As filed with the Securities and Exchange Commission on August 20, 1999
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
<TABLE>
<S> <C> <C>
BERRY PLASTICS CORPORATION
(Exact name of registrant as specified in charter)
Delaware 3089 35-1813706
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
BPC HOLDING CORPORATION
(Exact name of registrant as specified in charter)
Delaware 3089 35-1814673
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
BERRY IOWA CORPORATION
(Exact name of registrant as specified in charter)
Delaware 3089 42-1382173
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
BERRY TRI-PLAS CORPORATION
(Exact name of registrant as specified in charter)
Delaware 3089 56-1949250
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
BERRY STERLING CORPORATION
(Exact name of registrant as specified in charter)
Delaware 3089 54-1749681
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
AEROCON, INC.
(Exact name of registrant as specified in charter)
Delaware 3089 35-1948748
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
<PAGE>
PACKERWARE CORPORATION
(Exact name of registrant as specified in charter)
Kansas 3089 48-0759852
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
PACKERWARE CORPORATION
(Exact name of registrant as specified in charter)
Delaware 3089 N/A
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
BERRY PLASTICS DESIGN CORPORATION
(Exact name of registrant as specified in charter)
Delaware 3089 62-1689708
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
VENTURE PACKAGING, INC.
(Exact name of registrant as specified in charter)
Delaware 3089 51-0368479
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
VENTURE PACKAGING MIDWEST, INC.
(Exact name of registrant as specified in charter)
Delaware 3089 34-1809003
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
VENTURE PACKAGING SOUTHEAST, INC.
(Exact name of registrant as specified in charter)
South Carolina 3089 57-1029638
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
VENTURE PACKAGING SOUTHEAST, INC.
(Exact name of registrant as specified in charter)
Delaware 3089 N/A
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
NIM HOLDINGS LIMITED
(Exact name of registrant as specified in charter)
England and Wales 3089 N/A
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
(Exact name of registrant as specified in charter)
England and Wales 3089 N/A
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
KNIGHT PLASTICS, INC.
(Exact name of registrant as specified in charter)
_______________
Delaware 3089 35-2056610
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
CPI HOLDING CORPORATION
(Exact name of registrant as specified in charter)
Delaware 3089 34-1820303
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
CARDINAL PACKAGING, INC.
(Exact name of registrant as specified in charter)
Ohio 3089 34-1396561
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
NORWICH ACQUISITION LIMITED
(Exact name of registrant as specified in charter)
England and Wales 3089 N/A
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
BERRY PLASTICS ACQUISITION CORPORATION
(Exact name of registrant as specified in charter)
Delaware 3089 N/A
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
101 Oakley Street
Evansville, Indiana 47710
(812) 424-2904
(Address, including zip code, and telephone number,
including area code, of registrants' principal executive offices)
_______________
Martin R. Imbler
President and Chief Executive Officer
Berry Plastics Corporation
101 Oakley Street
Evansville, Indiana 47710
(812) 424-2904
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
_______________
WITH COPIES TO:
James M. Lurie, Esq.
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
(212) 408-2400
_______________
<PAGE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON
AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of 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. [ ]
_______________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NOTE PRICE(1) FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11% Series B Senior
Subordinated Notes due 2007..... $75,000,000 100% $75,000,000 $20,850
- -------------------------------------------------------------------------------------------------
Guarantees of Senior
Subordinated Notes due 2007..... (2) (2) (2) (2)
=================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) BPC Holding Corporation and each of the domestic and foreign subsidiaries
of Berry Plastics Corporation will guarantee on an unconditional basis the
obligations of Berry Plastics Corporation under the 11% Senior Subordinated
Notes due 2007. Pursuant to Rule 457(n), no additional registration fee is
being paid in respect of the guarantees.
__________________
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
Subject to Completion, dated August ___, 1999
PROSPECTUS
BERRY PLASTICS CORPORATION
OFFER TO EXCHANGE ALL OUTSTANDING
11% SENIOR SUBORDINATED NOTES DUE 2007
$75,000,000 AGGREGATE PRINCIPAL AMOUNT OUTSTANDING, FOR
11% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
------------------------------------------------------------------------
| THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, |
| ON , 1999, UNLESS EXTENDED. |
------------------------------------------------------------------------
o We will exchange all notes that you validly tender and do not validly
withdraw.
o You may withdraw your tender of notes any time before the expiration of
the exchange offer.
o The exchange offer is not subject to any condition, other than that it
not violate any applicable law or interpretation of the staff of the
Securities and Exchange Commission.
o Neither us nor our guarantors will receive any proceeds from the
exchange offer.
o Based on the advice of our counsel, we believe the exchange of notes
will not be a taxable exchange for U.S. federal income tax purposes.
o The terms of the exchange notes are substantially identical to the
outstanding notes, except for the transfer restrictions and
registration rights relating to the outstanding notes and preferred
stock.
o There is no existing market for the exchange notes, and we do not
intend to apply for their listing on any securities exchange.
o Each broker-dealer that receives exchange notes must deliver a
prospectus in connection with any resales of the exchange notes or the
new preferred stock.
o Each broker-dealer that acquired exchange notes for its own account in
exchange for outstanding notes, where the outstanding notes were
acquired 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 those exchange notes.
SEE "RISK FACTORS" COMMENCING ON PAGE 11 FOR A DISCUSSION OF
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING
OUTSTANDING NOTES IN THE EXCHANGE OFFER.
-------------------
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS AUGUST , 1999
<PAGE>
TABLE OF CONTENTS
PAGE PAGE
Where You Can Find More Information.. i Principal Stockholders......... 61
Prospectus Summary................... 1 Certain Transactions........... 63
Risk Factors ........................ 11 Description of Certain Other
Exchange Offer....................... 20 Debt......................... 68
Capitalization....................... 29 Description of Notes........... 70
Pro Forma Condensed Consolidated Certain Federal Income Tax
Financial Statements............... 30 Considerations............... 107
Selected Historical Financial Data... 36 Plan of Distribution........... 111
Management's Discussion and Analysis Legal Matters.................. 112
of Financial Condition and Results Experts........................ 112
of Operations...................... 38 Index to Financial Statements.. F-1
Business............................. 44
Management......................... 54
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-4 under the Securities Act of 1933 with respect to the
exchange notes. This prospectus, which is a part of that registration statement,
does not contain all of the information set forth in the registration statement.
For further information about us and the exchange notes, you should refer to the
registration statement. This prospectus summarizes material provisions of
contracts and other documents to which we refer you. Since this prospectus may
not contain all of the information that you may find important, you should
review the full text of these documents. We have included copies of these
documents as exhibits to our registration statement.
Upon effectiveness of the registration statement of which this prospectus
is a part, we will be subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith will
file reports and other information with the SEC. You may inspect any such
material, without charge, at the public reference facilities maintained by the
SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's Regional Offices located at Seven World Trade Center,
Suite 1300, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may also be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition we will file electronic versions of
these documents with the SEC through the SEC's Electronic Data Gathering,
Analysis and Retrieval (EDGAR) system. The SEC maintains a World Wide Web site
at http://www.sec.gov that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
SEC.
FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act
including, in particular, the statements about our plans, strategies, and
prospects under the headings "Prospectus Summary", "Management's Discussion and
Analysis of Financial Condition and Results of Operations and Business."
Although we believe that our plans, intentions and expectations reflected in or
suggested by such forward-looking statements are reasonable, we can give no
assurance that such plans, intentions or expectations will be achieved.
Important factors that could cause actual results to differ materially from the
forward-looking statements we make in this prospectus are set forth in this
prospectus, including under the heading "Risk Factors." All forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements included in this
prospectus.
----------------
Certain of the names and logos of our products referenced in this
prospectus are our trademarks. Each trade name, trademark or servicemark of any
other company appearing in this prospectus is the property of its holder.
i
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES,
"BERRY PLASTICS," "WE," "US," "OUR" AND SIMILAR TERMS REFER TO BERRY PLASTICS
CORPORATION, ITS SUBSIDIARIES AND THEIR RESPECTIVE OPERATIONS, AND THE TERM "BPC
HOLDING" REFERS TO BPC HOLDING CORPORATION. THE FISCAL YEAR OF BPC HOLDING AND
BERRY PLASTICS IS THE 52 OR 53 WEEK PERIOD ENDING ON THE SATURDAY CLOSEST TO
DECEMBER 31. ALL REFERENCES IN THIS PROSPECTUS TO "FISCAL 1994," "FISCAL 1995,"
"FISCAL 1996," "FISCAL 1997" AND "FISCAL 1998" REFER TO THE FISCAL YEARS OF
BERRY PLASTICS AND BPC HOLDING ENDED ON JANUARY 1, 1994, DECEMBER 31, 1994,
DECEMBER 30, 1995, DECEMBER 28, 1996, DECEMBER 27, 1997 AND JANUARY 2, 1999,
RESPECTIVELY. ALSO, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE INFORMATION
CONTAINED IN THIS PROSPECTUS GIVES PRO FORMA EFFECT TO THE ACQUISITION BY US OF
NORWICH INJECTION MOULDERS LIMITED, THE KNIGHT ENGINEERING AND PLASTICS DIVISION
OF COURTAULDS PACKAGING INC., AND CARDINAL PACKAGING, INC. AS OF THE BEGINNING
OF THE PERIOD STATED FOR INCOME STATEMENT DATA AND AT THE DATE STATED FOR
BALANCE SHEET DATA.
THE COMPANY
We are the nation's leading manufacturer and supplier of plastic
injection-molded aerosol overcaps, drink cups and rigid thinwall open-top
containers for a wide variety of end-use markets. We are also a leading
manufacturer and supplier of plastic injection-molded semi-disposable
housewares. In addition, with sales of over two billion aerosol overcaps in
fiscal 1998, we believe that we are the largest supplier of plastic aerosol
overcaps in the world. In our plastic packaging business, we focus primarily on
three markets: aerosol overcaps, rigid thinwall open-top containers and drink
cups. Our housewares business produces home products such as dinnerware,
tumblers and garden items. We concentrate on manufacturing high-quality items
sold to image-conscious marketers of consumer and industrial products. With over
1,000 proprietary molds, superior color matching capabilities, sophisticated
multi-color printing techniques and nationwide plant locations, we consistently
produce and deliver mass quantities of high-quality products on a cost-efficient
basis.
Our total net sales among our product categories is as follows:
<TABLE>
<CAPTION>
FISCAL
--------------------------------------------------
1994 1995 1996 1997 1998
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
PLASTIC PACKAGING PRODUCTS:
Aerosol overcaps ........ $ 38.0 $ 43.6 $ 49.7 $ 47.1 $ 49.1
Rigid open-top containers 61.6 71.1 80.8 111.5 145.9
Drink cups .............. 17.3 14.1 37.6 39.9
Other ................... 6.5 8.7 6.5 13.3 15.3
PLASTIC HOUSEWARES PRODUCTS . 17.5 21.6
------ ------ ------ ------ ------
Total net sales ............. $106.1 $140.7 $151.1 $227.0 $271.8
====== ====== ====== ====== ======
</TABLE>
We supply aerosol overcaps to a wide variety of customers and for a wide
variety of products, including such well-known brand names as Faultless starch,
Gillette personal care products, Pam cooking spray, Pledge furniture polish,
Raid insect repellants, Rustoleum and Sherwin-Williams paints and Sure
deodorant. Similarly, our containers are used for packaging a broad spectrum of
consumer and commercial products, including Arch (Olin) pool chemicals, Elmer's
home repair products, Hershey's cocoa, McDonald's children's meals, Milliken
adhesives, Pillsbury cookie dough and promotional containers for a variety of
customers, including the National Football League, Walt Disney and Warner-
Brothers. Our drink cups are sold to fast food and family-dining restaurants,
convenience stores, stadiums and retail stores. Our largest drink cup customers
are Circle K, Coca-Cola, McDonald's, Pepsi-Cola and Steak' n Shake. Our
housewares products are primarily seasonal, semi-disposable housewares and lawn
and garden items such as plates, bowls, pitchers, tumblers and flower pots. Our
largest housewares customer, Wal-Mart, named us their housewares "Supplier of
the Year" for 1998.
1
<PAGE>
COMPETITIVE STRENGTHS
We believe that we are a strong competitor in our industry for the
following reasons:
o SUCCESSFUL INTEGRATION OF NUMEROUS STRATEGIC ACQUISITIONS.
o HIGH-CAPACITY, STATE-OF-THE-ART PRODUCTION CAPABILITIES.
o FULL PRODUCT LINES AND STRONG MARKET POSITION.
o LARGE, DIRECT SALES FORCE.
o IN-HOUSE PRODUCT DESIGN AND GRAPHIC ARTS CAPABILITIES.
o DEDICATION TO SERVICE AND QUALITY.
o LARGE, DIVERSE CUSTOMER BASE.
For a complete discussion of our competitive strengths, see "Business --
Competitive Strengths."
GROWTH STRATEGY
Our goal is to maintain and enhance our market position and leverage our
core strengths to increase profitability. Our strategy to achieve this goal
includes the following elements:
o PURSUE STRATEGIC ACQUISITIONS IN OUR CORE BUSINESSES.
o DESIGN AND INTRODUCE INNOVATIVE NEW PRODUCTS TO PENETRATE NEW MARKETS.
o EMPHASIZE OUTSTANDING PRODUCT QUALITY AND CUSTOMER SERVICE.
For a complete discussion of our growth strategy, see "Business -- Growth
Strategy."
Our address is 101 Oakley Street, Evansville, Indiana 47710. Our
telephone number is (812) 424-2904.
ACQUISITIONS
CARDINAL
Cardinal, which is headquartered in Streetsboro, Ohio, operates three
manufacturing locations and is the nation's leading producer and marketer of
plastic containers for ice cream and other frozen desserts. Cardinal also sells
containers for other consumer products, such as refrigerated dairy products and
non-dairy foods. Cardinal has filling equipment in many of its customers' plants
and provides the services needed to operate this equipment. By providing its
customers with both containers and the filling machine equipment, Cardinal
significantly increases customer retention.
In July 1999, we acquired Cardinal for about $72.0 million, including
related acquisition costs. For the year ended November 30, 1998, Cardinal
reported net sales of $54.0 million. As in our nine previous acquisitions, we
believe that we can lower Cardinal's costs by consolidating plants, purchasing
resin in greater volume, using larger, more cost-efficient injection-molding
equipment and improving Cardinal's operating systems.
2
<PAGE>
1998 ACQUISITIONS
In October 1998, we acquired the Knight Engineering and Plastics Division
of Courtaulds Packaging Inc. for about $18 million. Knight, which is
headquartered in Woodstock, Illinois, manufactures and markets plastic
injection- molded aerosol overcaps. We believe that this acquisition enhanced
our aerosol overcap business and better positioned us to meet the needs of our
domestic customers. For the year ended March 31, 1998, Knight reported net sales
of $23.8 million. Since the acquisition, we have significantly reduced Knight's
manufacturing and operating costs, principally by closing one of its two
manufacturing plants.
In July 1998, we acquired Norwich Injection Moulders Limited for about $14
million. Norwich, which is headquartered in Norwich, England, manufactures and
markets plastic injection-molded overcaps and closures for the European market.
For the year ended October 31, 1997, Norwich reported net sales of about $13.4
million. Norwich provides us with a European production platform that allows us
to better serve our global overcap customers and to introduce our other product
lines in Europe.
1997 ACQUISITIONS
During 1997 we completed four acquisitions, including PackerWare
Corporation and Venture Packaging, Inc. PackerWare, which is headquartered in
Lawrence, Kansas, is a major producer of drink cups and housewares. For the year
ended October 31, 1996, PackerWare reported net sales of $42.8 million. The
acquisition of PackerWare enabled us to enter the housewares business and
strengthened our position in the plastic drink cup market. Venture, which is
headquartered in Monroeville, Ohio, reported net sales of $42.3 million for the
year ended September 30, 1996 and is one of the nation's largest producers of
plastic injection-molded containers for the food and dairy markets.
3
<PAGE>
THE EXCHANGE OFFER
REGISTRATION RIGHTS AGREEMENT......... The outstanding notes were sold by us
on July 6, 1999 to Donaldson, Lufkin &
Jenrette Securities Corporation and
Chase Securities Inc. (the "Initial
Purchasers"), who placed the
outstanding notes with institutional
investors. In connection therewith, we
and the Initial Purchasers executed and
delivered for the benefit of the
holders of the outstanding notes a
registration rights agreement (the
"Registration Rights Agreement")
providing, among
other things, for the exchange offer.
THE EXCHANGE OFFER.................... Exchange notes are being offered in
exchange for a like principal amount
of outstanding notes. As of the date
of this prospectus, $75,000,000
aggregate principal amount of notes
are outstanding. We will issue the
exchange notes to holders promptly
following the expiration date. See
"Risk Factors-- Your ability to
resell your notes will remain
restricted if you fail to exchange
them in the exchange offer."
EXPIRATION DATE....................... The exchange offer will expire at
5:00 p.m., New York City time,
on , 1999, unless
we decide to extend the expiration
date.
INTEREST.............................. Each exchange note will bear interest
from January 15, 2000. Interest will be
payable on the outstanding notes
accepted for exchange to, but not
including, January 15, 2000.
CONDITIONS TO THE EXCHANGE OFFER...... The exchange offer is subject to
certain customary conditions, which
we may waive. We reserve the right
to amend, terminate or extend the
exchange offer at any time prior to
the expiration date upon the
occurrence of any such condition.
See "The Exchange Offer-- Conditions."
PROCEDURES FOR TENDERING OUTSTANDING If you wish to accept the exchange
NOTES............................... offer, you must complete, sign and
date the letter of transmittal, or a
facsimile thereof, in accordance with
the instructions contained herein and
therein, and mail or otherwise
deliver the letter of transmittal, or
facsimile, or an Agent's Message (as
defined herein) together with the
outstanding notes and any other
required documentation to the
exchange agent (the "Exchange Agent")
at the address set forth herein. By
executing the letter of transmittal
or delivering an Agent's Message, you
will represent to us, among other
things, that
o the exchange notes acquired
pursuant to the exchange offer by
you and any beneficial owners of
outstanding notes are being
obtained in the ordinary course of
business of the person receiving
the exchange notes;
o neither you nor such beneficial
owner has an arrangement with any
person to participate in the
distribution of the exchange notes;
4
<PAGE>
o neither you nor such beneficial
owner nor any such other person is
engaging in or intends to engage in
a distribution of such exchange
notes; and
o neither you nor such beneficial
owner is our "affiliate," as
defined under Rule 405 promulgated
under the Securities Act. Each
broker-dealer that receives
exchange notes for its own account
in exchange for outstanding notes,
where such outstanding notes were
acquired by such broker-dealer as a
result of market-making activities
or other trading activities (other
than outstanding notes acquired
directly from us), may participate
in the exchange offer but may be
deemed an "underwriter" under the
Securities Act and, therefore, must
acknowledge in the letter of
transmittal that it will deliver a
prospectus in connection with any
resale of such exchange notes. The
letter of transmittal states that
by so acknowledging and by
delivering a prospectus, a
broker-dealer will not be deemed to
admit that it is an "underwriter"
within the meaning of the
Securities Act. See "The Exchange
Offer-- Procedures for Tendering"
and "Plan of Distribution."
SPECIAL PROCEDURES FOR BENEFICIAL OWNERS. If you are a beneficial owner whose
outstanding notes are registered in
the name of a broker, dealer,
commercial bank, trust company or
other nominee and you wish to
tender you should contact such
registered person promptly and
instruct that registered person to
tender on your behalf. If you wish
to tender on your own behalf you
must, prior to completing and
executing the letter of transmittal
or delivering an Agent's Message
and delivering his outstanding
notes, either make appropriate
arrangements to register ownership
of the outstanding notes in such
beneficial owner's name or obtain a
properly completed bond power from
the registered holder. The transfer
of registered ownership may take
considerable time. See "The
Exchange Offer -- Procedures for
Tendering."
GUARANTEED DELIVERY PROCEDURES........... If you wish to tender your
outstanding notes and:
o time will not permit your notes
or other required documents to
reach the notes exchange agent
by the expiration date; or
o the procedure for book-entry
transfer cannot be completed on
time;
you may tender your notes in compliance
with the guaranteed delivery procedures
described in this prospectus under the
heading "The Exchange Offer --
Withdrawal of Tenders."
WITHDRAWAL RIGHTS..................... You may withdraw your tender as
provided in this prospectus at any
time prior to 5:00 p.m., New York
City time, on the expiration date.
See "The Exchange Offer -- Withdrawal
of Tenders."
5
<PAGE>
ACCEPTANCE OF OUTSTANDING NOTES AND We will accept for exchange any and all
DELIVERY OF EXCHANGE NOTES............ outstanding notes that are properly
tendered in the exchange offer prior to
5:00 p.m., New York City time, on the
expiration date. The exchange notes
issued pursuant to the exchange offer
will be delivered promptly following
the expiration date. See "The Exchange
Offer -- Terms of the Exchange Offer."
EXCHANGE AGENT........................ United States Trust Company of New
York is serving as exchange agent in
connection with the exchange offer.
See "The Exchange Offer -- Exchange
Agent."
USE OF PROCEEDS....................... There will be no cash proceeds to us
or the guarantors from the exchange
pursuant to the exchange offer.
FEDERAL INCOME TAX CONSEQUENCES....... The exchange of outstanding notes for
exchange notes will not be a taxable
exchange for Federal income tax
purposes. See "Certain Federal
Income Tax Considerations."
