of the Prospectus and the Letter of
Transmittal. Consummation of the Exchange Offer is subject to certain conditions
that are set forth in the Prospectus.
This material is being forwarded to you as the beneficial owner of
Outstanding Notes carried by us for your account or benefit but not registered
in your name. A tender of such Outstanding Notes may only be made by us as the
registered holder and pursuant to your instructions. Therefore, the
<PAGE>
2
Issuers urge beneficial owners of Outstanding Notes registered in the name of a
broker, dealer, commercial bank, trust company or other nominee to contact such
registered holder promptly if you wish to tender Outstanding Notes in the
Exchange Offer.
Accordingly, we request instructions as to whether you wish to tender any
or all such Outstanding Notes held by us for your account, pursuant to the terms
and conditions set forth in the enclosed Prospectus and Letter of Transmittal.
However, we urge you to read the Prospectus carefully before instructing us as
to whether or not to tender your Outstanding Notes.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender Outstanding Notes on your behalf in accordance with
the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00
P.M., New York City Time, on , 1999, unless the Exchange Offer is extended by
the Issuers. The time the Exchange Offer expires is referred to as the
"Expiration Date." Tenders of Outstanding Notes may be withdrawn at any time
prior to the Expiration Date.
IF YOU WISH TO HAVE US TENDER ANY OR ALL OF YOUR OUTSTANDING NOTES, PLEASE
SO INSTRUCT US BY COMPLETING, EXECUTING AND RETURNING TO US THE INSTRUCTION FORM
ON THE REVERSE HEREOF. The accompanying Letter of Transmittal is furnished to
you for your information only and may not be used by you to tender Outstanding
Notes held by us and registered in our name for your account or benefit.
If we do not receive written instructions in accordance with the
procedures presented in the Prospectus and the Letter of Transmittal, we will
not tender any of the Outstanding Notes on your account.
PLEASE CAREFULLY REVIEW THE ENCLOSED MATERIAL AS YOU CONSIDER THE EXCHANGE
OFFER.
<PAGE>
INSTRUCTION TO REGISTERED HOLDER AND/OR DTC PARTICIPANT
FROM BENEFICIAL OWNER
OF
10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
The undersigned hereby acknowledges receipt of the Prospectus
dated , 1999 (as the same may be amended or supplemented from time to time, the
"Prospectus"), and a Letter of Transmittal (the "Letter of Transmittal"),
relating to the offer (the "Exchange Offer") by Consolidated Container Company
LLC (the "Company"), Consolidated Container Capital, Inc. ("Capital" and,
together with the Company, the "Issuers") and Reid Plastics Group LLC ("Reid"),
Plastic Containers LLC ("Plastic Containers"), Continental Plastic Containers
LLC ("Continental") and Continental Caribbean Containers, Inc. ("Caribbean" and,
together with Reid Plastic Containers and Continental, the "Guarantors"), to
exchange $1,000 in principal amount of the Issuer's 10 1/8% Senior Subordinated
Notes due 2009 guaranteed by the Guarantors (the "Exchange Notes") for each
$1,000 in principal amount of outstanding 10 1/8% Senior Subordinated Notes due
2009 guaranteed by the Guarantors (the "Outstanding Notes") upon the terms and
subject to the conditions set forth in the Prospectus and Letter of Transmittal.
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Prospectus.
This will instruct you, the registered holder, as to the action to be
taken by you relating to the Exchange Offer with respect to the Outstanding
Notes held by you for the account of the undersigned.
o The aggregate face amount of the Outstanding Notes held by you for
the account of the undersigned is (FILL IN AMOUNT): $_______________
of the Outstanding Notes.
o With respect to the Exchange Offer, the undersigned hereby instructs
you (CHECK APPROPRIATE BOX):
|_| To TENDER the following Outstanding Notes held by you for the
account of the undersigned (INSERT PRINCIPAL AMOUNT OF
OUTSTANDING NOTES TO BE TENDERED, IF ANY): $_______________ of
the Outstanding Notes.
|_| NOT to TENDER any Outstanding Notes held by you for the
account of the undersigned.