CONSEQUENCES OF FAILURE TO EXCHANGE... If you do not exchange your
outstanding notes for exchange notes
pursuant to the exchange offer you
will continue to be subject to the
restrictions on transfer of such
outstanding notes as set forth in the
legend thereon as a consequence of
the issuance of the outstanding notes
pursuant to exemptions from, or in
transactions not subject to, the
registration requirements of the
Securities Act and applicable state
securities laws. In general,
outstanding notes may not be offered
or sold unless registered under the
Securities Act, except pursuant to an
exemption from, or in a transaction
not subject to, the Securities Act
and applicable state securities laws.
SUMMARY DESCRIPTION OF THE EXCHANGE NOTES
The exchange offer applies to $75,000,000 aggregate principal amount of
outstanding notes. The terms of the exchange notes are identical in all material
respects to the outstanding notes, except that the exchange notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting their transfer and will not contain certain provisions providing for
an increase in the interest rate on the outstanding notes under certain
circumstances relating to the Registration Rights Agreement, which provisions
will terminate as to all of the notes upon the consummation of the exchange
offer. The exchange notes will evidence the same debt as the outstanding notes
and, except as set forth in the immediately preceding sentence, will be entitled
to the benefits of the Indenture, under which both the outstanding notes were,
and the exchange notes will be, issued. See "Description of Notes."
THE EXCHANGE NOTES.................... $75 million in aggregate principal
amount of 11% Series B Senior
Subordinated Notes due 2007 (the
"1999 Notes").
MATURITY DATE......................... July 15, 2007.
INTEREST PAYMENT DATES................ January 15 and July 15 of each year,
commencing on January 15, 2000.
MANDATORY REDEMPTION.................. We are not required to make mandatory
redemption or sinking fund payments
with respect to the exchange notes.
6
<PAGE>
OPTIONAL REDEMPTION................... On or after , the exchange notes
will be redeemable at any time at our
option, in whole or in part, at the
redemption prices set forth herein,
plus accrued and unpaid interest, if
any, to the date of redemption.
CHANGE OF CONTROL..................... In the event of a Change of Control,
each holder of the notes will have
the right to require us to repurchase
such holder's notes, in whole or in
part, at a price equal to 101% of the
aggregate principal amount thereof,
plus accrued and unpaid interest, if
any, to the date of repurchase.
GUARANTEES............................ The exchange notes will be guaranteed
by our parent corporation, BPC
Holding, and each of our domestic and
foreign subsidiaries. The note
guarantees will be unconditional
joint and several obligations of each
guarantor and will be subordinated as
described below under "Ranking."
RANKING............................... The exchange notes will be unsecured
senior subordinated obligations of
Berry Plastics, will rank PARI PASSU
with our $100 million principal
amount of 121/4% Senior Subordinated
Notes due 2004 (the "1994 Notes") and
our $25 million principal amount of
121/4% Senior Subordinated Notes due
2004 (the "1998 Notes") and will be
subordinate in right of payment to
all our Senior Indebtedness, which
will include borrowings under our
credit facility. The exchange notes
will be senior to any indebtedness
which by its terms is subordinate to
the exchange notes, regardless of
when such indebtedness is incurred.
Each note guarantee will be
subordinate in right of payment to
all Senior Indebtedness of each
guarantor. Our Senior Indebtedness
consists of borrowings under our
credit facility and our Nevada
Industrial Revenue Bonds. Senior
Indebtedness of the guarantors
consists of their joint and several
guarantee of our obligations under
our credit facility and obligations
with respect to our Nevada Industrial
Revenue Bonds and, in the case of BPC
Holding, the 1996 Notes. As of July
3, 1999, the aggregate amount of our
outstanding Senior Indebtedness would
have been $89.0 million, the
aggregate amount of our outstanding
total indebtedness, including the
1994 Notes and the 1998 Notes, would
have been $290.5 million, and the
indebtedness of the guarantors senior
to the note guarantees would have
been $395.5 million. As of July 3,
1999, all of our indebtedness other
than the Senior Indebtedness was PARI
PASSU in right of payment to the
exchange notes, and there was no
indebtedness subordinated to the
exchange notes.
CERTAIN COVENANTS..................... The Indenture pursuant to which the
outstanding notes were, and the
exchange notes will be, issued (the
"Indenture") contains covenants,
including, but not limited to,
covenants with respect to the
following matters:
7
<PAGE>
o limitations on the retention of
proceeds from asset sales;
o limitations on the incurrence of
additional indebtedness and the
issuance of disqualified stock;
o limitations on restricted payments;
o limitations on transactions with
affiliates;
o limitations on liens;
o limitations on dividends and other
payment restrictions affecting
subsidiaries; and
o limitations on mergers,
consolidations and sales of assets.
In addition, while the Indenture contains, among other things, the
foregoing covenants as well as a requirement to offer to purchase exchange
notes upon a Change of Control, the Indenture does not contain any provisions
specifically intended to protect holders of the exchange notes in the event of
a future highly leveraged transaction involving us or any guarantor. See
"Description of Notes."
RISK FACTORS
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN
FACTORS THAT YOU SHOULD CONSIDER PRIOR TO TENDERING OUTSTANDING NOTES IN THE
EXCHANGE OFFER.
8
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table presents summary financial data for BPC Holding and
its subsidiaries. The summary historical financial data for fiscal 1994, fiscal
1995, fiscal 1996, fiscal 1997 and fiscal 1998 come from BPC Holding's audited
consolidated financial statements. BPC Holding's and its subsidiaries' audited
consolidated financial statements for fiscal 1997 and fiscal 1998 and the
audited consolidated statement of operations and cash flows for fiscal 1996 are
included in this prospectus. The summary unaudited pro forma financial data give
effect to our acquisitions of Cardinal, Knight and Norwich, and issuance of the
notes. The summary unaudited pro forma financial data are not necessarily
indicative of the operating results or the financial position that would have
been achieved had the events given effect therein been consummated and should
not be construed as representative of future operating results or financial
position.
<TABLE>
<CAPTION>
FISCAL
---------------------------------------------------------------------
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATIONS STATEMENT
DATA:
Net sales ................................. $ 106,141 $ 140,681 $ 151,058 $ 226,953 $ 271,830
Cost of goods sold ........................ 73,997 102,484 110,110 180,249 199,227
--------- --------- --------- --------- ---------
Gross margin .............................. 32,144 38,197 40,948 46,704 72,603
Operating expenses ........................ 15,160 17,670 23,679 30,505 44,001
--------- --------- --------- --------- ---------
Operating income .......................... 16,984 20,527 17,269 16,199 28,602
Other expenses(1) ......................... 184 127 302 226 1,865
Interest expense, net (2) ................. 10,972 13,389 20,075 30,246 34,556
--------- --------- --------- --------- ---------
Income (loss) before income taxes
and extraordinary charge ................ 5,828 7,011 (3,108) (14,273) (7,819)
Income taxes (benefit) .................... 11 678 239 138 (249)
--------- --------- --------- --------- ---------
Income (loss) before extraordinary
charge .................................. 5,817 6,333 (3,347) (14,411) (7,570)
Extraordinary charge(3) ................... 3,652 -- -- -- --
--------- --------- --------- --------- ---------
Net income (loss) ......................... $ 2,165 $ 6,333 $ (3,347) $ (14,411) $ (7,570)
========= ========= ========= ========= =========
CONSOLIDATED OTHER DATA:
Adjusted EBITDA(4) ........................ $ 26,380 $ 31,569 $ 34,718 $ 40,268 $ 59,768
Adjusted EBITDA margin(5) ................. 24.9% 22.4% 23.0% 17.7% 22.0%
Cash provided by operating
activities ............................. 15,556 12,969 14,426 14,154 34,131
Cash used for investing activities ........ (9,495) (25,385) (14,639) (102,102) (52,120)
Cash provided by financing
activities ............................. 2,184 11,124 2,370 80,444 17,619
Depreciation and amortization(6) .......... 8,176 9,536 11,331 19,026 24,830
Capital expenditures ...................... 9,118 11,247 13,581 16,774 22,595
Ratios of earnings to fixed
charges (7) ............................... 1.5x 1.5x -- -- --
BERRY PLASTICS DATA:
Cash interest expense, net ...................... $ 9,795 $ 12,439 $ 12,854 $ 17,187 $ 20,569
Ratio of Adjusted EBITDA to cash
interest expense, net ......................... 2.9x
Ratio of net debt to Adjusted EBITDA ............ 3.6x
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA 26
PRO FORMA WEEKS ENDED
FISCAL JULY 3,
1998 1999
--------- ------------
<S> <C> <C>
CONSOLIDATED OPERATIONS STATEMENT
DATA:
Net sales ................................. $ 352,670 $ 188,317
Cost of goods sold ........................ 265,079 136,189
--------- ---------
Gross margin .............................. 87,591 52,128
Operating expenses ........................ 55,851 30,079
--------- ---------
Operating income .......................... 31,740 22,049
Other expenses(1) ......................... 1,861 778
Interest expense, net (2) ................. 45,604 22,174
--------- ---------
Income (loss) before income taxes
and extraordinary charge ................ (15,725) (903)
Income taxes (benefit) .................... 90 482
--------- ---------
Income (loss) before extraordinary
charge .................................. (15,815) (1,385)
Extraordinary charge(3) ................... -- --
--------- ---------
Net income (loss) ......................... $ (15,815) $ (1,385)
========= =========
CONSOLIDATED OTHER DATA:
Adjusted EBITDA(4) ........................ $ 77,526 $ 42,964
Adjusted EBITDA margin(5) ................. 22.0% 22.8%
Cash provided by operating
activities ............................. 47,745 20,876
Cash used for investing activities ........ (133,059) (90,258)
Cash provided by financing
activities ............................. 84,944 79,943
Depreciation and amortization(6) .......... 32,496 16,350
Capital expenditures ...................... 28,759 15,666
Ratios of earnings to fixed
charges (7) ............................... -- --
BERRY PLASTICS DATA:
Cash interest expense, net ...................... $ 31,243 $ 14,699
Ratio of Adjusted EBITDA to cash
interest expense, net ......................... 2.5x 2.9x
Ratio of net debt to Adjusted EBITDA ............ 3.8x --
</TABLE>
AT JULY 3, 1999
--------------------------
HISTORICAL PRO FORMA
------------ ------------
BERRY PLASTICS CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents ....................... $ 2,622 $ 2,622
Working capital ................................. 12,597 24,620
Total assets .................................... 254,331 336,453
Total long-term debt, including current portion . 215,484 290,484
Stockholders' equity (deficit) .................. (17,456) (17,456)
9
<PAGE>
- --------------
(1) Other expenses consist of loss on disposal of property and equipment for
the respective periods.
(2) Includes non-cash interest expense of $1,178 in fiscal 1994, $950 in fiscal
1995, $1,212 in fiscal 1996, $2,005 in fiscal 1997, $1,765 in fiscal 1998
and $884 and $872 for the 26 weeks ended June 27, 1998 and July 3, 1999.
(3) During 1994, an extraordinary charge of $3.7 million was recognized as a
result of the retirement of debt concurrently with the issuance of the 1994
Notes.
(4) Adjusted EBITDA should not be considered in isolation or as an alternative
to income from operations or to cash flows from operating activities (as
determined in accordance with generally accepted accounting principles) and
should not be construed as an indication of a company's operating
performance or as a measure of liquidity. In addition, our calculation of
Adjusted EBITDA differs from that presented by certain other companies and
thus is not necessarily comparable to similarly titled measures used by
other companies. The following table reconciles operating income to EBITDA
and Adjusted EBITDA for each respective period:
<TABLE>
<CAPTION>
FISCAL
----------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- -------- -
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating income ............................. $ 16,984 $ 20,527 $ 17,269 $ 16,199 $ 28,602
Depreciation and amortization ................ 8,176 9,536 11,331 19,026 24,830
-------- -------- -------- -------- --------
EBITDA ....................................... 25,160 30,063 28,600 35,225 53,432
One-time expenses:
1996 transaction compensation expenses . -- -- 2,762 -- --
Plant shutdown expenses ................ -- -- 907 848 2,559
Acquisition integration expenses ....... 116 867 692 3,267 1,525
Litigation expenses related to drink cup
patent .............................. -- -- 650 100 631
Corporate expenses:
Non-cash compensation expenses (benefit) 358 (214) 358 -- 749
Management fees and expenses ........... 746 853 749 828 872
Pro Forma adjustments relating to the
acquisitions:
Raw material savings ...................
Plant consolidations ...................
Tooling consolidation ..................
Discontinued sales .....................
Expense reductions (i.e. legal,
management fees) ....................
Staff reductions ......................
-------- -------- -------- -------- --------
Adjusted EBITDA .............................. $ 26,380 $ 31,569 $ 34,718 $ 40,268 $ 59,768
======== ======== ======== ======== ========
</TABLE>
PRO FORMA
PRO FORMA 26 WEEKS
FISCAL ENDED
1998 JULY 3, 1999
-------- ------------
(DOLLARS IN THOUSANDS)
Operating income ............................. $ 31,740 $ 22,049
Depreciation and amortization ................ 32,496 16,350
-------- --------
EBITDA ....................................... 64,236 38,399
One-time expenses:
1996 transaction compensation expenses . -- --
Plant shutdown expenses ................ 2,559 576
Acquisition integration expenses ....... 1,525 1,091
Litigation expenses related to drink cup
patent .............................. 631 --
Corporate expenses:
Non-cash compensation expenses (benefit) 749 197
Management fees and expenses ........... 872 437
Pro Forma adjustments relating to the
acquisitions:
Raw material savings ................... 3,368 1,256
Plant consolidations ................... 1,906 508
Tooling consolidation .................. 416 --
Discontinued sales ..................... (340) --
Expense reductions (i.e. legal,
management fees) .................... 766 500
Staff reductions ...................... 838 --
-------- --------
Adjusted EBITDA .............................. $ 77,526 $ 42,964
======== ========
(5) Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of net
sales.
(6) Depreciation and amortization excludes non-cash amortization of deferred
financing and origination fees and debt premium/discount amortization which
are included in interest expense.
(7) In calculating the ratio of earnings to fixed charges, earnings consist of
(i) income (loss) before income taxes, plus (ii) fixed charges consisting
of interest on debt (including amortization of deferred financing fees),
plus (iii) that portion of lease rental expense representative of the
interest factor. Earnings were inadequate to cover fixed charges by $2,883
in fiscal 1996, by $13,932 in fiscal 1997, by $7,042 in fiscal 1998, by
$14,948 in pro forma fiscal 1998 and by $1,644 for the pro forma twenty-six
weeks ended July 3, 1999.
10
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD
CONSIDER THE FACTORS BELOW BEFORE MAKING A DECISION TO TENDER OUTSTANDING NOTES
IN THE EXCHANGE OFFER. THE FOLLOWING RISKS MAY CAUSE OUR BUSINESS, RESULT OF
OPERATIONS OR FINANCIAL CONDITION TO DECLINE.
WE HAVE A SIGNIFICANT AMOUNT OF DEBT.
We have now and, after this offering, will continue to have a large amount
of debt. As of July 3, 1999, our aggregate amount of total indebtedness was
about $290.5 million.
We may also incur additional debt from time to time to finance
acquisitions or capital expenditures or for other purposes subject to the
restrictions in our credit facility and the indentures governing the notes, the
1994 Notes and the 1998 Notes. See "Capitalization," "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources," "Description of Certain Other Debt" and "Description of
Notes."
Our high degree of debt has important consequences for us, including the
following:
o It may be more difficult for us to satisfy our
obligations under the notes;
o Our ability to obtain additional financing, if necessary,
for working capital, capital expenditures, acquisitions or
other purposes may be impaired or such financing may not
be available on favorable terms;
o We will need a substantial portion of our cash flow to pay
the principal and interest on our debt, including debt
that we may incur in the future;
o Payments on our debt will reduce the funds that would
otherwise be available for our operations and future
business opportunities;
o A substantial decrease in our net operating cash flows
could make it difficult for us to meet our debt service
requirements and force us to modify our operations;
o We may be more highly leveraged than our competitors,
which may place us at a competitive disadvantage; and
o We may be more vulnerable to a downturn in our business or
the economy generally.
If we are unable to service our debt or obtain additional financing, as
needed, our business and financial condition would be materially adversely
affected.
WE MAY NOT BE ABLE TO SERVICE OR REFINANCE OUR DEBT.
Our ability to pay principal and interest on the notes and to satisfy our
other obligations will depend upon:
o Our future financial and operating performance, which
performance will be affected by prevailing economic
conditions and financial, business and other factors,
certain of which are beyond our control; and
o The future availability of revolving credit borrowings
under our credit facility or any successor facility, the
availability of which is dependent or may depend on, among
other things, our complying with certain covenants and
meeting certain specified borrowing base prerequisites.
See "Description of Certain Other Debt -- The Credit
Facility."
11
<PAGE>
Based on our current and expected levels of operations, we expect that our
operating cash flow and borrowings under our credit facility should be
sufficient for us to meet our operating expenses, to make necessary capital
expenditures and to service our debt requirements as they become due. However,
our operating results and borrowings under our credit facility may not be
sufficient to service our debt, including the notes. If we cannot service our
debt, we will be forced to take actions such as reducing or delaying
acquisitions and/or capital expenditures, selling assets, restructuring or
refinancing our debt (which could include the notes), or seeking additional
equity capital or bankruptcy protection. We cannot assure you that any of these
remedies can be effected on satisfactory terms, if at all.
RESTRICTIVE DEBT COVENANTS IN OUR INDENTURES AND CREDIT FACILITY MAY ADVERSELY
AFFECT US.
The indenture governing the notes restricts, among other things, our
ability to:
o incur additional debt;
o pay dividends;
o redeem capital stock;
o create liens, dispose of certain assets, engage in
mergers;
o make contributions, loans or advances; and
o enter into certain transactions with affiliates.
Our credit facility and the indentures governing the 1994 and the 1998
Notes contain similar restrictions. If our cash flow and existing working
capital are insufficient to fund our expenditures or to service our debt,
including the notes, the 1994 Notes, the 1998 Notes and borrowings under our
credit facility, we would have to raise additional funds through capital
contributions from BPC Holding, or by refinancing all or a part of our debt or
by a sale of assets or subsidiaries. The restrictions contained in the
indentures governing the notes, the 1994 Notes and the 1998 Notes and the credit
facility, in combination with our high level of debt, could severely limit our
ability to raise such additional funds, respond to changing market and economic
conditions, provide for capital expenditures or take advantage of business
opportunities that may arise. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources,"
"Description of Certain Other Debt" and "Description of Notes."
OUR ACQUISITION STRATEGY MAY BE UNSUCCESSFUL.
As part of our growth strategy, we plan to pursue the acquisition of other
companies, assets and product lines that either complement or expand our
existing business. We continually evaluate potential acquisition opportunities,
particularly those that could be material in size and scope. Acquisitions
involve a number of special risks and factors, including:
o the focus of management's attention to the assimilation of
the acquired companies and their employees and on the
management of expanding operations;
o the incorporation of acquired products into our product
line;
o the increasing demands on our operational systems;
12
<PAGE>
o adverse effects on our reported operating results;
o the amortization of acquired intangible assets; and
o the loss of key employees and the difficulty of presenting
a unified corporate image.
We may be unable to make appropriate acquisitions because of competition
for the specific acquisition. In pursuing acquisitions, we compete against other
plastic product manufacturers, some of which are larger than we are and have
greater financial and other resources than we have. We compete for potential
acquisitions based on a number of factors, including price, terms and
conditions, size and ability to offer cash, stock or other forms of
consideration. In addition, the negotiation of potential acquisitions may
require members of management to divert their time and resources away from our
operations.
THE INTEGRATION OF ACQUIRED BUSINESSES MAY RESULT IN SUBSTANTIAL COSTS, DELAYS
OR OTHER PROBLEMS.
We may not be able to successfully integrate our acquisitions without
substantial costs, delays or other problems. We will have to continue to expend
substantial managerial, operating, financial and other resources to integrate
our businesses. The costs of such integration could have an adverse effect on
short-term operating results. Such costs include non-recurring acquisition costs
including accounting and legal fees, investment banking fees, recognition of
transaction-related obligations and various other acquisition-related costs.
In addition, the rapid pace of our acquisitions of other businesses may
adversely affect our efforts to integrate acquisitions and manage those
acquisitions profitably. We may seek to recruit additional managers to
supplement the incumbent management of the acquired businesses, but we may not
have the ability to recruit additional candidates with the necessary skills.
Once we acquire a business, we are faced with risks, including:
o the possibility that it will be difficult to integrate
the operations into our other operations;
o the possibility that we have acquired substantial
undisclosed liabilities;
o the risks of entering markets or offering services for
which we have no prior experience; and
o the potential loss of customers as a result of changes in
management.
We may not be successful in overcoming these risks.
BPC HOLDING HAS EXPERIENCED CONSOLIDATED NET LOSSES, AND EXPECTS TO CONTINUE TO
DO SO.
BPC Holding has not generated enough revenue on a consolidated basis to
make a profit. Consolidated earnings have been insufficient to cover fixed
charges by $2.9 million for fiscal 1996, by $13.9 million for fiscal 1997 and by
$7.0 million for fiscal 1998. In addition, BPC Holding has experienced
consolidated net losses during each of such periods principally as a result of
expenses and charges incurred in connection with our acquisitions. These net
losses were $3.3 million for fiscal 1996, $14.4 million for fiscal 1997 and $7.6
million for fiscal 1998. BPC Holding expects that it will continue to experience
consolidated net losses for the foreseeable future.
13
<PAGE>
BPC HOLDING RELIES ON DIVIDENDS FROM US TO MEET ITS DEBT OBLIGATIONS AND MAY NOT
BE ABLE TO SATISFY ITS OBLIGATIONS UNDER ITS GUARANTEE OF THE NOTES.
BPC Holding is a holding company and is entirely dependent on our paying
it dividends to pay its obligations, including its obligations under its
guarantee. Under the terms of our credit facility, there are severe restrictions
on our ability to declare dividends to BPC Holding. In addition, the indenture
governing the $105 million aggregate principal amount of BPC Holding's 12 1/2%
Senior Secured Notes due 2006 (the "1996 Notes") limits the ability of BPC
Holding to make certain payments, including payments under its Guarantee.
Accordingly, absent a substantial increase in our operating results and a
refinancing of the 1996 Notes or an equity offering, we do not expect BPC
Holding to be able to perform under its guarantee.
In addition, without a substantial increase in our net income above
historical levels, we anticipate that we will be unable to generate sufficient
cash flow to permit a dividend to BPC Holding under the limitations placed on us
by our debt indentures in an amount sufficient to meet BPC Holding's interest
payment obligations under the 1996 Notes. We must pay the interest obligations
of the 1996 Notes in cash beginning December 15, 2001. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES IS JUNIOR TO OUR SENIOR DEBT, WHICH
BEARS INTEREST AT FLUCTUATING RATES, AND POSSIBLY OUR FUTURE INDEBTEDNESS.
Under the indenture, payments on the notes will be subordinated to the
prior payment of all of our senior debt, totaling $89.0 million on July 3, 1999.
Our senior debt currently includes borrowings under our credit facility and our
Nevada Industrial Revenue Bonds (which bear interest at a variable rate, require
annual principal payments of $0.5 million on April 1, and mature in April 2007).
As of July 3, 1999, $35.8 million was available for borrowing under the credit
facility (subject to applicable borrowing base limitations), and there was no
debt subordinated to the Notes. See "Description of Certain Other Debt--The
Credit Facility." The indenture permits us to incur additional senior debt under
our credit facility provided that certain conditions are met. See "Description
of Notes."
By reason of such subordination, in the event of our insolvency,
liquidation, reorganization, dissolution or winding up, or in the event that the
senior debt is otherwise accelerated, holders of senior debt must be paid in
full before we may pay you. In such event, there may be insufficient assets
remaining to satisfy claims. In addition, we will not be permitted to make any
payment with respect to the notes or our other senior subordinated debt for a
substantial period of time if defaults under our credit facility or certain
other senior debt exist and are continuing and certain other conditions are
satisfied. The notes rank PARI PASSU with the 1998 Notes and the 1994 Notes and
PARI PASSU with, or senior to, all other future subordinated debt of the
Company. In addition, the guarantees are subordinated to all existing and future
senior debt of each guarantor, including the guarantees under our credit
facility, and, in the case of BPC Holding, the 1996 Notes.
In addition, Berry Plastics' and the guarantors' respective obligations
under our credit facility and our Nevada Industrial Revenue Bonds bear interest
at rates that may be expected to fluctuate over time. Accordingly, a substantial
increase in interest rates could adversely affect our ability to service our
debt obligations, including our obligations with respect to the notes.
THE NOTES ARE NOT SECURED BY ANY OF OUR ASSETS.
The notes and guarantees are unsecured obligations of Berry Plastics and
the guarantors, respectively. The indenture will permit us to incur certain
secured debt, including debt under our credit facility, which is secured by a
lien on substantially all of the assets of Berry Plastics and the guarantors.
The holders of any secured debt will have a claim prior to the holders of the
notes with respect to any assets pledged by us as security for such debt. Upon
an event of default under the credit facility, the lender would be entitled to
foreclose on the assets of Berry Plastics and the guarantors. In such event, the
assets of Berry Plastics and the guarantors remaining after repayment of such
secured debt may be insufficient to satisfy our obligations with respect to the
notes.
14
<PAGE>
WE HAVE $125 MILLION IN PRINCIPAL AMOUNT OF NOTES OUTSTANDING THAT WILL BE PAID
BEFORE THE NOTES IN THE EVENT OF CERTAIN ASSETS SALES.
The 1994 Notes and the 1998 Notes have a priority upon the payment of
proceeds pursuant to certain asset sales. See "Description of Notes--Repurchase
at the Option of Holders--Asset Sales."
WE DO NOT HAVE FIRM CONTRACTS WITH PLASTIC RESIN SUPPLIERS.
We source plastic resin primarily from major industry suppliers, such as
Dow Chemical, Chevron, Mobil and Equistar. We have long-standing relationships
with certain of these suppliers but have not entered into a firm supply contract
with any of our resin vendors. We may not be able to arrange for other sources
of resin in the event of an industry-wide general shortage of resins used by us,
or a shortage or discontinuation of certain types of grades of resin purchased
from one or more of our suppliers.
IF MARKET CONDITIONS DO NOT PERMIT US TO PASS ON THE COST OF PLASTIC RESINS TO
OUR CUSTOMERS ON A TIMELY BASIS, IF AT ALL, OUR FINANCIAL CONDITION AND RESULTS
OF OPERATIONS WILL SUFFER.
To produce our products we use various plastic resins, which in fiscal
1998 cost us about $62 million, or 31% of our total cost of goods sold. In order
for us to do well financially we must pass this cost on to our customers in a
timely manner. Plastic resins are subject to cyclical price fluctuations,
including those arising from supply shortages and changes in the prices of
natural gas, crude oil and other petrochemical intermediates from which resins
are produced. Historically, we have been able to pass on increases in resin
prices to our customers over a period of time. However, we may not be able to
continue to do so on a timely basis, if at all, or there could be a significant
increase in resin prices, which would have a material adverse effect on our
financial performance. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--General Economic Conditions and Inflation"
and "Business--Sources and Availability of Raw Materials."
WE ARE CONTROLLED BY A SMALL GROUP OF STOCKHOLDERS.
Atlantic Equity Partners International II, L.P., a Delaware limited
partnership, owns about 54% (on a voting common stock equivalent basis) of BPC
Holding's outstanding voting capital stock. As such, subject to the terms of our
Stockholders Agreement, Atlantic Equity Partners International II has the
ability to elect all of the members of BPC Holding's board of directors and can
determine the outcome of any corporate transaction or other matter submitted to
the stockholders of BPC Holding or Berry Plastics for approval, including
mergers, consolidations and the sale of Berry Plastics or all or substantially
all of our assets. See "Certain Transactions--Stockholders Agreements." Atlantic
Equity Associates International II, L.P., a Delaware limited partnership, is the
sole general partner of Atlantic Equity Partners International II. Roberto
Buaron, the Chairman and a director of Berry Plastics, is the sole shareholder
of Buaron Holdings Ltd. Buaron Holdings is the sole general partner of Atlantic
Equity Associates International II. Through his affiliations with Buaron
Holdings and Atlantic Equity Associates International II, Mr. Buaron may be
deemed to control Atlantic Equity Partners International II.
Including the shares of capital stock owned by Atlantic Equity Partners
International II, all executive officers and directors of Berry Plastics as a
group beneficially own about 96.3% (on a voting common stock equivalent basis)
of BPC Holding's outstanding voting capital stock.
WE ARE SUBJECT TO VARIOUS ENVIRONMENTAL LAWS AND MAY BE ADVERSELY AFFECTED BY
NEW ENVIRONMENTAL LAWS OR THE COSTS OF COMPLIANCE WITH ANY SUCH LAWS.
Federal, state and local governments could enact laws or regulations
concerning environmental matters that increase the cost of producing, or
otherwise adversely affect the demand for, plastic products. We are aware that
certain local governments have adopted ordinances prohibiting or restricting the
use or disposal of certain plastic products that are among the types of products
that we produce. If such prohibitions or restrictions were widely adopted, they
could have a material adverse effect on us. Furthermore, a decline in consumer
preference for plastic
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products due to environmental considerations could have a negative effect on our
business. In addition, certain of our operations are subject to federal, state
and local environmental laws and regulations that impose limitations on the
discharge of pollutants into the air and water and establish standards for the
treatment, storage and disposal of solid and hazardous wastes. While we have not
been required historically to make significant capital expenditures in order to
comply with applicable environmental laws and regulations, we cannot predict
with any certainty our future capital expenditure requirements because of
continually changing compliance standards and environmental technology.
Furthermore, violations or contaminated sites that we do not know about
(including contamination caused by prior owners and operators of such sites)
could result in additional compliance or remediation costs or other liabilities.
We do not have insurance coverage for environmental liabilities and do not
anticipate obtaining such coverage in the future. See "Business--Environmental
Matters and Governmental Regulation."
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE
OF CONTROL OFFER REQUIRED BY THE INDENTURE.
In the event of certain change of control events, we will be required,
subject to certain conditions, to offer to purchase all outstanding notes, 1994
Notes and 1998 Notes at a purchase price equal to 101% of the principal amount
thereof, plus accrued interest and any liquidated damages to the date of
repurchase. In addition, BPC Holding will also be required, subject to certain
conditions, to offer to purchase all outstanding 1996 Notes at a purchase price
equal to 101% of the principal amount thereof (or 101% of $105,000,000), plus
accrued interest to the date of repurchase. There can be no assurance that we
will have sufficient funds available to make the required purchases. Moreover,
our credit facility and the indenture governing the 1996 Notes restrict such a
purchase and the offer would require the approval of the lender or
securityholders thereunder, as the case may be. As a result of this potential
lack of funds and the restrictions contained in our credit facility and the
indenture governing the 1996 Notes, the indenture governing the Notes may offer
little, if any, protection to you in the event of a change of control. If we
failed to purchase Notes tendered upon a change of control it would constitute
an event of default under the indenture. Our credit facility provides that
events similar to a change of control will constitute an event of default
thereunder. Upon the occurrence of an event of default under our credit
facility, all amounts outstanding thereunder may become due and payable. All
debt of Berry Plastics under our credit facility is senior debt, which, as of
July 3, 1999, on a pro forma basis giving effect to the acquisition of Cardinal
and a $20.0 million concurrent increase in our credit facility, could have been
as much as $132.5 million under the borrowing base calculation. The
subordination provisions contained in the Indenture will prohibit us (if the
holders of senior debt issue a notice to us to such effect) from making any
payment on the notes until such event of default is cured or upon the expiration
of 179 days (unless the holders of senior debt accelerate the maturity of the
senior debt). We could, in the future enter into certain transactions, including
acquisitions, refinancings or other recapitalizations or highly leveraged
transactions, that would not result in a change of control but would increase
the amount of debt outstanding or otherwise affect our capital structure or
credit ratings or otherwise adversely affect holders of the notes. See
"Description of Certain Other Debt" and "Description of Notes--Repurchase at the
Option of Holders--Change of Control."
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY.
We face intense competition in the sale of our products. We compete with
several companies, including divisions or subsidiaries of larger companies, on
the basis of price, service, quality and the ability to supply products to
customers in a timely manner. Many of our competitors have financial and other
resources that are substantially greater than ours. Our customers may opt to
purchase a different production type of product, such as those made by
thermoforming. We may not be able to compete successfully with respect to any of
the foregoing factors. Competition could result in our products losing market
share or our having to reduce our prices, either of which would have a material
adverse effect on our business and results of operations.
UNDER SPECIFIC CIRCUMSTANCES, THE NOTES AND GUARANTEES MAY BE VOIDED.
Federal and state statutes allow courts, under specific circumstances, to
void the notes and the guarantees and require you to return payments received
from us or the Guarantors. If a court of competent jurisdiction in a suit by an
unpaid creditor or a representative of creditors (such as a trustee in
bankruptcy or a debtor-in-possession) were
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to find that, at the time of the incurrence of the debt represented by the notes
and the Guarantees, Berry Plastics or a Guarantor:
o was insolvent or was rendered insolvent by reason of
such incurrence;
o was engaged in a business or transaction for which its
remaining assets constituted unreasonably small capital;
o intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they matured;
o intended to hinder, delay or defraud its creditors; or
o incurred the debt for less than reasonably equivalent
value or fair consideration;
then such court could, among other things:
o void all or a portion of our or such Guarantor's
obligations to the holders of the Notes, the effect of
which could be that you might not be repaid in full;
and/or
o subordinate our or such Guarantor's obligations to the
holders of the notes to other existing and future debt of
Berry Plastics or such Guarantor, as the case may be, the
effect of which would be to entitle such other creditors
to be paid in full before any payment could be made to
you.
The measure of insolvency for purposes of the foregoing will vary
depending upon the law applied in such case. Generally, however, we would be
considered insolvent if:
o the sum of our debts, including contingent liabilities,
was greater than all of our assets at a fair valuation or
if the present fair saleable value of our assets was less
than the amount that would be required to pay the probable
liabilities on our existing debts, including contingent
liabilities, as they become absolute and matured; or
o we could not pay our debts as they became due.
THERE IS NO PUBLIC MARKET FOR THE EXCHANGE NOTES.
The exchange notes will be new securities for which currently there is no
trading market. We do not intend to list the exchange notes on any national
securities exchange or to seek the admission thereof to trading in the Nasdaq
National Market. The outstanding notes are designated for trading in the PORTAL
market. We have been advised by the Initial Purchasers that they currently
intend to make a market. The Initial Purchasers are not obligated to do so,
however, and any market-making activities with respect to the exchange notes may
be discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act, and may be limited during the exchange offer and while any shelf
registration statement is pending. Accordingly, we cannot assure you that an
active public or other market or liquidity will develop for the exchange notes.
If a trading market does not develop or is not maintained, you may experience
difficulty in reselling the exchange notes or may be unable to sell them at all.
If a market develops for the exchange notes, future trading prices of the
exchange notes will depend on many factors, including among other things:
o our financial performance or prospects;
o prevailing interest rates;
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o the overall market for high yield securities;
o the prospects for companies in our industry generally;
and
o the number of holders of the exchange notes.
Depending on those and other factors, the exchange notes may trade at a
discount from their principal amount. Historically, the market for
non-investment grade debt has been subject to disruptions that have caused
substantial volatility in the prices of securities similar to the exchange
notes. We cannot assure you that the market for the exchange notes, if any, will
not be subject to similar disruptions. Any such disruptions may adversely affect
you as a holder of the exchange notes.
YOUR ABILITY TO RESELL YOUR NOTES WILL REMAIN RESTRICTED IF YOU FAIL TO EXCHANGE
THEM IS THE EXCHANGE OFFER.
If you do not exchange the outstanding notes for exchange notes pursuant
to the exchange offer you will continue to be subject to the restrictions on
transfer of the outstanding notes as set forth in the legend thereon as a
consequence of the issuance of the outstanding notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the outstanding
notes may not be offered or sold unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. We do not currently
anticipate that we will register the outstanding notes under the Securities Act.
In addition, any trading market for the outstanding notes not exchanged for
exchange notes will be adversely affected to the extent that outstanding notes
are tendered and accepted in the exchange offer. Based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
we believe that the exchange notes issued pursuant to the exchange offer in
exchange for outstanding notes may be offered for resale, resold or otherwise
transferred by any holder thereof (other than any such holder that is an
"affiliate" of Berry Plastics within the meaning of Rule 405 promulgated under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, PROVIDED that the exchange notes are
acquired in the ordinary course of the holder's business, the holder has no
arrangement with any person to participate in the distribution of such exchange
notes and neither the holder nor any such other person is engaging in or intends
to engage in a distribution of the exchange notes. Notwithstanding the
foregoing, 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 such exchange notes. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with any resale of exchange notes received in exchange for outstanding notes
where such outstanding notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities (other than outstanding
notes acquired directly from Berry Plastics). Berry Plastics and the guarantors
have agreed that, for a period of one year from the date of this prospectus,
they will make this prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution." However, your
ability to resell the exchange notes is subject to applicable state securities
laws as described in "Risk Factors -- There are state securities laws
restrictions on the resale of exchange notes."
TO PARTICIPATE IN THE EXCHANGE OFFER YOU MUST COMPLY WITH THE PROCEDURES
DISCUSSED IN THIS PROSPECTUS.
To participate in the exchange offer, and to avoid the restrictions on
transfer of the outstanding notes, holders of outstanding notes must transmit a
properly completed letter of transmittal or an Agent's Message, including all
other documents required by the letter of transmittal, to the exchange agent at
one of the addresses set forth below under "The Exchange Offer -- Exchange
Agent" on or prior to the expiration date. In addition, either (i) certificates
for the outstanding notes must be received by the Exchange Agent along with the
letter of transmittal; (ii) a timely confirmation of a book-entry transfer of
such outstanding notes, if such procedure is available, into the Exchange
Agent's account at The Depository Trust Company pursuant to the procedure for
book-entry transfer
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described herein, must be received by the Exchange Agent prior to the Expiration
Date; or (iii) you must comply with the guaranteed delivery procedures described
in this prospectus. The method of delivery of the outstanding notes and the
letter of transmittal and all other required documents to the Exchange Agent is
at the your election and risk. Neither Berry Plastics, the Exchange Agent nor
any other person shall incur any liability for failure to notify you of defects
or irregularities with respect to tenders of outstanding notes. See "The
Exchange Offer."
THERE ARE STATE SECURITIES LAWS RESTRICTIONS ON THE RESALE OF EXCHANGE NOTES.
In order to comply with the securities laws of certain jurisdictions, the
exchange notes may not be offered or resold by you unless they have been
registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and the requirements of such
exemption have been satisfied. We do not currently intend to register or qualify
the resale of the exchange notes in any such jurisdictions. However, an
exemption is generally available for sales to registered broker-dealers and
certain institutional buyers. Other exemptions under applicable state securities
laws may also be available.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The outstanding notes were sold by Berry Plastics on July 6, 1999 to the
Initial Purchasers, who placed the outstanding notes with institutional
investors. In connection therewith, Berry Plastics, the guarantors and the
Initial Purchasers entered into the Registration Rights Agreement, pursuant to
which Berry Plastics and the guarantors agreed, for the benefit of the holders
of the outstanding notes, that Berry Plastics and the guarantors would, at their
sole cost, among other things: (i) within 45 days following the original
issuance of the outstanding notes, file with the Commission the Registration
Statement (of which this prospectus is a part) under the Securities Act with
respect to an issue of a series of new notes of Berry Plastics identical in all
material respects to the series of outstanding notes (except that such exchange
notes would not contain terms with respect to transfer restrictions); and (ii)
cause such Registration Statement to be declared effective under the Securities
Act within 210 days following the original issuance of the outstanding notes.
Upon the effectiveness of the Registration Statement, Berry Plastics will offer,
pursuant to this prospectus, to the holders of Transfer Restricted Securities
(as defined herein) who are able to make certain representations the opportunity
to exchange their Transfer Restricted Securities for a like principal amount of
exchange notes, to be issued without a restrictive legend and which may,
generally, be reoffered and resold by the holder without restrictions or
limitations under the Securities Act. The term "Holder" with respect to the
exchange offer means any person in whose name outstanding notes are registered
on the books of Berry Plastics or any other person who has obtained a properly
completed bond power from the registered holder.
Berry Plastics has not requested, and does not intend to request, an
interpretation by the staff of the Commission with respect to whether the
exchange notes issued pursuant to the exchange offer in exchange for the
Transfer Restricted Securities may be offered for sale, resold or otherwise
transferred by any holder without compliance with the registration and
prospectus delivery provisions of the Securities Act. Instead, based on
interpretations by the staff of the Commission set forth in no-action letters
issued to third parties, Berry Plastics believes that exchange notes issued
pursuant to the exchange offer in exchange for Transfer Restricted Securities
may be offered for resale, resold and otherwise transferred by any holder of the
exchange notes (other than any such holder that is an "affiliate" of Berry
Plastics within the meaning of Rule 405 promulgated under the Securities Act)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, PROVIDED that the exchange notes are acquired in the
ordinary course of such holder's business, such holder has no arrangement or
understanding with any person to participate in the distribution of such
exchange notes and neither such holder nor any other such person is engaging in
or intends to engage in a distribution of the exchange notes. Since the
Commission has not considered the exchange offer in the context of a no-action
letter, there can be no assurance that the staff of the Commission would make a
similar determination with respect to the exchange offer. Any holder who is an
affiliate of Berry Plastics or who tenders in the exchange offer for the purpose
of participating in a distribution of the exchange notes cannot rely on such
interpretations by the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a resale transaction.
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 such exchange notes. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for Transfer Restricted
Securities where such Transfer Restricted Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (other than Transfer Restricted Securities acquired directly from the
Company). Berry Plastics and the guarantors have agreed that, for a period of
one year after the date of this prospectus, they will make this prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
If (i) Berry Plastics and the Guarantors are not permitted to consummate
the exchange offer because the exchange offer is not permitted by applicable law
or Commission policy or (ii) any holder of Transfer Restricted Securities
notifies Berry Plastics 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
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exchange notes acquired by it in the exchange offer to the public without
delivering a prospectus and this prospectus is not appropriate or available for
such resales or (C) that it is a broker-dealer and owns notes acquired directly
from Berry Plastics or an affiliate of Berry Plastics, Berry Plastics and the
guarantors will file with the Commission a shelf registration statement (the
"Shelf Registration Statement") to cover resales of the notes by the holders
thereof who satisfy certain conditions relating to the provision of information
in connection with the Shelf Registration Statement. Berry Plastics and the
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 foregoing, "Transfer Restricted Securities" means each
outstanding note (together with any related note guarantees) until (i) the date
on which the outstanding note has been exchanged by a person other than a
broker-dealer for an exchange note in the exchange offer, (ii) following the
exchange by a broker-dealer in the exchange offer of an outstanding note for an
exchange note, the date on which the 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
this prospectus, (iii) the date on which the outstanding note has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iv) the date on which the outstanding
note is distributed to the public pursuant to Rule 144 under the Securities Act.