If the undersigned instructs you to tender the Outstanding Notes held by
you for the account of the undersigned, it is understood that you are
authorized:
(a) to make, on behalf of the undersigned (and the undersigned, by
its signature below, hereby makes to you), the representations and
warranties contained in the Letter of Transmittal that are to be made with
respect to the undersigned as a beneficial owner of the Outstanding Notes,
including but not limited to the representations that:
(i) the undersigned is acquiring the Exchange Notes in the
ordinary course of business of the undersigned;
(ii) the undersigned is not participating, does not intend to
participate, and has no arrangement of understanding with any person
to participate, in the distribution of Exchange Notes;
<PAGE>
2
(iii) the undersigned acknowledges that any person
participating in the Exchange Offer for the purpose of distributing
the Exchange Notes must comply with the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the
"Securities Act"), in connection with any resale transaction of the
Exchange Notes acquired by such person and cannot rely on the
position of the staff of the Division of Corporation Finance
Securities and Exchange Commission set forth in certain no-action
letters (see the section of the Prospectus entitled "The Exchange
Offer -- Resale of Exchange Notes");
(iv) the undersigned understands that a secondary resale
transaction described in clause (iii) above should be covered by an
effective registration statement containing the selling security
holder information required by Item 507 of Regulation S-K of the
Securities and Exchange Commission;
(v) the undersigned is not an "affiliate," as defined in Rule
405 under the Securities Act, of the Issuers;
(vi) if the undersigned is not a broker-dealer, that it is not
participating in, does not intend to participate in, and has no
arrangement or understanding with any person to participate in, the
distribution of Exchange Notes; and
(vii) if the undersigned is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Outstanding Notes
that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes received in
respect of such Outstanding Notes pursuant to the Exchange Offer,
however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act;
(b) to agree, on behalf of the undersigned, as set forth in the
Letter of Transmittal; and
(c) to take such other action as necessary under the Prospectus or
the Letter of Transmittal to effect the valid tender of Outstanding Notes.
- --------------------------------------------------------------------------------
SIGN HERE
Name of Beneficial Owner(s):____________________________________________________
Signature(s):___________________________________________________________________
Name(s) (PLEASE PRINT):_________________________________________________________
Address:________________________________________________________________________
Telephone Number:_______________________________________________________________
Taxpayer Identification or Social Security Number:______________________________
Date:___________________________________________________________________________
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 99.4
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
IN EXCHANGE FOR
NEW 10 1/8% SENIOR SUBORDINATED NOTES 2009
OF
CONSOLIDATED CONTAINER COMPANY LLC
CONSOLIDATED CONTAINER CAPITAL, INC.
Registered holders of outstanding 10 1/8% Senior Subordinated
Notes due 2009 (the "Outstanding Notes") of Consolidated Container Company
LLC and Consolidated Container Capital, Inc. (together the "Issuers") who
wish to tender their Outstanding Notes in exchange for a like principal
amount of new 10 1/8% Senior Subordinated Notes due 2009 (the "Exchange
Notes") and whose Outstanding Notes are not immediately available or who
cannot deliver their Outstanding Notes and Letter of Transmittal (and any
other documents required by the Letter of Transmittal) to The Bank of New
York (the "Exchange Agent") prior to the Expiration Date, may use this Notice
of Guaranteed Delivery or one substantially equivalent hereto. This Notice of
Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight delivery) or mail to the Exchange Agent. See "The
Exchange Offer -- Procedures for Tendering" in the Prospectus.
THE EXCHANGE AGENT IS:
THE BANK OF NEW YORK
BY REGISTERED OR CERTIFIED MAIL: BY HAND DELIVERY:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
New York, New York 10286 Attention: New York, New York 10286
Reorganization Unit Attention: Reorganization Unit
BY OVERNIGHT COURIER: BY FACSIMILE:
The Bank of New York The Bank of New York
101 Barclay Street Facsimile No. (212) 815-6339
New York, New York 10286 Attention: Reorganization Unit
Attention: Reorganization Unit
WITH CONFIRMATION BY TELEPHONE:
(212) 815-__
<PAGE>
2
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER
THAN AS SET FORTH ABOVE AND WITHOUT CONFIRMATION BY TELEPHONE WILL NOT
CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Prospectus), such
signature guarantee must appear in the applicable space provided on the Letter
of Transmittal for guarantee of signatures.
<PAGE>
3
Ladies and Gentlemen:
The undersigned hereby tenders the principal amount of Outstanding Notes
indicated below, upon the terms and subject to the conditions contained in the
Prospectus dated , 1999 (the "Prospectus") of the Issuers and the Guarantors,
receipt of which is hereby acknowledged. The Outstanding Notes are
unconditionally guaranteed (the "Old Guarantees") by Reid Plastics Group LLC
("Reid"), Plastic Containers LLC ("Plastic Containers"), Continental Plastic
Containers LLC ("Continental") and Continental Caribbean Containers, Inc.
("Caribbean" and, together with Reid, Plastic Containers and Continental, the
"Guarantors") on a senior subordinated basis, and the Exchange Notes will be
unconditionally guaranteed (the New Guarantees") by the Guarantors on a senior
subordinated basis. Upon the terms and subject to the conditions set forth in
the Prospectus and the Letter of Transmittal, the Guarantors are offering to
issue the New Guarantees with respect to all Exchange Notes issued in the
Exchange Offer in exchange for the outstanding Old Guarantees with for which
such Exchange Noted are issued in exchange. Throughout this letter, unless the
context otherwise requires and whether so expressed or not, references to the
"Exchange Offer" include the Guarantor's offer to exchange the New Guarantees
for the Old Guarantees, references to the "Exchange Notes" include the relates
New Guarantees and references to the "Outstanding Notes" include the relates Old
Guarantees.
DESCRIPTION OF OUTSTANDING NOTES TENDERED
<TABLE>
<CAPTION>
NAME AND ADDRESS OF CERTIFICATE NUMBER(S) OF
REGISTERED HOLDER AS IT OUTSTANDING NOTES
APPEARS ON THE OUTSTANDING TENDERED (OR ACCOUNT PRINCIPAL AMOUNT OF
NAME OF TENDERING NOTES NUMBER AT BOOK- OUTSTANDING NOTES
HOLDER (PLEASE PRINT) ENTRY FACILITY) TENDERED
<S> <C> <C> <C>
- ------------------- -------------------------- ------------------------ -------------------
- ------------------- -------------------------- ------------------------ -------------------
- ------------------- -------------------------- ------------------------ -------------------
- ------------------- -------------------------- ------------------------ -------------------
- ------------------- -------------------------- ------------------------ -------------------
</TABLE>
SIGN HERE
NAME OF REGISTERED OR ACTING HOLDER:____________________________________________
<PAGE>
Signature(s):___________________________________________________________________
Name(s) (PLEASE PRINT):_________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
Telephone Number:_______________________________________________________________
Date:___________________________________________________________________________
IF SHARES OF OUTSTANDING NOTES WILL BE TENDERED BY BOOK-ENTRY TRANSFER, PROVIDE
THE FOLLOWING INFORMATION:
DTC ACCOUNT NUMBER:_____________________________________
DATE:___________________________________________________
THE FOLLOWING GUARANTEE MUST ALSO BE COMPLETED
<PAGE>
5
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, hereby guarantees to deliver to the Exchange Agent at one of
its addresses set forth on the reverse hereof, the certificates representing the
Outstanding Notes (or a confirmation of book-entry transfer of such Outstanding
Notes into the Exchange Agent's account at the book-entry transfer facility),
together with a properly completed and a duly executed Letter of Transmittal (or
a facsimile thereof), with any required signature guarantees, and any other
documents required by the Letter of Transmittal within three New York Stock
Exchange trading days after the Expiration Date (as defined in the Letter of
Transmittal).
Name of Firm:___________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
Area Code and Telephone No.:____________________________________________________
________________________________________________________________________________
(AUTHORIZED SIGNATURE)
Title:________________________________________________________________
Name:_________________________________________________________________
(PLEASE TYPE OR PRINT)
Date:_________________________________________________________________
NOTE: DO NOT SEND OUTSTANDING NOTES WITH THIS NOTICE OF GUARANTEED
DELIVERY. OUTSTANDING NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