The Registration Rights Agreement provides that (i) Berry Plastics and the
guarantors will file the Registration Statement with the Commission on or prior
to 45 days after the original issuance of the outstanding notes, (ii) Berry
Plastics will use its best efforts to have the Registration Statement declared
effective by the Commission on or prior to 210 days after the original issuance
of the outstanding notes, (iii) unless the exchange offer would not be permitted
by applicable law or Commission policy, Berry Plastics and the guarantors will
commence the exchange offer and use their best efforts to issue, on or prior to
30 business days after the date on which the Registration Statement was declared
effective by the Commission, exchange notes in exchange for all outstanding
notes tendered prior thereto in the exchange offer and (iv) if obligated to file
the Shelf Registration Statement, Berry Plastics and the guarantors will use
their best efforts to file the Shelf Registration Statement with the Commission
on or prior to 45 days after such filing obligation arises and to cause the
Shelf Registration Statement to be declared effective by the Commission on or
prior to 90 days after such obligation arises. If (a) Berry Plastics and the
guarantors fail to file any of the registration statements required by the
Registration Rights Agreement on or before the date specified for such filing,
(b) any of such registration statements is not declared effective by the
Commission on or prior to the dated specified for such effectiveness (the
"Effectiveness Target Date"), or (c) Berry Plastics and the guarantors fail to
consummate the exchange offer within 30 business days of the Effectiveness
Target Date with respect to the Registration Statement, or (d) the Shelf
Registration Statement or the Registration Statement is declared effective but
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 (a) through (d) above a
"Registration Default"), then Berry Plastics and the 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
Berry Plastics and the Guarantors on each Damages Payment Date to the Global
Note Holder (as defined herein) by wire transfer of immediately available funds
or by Federal funds check and to Holders of Certificated Securities (as defined
herein) 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 certain
representations to Berry Plastics and the guarantors in order to participate in
the exchange offer and will be required to deliver certain 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.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
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Agreement, a copy of which has been filed as an exhibit to the Registration
Statement of which this prospectus forms a part.
The outstanding notes are designated for trading in the PORTAL market. To
the extent outstanding notes are tendered and accepted in the exchange offer,
the principal amount of outstanding notes will decrease with a resulting
decrease in the liquidity in the market therefor. Following the consummation of
the exchange offer, holders of outstanding notes who were eligible to
participate in the exchange offer but who did not tender their outstanding notes
will not be entitled to certain rights under the Registration Rights Agreement
and those outstanding notes will continue to be subject to certain restrictions
on transfer. Accordingly, the liquidity of the market for the outstanding notes
could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, Berry Plastics will accept any and all
outstanding notes validly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date. Berry Plastics will issue $1,000
principal amount of exchange notes in exchange for each $1,000 principal amount
of outstanding notes accepted in the exchange offer. Holders may tender some or
all of their outstanding notes pursuant to the exchange offer. However,
outstanding notes may be tendered only in integral multiples of $1,000.
The form and terms of the exchange notes will be identical in all material
respects to the form and terms of the outstanding notes, except that the
exchange notes have been registered under the Securities Act and therefore will
not bear legends restricting their transfer and will not contain certain
provisions providing for an increase in the interest rate on the outstanding
notes under certain circumstances relating to the Registration Rights Agreement,
which provisions will terminate upon the consummation of the exchange offer. The
exchange notes will evidence the same debt as the outstanding notes and will be
entitled to the benefits of the Indenture under which the outstanding notes
were, and the exchange notes will be, issued.
As of the date of this prospectus, $75,000,000 aggregate principal amount
of the outstanding notes. Berry Plastics has fixed the close of business on ,
1999 as the record date for the exchange offer for purposes of determining the
persons to whom this prospectus, together with the letter of transmittal, will
initially be sent. As of such date, there were registered holders of the
outstanding notes.
Holders of the outstanding notes do not have any appraisal or dissenters'
rights under the Delaware General Corporation Law (the "DGCL") or the Indenture
in connection with the exchange offer. Berry Plastics intends to conduct the
exchange offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission promulgated thereunder.
Berry Plastics shall be deemed to have accepted validly tendered
outstanding notes when, as and if Berry Plastics has given oral notice
(confirmed in writing) or written notice thereof to the Exchange Agent. The
Exchange Agent will act as agent for the tendering holders for the purpose of
the exchange of outstanding notes.
If any tendered outstanding notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, any such unaccepted outstanding notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
expiration date.
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes pursuant to the exchange offer. Berry Plastics will pay all
charges and expenses, other than certain applicable taxes, in connection with
the exchange offer. See "The Exchange Offer -- Fees and Expenses."
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" shall mean 5:00 p.m., New York City time, on ,
1999, unless Berry Plastics, in its sole discretion, extends the exchange offer,
in which case the term "expiration date" shall mean the latest date and time to
which the exchange offer is extended.
In order to extend the exchange offer, Berry Plastics will notify the
Exchange Agent of any extension by oral notice (confirmed in writing) or written
notice and will make a public announcement thereof prior to 9:00 a.m., New York
City time, on the next business day after each previously scheduled expiration
date.
Berry Plastics reserves the right, in its sole discretion, (i) to delay
accepting any outstanding notes, to extend the exchange offer or, if any of the
conditions set forth below under "The Exchange Offer -- Conditions" shall not
have been satisfied, to terminate the exchange offer, by giving oral notice
(confirmed in writing) or written notice of such delay, extension or termination
to the Exchange Agent or (ii) to amend the terms of the exchange offer in any
manner. Any such delay in acceptance, extension, termination or amendment will
be followed as promptly as practicable by a public announcement thereof. If the
exchange offer is amended in a manner determined by Berry Plastics to constitute
a material change, Berry Plastics will promptly disclose such amendment by means
of a prospectus supplement that will be distributed to the registered Holders,
and Berry Plastics will extend the exchange offer for a period of five to 10
business days, depending upon the significance of the amendment and the manner
of disclosure to the registered Holders, if the exchange offer would otherwise
expire during such five- to 10-business-day period.
Without limiting the manner in which Berry Plastics may choose to make
public announcement of any delay, extension, termination or amendment of the
exchange offer, Berry Plastics shall have no obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest from January 15, 2000. Interest will
be payable on the outstanding notes accepted for exchange to, but not including,
January 15, 2000.
PROCEDURES FOR TENDERING
The tender of outstanding notes by a Holder thereof pursuant to one of the
procedures set forth below and the acceptance thereof by Berry Plastics will
constitute a binding agreement between such Holder and Berry Plastics in
accordance with the terms and subject to the conditions set forth herein and in
the letter of transmittal. This prospectus, together with the letter of
transmittal, will first be sent on or about August , 1999, to all Holders of
outstanding notes known to Berry and the Exchange Agent.
Only a Holder of the outstanding notes may tender such outstanding notes
in the exchange offer. A Holder who wishes to tender any outstanding notes for
exchange pursuant to the exchange offer must transmit a properly completed and
duly executed letter of transmittal, or a facsimile thereof, or an Agent's
Message, including any other required documents, to the Exchange Agent prior to
5:00 p.m., New York City time, on the Expiration Date. In addition, either (i)
the certificates for such outstanding notes must be received by the Exchange
Agent along with the letter of transmittal or (ii) a timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such outstanding notes, if
such procedure is available, into the Exchange Agent's account at The Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedure for
book-entry transfer described below, must be received by the Exchange Agent
prior to the Expiration Date or (iii) the Holder must comply with the guaranteed
delivery procedures described below. To be tendered effectively, the outstanding
notes, letter of transmittal or Agent's Message and other required documents
must be received by the Exchange Agent at the address set forth below under
"Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration Date.
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The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Exchange Agent and forming a part of
a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering outstanding notes which are the subject of such
Book-Entry Confirmation that such participant has received and agrees to be
bound by the terms of the letter of transmittal, and that Berry Plastics may
enforce such agreement against such participant.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND
RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS
USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IF SENT BY MAIL, IT IS RECOMMENDED
THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED AND PROPER INSURANCE BE
OBTAINED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO
THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTERS OF TRANSMITTAL OR
OUTSTANDING NOTES SHOULD BE SENT TO BERRY.
Any beneficial owner whose outstanding notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such beneficial owner's own behalf, such
beneficial owner must, prior to completing and executing the letter of
transmittal or delivering an Agent's Message and delivering such beneficial
owner's outstanding notes, either make appropriate arrangements to register
ownership of the outstanding notes in such beneficial owner's name or obtain a
properly completed bond power from the registered Holder. The transfer of
registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined herein)
unless the outstanding notes tendered pursuant thereto are tendered (i) by a
registered Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the letter of transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a letter of transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be 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 an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 promulgated under the Exchange Act (an "Eligible
Institution").
If the letter of transmittal is signed by a person other than the
registered Holder of any outstanding notes listed therein, such outstanding
notes must be endorsed or accompanied by a properly completed bond power, signed
by such registered Holder as such registered Holder's name appears on such
outstanding notes.
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, such persons should so indicate when signing, and unless waived by
Berry Plastics, evidence satisfactory Berry Plastics of their authority to so
act must be submitted with the letter of transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered outstanding notes will be
determined by Berry Plastics in its sole discretion, which determination will be
final and binding. Berry Plastics reserves the absolute right to reject any and
all outstanding notes not properly tendered or any Old Berry's acceptance of
which would, in the opinion of counsel for Berry Plastics, be unlawful. Berry
Plastics also reserves the right to waive any defects, irregularities or
conditions of tender as to particular outstanding notes. Berry's 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 such time as Berry Plastics shall determine. Although
Berry Plastics intends to notify Holders of defects or irregularities with
respect to tenders of outstanding notes, neither Berry Plastics, the Exchange
Agent nor any other person shall incur any liability for failure to give such
notification. Tenders of outstanding notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any outstanding
notes received by the Exchange Agent that Berry Plastics determines are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will
24
<PAGE>
be returned by the Exchange Agent to the tendering Holders, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
Expiration Date.
By tendering, each Holder will represent to Berry Plastics, among other
things, that (i) the exchange notes acquired by the Holder and any beneficial
owners of outstanding notes pursuant to the exchange offer are being obtained in
the ordinary course of business of the persons receiving such exchange notes,
(ii) neither the Holder nor such beneficial owner has an arrangement with any
person to participate in the distribution of such exchange notes, (iii) neither
the Holder nor such beneficial owner nor any such other person is engaging in or
intends to engage in a distribution of such exchange notes and (iv) neither the
Holder nor any such other person is an "affiliate," as defined under Rule 405
promulgated under the Securities Act, of Berry Plastics. Each broker-dealer that
receives exchange notes for its own account in exchange for outstanding notes,
where such outstanding notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities (other than outstanding
notes acquired directly from Berry Plastics), may participate in the exchange
offer but may be deemed an "underwriter" under the Securities Act and,
therefore, must acknowledge in the letter of transmittal that it will deliver a
prospectus in connection with any resale of such exchange notes. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the outstanding notes at the Book-Entry Transfer Facility for
purposes of the exchange offer within two business days after the date of this
prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's system may make book-entry delivery of
outstanding notes by causing the Book-Entry Transfer Facility to transfer such
outstanding notes into the Exchange Agent's account at the Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures for
transfer. However, although delivery of outstanding notes may be effected
through book-entry transfer at the Book-Entry Transfer Facility, the letter of
transmittal or facsimile thereof, or an Agent's Message, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at one of the addresses set
forth below under "The Exchange Offer -- Exchange Agent" on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their outstanding notes and (i) whose
outstanding notes are not immediately available or (ii) who cannot deliver their
outstanding notes, the letter of transmittal or any other required documents to
the Exchange Agent prior to the Expiration Date may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate
number(s) of such outstanding notes and the principal amount of
outstanding notes tendered, stating that the tender is being made thereby
and guaranteeing that, within three New York Stock Exchange trading days
after the Expiration Date, the letter of transmittal (or facsimile
thereof) or an Agent's Message, together with the certificate(s)
representing the outstanding notes, or a Book-Entry Confirmation, and any
other documents required by the letter of transmittal will be deposited by
the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed letter of transmittal (or
facsimile thereof) or an Agent's Message, as well as the certificate(s)
representing all tendered outstanding notes in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other document
required by the letter of
25
<PAGE>
transmittal are received by the Exchange Agent within three New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will
be sent to Holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
To withdraw a tender of outstanding notes in the exchange offer, a written
or facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the outstanding notes to be withdrawn (the
"Depositor"), (ii) identify the outstanding notes to be withdrawn (including the
certificate number or numbers and principal amount of such outstanding notes),
(iii) be signed by the Holder in the same manner as the original signature on
the letter of transmittal by which such outstanding notes were tendered
(including any required signature guarantees) or be accompanied by documents of
transfer sufficient to have the Trustee with respect to the outstanding notes
register the transfer of such outstanding notes into the name of the persons
withdrawing the tender and (iv) specify the name in which any such outstanding
notes are to be registered, if different from that of the Depositor. If
certificates for outstanding notes have been delivered or otherwise identified
to the Exchange Agent, then, prior to the release of such certificates, the
withdrawing Holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution unless such Holder is an Eligible
Institution. If outstanding notes have been tendered pursuant to the procedure
for book-entry transfer described above, any notice of withdrawal must specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn outstanding notes and otherwise comply with the
procedures of such facility. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
Berry in its sole discretion, which determination shall be final and binding on
all parties. Any outstanding notes so withdrawn will be deemed not to have been
validly tendered for purposes of the exchange offer and no exchange notes will
be issued with respect thereto unless the outstanding notes so withdrawn are
validly rendered. Properly withdrawn outstanding notes may be rendered by
following one of the procedures described above under "The Exchange Offer --
Procedures for Tendering" at any time prior to the Expiration Date.
Any outstanding notes which have been tendered but which are not accepted
for payment due to withdrawal, rejection of tender or termination of the
exchange offer will be returned as soon as practicable 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 maintained with such Book-Entry
Transfer Facility for the outstanding notes).
CONDITIONS
Notwithstanding any other term of the exchange offer, Berry Plastics shall
not be required to accept for exchange, or exchange notes for, any outstanding
notes, and may terminate the exchange offer as provided herein before the
acceptance of such outstanding notes, if:
(a) the exchange offer shall violate applicable law or any
applicable interpretation of the staff of the Commission; or
(b) any action or proceeding is instituted or threatened in any
court or by any governmental agency that might materially impair the
ability of Berry Plastics to proceed with the exchange offer or any
material adverse development has occurred in any existing action or
proceeding with respect to Berry Plastics; or
(c) any governmental approval has not been obtained, which approval
Berry Plastics shall deem necessary for the consummation of the exchange
offer.
26
<PAGE>
If Berry Plastics determines in its sole discretion that any of the
conditions are not satisfied, Berry Plastics may (i) refuse to accept any
outstanding notes and return all tendered outstanding notes to the tendering
Holders (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 maintained with such Book-Entry Transfer
Facility), (ii) extend the exchange offer and retain all outstanding notes
tendered prior to the expiration of the exchange offer, subject, however, to the
rights of Holders to withdraw such outstanding notes (see "The Exchange Offer --
Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect
to the exchange offer and accept all properly tendered outstanding notes which
have not been withdrawn. If such waiver constitutes a material change to the
exchange offer, Berry Plastics will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the registered Holders, and
Berry Plastics will extend the exchange offer for a period of five to 10
business days, depending upon the significance of the waiver and the manner of
disclosure to the registered Holders, if the exchange offer would otherwise
expire during such five- to 10-business-day period.
EXCHANGE AGENT
The United States Trust Company of New York has been appointed as Exchange
Agent for the exchange offer. Questions and requests for assistance, requests
for additional copies of this prospectus or of the letter of transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
To: United States Trust Company of New York, as Exchange Agent
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY FACSIMILE: BY HAND BEFORE 4:30 P.M.:
United States Trust Company of (212) 780-0592 United States Trust Company of
New York Attention: New York
P.O. Box 843 Customer Service 111 Broadway
Cooper Station New York, New York 10006
New York, New York 10276 Attention: Lower Level
Attention: Corporate Trust Corporate Trust Window
Services
CONFIRM BY BY OVERNIGHT COURIER AND BY
TELEPHONE TO: HAND AFTER 4:30 P.M. ON THE
(800) 548-6565 EXPIRATION DATE:
United States Trust Company of
New York
770 Broadway
New York, New York 10003
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by Berry Plastics. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of Berry and our affiliates.
Berry has not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. Berry Plastics, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the exchange offer
will be paid by Berry Plastics. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs, among
others.
Berry Plastics will pay all transfer taxes, if any, applicable to the
exchange of outstanding notes pursuant to the exchange offer. If, however,
certificates representing exchange notes or outstanding notes for principal
amounts
27
<PAGE>
not tendered or accepted for exchange are to be delivered to, or are to be
issued in the name of, any person other than the registered Holder of the
outstanding notes tendered, or if tendered outstanding notes are registered in
the name of any person other than the person signing the letter of transmittal,
or if a transfer tax is imposed for any reason other than the exchange of
outstanding notes pursuant to the exchange offer, then 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 exemption therefrom is not submitted with the letter of
transmittal, the amount of such transfer taxes will be billed directly to such
tendering Holder.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
outstanding notes as reflected in Berry Plastic's accounting records on the date
of the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The expenses of the exchange offer and the unamortized expenses
related to the issuance of the outstanding notes will be amortized over the term
of the exchange notes.
28
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of BPC
Holding and its subsidiaries at July 3, 1999 and the pro forma capitalization of
BPC Holding and its subsidiaries as of such date after giving effect to the
acquisition of Cardinal and the notes. You should read the information in the
table below in conjunction with the historical consolidated financial statements
of BPC Holding and the related notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AT JULY 3, 1999
--------------------------
HISTORICAL PRO FORMA
------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current portion:
BERRY PLASTICS CORPORATION:
Revolving credit facility ......................................... $ 23,835 $ 23,835
Term loans ........................................................ 61,151 61,151
Nevada Industrial Revenue Bonds ................................... 4,000 4,000
Capital lease obligations ......................................... 740 740
1994 Notes ........................................................ 100,000 100,000
1998 Notes ........................................................ 25,000 25,000
1999 Notes ........................................................ -- 75,000
Debt premium ...................................................... 758 758
--------- ---------
Total Berry Plastics long-term debt, including current portion 215,484 290,484
BPC HOLDING:
1996 Notes ........................................................ 105,000 105,000
--------- ---------
Total consolidated long-term debt, including current portion 320,484 395,484
Total stockholders' equity (deficit) .................................... (120,667) (120,667)
--------- ---------
Total capitalization .............................................. $ 199,817 $ 274,817
========= =========
</TABLE>
29
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated statement of
operations and condensed consolidated balance sheet of BPC Holding
(collectively, the "Pro Forma Statements") give effect to (1) the issuance of
the notes, (2) the offering of our 1998 Notes and the applications of the
proceeds therefrom and (3) our acquisitions of Cardinal, Knight and Norwich, as
if the transactions had occurred as of the beginning of the respective period
for the statement of operations data and other data, and in the case of the
issuance of the notes and our acquisition of Cardinal, as if the transactions
had occurred on July 3, 1999 for the balance sheet data. Fiscal year data
reflect Cardinal's financial data for its fiscal year ended November 30, 1998.
Twenty-six week period data reflect Cardinal's financial data for its period
ended May 31, 1999. The Pro Forma Statements do not purport to represent what
BPC Holding's consolidated financial position or results of operations would
actually have been if such transactions had in fact occurred on such dates or to
project BPC Holding's consolidated financial position or results of operations
for any future date or period. The pro forma adjustments are based on
information and upon assumptions that management believes to be reasonable. The
Pro Forma Statements and accompanying notes should be read in conjunction with
the historical consolidated financial statements and other financial information
pertaining to BPC Holding and related notes thereto included elsewhere in this
prospectus.
BPC HOLDING
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED JANUARY 2, 1999
<TABLE>
<CAPTION>
PRO FORMA
FOR THE
CARDINAL 1998 PRO FORMA ACQUISITIONS
BPC HOLDING ACQUISITION ACQUISITIONS FOR THE 1999 NOTES AND THE
HISTORICAL ADJUSTMENTS ADJUSTMENTS ACQUISITIONS ADJUSTMENTS 1999 NOTES
-------------- ------------- --------------- -------------- -------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net sales ........................... $ 271,830 $ 53,971 $ 26,869 $ 352,670 $ -- $ 352,670
Cost of goods sold .................. 199,227 43,066 22,786 265,079 -- 265,079
--------- --------- --------- --------- --------- ---------
Gross margin ........................ 72,603 10,905 4,083 87,591 -- 87,591
Operating expenses .................. 44,001 8,166(1) 3,684(6) 55,851 -- 55,851
--------- --------- --------- --------- --------- ---------
Operating income .................... 28,602 2,739 399 31,740 -- 31,740
Other expenses (income) ............. 1,865 (6) 2 1,861 -- 1,861
Interest expense, net ............... 34,556 --(2) 2,423(7) 36,979 8,625(11) 45,604
--------- --------- --------- --------- --------- ---------
Income (loss) before income taxes ... (7,819) 2,745 (2,026) (7,100) (8,625) (15,725)
Income taxes (benefit) .............. (249) --(3) 339(8) 90 -- 90
--------- --------- --------- --------- --------- ---------
Net income (loss) ................... $ (7,570) $ 2,745 $ (2,365) $ (7,190) $ (8,625) $ (15,815)
========= ========= ========= ========= ========= =========
OTHER DATA:
Depreciation and amortization ....... $ 24,830 $ 5,828(4) $ 1,838(9) $ 32,496 $ -- $ 32,496
BERRY PLASTICS DATA:
Cash interest expense, net .......... $ 20,569 $ --(5) $ 2,423(10) $ 22,993 $ 8,250 $ 31,243
Total interest expense, net ......... 21,835 -- 2,423 24,258 8,625(11) 32,883
</TABLE>
30
<PAGE>
BPC HOLDING
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
26 WEEKS ENDED JULY 3, 1999
<TABLE>
<CAPTION>
FOR THE
CARDINAL PRO FORMA FOR ACQUISITION AND
BPC HOLDING ACQUISITION THE CARDINAL 1999 NOTES THE
HISTORICAL ADJUSTMENTS ACQUISITION ADJUSTMENTS 1999 NOTES
-------------- -------------- ---------------- -------------- ---------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales ............................ $ 159,852 $ 28,465 $ 188,317 -- $ 188,317
Cost of goods sold ................... 112,782 23,407 136,189 -- 136,189
--------- --------- --------- --------- ---------
Gross margin ......................... 47,070 5,058 52,128 -- 52,128
Operating expenses ................... 25,828 4,251(1) 30,079 -- 30,079
--------- --------- --------- --------- ---------
Operating income ..................... 21,242 807 22,049 -- 22,049
Other expenses ....................... 778 -- 778 -- 778
Interest expense, net ................ 17,860 --(2) 17,860 4,314(11) 22,174
--------- --------- --------- --------- ---------
Income (loss) before income taxes .... 2,604 807 3,411 (4,314) (903)
Income taxes ......................... 482 --(3) 482 -- 482
--------- --------- --------- --------- ---------
Net income (loss) .................... $ 2,122 $ 807 $ 2,929 $ (4,314) $ (1,385)
========= ========= ========= ========= =========
OTHER DATA:
Depreciation and amortization ........ $ 14,110 $ 3,372(4) $ 16,350 $ -- $ 16,350
BERRY PLASTICS DATA:
Cash interest expense, net ........... $ 10,574 $ -- $ 10,574 $ 4,125 $ 14,699
Total interest expense, net .......... 11,196 --(5) 11,196 4,314(11) 15,510
</TABLE>
31
<PAGE>
BPC HOLDING
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FISCAL 26 WEEKS
YEAR ENDED ENDED
JANUARY 2, 1999 JULY 3, 1999
------------------ --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CARDINAL ACQUISITION ADJUSTMENTS:
(1) Actual operating expenses................................................. $ 6,291 $ 3,119
Add amortization of goodwill resulting from the acquisition............... 1,875 1,132
-------- ---------
Adjusted operating expenses............................................... $ 8,166 $ 4,251
======== =========
(2) Actual interest expense................................................... $ 3,384 $ 1,400
Deduct interest on extinguished debt...................................... (3,384) (1,400)
-------- ---------
Adjusted interest expense................................................. $ -- $ --
======== =========
(3) Actual provision for income taxes......................................... $ 439 $ 202
Adjust taxes for the acquisition.......................................... (439) (202)
-------- ---------
Adjusted income tax expense............................................... $ -- $ --
======== =========
(4) Actual depreciation and amortization acquisition.......................... $ 3,953 $ 2,240
Add amortization of goodwill resulting from the acquisition............... 1,875 1,132
-------- ---------
Adjusted depreciation and amortization.................................... $ 5,828 $ 3,372
======== =========
(5) Actual net cash interest expense.......................................... $ 3,170 $ 1,292
Deduct interest on extinguished debt...................................... (3,170) 1,292
-------- ---------
Adjusted net cash interest expense........................................ $ -- $ --
======== =========
NORWICH AND KNIGHT ACQUISITIONS ADJUSTMENTS:
(6) Actual operating expenses................................................. $ 3,350
Add amortization of goodwill resulting from the acquisitions.............. 334
--------
Adjusted operating expenses............................................... $ 3,684
========
(7) Actual interest expense................................................... $ 48
Add incremental interest expense from the acquisitions.................... 2,375
--------
Adjusted interest expense................................................. $ 2,423
========
(8) Actual provision for income taxes......................................... $ 196
Adjust taxes for the acquisitions......................................... 143
--------
Adjusted tax expense...................................................... $ 339
========
(9) Actual depreciation and amortization...................................... $ 1,504
Add amortization of goodwill resulting from the acquisitions.............. 334
--------
Adjusted depreciation and amortization.................................... $ 1,838
========
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
FISCAL 26 WEEKS
YEAR ENDED ENDED
JANUARY 2, 1999 JULY 3, 1999
----------------- ---------------
<S> <C>
(10) Actual net cash interest expense.................................. $ 48
Add incremental net cash interest expense from acquisitions....... 2,375
--------
Adjusted net cash interest expense................................ $ 2,423
========
OFFERING ADJUSTMENTS:
(11) Adjustment of net interest expense:
Interest on the 1999 Notes at 11%................................. $ 8,250 $ 4,125
Amortization of deferred financing costs associated with this
Offering...................................................... 375 189
-------- ---------
Change in net interest expense.................................... $ 8,625 $ 4,314
======== =========
</TABLE>
33
<PAGE>
BPC HOLDING
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT JULY 3, 1999
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA FOR THE
CARDINAL FOR THE CARDINAL
BPC HOLDING ACQUISITION CARDINAL 1999 NOTES ACQUISITION AND
HISTORICAL ADJUSTMENTS(1) ACQUISITION ADJUSTMENTS(2) THE 1999 NOTES
------------- --------------- -------------- --------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .............. $ 2,993 $ 31 $ 3,024 $-- $ 3,024
Accounts receivable .................... 40,842 6,910 47,752 -- 47,752
Inventories ............................ 32,314 8,043 40,357 -- 40,357
Other current assets ................... 2,658 628 3,286 -- 3,286
--------- --------- --------- --------- ---------
Total current assets ............ 78,807 15,612 94,419 -- 94,419
Assets held in trust ....................... 252 -- 252 -- 252
Property and equipment ..................... 120,271 31,956 152,227 -- 152,227
Intangible assets .......................... 55,950 31,596 87,546 3,000 90,546
Investment in subsidiary ................... -- (72,000) (72,000) 72,000 --
Other assets ............................... 3,129 112 3,241 -- 3,241
--------- --------- --------- --------- ---------
Total assets .................... $ 258,409 $ 7,276 $ 265,685 75,000 340,685
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ...... $ 20,297 $-- $ 20,297 $-- $ 20,297
Accounts payable ....................... 20,664 4,205 24,869 -- 24,869
Accrued liabilities .................... 26,075 157 26,232 -- 26,232
--------- --------- --------- --------- ---------
Total current liabilities ....... 67,036 4,362 71,398 -- 71,398
Long-term debt:
Industrial revenue bonds (Nevada) ...... 4,000 -- 4,000 -- 4,000
Term loans ............................. 61,151 -- 61,151 -- 61,151
Revolving line of credit ............... 23,835 -- 23,835 -- 23,835
Capital lease obligations .............. 740 -- 740 -- 740
1994 Notes ............................. 100,000 -- 100,000 -- 100,000
1998 Notes ............................. 25,000 -- 25,000 -- 25,000
1999 Notes ............................. -- -- -- 75,000 75,000
1996 Notes ............................. 105,000 -- 105,000 -- 105,000
Debt premium ........................... 758 -- 758 -- 758
Less: current portion .................. (20,297) -- (20,297) -- (20,297)
--------- --------- --------- --------- ---------
Total long-term debt ............ 300,187 -- 300,187 75,000 375,187
Other liabilities .......................... 11,853 2,914 14,767 -- 14,767
--------- --------- --------- --------- ---------
Total liabilities ............... 379,076 7,276 386,352 75,000 461,352
Stockholders' equity:
Total stockholders' equity
(deficit) ....................... (120,667) -- (120,667) -- (120,667)
--------- --------- --------- --------- ---------
Total liabilities and
stockholders' equity
(deficit) ..................... $ 258,409 $ 7,276 $ 265,685 $ 75,000 $ 340,685
========= ========= ========= ========= =========
</TABLE>
34
<PAGE>
BPC HOLDING
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(1) The aggregate purchase price of the Cardinal acquisition is expected to be
$72,000 (including $2,500 of fees and expenses related to the
acquisition). The preliminary allocation of the purchase price to
historical assets and liabilities of Cardinal was as follows:
AT JULY 3, 1999
(Dollars in thousands)
----------------------
Net assets at predecessor historical costs.... $ 19,814
Elimination of intangible assets.............. (14,743)
Extinguishment of debt........................ 33,065
Decrease in other liabilities................. 2,268
Excess of cost over net assets acquired....... 31,596
----------
$ 72,000
==========
(2) Deferred debt issuance costs.................. 3,000
Acquisition of Cardinal, including fees
and expenses.................................. 72,000
----------
$ 75,000
==========
35
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following selected financial data of BPC Holding and its subsidiaries
as of and for the five fiscal years ended January 2, 1999 are derived from the
consolidated financial statements of BPC Holding that have been audited by Ernst
& Young LLP, independent auditors. The following selected consolidated financial
data for the 26 weeks ended June 27, 1998 and July 3, 1999 are derived from the
unaudited condensed consolidated financial statements of BPC Holding and, in our
opinion, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such data. Operating results
for the 26 weeks ended July 3, 1999 are not necessarily indicative of the
results that may be achieved for BPC Holding's fiscal year ending January 1,
2000. You should read this selected financial data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements, related notes and other
financial information included in this prospectus.
<TABLE>
<CAPTION>
FISCAL
---------------------------------------------------------------------
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales ........................ $ 106,141 $ 140,681 $ 151,058 $ 226,953 $ 271,830
Cost of goods sold ............... 73,997 102,484 110,110 180,249 199,227
--------- --------- --------- --------- ---------
Gross margin ..................... 32,144 38,197 40,948 46,704 72,603
Operating expenses ............... 15,160 17,670 23,679 30,505 44,001
--------- --------- --------- --------- ---------
Operating income ................. 16,984 20,527 17,269 16,199 28,602
Other expenses(1) ................ 184 127 302 226 1,865
Interest expense, net (2) ........ 10,972 13,389 20,075 30,246 34,556
--------- --------- --------- --------- ---------
Income (loss) before income taxes
and extraordinary charge ...... 5,828 7,011 (3,108) (14,273) (7,819)
Income taxes (benefit) ........... 11 678 239 138 (249)
--------- --------- --------- --------- ---------
Income (loss) before
extraordinary charge .......... 5,817 6,333 (3,347) (14,411) (7,570)
Extraordinary charge(3) .......... 3,652 -- -- -- --
--------- --------- --------- --------- ---------
Net income (loss) ............. $ 2,165 $ 6,333 $ (3,347) $ (14,411) $ (7,570)
========= ========= ========= ========= =========
Preferred stock dividends ..... $ -- $ -- $ 1,116 $ 2,558 $ 3,551
Common stock dividends ........ 50,000 -- -- -- --
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital .................. $ 13,393 $ 13,012 $ 15,910 $ 20,863 $ 4,762
Fixed assets ..................... 38,103 52,441 55,664 108,218 120,005
Total assets ..................... 91,790 103,465 145,798 239,444 255,317
Total debt ....................... 112,287 111,676 216,046 306,335 323,298
Stockholders' equity (deficit) ... (38,838) (32,484) (97,550) (108,975) (120,357)
OTHER DATA:
Adjusted EBITDA(4) ............... $ 26,380 $ 31,569 $ 34,718 $ 40,268 $ 59,768
Adjusted EBITDA margin ........... 24.9% 22.4% 23.0% 17.7% 22.0%
Cash provided by operating
activities .................... 15,556 12,969 14,426 14,154 34,131
Cash used for investing activities (9,495) (25,385) (14,639) (102,102) (52,120)
Cash provided by (used for)
financing activities .......... 2,184 11,124 2,370 80,444 17,619
Depreciation and amortization(5) . 8,176 9,536 11,331 19,026 24,830
Capital expenditures ............. 9,118 11,247 13,581 16,774 22,595
Ratio of earnings to fixed
charges(6) .................... 1.5x 1.5x -- -- --
</TABLE>
TWENTY-SIX WEEKS ENDED
------------------------
JUNE 27, JULY 3,
1998 1999
--------- ---------
STATEMENT OF OPERATIONS DATA:
Net sales ........................ $ 136,317 $ 159,852
Cost of goods sold ............... 100,016 112,782
--------- ---------
Gross margin ..................... 36,301 47,070
Operating expenses ............... 20,725 25,828
--------- ---------
Operating income ................. 15,576 21,242
Other expenses(1) ................ 430 778
Interest expense, net (2) ........ 16,866 17,860
--------- ---------
Income (loss) before income taxes
and extraordinary charge ...... (1,720) 2,604
Income taxes (benefit) ........... 26 482
--------- ---------
Income (loss) before
extraordinary charge .......... (1,746) 2,122
Extraordinary charge(3) .......... -- --
--------- ---------
Net income (loss) ............. $ (1,746) $ 2,122
========= =========
Preferred stock dividends ..... $ 1,783 $ 1,962
Common stock dividends ........ -- --
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital .................. $ 18,763 $ 11,771
Fixed assets ..................... 105,260 120,271
Total assets ..................... 231,171 258,409
Total debt ....................... 299,855 320,484
Stockholders' equity (deficit) ... (112,563) (120,667)
OTHER DATA:
Adjusted EBITDA(4) ............... $ 30,066 $ 37,653
Adjusted EBITDA margin ........... 22.1% 23.6%
Cash provided by operating
activities .................... 14,380 16,136
Cash used for investing activities (7,759) (13,053)
Cash provided by (used for)
financing activities .......... (6,629) (2,402)
Depreciation and amortization(5) . 11,783 14,110
Capital expenditures ............. 7,854 13,461
Ratio of earnings to fixed
charges(6) .................... -- 1.1x
(1) Other expenses consist of loss on disposal of property and equipment for the
respective periods.
(2) Includes non-cash interest expense of $1,178 in fiscal 1994, $950 in fiscal
1995, $1,212 in fiscal 1996, $2,005 in fiscal 1997, $1,765 in fiscal 1998
and $884 and $872 for the 26 weeks ended June 27, 1998 and July 3, 1999.
(3) During 1994, an extraordinary charge of $3.7 million was recognized as a
result of the retirement of debt concurrently with the issuance of the 1994
Notes.
36
<PAGE>
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
FISCAL ----------------------
--------------------------------------------------------- JUNE 27, JULY 3,
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Income ............................. $ 16,984 $ 20,527 $ 17,269 $ 16,199 $ 28,602 $ 15,576 $ 21,242
Depreciation and amortization ................ 8,176 9,536 11,331 19,026 24,830 11,783 14,110
-------- -------- -------- -------- -------- -------- --------
EBITDA ....................................... 25,160 30,063 28,600 35,225 53,432 27,359 35,352
One-time expenses related to acquisitions:
1996 transaction compensation expenses . -- -- 2,762 -- -- -- --
Acquisition integration expenses ....... 116 867 692 3,267 1,525 1,035 1,091
Plant shutdown expenses ................ -- -- 907 848 2,559 1,328 576
Litigation expenses related to drink cup
patent ................................ -- -- 650 100 631 -- --
Corporate expenses:
Non-cash compensation expenses (benefit) 358 (214) 358 -- 749 (91) 197
Management fees and expenses ........... 746 853 749 828 872 435 437
-------- -------- -------- -------- -------- -------- --------
Adjusted EBITDA .............................. $ 26,380 $ 31,569 $ 34,718 $ 40,268 $ 59,768 $ 30,066 $ 37,653
======== ======== ======== ======== ======== ======== ========
</TABLE>
(4) Adjusted EBITDA should not be considered in isolation or as an alternative
to income from operations or to cash flows from operating activities (as
determined in accordance with generally accepted accounting principles) and
should not be construed as an indication of a company's operating
performance or as a measure of liquidity. In addition, our calculation of
Adjusted EBITDA differs from that presented by certain other companies and
thus is not necessarily comparable to similarly titled measures used by
other companies. The following table reconciles operating income to EBITDA
and Adjusted EBITDA for each respective period:
(5) Depreciation and amortization excludes non-cash amortization of deferred
financing and origination fees and debt premium/discount amortization which
are included in interest expense.
(6) In calculating the ratio of earnings to fixed charges, earnings consist of
(i) income (loss) before income taxes, plus (ii) fixed charges consisting of
interest on debt (including amortization of deferred financing fees), plus
(iii) that portion of lease rental expense representative of the interest
factor. Earnings were inadequate to cover fixed charges by $2,883 in fiscal
1996, by $13,932 in fiscal 1997, by $7,042 in fiscal 1998 and by $2,046 for
the twenty-six weeks ended June 27, 1998.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with "Selected
Historical Financial Data" and the consolidated financial statements and the
notes thereto included elsewhere in this prospectus.
RESULTS OF OPERATIONS
26 WEEKS ENDED JULY 3, 1999
COMPARED TO 26 WEEKS ENDED JUNE 27, 1998
NET SALES. Net sales increased $23.6 million, or 17%, to $159.9 million
for the 26 weeks ended July 3, 1999 from $136.3 million for the 26 weeks ended
July 27, 1998 with an approximate 2% decrease in net selling prices due
primarily to contractual decreases associated with lower raw material costs.
Plastic packaging product net sales increased $19.6 million from the 26 weeks
ended July 27, 1998. Within this segment, the addition of Norwich and Knight
provided net sales for the 26 weeks ended July 3, 1999 of $7.3 million and $9.6
million, respectively. In addition, overcaps sales, excluding Knight, increased
$2.1 million. Drink cup sales for the 26 weeks ended July 3, 1999 were $3.0
million off the 26 weeks ended July 27, 1998 due to a $3.5 million promotion
during the 26 weeks ended July 27, 1998. Container sales increased $0.1 million
from the 26 weeks ended July 27, 1998 despite the Company's decision to exit
certain low margin business. Custom sales, including tooling, increased $3.4
million from the 26 weeks ended July 27, 1998 with a large promotion in the 26
weeks ended July 3, 1999. Plastic housewares product sales for the 26 weeks
ended July 27, 1998 increased $4.0 million from the 26 weeks ended July 3, 1999
due to strong internal growth including several new products.
GROSS MARGIN. Gross margin increased by $10.8 million to $47.1 million
(29% of net sales) for the 26 weeks ended July 3, 1999 from $36.3 million (27%
of net sales) from the 26 weeks ended July 27, 1998. This increase of 30%
includes the combined impact of the added Norwich and Knight sales volume,
acquisition integration, productivity improvement initiatives, and the cyclical
impact of lower raw material costs compared to the 26 weeks ended July 27, 1998.
A major focus continues to be the consolidation of products and business of
recent acquisitions to the most efficient tooling, providing customers with
improved products and customer service. As part of the integration, we closed
the Anderson, South Carolina facility in 1998 with the majority of the business
being transferred to the Charlotte, North Carolina plant. In addition, we closed
the Arlington Heights, Illinois facility, which was acquired in the Knight
acquisition, in 1999 with the majority of the business being transferred to the
Woodstock, Illinois plant. Also, significant productivity improvements have been
made, including the addition of state-of-the-art injection molding equipment,
molds and printing equipment at several of our facilities.
OPERATING EXPENSES. Selling expenses increased by $1.5 million to $8.6
million for the 26 weeks ended July 3, 1999 from $7.1 million for the 26 weeks
ended July 27, 1998 principally as a result of expanded sales coverage and
increased marketing expenses. General and administrative expenses increased by
$3.1 million to $11.9 million for the 26 weeks ended July 3, 1999 from $8.8
million for the prior 26 weeks ended July 27, 1998. The increase is primarily
attributable to the Norwich and Knight acquisitions and increased accrued bonus
expenses. One-time transition expenses for the 26 weeks ended July 3, 1999
include $0.6 million related to the shutdown of the Anderson and Arlington
Heights facilities and $1.1 million related to acquisitions. One-time transition
expenses for 26 weeks ended July 27, 1998 were $1.1 million related to
acquisitions and $1.3 million related to the Anderson plant consolidation.
INTEREST EXPENSE. Interest expense increased $0.6 million to $18.0 million
for the 26 weeks ended July 3, 1999 compared to $17.4 million for the 26 weeks
ended July 27, 1998 primarily due to additional borrowings to support the
Norwich Moulders and Knight acquisitions.
INCOME TAX. Our income tax expense was $0.5 million for the 26 weeks ended
July 3, 1999. We continue to operate in a net operating loss carryforward
position for Federal income tax purposes.
38
<PAGE>
NET INCOME (LOSS). Net income for the 26 weeks ended July 3, 1999 of $2.1
million improved $3.8 million from a net loss of $1.7 million for the 26 weeks
ended June 27, 1999 for the reasons discussed above.
YEAR ENDED JANUARY 2, 1999
COMPARED TO YEAR ENDED DECEMBER 27, 1997
NET SALES. Net sales increased 19.8% to $271.8 million in 1998, up $44.9
million from $227.0 million in 1997, despite an approximate 2% decrease in net
selling price due mainly to competitive market conditions. Container sales
increased $34.5 million in 1998, primarily due to the continued market strength
of base products and the acquisition of Venture. Net sales in the drink cup
product line increased $2.3 million in 1998 as a result of a large promotion.
Net sales for aerosol overcaps increased about $2.0 million due to the
acquisition of Knight.
Housewares net sales increased $4.0 million or 23% in 1998 due primarily
to new products and strong market demands. The acquisition of Norwich also
brought us into the U.K. market, primarily closures product sales, which
provided an additional $7.3 million of net sales in 1998. Other product lines,
including custom molded products and custom mold building, decreased $5.2
million due to large custom programs that occurred in 1997.
GROSS MARGIN. Gross margin increased $25.9 million, or 55.5%, from $46.7
million (20.6% of net sales) in 1997 to $72.6 million (26.7% of net sales) in
1998. The increase in gross margin was primarily attributed to increased sales
volume as described above, acquisition integration, productivity improvements
and lower raw material costs. A major focus during 1998 was the consolidation of
products and business of the subsidiaries that we acquired in 1997 to the most
efficient tooling, providing customers with the best product and customer
service. As part of the integration, we closed the Anderson, South Carolina
facility, which was acquired in the acquisition of Venture, in 1998. The
majority of the business was transferred to our Charlotte, North Carolina plant.
Also, productivity improvements were made during the year, including the
addition of state-of-the-art injection molding equipment, molds and printing
equipment at several of our facilities.
OPERATING EXPENSES. Operating expenses during 1998 were $44.0 million
(16.2% of net sales), compared with $30.5 million (13.4% of net sales) for 1997.
Sales related expenses, including the cost of expanded sales coverage and higher
product development and marketing expenses, increased $3.5 million, almost all a
result of our 1997 acquisitions. General and administrative expenses increased
$7.8 million in 1998 primarily as a result of acquisitions made in 1997 and
1998, increased patent litigation expenses and increased employee profit sharing
expense. Intangible amortization increased from $2.2 million in 1997 to $4.1
million for 1998, primarily as a result of the amortization of goodwill ascribed
to acquired companies in 1997 and 1998. Other expense was $4.1 million for 1998
and 1997. Our 1997 acquisitions resulted in start-up related expenses of $3.2
million in 1997 and $1.3 million in 1998. The assets acquired with the
acquisition of PackerWare included a facility in Reno, Nevada that was closed in
1997. Expenses related to the closing of the Reno facility were $0.5 million in
1997 and $0.2 million in 1998. Plant closing expenses related to the Winchester,
Virginia facility resulted in expenses of $0.4 million for 1997. The closing of
the Anderson, South Carolina facility resulted in 1998 expenses of $2.4 million.
INTEREST EXPENSE AND INCOME. Net interest expense, including amortization
of deferred financing costs for 1998 was $34.6 million (12.7% of net sales)
compared to $30.2 million (13.3% of net sales) in 1997, an increase of $4.3
million. This increase is attributed to interest on borrowings related to the
1997 and 1998 acquisitions offset partially by principal reductions. Cash
interest paid in 1998 was $33.2 million as compared to $29.9 million for 1997.
Interest income for 1998 was $1.0 million, down from $2.0 million in 1997, which
is attributable to an additional year of interest payments on the 1996 Notes
from the escrow account.
INCOME TAXES. During fiscal 1998, we recorded a benefit of $0.2 million in
federal and state income tax, primarily due to a carryback claim, compared to an
expense of $0.1 million for fiscal 1997. We continue to operate in a net
operating loss carryforward position for federal income tax purposes.
NET LOSS. We recorded a net loss of $7.6 million in 1998 compared to a
$14.4 million net loss in 1997 for the reasons stated above.
39
<PAGE>
YEAR ENDED DECEMBER 27, 1997
COMPARED TO YEAR ENDED DECEMBER 28, 1996
NET SALES. Net sales increased 50.2% to $227.0 million in 1997, up $75.9
million from $151.1 million in 1996, which sales included an approximate 2%
increase in net selling price due mainly to the impact of cyclical adjustments
in the price of plastic resin. Container sales increased $30.1 million in 1997,
primarily due to the continued market strength of base products and the
acquisitions of Venture, Virginia Design and Container Industries. Net sales in
the drink cup product line increased $23.8 million in 1997 as a result of the
acquisition of PackerWare and a strong increase in existing drink cup business.
Net sales of aerosol overcaps were relatively flat, decreasing about $2.6
million. The acquisition of PackerWare also brought us into the housewares
product market, which provided an additional $17.5 million of net sales in 1997.
Other product lines, including custom molded products and custom mold building,
increased $7.1 million due to large custom programs that occurred in 1997.
GROSS MARGIN. Gross margin increased $5.8 million or 14.1% from $40.9
million (27.1% of net sales) in 1996 to $46.7 million (20.6% of net sales) in
1997. The increase in gross margin is primarily attributable to increased sales
volume as described above. The gross margin as a percent of net sales derived
from our 1997 acquisitions was about 10.6% compared to 23.8% for non-acquisition
related sales. Significant productivity improvements were made during the year,
including the addition of state-of-the-art injection molding equipment, molds
and printing equipment at several of our facilities. These productivity
improvements were offset by increased resin prices in 1997 and the transition
expenses of our 1997 acquisitions.
OPERATING EXPENSES. Operating expenses during 1997 were $30.5 million
(13.4% of net sales), compared with $23.7 million (15.7% of net sales) for 1996.
Sales related expenses, including the cost of expanded sales coverage and higher
product development and marketing expenses, increased $4.4 million, primarily as
a result of the business acquisitions that we made in 1997 ($3.3 million).
General and administrative expenses decreased $2.3 million in 1997 primarily as
a result of the $2.8 million one-time compensation expense incurred in 1996
which related to the recapitalization of BPC Holding. Intangible amortization
increased from $0.5 million in 1996 to $2.2 million for 1997, primarily as a
result of the amortization of $1.6 million related to our 1997 acquisitions.
Other expenses increased $2.6 million from $1.6 million for 1996 to $4.1
million in 1997. Our 1997 acquisitions resulted in a charge of $3.2 million in
1997 for start-up related expenses. The acquisition of PackerWare included a
facility in Reno, Nevada, which was closed in 1997. Expenses related to the
closing of the Reno facility were $0.5 million in 1997. Plant closing expenses
related to the Winchester, Virginia facility resulted in expenses of $0.4
million for 1997. Included in 1996 was a charge of $0.7 million of start-up
related expenses associated with the acquisition of Tri-Plas and $0.9 million
related to the Winchester plant closing.
INTEREST EXPENSE AND INCOME. Net interest expense, including amortization
of deferred financing costs for 1997, was $30.2 million (13.3% of net sales)
compared to $20.1 million (13.3% of net sales) in 1996, an increase of $10.1
million. This increase is due to the full year impact of the recapitalization of
BPC Holding, which occurred in June 1996. The recapitalization of BPC Holding
included an offering of $105.0 million aggregate principal amount of the 1996
Notes, which bear interest at 12.5% annually. $35.6 million of the proceeds from
the 1996 Notes were placed in escrow to pay the first three years of interest on
the 1996 Notes. Interest is payable semi-annually on June 15 and December 15 of
each year. Cash interest paid in 1997 was $29.9 million as compared to $19.7
million for 1996. Interest income for 1997 was $2.0 million, up from $1.3
million in 1996, also attributed to the full year impact of the recapitalization
of BPC Holding.
INCOME TAXES. During fiscal 1997, we incurred $0.1 million in federal and
state income tax compared to $0.2 million for fiscal 1996. We continue to
operate in a net operating loss carryforward position for federal income tax
purposes.
NET LOSS. We recorded a net loss of $14.4 million in 1997 compared to
a $3.3 million net loss in 1996 for the reasons stated above.
40
<PAGE>
INCOME TAX MATTERS
BPC Holding has unused operating loss carryforwards of $26.0 million for
federal income tax purposes which begin to expire in 2010. Alternative minimum
tax credit carryforwards of about $2.8 million are available to BPC Holding
indefinitely to reduce future years' federal income taxes.
LIQUIDITY AND CAPITAL RESOURCES
We have a credit facility with NationsBank, N.A. for a senior secured line
of credit. Giving effect to the $20.0 million increase in our credit facility in
connection with the Cardinal acquisition, the credit facility provides for
aggregate borrowings up to a maximum of about $142.9 million including:
o a $70.0 million revolving line of credit, subject to a borrowing base
formula;
o a 1.5 million revolving line of credit, subject to a borrowing
base;
o a $58.6 million term loan facility;
o a 3.8 million term loan facility; and
o a $5.6 million standby letter of credit facility to support our and
our subsidiaries' obligations under our Nevada Industrial Revenue
Bonds.
The debt under our credit facility is guaranteed by our parent, BPC
Holding, and our subsidiaries. Our credit facility requires us to comply with
specified financial ratios and tests, including a minimum Tangible Capital Funds
(as defined in the credit facility) test, maximum leverage ratio, interest
coverage ratio, debt service coverage ratio and a fixed charge coverage ratio.
The requirements of these tests may change on a quarterly basis. These covenants
were waived as of July 3, 1999, as a result of the Cardinal acquisition. See
"Description of Certain Other Debt -- The Credit Facility".
The 1994 Indenture, the 1996 Indenture and the 1998 Indenture restrict our
ability to incur additional debt and contain other provisions that could limit
our liquidity. At July 3, 1999, on a pro forma basis giving effect to the
acquisition of Cardinal and a $20.0 million concurrent increase in our credit
facility, we had unused borrowing capacity under our credit facility's borrowing
base of $35.8 million. Any additional debt above the borrowing base requires
approval from the credit facility's lenders.
Net cash provided by operating activities was $34.1 million in 1998 as
compared to $14.2 million in 1997. The increase was primarily the result of a
decreased consolidated net loss in 1998 and additional depreciation and
amortization as the result of acquisitions in 1997 and 1998. Net cash provided
by operating activities was $16.1 million for the 26 weeks ended July 3, 1999,
an increase of $1.7 million from the 26 weeks ended June 27, 1998. The increase
is primarily the result of improved operating performance with income before
depreciation and amortization increasing $6.1 million from the 26 weeks ended
June 27, 1998. Net working capital changes (defined as accounts receivable,
inventories, prepaid expenses, other receivables, accounts payable and accrued
expenses) decreased net cash $4.8 million from the 26 weeks ended June 27, 1998
due to our growth.
Capital expenditures in 1998 were $22.6 million, an increase of $5.8
million from $16.8 million in 1997. Included in capital expenditures during 1998
was $6.2 million relating to the addition of a new warehouse, production systems
and offices necessary to support production operating levels throughout Berry
Plastics. Capital expenditures also included investment of $11.7 million for
molds, $2.2 million for molding and printing machines, and $2.5 million for
miscellaneous accessory equipment and systems. The capital expenditure budget
for 1999 is expected to be $25.8 million, including about $8.1 million for
building and systems which includes a major plant renovation, $10.5 million for
molds, $4.2 million for molding and printing machines, and $3.0 million for
miscellaneous accessory equipment. Capital expenditures for the 26 weeks ended
July 3, 1999 included $5.5 million
41
<PAGE>
for molds, $0.7 million for molding and printing machines, $4.4 million for
buildings and systems, and $2.9 million for accessory equipment and systems.
Net cash provided by financing activities was $17.6 million in 1998 as
compared to $80.4 million in 1997. The $62.8 million decrease can be attributed
primarily to a $52.4 million decrease in borrowings to finance acquisitions. Net
cash provided by financing activities was $2.4 million for the 26 weeks ended
July 3, 1999, representing a decrease of $4.2 million from the 26 weeks ended
June 27, 1998. This decrease can be attributed to a decrease in borrowings from
the revolving line of credit as a result of the improved operating performance
noted above.
Increased working capital needs occur whenever we experience strong
incremental demand or a significant rise in the cost of raw material,
particularly plastic resin. However, we anticipate that our cash interest,
working capital and capital expenditure requirements for 1999 will be satisfied
through a combination of funds generated from operating activities and cash on
hand, together with funds available under our credit facility. Management bases
such belief on historical experience and the substantial funds available under
our credit facility. However, we cannot predict our future results of
operations.
The indentures governing the 1994 Notes, the 1998 Notes and the Notes
restrict, and our credit facility prohibits, our ability to pay any dividend or
make any distribution of funds to BPC Holding to satisfy interest and other
obligations on the 1996 Notes. Based upon historical operating results, without
a substantial increase in the net income of Berry Plastics, we anticipate that
we will be unable to generate sufficient net income to permit a dividend to BPC
Holding in an amount sufficient to meet BPC Holding's interest payment
obligations under the 1996 Notes. Interest on the 1996 Notes is payable
semi-annually on June 15 and December 15 of each year. However, from December
15, 1999 until June 15, 2001, BPC Holding may, at its option, pay interest, at
an increased rate of 0.75% per annum, in additional 1996 Notes valued at 100% of
the principal amount thereof. After June 15, 2001 or in the event that BPC
Holding does not pay interest in additional notes, management anticipates that
such interest obligations will only be met by refinancing the 1996 Notes or
raising capital through equity offerings. We can not assure you that
then-current market conditions would permit BPC Holding to consummate a
refinancing or equity offering.
At July 3, 1999, our cash balance was $3.0 million and, on a pro forma
basis giving effect to the acquisition of Cardinal and a $20 million concurrent
increase in our credit facility, we had unused borrowing capacity under our
credit facility's borrowing base of about $35.8 million.
GENERAL ECONOMIC CONDITIONS AND INFLATION
We face various economic risks ranging from an economic downturn adversely
impacting our primary markets to market fluctuations in plastic resin prices. In
the short-term, rapid increases in the cost of resin may not be recovered
through price increases to customers. Also, shortages of raw materials may occur
from time to time. In the long-term, however, raw material availability and
price changes generally do not have a material adverse effect on gross margin.
Cost changes generally are passed through to customers over a period of time. In
addition, we believe that our sensitivity to economic downturns in our primary
markets is less significant due to our diverse customer base and our ability to
provide a wide array of products to numerous end markets.
We believe that we are not affected by inflation except to the extent that
the economy in general is thereby affected. Should inflationary pressures drive
costs higher, we believe that general industry competitive price increases would
sustain operating results, although we can not assure you that this will be the
case.
IMPACT OF YEAR 2000
We have been modifying or replacing portions of our software since 1991 so
that our computer systems will function properly with respect to dates in the
Year 2000 and thereafter. Because we commenced this process early, the costs
incurred to address this issue in any single year have not been significant. Our
current business applications are Year 2000 compliant. Acquired businesses are
converted to our applications for Year 2000
42
compliance and consistency in applications and reporting. Excluding Cardinal,
the most recent acquired business, Knight, was converted to our applications on
March 1, 1999. We plan to convert Cardinal to our applications by November 1999.
However, we are currently in the process of replacing our current business
software with another Year 2000 compliant package. This replacement is not due
to any Year 2000 issues, but is needed to accommodate the changes that we have
experienced in our business due to acquisitions in recent years. The anticipated
cost of this conversion is about $2.0 million. The accounting phase of this
conversion was completed for all plants in January 1999. The remaining phases
are scheduled to be completed by the end of 1999.
We believe that we have an effective program in place to resolve all
internal Year 2000 issues. An inventory of computer based systems has been
compiled and verified through testing and supplier verification. All identified
non-compliant equipment and software will be corrected before December 1999. The
current estimated cost for this resolution is $110,000. These systems include
personal computers, postage machines, plant automation and telephone system
components.
The major Year 2000 risk that we face is the Year 2000 readiness of
external suppliers of goods and services. We could have material disruption in
our ability to produce and deliver product should there be major disruptions in
the economy or failure of key suppliers. While it is impossible to account for
the effectiveness of every supplier's Year 2000 efforts, the following steps are
in the process of being completed:
o We are identifying key suppliers, which include suppliers
of raw material, banking, transportation, service, and
utility providers and surveying these suppliers as to
their Year 2000 status;
o We are identifying which suppliers are not compliant or
at risk; and
o We are engaging in risk assessment and contingency
planning for these key suppliers.
These steps will not be completed until some time during the 3rd quarter
of 1999 because some of our suppliers are not targeting Year 2000 compliance
until the summer of 1999.
The amount of potential liability and lost revenue due to Year 2000 issues
cannot be reasonably estimated at this time. We will continue to work throughout
the year to minimize any Year 2000 risks.
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BUSINESS
We are the nation's leading manufacturer and supplier of plastic
injection-molded aerosol overcaps, drink cups and rigid thinwall open-top
containers for a wide variety of end-use markets. We are also a leading
manufacturer and supplier of plastic injection-molded semi-disposable
housewares. In addition, with sales of over two billion aerosol overcaps in
fiscal 1998, we believe that we are the largest supplier of plastic aerosol
overcaps in the world. In our plastic packaging business, we focus primarily on
three markets: aerosol overcaps, rigid thinwall open-top containers and drink
cups. Our housewares business produces home products such as dinnerware,
tumblers and garden items. We concentrate on manufacturing high-quality items
sold to image-conscious marketers of consumer and industrial products. With over
1,000 proprietary molds, superior color matching capabilities, sophisticated
multi- color printing techniques and nationwide plant locations, we consistently
produce and deliver mass quantities of high-quality products on a cost-efficient
basis.
Our total net sales among our product categories is as follows:
Fiscal
------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
PLASTIC PACKAGING
PRODUCTS: (DOLLARS IN MILLIONS)
Aerosol overcaps $ 38.0 $ 43.6 $ 49.7 $ 47.1 $ 49.1
Rigid open-top
containers ..... 61.6 71.1 80.8 111.5 145.9
Drink cups ..... 17.3 14.1 37.6 39.9
Other .......... 6.5 8.7 6.5 13.3 15.3
PLASTIC HOUSEWARES
PRODUCTS ........ 17.5 21.6
-------- -------- -------- -------- --------
Total net sales ... $ 106.1 $ 140.7 $ 151.1 $ 227.0 $ 271.8
======== ======== ======== ======== ========
We supply aerosol overcaps to a wide variety of customers and for a wide
variety of products, including such well-known brand names as Faultless starch,
Gillette personal care products, Pam cooking spray, Pledge furniture polish,
Raid insect repellants, Rustoleum and Sherwin-Williams paints and Sure
deodorant. Similarly, our containers are used for packaging a broad spectrum of
consumer and commercial products, including Arch (Olin) pool chemicals, Elmer's
home repair products, Hershey's cocoa, McDonald's children's meals, Milliken
adhesives, Pillsbury cookie dough and promotional containers for a variety of
customers, including the National Football League, Walt Disney and Warner-
Brothers. Our drink cups are sold to fast food and family-dining restaurants,
convenience stores, stadiums and retail stores. Our largest drink cup customers
are Circle K, Coca-Cola, McDonald's, Pepsi-Cola and Steak 'n Shake. Our
housewares products are primarily seasonal, semi-disposable housewares and lawn
and garden items such as plates, bowls, pitchers, tumblers and flower pots. Our
largest housewares customer, Wal-Mart, named us their housewares "Supplier of
the Year" for 1998.
COMPETITIVE STRENGTHS
We believe that we are a strong competitor in our industry for the
following reasons:
o SUCCESSFUL INTEGRATION OF NUMEROUS STRATEGIC ACQUISITIONS. We have
historically acquired businesses that we believe will improve our
financial performance in the long-term and, in some cases, provide
us with a new or complementary product line. We have successfully
closed ten acquisitions since 1992. Our acquired businesses had
aggregate pre-acquisition revenues of about $239 million. We
believe that our acquisitions have strengthened our core
businesses, as well as opened up new product lines and markets for
us. Moreover, we believe that we have materially reduced the
manufacturing and overhead costs of the companies that we acquired
by introducing high technology manufacturing processes, closing
excess facilities and taking advantage of economies of scale.
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o HIGH-CAPACITY, STATE-OF-THE-ART PRODUCTION CAPABILITIES. We operate
over 300 injection molding machines in 12 locations in the United
States and one location in Europe. These machines, many of which
are high-speed, specialized machines, range in clamp tonnage from
80 to 825 tons. Our wide range of state-of-the-art molding machines
and national distribution system allow us to economically mass
produce high-quality products. In addition, we believe that our
post-molding capabilities are among the most modern and extensive
in the industry. These capabilities include printing, labeling,
assembly, packing and distribution.
o FULL PRODUCT LINES AND STRONG MARKET POSITION. A substantial
majority of our sales are in product categories in which we are the
nation's largest supplier. We use over 1,000 active molds,
providing our customers with a wide range of products from which to
choose. For a majority of our customers we are the sole or largest
supplier of plastic injection-molded products. We believe that our
extensive product lines, market experience, product quality and
focus on customer satisfaction allow us to maintain our strong
position in our key markets.
o LARGE, DIRECT SALES FORCE. Our sales force is comprised of over 40
dedicated professionals and is among the largest in-house sales forces
in our industry. Our sales force is focused on working both with
customers and with our internal production and product design
personnel to develop customized packaging. We believe that the size of
our sales force allows us to maintain close working relationships with
our customers.
o IN-HOUSE PRODUCT DESIGN AND GRAPHIC ARTS CAPABILITIES. We have an
in-house staff of 16 product development engineers and 22 graphic
artists. These professionals work closely with customers to develop
new products and designs. We also believe that our customized
designs often help our customers differentiate their products in
the marketplace and improve their product's performance. We believe
that these capabilities have given us a significant competitive
advantage in certain high-margin niche container product markets
where the ability to produce sophisticated and colorful graphics is
crucial to a product's success.
o DEDICATION TO SERVICE AND QUALITY. As a result of our dedication to
service and quality, we have received several awards from our top
ten customers including, in 1998, Wal-Mart's "Supplier of the Year"
award in its housewares division and SC Johnson Wax's "Supplier
Quality Achievement Award." In addition, four of our plants are ISO
9000 certified. Our remaining nine facilities are working to obtain
their ISO 9000 certification. ISO 9000 certification is only given
to companies that meet the requirements of a quality management
system established by the International Standardization
Organization.
o LARGE, DIVERSE CUSTOMER BASE. We sell our plastic packaging and
housewares products to over 7,000 customers who are engaged in a
variety of businesses. We believe that this provides us with a
stable client base that is not materially affected by particular
end-use market fluctuations. We also believe that we are the
single-source or largest supplier of plastic aerosol overcaps,
containers and drink cups to a majority of our customers. Our top
ten customers represented only about 18% of our fiscal 1998 net
sales on a pro forma basis. Our largest customer represented only
about 4% of our fiscal 1998 net sales on a pro forma basis.
GROWTH STRATEGY
Our goal is to maintain and enhance our market position and leverage our
core strengths to increase profitability. Our strategy to achieve this goal
includes the following elements:
o PURSUE STRATEGIC ACQUISITIONS IN OUR CORE BUSINESSES. We have
successfully closed ten acquisitions since 1992. We will continue to
pursue strategic acquisitions that we believe will provide added value
to our core businesses.
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o DESIGN AND INTRODUCE INNOVATIVE NEW PRODUCTS TO PENETRATE NEW
MARKETS. We intend to grow our product lines and increase market
share by producing new products. For example, we recently developed
a complete line of pool chemical containers specifically designed
for Arch. We also introduced a 16 oz. insulated coffee mug and lid,
with enhanced functionality and styling, in 1999 and a single-serve
soft ice cream dispensing container that was recently accepted for
use by Healthy Choice.
o EMPHASIZE OUTSTANDING PRODUCT QUALITY AND CUSTOMER SERVICE. Through
our dedication to product quality and service, we intend to grow
our base business through growth in the marketplace and by gaining
business from our competitors. Our field sales, production, and
support staff meet with customers to understand their needs and
improve our product offerings and services. Each of our customers
has designated sales and customer service representatives
responsible for their individual needs. Sophisticated technology is
an ongoing part of our traditional quality assurance activities. We
extensively test parts for size, color, strength and material
quality using statistical process control techniques.
PLASTIC PACKAGING PRODUCTS
AEROSOL OVERCAPS
We believe that we are the worldwide leader in the production of aerosol
overcaps. About 20% of the U.S. market consists of marketers who produce
overcaps for use on their own products. We believe that a portion of these
in-house producers will outsource the manufacture of aerosol overcaps in order
to reduce their inventory of manufacturing assets and to focus on their core
businesses. We believe that these companies will look to outsource the
manufacture of overcaps to high technology, low cost manufacturers, such as
Berry Plastics.
The aerosol overcaps that we produce are used in a wide variety of
consumer goods including spray paints, household and personal care products,
insecticides and numerous other commercial and consumer products. Most U.S.
manufacturers and contract fillers of aerosol products purchase some portion of
their needs from us. In fiscal 1998, no single aerosol overcap customer
accounted for more than 3% of our total net sales.
We believe that, over the years, Berry Plastics has developed several
significant competitive advantages including the following:
o a reputation for outstanding quality;
o short lead-time requirements to fill customer orders;
o long-standing relationships with major customers;
o the ability to quickly and accurately reproduce over 3,500 colors;
o proprietary packing technology that minimizes freight cost and
warehouse space;
o high-speed, low-cost molding and decorating capability; and
o a broad product line of proprietary molds.
We received a "Supplier Quality Achievement Award" in 1998 from SC Johnson
Wax. We continue to develop new products in the plastic aerosol overcap market,
including the "spray-thru" line of aerosol overcaps, such as that used for
Pledge furniture polish.
Major competitors in this market include Dubuque Plastics, Cobra and
Transcontainer. In addition, a number of companies, including several of our
customers (e.g., S.C. Johnson and Reckitt & Colman), currently produce plastic
aerosol overcaps for their own use.
RIGID OPEN-TOP CONTAINERS
We produce six different types of containers, classified as follows:
o thinwall;
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o child-resistant;
o pry-off;
o dairy;
o polypropylene; and
o industrial.
We believe that we are the leading U.S. manufacturer in thinwall, child-
resistant, pry-off and frozen dessert containers. We consider industrial
containers to be a market with little differentiation between products and an
absence of higher margin niches. The following table describes each of our six
container product lines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRODUCT LINE DESCRIPTION SIZE OF CONTAINER USES OF PRODUCT
- ------------ ----------- ----------------- ---------------
<S> <C> <C> <C>
Thinwall Thinwalled, multi-purpose containers with 6 oz. to 2 gallons Food, promotional products, toys
or without handles and lids and a wide variety of other uses
Child-resistant Containers that meet Consumer Product Safety 2 lbs. to 2 gallons Pool and other chemicals
Commission standards for child safety
Pry-off Containers having a tight lid-fit and requiring 4 oz. to 2 gallons Building products, adhesives, other
an opening device industrial uses
Dairy Thinwall containers in traditional dairy market 6 oz. to 1.25 gallons, Cultured dairy products including
sizes and styles Multi-pack yogurt, cottage cheese, sour cream
and dips, frozen desserts
Polypropylene Usually clear containers in round, oblong or 6 oz. to 5 lbs. Food, deli, sauces, salads
rectangular shapes
Industrial Thick-walled, larger pails designed to 2.5 to 5 gallons Building products, chemicals,
accommodate heavy loads paints, other industrial uses
</TABLE>
- --------------------------------------------------------------------------------
The largest uses for our containers are for food products, building
products, chemicals and dairy products. We have a diverse customer base for our
container lines, and no single container customer exceeded 3% of our total net
sales in fiscal 1998.
We believe that we offer the broadest product line among U.S.-based
injection-molded plastic container manufacturers. Our container capacities range
from 4 ounces to 5 gallons and are offered in various styles with accompanying
lids, bails and handles, as well as a wide array of decorating options. In
addition to a complete product line, we offer sophisticated printing
capabilities, an in-house graphic arts department, low cost manufacturing
capability with 12 plants strategically located throughout the U.S. and a
dedication to high-quality products and customer service. Our product engineers,
located in most of our facilities, work with customers to design and
commercialize new containers.
We seek to develop niche container products and new applications for our
products by taking advantage of our state-of-the-art decorating and graphic arts
capabilities and dedication to service and quality. We believe that these
capabilities have given us a significant competitive advantage in certain
high-margin niche container product markets where the ability to produce
sophisticated and colorful graphics is crucial to the product's success.
Examples of these products are popcorn containers for new movie promotions and
professional and college sporting and entertainment events. In order to identify
new applications for existing products, we rely extensively on our national
sales force. Once opportunities are identified, the sales force works with our
product design engineers to satisfy customers' needs.
In the non-industrial container market, our strongest competitors include
Airlite, Sweetheart, Landis and Polytainers. We also produce industrial pails
for a market that is dominated by large volume competitors such as
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<PAGE>
Letlea, Plastican, NAMPAC and Ropak. We do not participate heavily in this
market due to its generally lower margins. We intend to selectively participate
in the industrial container market when higher margin opportunities, equipment
utilization or customer requirements make participation an attractive option.
DRINK CUPS
We believe that we are the leading provider of injection-molded plastic
drink cups in the United States. As beverage producers, convenience stores and
fast food restaurants increase their marketing efforts for larger sized drinks,
we believe that the plastic drink cup market will expand because of plastic's
desirability over paper for larger drink cups. We produce injection-molded
plastic cups that range in size from 12 to 64 ounces. Our primary markets are
fast food and family-dining restaurants, convenience stores, stadiums, and
retail stores. Virtually all of our cups are decorated, often as promotional
items, and we are known in the industry for our innovative, state-of-the-art
graphics capability.
We have historically supplied a full line of traditional straight-sided
and drive-through style drink cups from 12 to 64 ounces with disposable and
reusable lids primarily to fast food and convenience store chains. With the
acquisition of PackerWare, we expanded our presence in this market while
diversifying into the stadium and family-dining restaurant markets. The 64 ounce
cup, which has been highly successful with convenience stores, is one of our
fastest growing drink cups. Our major competitors in the drink cup market
include Packaging Resources Incorporated, Pescor Plastics and WNA (formerly Cups
Illustrated).
CUSTOM MOLDED PRODUCTS AND CLOSURES PRODUCTS
We also make custom molded products by using molds provided by our
customers as the model. Typically, the low cost of entry in the custom molded
products market creates an open marketplace in which many companies can compete.
Rather than pursue the overall custom molded products market, we focus our
custom molding efforts on those customers who value our mold and product design
expertise, superior color matching abilities and sophisticated multi-color
printing capabilities. The majority of our custom business requires specialized
equipment and expertise.
We entered the closures market as a result of our acquisition of Norwich
in July 1998. We only sell closure products in the United Kingdom. The primary
closure product that we sell is a foil sealed milk cap. Demand for this product
has increased in recent years as the U.K.'s milk market is using more plastic
containers. Through Norwich, we offer a broad product line that includes
dispensing, tamper evident and custom molded closures.
PLASTIC HOUSEWARES PRODUCTS
Our participation in the multi-billion dollar plastic housewares market is
focused on producing and selling seasonal (spring and summer) semi-disposable
plastic housewares (e.g., plates, bowls, pitchers and tumblers) and plastic lawn
and garden products (primarily outdoor flower pots). We sell virtually all of
our products in this market through major national retail marketers and national
chain stores including Wal-Mart and Target. PackerWare is a recognized brand
name in these markets and our PackerWare branded products are often co-branded
by our customers.
Historically, our PackerWare subsidiary has provided high-quality products
to consumers at a relatively modest price that is consistent with the pricing
targets of our retail marketers. We believe that outstanding service and ability
to deliver products with timely combination of color and design further enhance
our position in this market. We received an award as the "Supplier of the Year"
in 1998 by Wal-Mart in its housewares division.
MARKETING AND SALES
We reach our large and diversified base of over 7,000 customers primarily
through our direct field sales force of over 40 professionals. These field sales
representatives are focused on individual product lines, but are encouraged to
sell all of our products to serve the needs of our customers. We believe that a
direct field sales force is
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able to focus on target markets and customers, with the added benefit of
permitting us to control pricing decisions centrally. We also use the services
of manufacturing representatives to assist our direct sales force.
We believe that we produce a high level of customer satisfaction. Highly
skilled customer service representatives are located in each of our facilities
to support the national field sales force. In addition, telemarketing
representatives, marketing managers and sales/marketing executives oversee
marketing and sales efforts. Manufacturing and engineering personnel work
closely with field sales personnel to satisfy customers' needs through the
production of high quality, value-added products and on-time deliveries.
Additional marketing and sales techniques include promoting the benefits
that our Graphic Arts department with computer-assisted graphic design
capabilities and in-house production of photopolymer printing plates can offer
our customers. Our centralized color matching and materials blending department
uses a computerized spectrophotometer to ensure that colors produced match those
requested by customers.
MANUFACTURING
GENERAL
We manufacture our products using a plastic injection molding process. In
this process, plastic resin, in the form of small pellets, is fed into an
injection molding machine. The injection molding machine melts the plastic resin
and injects it into a multi-cavity steel mold, which forces the plastic resin to
take the final shape of the product. After they solidify, which generally takes
between five and 25 seconds, the plastic parts are ejected from the mold into
automated handling systems from which they are packed in corrugated containers
for further processing or shipment. After molding, the product may be either
decorated (printing, silk-screening, labeling) or assembled (e.g., bail handles
fitted to containers). We believe that our molding and decorating capabilities
are among the best in the industry.
Our overall manufacturing philosophy is to be a low-cost producer by using
high-speed molding machines, modern multi-cavity hot runner, cold runner and
insulated runner molds, extensive material handling automation and sophisticated
printing technology. We package large volume products using state-of-the-art
robotic packaging processes. This technology enables us to deliver a higher
quality product (due to reduced breakage) and lowers warehousing and shipping
costs (due to more efficient use of space). At each of our plants we have
complete tooling maintenance capability to support our molding and decorating
operations. We historically have made, and intend to continue to make,
significant capital investments in plant and equipment because of our objectives
to grow, to improve productivity, to maintain competitive advantages, and to
maintain the large base of equipment and other assets necessary for our
business.
PRODUCT DEVELOPMENT
Our full-time product engineers use three-dimensional
computer-aided-design technology to design and modify new products and prepare
mold drawings. Engineers use an in-house model shop that includes a
thermoforming machine to produce prototypes and sample parts. They simulate the
molding environment by running prototype molds in a small injection molding
machine dedicated to the research and development of new products. Production
molds are then designed and outsourced for production by various companies in
the U.S. and Canada with whom we have extensive experience and established
relationships. Our engineers oversee the mold-building process from start to
finish.
QUALITY ASSURANCE
Each of our plants uses Total Quality Management philosophies. These
philosophies include the use of statistical process control and extensive
involvement of employees to increase productivity. This team approach to
problem- solving increases employee participation and provides necessary
training at all levels. Four of our plants have ISO 9000 certification, which
certifies compliance by a company in meeting the requirements of a quality
management system established by the International Standardization Organization.
Our Evansville plant was
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<PAGE>
certified in 1994, our Henderson plant was certified in 1995, our Iowa Falls
plant was certified in 1996 and our Lawrence plant was certified in 1998. We are
pursuing ISO certification in all of our other facilities. Extensive testing of
parts for size, color, strength and material quality using statistical process
control techniques and sophisticated technology is also an ongoing part of our
traditional quality assurance activities.
SYSTEMS
We use a fully integrated computer software system at our plants that is
capable of producing complete financial and operational reports. This accounting
and control system may be expanded to add new features and/or locations as we
grow. In addition, we have a sophisticated quality assurance system based on ISO
9000 certification, a bar code based material management system and an
integrated manufacturing system.
SOURCES AND AVAILABILITY OF RAW MATERIALS
Plastic resin is the most important raw material that we purchase. We
purchased about $62 million of resin in fiscal 1998 (excluding specialty
resins), of which 70% was high density polyethylene, 12% linear low density
polyethylene and 18% polypropylene. Our purchasing strategy is to buy from only
high-quality, dependable suppliers, such as Dow, Union Carbide, Chevron,
Phillips, Equistar, and Mobil. Although we do not have any supply contracts with
our key suppliers, we believe that we have maintained outstanding relationships
with these key suppliers over the past several years and expect that such
relationships will continue into the foreseeable future. Based on our
experience, we believe that adequate quantities of plastic resins will be
available, but we cannot assure you of that. See "Risk Factors--We do not have
firm contracts with plastic resin supplies."
EMPLOYEES
We have about 2,800 employees. None of our employees are covered by
collective bargaining agreements. On February 5, 1998, the employees in
Monroeville, Ohio voted to decertify the union in the facility. This facility
was acquired as a result of the acquisition of Venture and was our only plant
with a collective bargaining agreement during 1998.
PATENTS AND TRADEMARKS
We have numerous patents and trademarks on our products. None of the
patents or trademarks are considered by management to be material to our
business. See "Legal Proceedings" below.
ENVIRONMENTAL MATTERS AND GOVERNMENT REGULATION
Our past and present operations and the past and present ownership and
operations of real property by Berry Plastics are subject to extensive and
changing federal, state and local environmental laws and regulations pertaining
to the discharge of materials into the environment, the handling and disposition
of wastes or otherwise relating to the protection of the environment. We believe
that we are in substantial compliance with applicable environmental laws and
regulations. However, we cannot predict whether we will incur liability in the
future under environmental statutes and regulations with respect to
non-compliance with environmental laws, contamination of sites formerly or
currently owned or operated by us (including contamination caused by prior
owners and operators of such sites) or the off-site disposal of hazardous
substances.
Based upon a May 1998 compliance inspection, the Ohio Environmental
Protection Agency issued a Notice of Violation dated June 23, 1998 to Venture
alleging that its Monroeville, Ohio facility failed to file certain reports
required pursuant to the Federal Emergency Planning and Community Right-To-Know
Act of 1986 (also known as "SARA Title III") for the reporting years 1994 and
1995. This matter has since been closed by the Ohio Environmental Protection
Agency. No fines or penalties were assessed.
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Like any manufacturer, we may receive notices of potential liability,
pursuant to CERCLA or analogous state laws, for cleanup costs associated with
offsite waste recycling or disposal facilities at which wastes associated with
its operations have allegedly come to be located. Liability under CERCLA is
strict, retroactive and joint and several. No such notices are currently
pending.
The Food and Drug Administration regulates the material content of direct-
contact food containers and packages, including certain thinwall containers that
we manufacture. We use approved resins and pigments in our direct contact food
products and believe we are in material compliance with all such applicable FDA
regulations.
The plastics industry, including Berry Plastics, also is subject to
existing and potential federal, state, local and foreign legislation designed to
reduce solid wastes by requiring, among other things, plastics to be degradable
in landfills, minimum levels of recycled content, various recycling
requirements, disposal fees and limits on the use of plastic products. In
addition, various consumer and special interest groups have lobbied from time to
time for the implementation of these and other similar measures. The principal
resin used in our products, high-density polyethylene, is recyclable, and,
accordingly, we believe that the legislation promulgated to date and such
initiatives to date have not affected us negatively. It is possible that any
future legislative or regulatory efforts or future initiatives may affect us
adversely. Beginning January 1, 1995, legislation in Oregon, California and
Wisconsin requires products packaged in rigid plastic containers to comply with
standards intended to encourage recycling and to increase the use of recycled
materials. Although the regulations vary by state, the principal requirement is
typically the use of recycled plastic as an ingredient in containers sold for
non-food uses. Additionally, Oregon and California allow lightweighting of the
container or concentrating the product sold in the container as options for
compliance. Oregon and California provide for an exemption from all these
regulations if statewide recycling reaches or exceeds 25% of rigid plastic
containers. In September 1996, California passed a new bill permanently
exempting food and cosmetics containers from this requirement. However, non-food
containers are still required to comply.
In December 1996, the Department of Environmental Quality estimated that
Oregon had met its recycling goal of 25% for 1997 (based on 1996 data), and
accordingly, was in compliance for the 1997 calendar year. However, in January
1998, California formally approved a 23.2% recycling rate for the state during
1996, and since this falls below the required 25% rate for exemption of non-food
containers, the state can now begin enforcing its recycled content mandate on
any non-food plastic containers from 8 oz. to 5 gallons. In order to facilitate
individual customer compliance with these regulations, we provide our customers
with the option to purchase containers that are lower weight.
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PROPERTIES
The following table sets forth our principal facilities:
LOCATION ACRES SQUARE FOOTAGE USE OWNED/LEASED
- ----------------- ----- -------------- ---------------- ----------------
Lawrence, KS...... 19.3 423,000 Manufacturing Owned
Evansville, IN.... 13.4 420,000 Headquarters and Owned
Manufacturing
Ontario, CA....... 10.0 200,000 Manufacturing Leased (expires
August 2003)
Henderson, NV..... 12.0 168,000 Manufacturing Owned
Charlotte, NC..... 32.0 148,000 Manufacturing Owned
Streetsboro, OH... 12.0 140,000 Manufacturing Owned
Monroeville, OH... 19.0 112,000 Manufacturing Owned
Minneapolis, MN... 3.0 110,000 Manufacturing Leased (expires
December 1999)
Suffolk, VA....... 14.0 102,000 Manufacturing Owned
Iowa Falls, IA.... 14.0 101,000 Manufacturing Owned
Woodstock, IL..... 11.7 98,000 Manufacturing Owned
Norwich, England.. 5.0 44,000 Manufacturing Owned
York, PA.......... 10.0 40,000 Manufacturing Leased (expires
December 2001)
We believe that our property and equipment are well-maintained, in good
operating condition and adequate for our present needs.
LEGAL PROCEEDINGS
We are party to various legal proceedings involving routine claims which
are incidental to our business. Although our legal and financial liability with
respect to such proceedings cannot be estimated with certainty, we believe that
any ultimate liability would not be material to our financial condition.
Berry Plastics and/or our subsidiary Berry Sterling are currently
litigating two lawsuits that involve United States Patent No. Des. 362,368. This
patent claims an ornamental design for a cup that fits an automobile cup holder.
On September 21, 1995, Berry Sterling filed suit in United States District
Court, Eastern District of Virginia, against Pescor Plastics, Inc. for
infringement of this patent. Pescor Plastics filed counterclaims seeking a
declaratory judgment of invalidity and non-infringement, and damages under the
Lanham Act. On December 28, 1995, Berry Sterling filed suit against Packaging
Resources Incorporated in United States District Court, Southern District of New
York, for infringement of this patent and seeking, among other equitable relief,
damages in an unspecified amount. Packaging Resources has filed counterclaims
against Berry Sterling alleging violation of the Lanham Act, tortious
interference with Packaging Resources' prospective business advantage, consumer
fraud and requesting a declaratory judgment that its "Drive-N-Go" cup does not
infringe this patent. Packaging Resources has not specified the amount of
damages sought. On February 25, 1998, after trial, a jury rendered a verdict in
Berry Sterling's action against Pescor Plastics. The jury found the patent to be
invalid on the grounds of functionality and obviousness and awarded Pescor
$150,000 on its counterclaim. The jury also found that Pescor willfully
infringed the patent and awarded Berry Sterling damages of $1.2 million, but
this award was not included in the judgment because of the finding of the
invalidity of the patent. On March 11, 1998, Berry Sterling filed a motion with
the Court to set aside the verdict of invalidity and the award on the
counterclaim, which was subsequently denied by the Court. On April 29, 1998,
Berry Sterling filed a Notice of Appeal of the Court's judgment and the denial
of its motion to set
52
<PAGE>
aside the jury's verdict. Oral argument for the appeal took place on January 5,
1999, and we are awaiting the Court's decision. The Court in the Packaging
Resources case put the case on its suspense calendar pending the appeal in the
Pescor Plastics case.
53
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers, directors and certain key personnel of our parent, BPC
Holding and its subsidiaries:
<TABLE>
<CAPTION>
NAME AGE TITLE ENTITY
---- --- ----- ------
<S> <C> <C> <C>
Roberto Buaron(1)(4)........ 52 Chairman and Director Berry Plastics and
BPC Holding
Martin R. Imbler(1)(4).... 51 President, Chief Executive Berry Plastics
Officer and Director
President and Director BPC Holding
Ira G. Boots................ 45 Executive Vice President - Berry Plastics
Operations and Director
James M. Kratochvil......... 42 Executive Vice President,
Chief Financial Officer, Berry Plastics
Treasurer and Secretary
Executive Vice President -
Chief Financial Officer and BPC Holding
Secretary
R. Brent Beeler............. 46 Executive Vice President, Berry Plastics
Sales and Marketing
Randy Hobson................ 32 Vice President - Sales and Berry Plastics
Marketing
Ruth Richmond............... 36 Vice President - Planning Berry Plastics
and Administration and
Assistant Secretary
David Weaver................ 36 Vice President and Plant Berry Plastics
Manager - Lawrence
Fredrick A. Heseman......... 46 Vice President and Plant Berry Plastics
Manager -Evansville
Bruce J. Sims............... 49 Vice President - Sales and Berry Plastics
Marketing, Housewares
George A. Willbrandt........ 54 Vice President - Sales and Berry Plastics
Marketing
Lawrence G. Graev(2)(3)..... 54 Director Berry Plastics and
BPC Holding
Joseph S. Levy(2)(3)........ 31 Vice President, Assistant Berry Plastics and
Donald J. Hofmann, Secretary and Director BPC Holding
Jr.(1)(2)(3)(4)............. 41 Director Berry Plastics and
BPC Holding
Mathew J. Lori.............. 35 Director Berry Plastics and
BPC Holding
David M. Clarke............. 48 Director Berry Plastics and
BPC Holding
</TABLE>
- ---------------------------------
(1) Member of the Stock Option Committee of BPC Holding.
(2) Member of the Audit Committee of BPC Holding.
(3) Member of the Audit Committee of Berry Plastics.
(4) Member of the Compensation Committee of Berry Plastics.
ROBERTO BUARON has been Chairman and a Director of Berry Plastics since it
was organized in December 1990. He has also served as Chairman and a Director of
BPC Holding since 1990. He is the Chairman and Chief Executive Officer of First
Atlantic Capital, Ltd., which he founded in 1989. From 1987 to 1989, he was an
Executive Vice President with Overseas Partners, Inc., an investment management
firm. From 1983 to 1986, he was First Vice President of Smith Barney, Inc., and
a General Partner of First Century Partnership, its venture capital
54
<PAGE>
affiliate. Prior to 1983, he was a Principal at McKinsey & Company. Mr. Buaron
is also a director of CFP Holdings, Inc., a processed meat company.
MARTIN R. IMBLER has been President, Chief Executive Officer and a
Director of Berry Plastics since January 1991. He has also served as a Director
of BPC Holding since January 1991, and as President of BPC Holding since May
1996. From June 1987 to December 1990, he was President and Chief Executive
Officer of Risdon Corporation, a cosmetic packaging company. Mr. Imbler was
employed by American Can Company from 1981 to 1987, as Vice President and
General Manager of the East/South Region Food and General Line Packaging
business from 1985 to 1987 and as Vice President-Marketing, from 1981 to 1985.
IRA G. BOOTS has been Executive Vice President-Operations, and a Director
of Berry Plastics since April 1992. Prior to that, Mr. Boots was Vice President
of Operations, Engineering and Product Development of the Company from December
1990 to April 1992. Mr. Boots was employed by Berry Plastics, Inc. from 1984 to
December 1990 as Vice President-Operations.
JAMES M. KRATOCHVIL was promoted to Executive Vice President, Chief
Financial Officer, Secretary and Treasurer of Berry Plastics in December 1997.
He formerly served as Vice President, Chief Financial Officer and Secretary of
Berry Plastics since 1991, and as Treasurer of Berry Plastics since May 1996. He
was also promoted to Executive Vice President, Chief Financial Officer and
Secretary of BPC Holding in December 1997. He formerly served as Vice President,
Chief Financial Officer and Secretary of BPC Holding since 1991. Mr. Kratochvil
was employed by Berry Plastics, Inc.
from 1985 to 1991 as Controller.
R. BRENT BEELER was promoted to Executive Vice President-Sales and
Marketing in February 1996. He formerly served as Vice President, Sales and
Marketing of Berry Plastics since December 1990. Mr. Beeler was employed by
Berry Plastics, Inc. from October 1988 to December 1990 as Vice President, Sales
and Marketing.
RANDY HOBSON has been Vice President-Sales and Marketing of Berry Plastics
since June 1998. Mr. Hobson was Marketing Manager-Containers for Berry Plastics
from November 1997 to June 1998. Prior to that, he was a Regional Sales Manager
from 1992 to November 1997. Mr. Hobson joined Berry Plastics, Inc. in 1988.
RUTH RICHMOND has been Assistant Secretary of BPC Holding and Berry
Plastics since April 1998. Ms. Richmond has been Vice President-Planning and
Administration of Berry Plastics since January 1995. From January 1994 to
December 1994, Ms. Richmond was Vice President and Plant Manager-Henderson. Ms.
Richmond was Plant Manager-Henderson from February 1993 to January 1994 and
Assistant General Manager-Henderson from February 1991 to February 1993. Ms.
Richmond joined the accounting department of Berry Plastics, Inc. in 1986.
DAVID WEAVER has been Vice President and Plant Manager-Lawrence of Berry
Plastics since January 1997. From January 1993 to January 1997, he was Vice
President and Plant Manager-Iowa Falls. From February 1992 to January 1993, Mr.
Weaver was Plant Manager-Iowa Falls and, prior to that, he was Maintenance
Engineering Supervisor from July 1990 to February 1992. Mr. Weaver was a Project
Engineer from January 1989 to July 1990 for Berry Plastics, Inc.
FREDRICK A. HESEMAN was promoted to Vice President and Plant
Manager-Evansville of Berry Plastics in December 1997. From October 1996 to
December 1997, Mr. Heseman was Plant Manager-Evansville, and prior to that, he
was Engineering Manager from December 1990 to October 1996. Mr. Heseman was
employed by Berry Plastics, Inc. from June 1987 to December 1990 as Engineering
Manager.
BRUCE J. SIMS has been Vice President-Sales and Marketing, Housewares of
Berry Plastics since January 1997. Prior to the acquisition of PackerWare, Mr.
Sims served as President of PackerWare from March 1996 to January 1997 and as
Vice President from October 1994 to March 1996. From January 1990 to October
1994 he was Vice President of the Miner Container Corporation, a national
injection molder. Mr. Sims was Executive Vice President of MKM Distribution
Company from 1985 to 1990.
55
<PAGE>
GEORGE A. WILLBRANDT was promoted to Vice President-Sales and Marketing of
Berry Plastics in April 1997. He formerly served as Vice President, Sales and
Marketing of Berry Sterling since 1995. Prior to that he was President and
co-owner of Sterling Products, which he founded in 1983.
LAWRENCE G. GRAEV has been a Director of Berry Plastics and BPC Holding
since August 1995. Mr. Graev is the Chairman of the law firm of O'Sullivan Graev
& Karabell, LLP of New York, where he has been a partner since 1974.
Mr. Graev is also a Director of First Atlantic.
JOSEPH S. LEVY has been Vice President and Assistant Secretary of Berry
Plastics and BPC Holding since April 1995. Mr. Levy has been a Director of BPC
Holding and the Company since April 1998. Mr. Levy has been a Vice President of
First Atlantic Capital, Ltd. since December 1994. From 1991 to December 1994,
Mr. Levy was an Associate at First Atlantic.
DONALD J. HOFMANN, JR. has been a Director of BPC Holding and Berry
Plastics since June 1996. Mr. Hofmann has been a General Partner of Chase
Capital Partners since 1992. Prior to that, he was head of MH Capital Partners
Inc., the equity investment arm of Manufacturers Hanover. Mr. Hofmann is also a
director of Advanced Accessory Systems, LLC, a manufacturer of towing and rack
systems and related accessories for automobiles.
MATHEW J. LORI has been a Director of BPC Holding and Berry Plastics since
October 1996. Mr. Lori has been a Principal with Chase Capital Partners since
January 1998, and prior to that, Mr. Lori had been an Associate since April
1996. From September 1993 to March 1996, he was an Associate in the Merchant
Banking Group of The Chase Manhattan Bank, N.A.
DAVID M. CLARKE has been a Director of BPC Holding and Berry Plastics
since June 1996. Mr. Clarke is a Managing Director with Aetna, Inc., a private
equity investment group and, prior to that, he had been a Vice President in the
Investment Group of Aetna Life Insurance Company from 1988 to 1996.
A stockholders agreement contains provisions regarding the election of
directors. See "Certain Transactions--Stockholders Agreements."
BOARD COMMITTEES
The Board of Directors of BPC Holding has an Audit Committee and a Stock
Option Committee, and the Board of Directors of Berry Plastics has an Audit
Committee and a Compensation Committee. In each case, the Audit Committees
oversee the activities of the independent auditors and internal controls. The
Stock Option Committee administers the BPC Holding 1996 Stock Option Plan. The
Compensation Committee makes recommendations to the Board of Directors of Berry
Plastics concerning salaries and incentive compensation for our officers and
employees.
56
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid by Berry
Plastics to our Chief Executive Officer and our four other most highly
compensated executive officers (collectively, the "Named Executive Officers")
for services rendered in all capacities to Berry Plastics during fiscal 1998,
1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
SECURITIES
FISCAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) PENSATION(1)
--------------------------- ---- ------ ----- ---------- ---------
1998 $327,397 $ 46,697 -- $1,650
<S> <C> <C> <C> <C>
Martin R. Imbler................................... 1997 307,396 87,623 -- 1,520
President and Chief Executive Officer 1996 292,078 128,993 8,472 595,848
1998 176,631 39,024 -- 1,650
Ira G. Boots........................................ 1997 151,691 72,868 -- 1,520
Executive Vice President - Operations 1996 145,735 94,205 5,214 239,335
James M. Kratochvil................................. 1998 142,483 30,413 -- 1,650
Executive Vice President, Chief Financial Officer, 1997 119,459 56,307 -- 1,520
Treasurer and Secretary 1996 112,614 72,796 3,259 120,427
1998 145,218 32,621 -- 1,650
R. Brent Beeler..................................... 1997 125,973 60,554 -- 1,520
Executive Vice President - Sales and Marketing 1996 121,108 72,796 3,259 120,427
1998 182,823 39,024 -- 1,650
George A. Willbrandt................................ 1997 214,788 -- -- 11,303
Vice President - Sales and Marketing 1996 182,077 100,000 -- 201,420
</TABLE>
- --------------------------------
(1) Amounts shown reflect contributions by us under our 401(k) plan and
payments made under a one-time deferred bonus award plan. See "Certain
Transactions -- Management." "
The following table provides information on the number of exercisable and
unexercisable management stock options held by the Named Executive Officers at
January 2, 1999.
FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END FISCAL YEAR-END
NAME EXERCISABLE/UNEXERCISABLE(#) EXERCISABLE/UNEXERCISABLE(2)
---- ---------------------------- ----------------------------
<S> <C> <C>
Martin R. Imbler...... 5,083/3,389 $355,810/237,230
Ira G. Boots.......... 3,128/2,086 218,960/146,020
James M. Kratochvil... 1,955/1,304 136,850/91,280
R. Brent Beeler....... 1,955/1,304 136,850/91,280
George A. Willbrandt.. 780/520 54,600/36,400
</TABLE>
- --------------------------------
1. None of BPC Holding's capital stock is currently publicly traded. The
values reflect management's estimate of the fair market value of the Class
B Nonvoting Common Stock of BPC Holding at January 2, 1999.
2. All options granted to management of Berry Plastics are excersiable for
shares of Class B Nonvoting Common Stock, par value $.01 per share, of BPC
Holding.
57
<PAGE>
DiRECTOR COMPENSATION
Directors receive no cash consideration for serving on the Board of
Directors of BPC Holding or Berry Plastics, but directors are reimbursed for
out-of-pocket expenses incurred in connection with their duties as directors.
EMPLOYMENT AGREEMENTS
We have an employment agreement with Mr. Imbler that expires on June 30,
2001. Base compensation under the agreement for fiscal 1998 was $327,397. The
agreement also provides for an annual performance bonus of $50,000 to $175,000
based upon Berry Plastics' attainment of certain financial targets. We may
terminate Mr. Imbler's employment for "cause" or upon a "disability" (as such
terms are defined in the agreement). If we terminate Mr. Imbler "without cause"
(as defined in the agreement) Mr. Imbler is entitled to receive, among other
things, the greater of one year's salary or 1/12 of one year's salary for each
year (not to exceed 24 years in the aggregate) of employment with Berry
Plastics. The agreement also contains customary noncompetition, nondisclosure
and nonsolicitation provisions.
We also have employment agreements with each of Messrs. Boots, Kratochvil,
Beeler and Willbrandt each of which expires on June 30, 2001. The agreements
provided for fiscal 1998 base compensation of $176,631 for Mr. Boots, $142,483
for Mr. Kratochvil, $145,218 for Mr. Beeler and $182,823 for Mr. Willbrandt.
Salaries are subject in each case to annual adjustment at the discretion of the
Compensation Committee of our Board of Directors. The agreements entitle each
executive to participate in all other incentive compensation plans established
for executive officers of Berry Plastics. We may terminate each agreement for
"cause" or a "disability" (as such terms are defined in the agreements). If we
terminate an executive's employment without "cause" (as defined in the
agreements), the agreements require that we pay certain amounts to the
terminated executive, including (1) the greater of (A) one year's salary or (B)
1/12 of one year's salary for each year (not to exceed 24 years in the
aggregate) of employment with Berry Plastics (other than Mr. Willbrandt, who
would receive one year's salary), and (2) certain benefits under applicable
incentive compensation plans. Each agreement also includes customary
noncompetition, nondisclosure and nonsolicitation provisions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
We established the Compensation Committee comprised of Messrs. Buaron,
Imbler and Hofmann, in October 1996. The annual salary and bonus paid to Messrs.
Imbler, Boots, Kratochvil, Beeler and Willbrandt for fiscal 1998 were determined
by the Compensation Committee in accordance with their respective employment
agreements. All other compensation decisions with respect to officers of Berry
Plastics are made by Mr. Imbler pursuant to policies established in consultation
with the Compensation Committee.
We are party to an Amended and Restated Management Agreement with First
Atlantic Capital, Ltd. pursuant to which First Atlantic Capital provides us with
financial advisory and management consulting services in exchange for an annual
fee of $750,000 and reimbursement for out-of-pocket costs and expenses. In
consideration of such services, we paid First Atlantic Capital fees and expenses
of $835,000 for fiscal 1998, $771,200 for fiscal 1997, and $787,600 for fiscal
1996. In connection with the recapitalization of BPC Holding in 1996, the
Management Agreement was amended to provide for a fee for services rendered in
connection with certain transactions equal to the lesser of (1) 1% of the total
transaction value and (2) $1,250,000 for any such transaction consummated plus
out-of-pocket expenses in respect of such transaction, whether or not
consummated. Also in connection with the recapitalization of BPC Holding in
1996, BPC Holding paid a fee of $1,250,000 plus reimbursement for out-of-pocket
expenses to First Atlantic Capital for advisory services, including originating,
structuring and negotiating the transaction. In January 1997, First Atlantic
Capital received advisory fees of about $287,500 for originating, structuring
and negotiating the acquisition of PackerWare and about $28,700 for providing
similar services in connection with the acquisition of Container Industries. In
May 1997, First Atlantic Capital received advisory fees of about $117,900 for
originating, structuring and negotiating the acquisition of Virginia Design. In
August 1997, First Atlantic Capital received advisory fees of about $531,600 for
providing services in the acquisition of Venture. First Atlantic Capital
received advisory fees of about $140,000 in July 1998 for originating,
structuring and
58
<PAGE>
negotiating the acquisition of Norwich. In October 1998, First Atlantic Capital
received advisory fees of about $180,000 for providing services in the
acquisition of Knight. Upon completion of the Cardinal acquisition, First
Atlantic received advisory fees of about $695,000 for services provided with
respect to the acquisition. See "Certain Transactions."
Mr. Buaron, the Chairman and a director of BPC Holding and Berry Plastics,
is the Chairman and Chief Executive Officer of First Atlantic Capital. Mr. Graev
is a director of First Atlantic Capital. As an officer and the sole stockholder
of First Atlantic Capital, Mr. Buaron is entitled to receive any bonuses paid
and any dividends declared by First Atlantic Capital on its capital stock,
including any bonuses paid as a result of, and any dividends paid out of, the
$1,250,000 fee paid by BPC Holding to First Atlantic Capital in connection with
the recapitalization of BPC Holding or any of the fees paid with respect to the
acquisitions described above. First Atlantic Capital is engaged by Atlantic
Equity Partners International II to provide certain financial and management
consulting services for which it receives annual fees. First Atlantic Capital
and Atlantic Equity Partners International II have completely distinct ownership
and equity structures.
See "Certain Transactions."
Atlantic Equity Partners, L.P., a stockholder of BPC Holding prior to the
consummation of the recapitalization of BPC Holding in 1996, received about
$67.6 million from the sale of its common stock in BPC Holding and warrants to
purchase common stock. First Atlantic is engaged by Atlantic Equity Partners to
provide certain financial and management consulting services for which it
receives annual fees. First Atlantic and Atlantic Equity Partners have
completely distinct ownership and equity structures. Atlantic Equity Associates,
L.P., a Delaware limited partnership, is the sole general partner of Atlantic
Equity Partners. Mr. Buaron is the sole shareholder of Buaron Capital
Corporation. Buaron Capital is the managing and sole general partner of Atlantic
Equity Associates. By virtue of their direct and indirect ownership interests in
Atlantic Equity Partners, Mr. Levy is entitled to receive $178,000 and Buaron
Capital is entitled to receive $4,672,000 from the proceeds from the sale of
equity interests in BPC Holding. See "Certain Transactions."
In connection with the recapitalization of BPC Holding in 1996, Mr.
Imbler, a director of Berry Plastics and BPC Holding, received about $5.9
million, Douglas E. Bell, a former director of Berry Plastics, received about
$2.5 million, Mr. Boots, a director of Berry Plastics, received about $2.4
million, and Messrs. Beeler and Kratochvil, officers of Berry Plastics, each
received about $1.3 million from their sale of certain equity interests in BPC
Holding. In connection with the offering in April 1994 of the 1994 Notes (the
"1994 Transaction"), we paid a $50.0 million dividend on our common stock to BPC
Holding, and BPC Holding distributed that amount to its holders of equity
interests. In connection therewith, BPC Holding agreed to pay cash bonuses, upon
the occurrence of certain events, to the members of management who held options
under BPC Holding's 1991 Stock Option Plan in amounts equal to the amounts they
would have been entitled to had the shares of common stock underlying their
unvested options been outstanding at the time of the declaration of the $50.0
million dividend by BPC Holding. As a result of the recapitalization of BPC
Holding, such bonuses were paid to Messrs. Imbler, Bell, and Boots. Mr. Imbler
received a bonus in the amount of $594,000. Messrs. Bell and Boots each received
bonuses of $238,000. See "Certain Transactions."
In connection with the recapitalization of BPC Holding in 1996, Chase
Securities Inc., an affiliate of Chase Venture Capital Associates and Messrs.
Hofmann and Lori, received a fee of $500,000 for arranging the sale of $15.0
million of BPC Holding's Common Stock to Atlantic Equity Partners International
II, Chase Venture Capital Associates and certain other equity investors
(collectively, the "Common Stock Purchasers") and the sale of $15.0 million of
BPC Holding's Preferred Stock to Chase Venture Capital Associates. Chase
Manhattan Investment Holdings, Inc., an affiliate of Chase Securities and
Messrs. Hofmann and Lori, received about $13.6 million from the sale of equity
interests of BPC Holding in the 1996 Transaction.
STOCK OPTION PLAN
Employees, directors and certain independent consultants of Berry Plastics
and its subsidiaries are entitled to participate in the BPC Holding 1996 Stock
Option Plan. This Stock Option Plan provides for the grant of both "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended, and stock options that are non-qualified under the Code. The
total number of shares of Class B Nonvoting Common Stock of BPC Holding for
which options may be granted pursuant to the Stock Option Plan is 51,620. The
Stock
59
<PAGE>
Option Plan will terminate on October 3, 2003 or such earlier date on which the
Board of Directors of BPC Holding, in its sole discretion, determines. The Stock
Option Committee of the Board of Directors of BPC Holding administers all
aspects of the Stock Option Plan. The Stock Option Committee selects which of
Berry Plastics' directors, employees and independent consultants will receive
options, the time when options are granted, whether the options are incentive
stock options or non-qualified stock options, the manner and timing for vesting
of such options, the terms of such options, the exercise date of any options and
the number of shares subject to such options. Directors who are also employees
are eligible to receive options under the Stock Option Plan.
The exercise price of incentive stock options granted by BPC Holding under
the Stock Option Plan may not be less than 100% of the fair market value of the
Class B Nonvoting Common Stock at the time of grant and the term of any option
may not exceed seven years. With respect to any employee who owns stock
representing more than 10% of the voting power of the outstanding capital stock
of BPC Holding, the exercise price of any incentive stock option may not be less
than 110% of the fair market value of such shares at the time of grant and the
term of such option may not exceed five years. The exercise price of a
non-qualified stock option is determined by the Stock Option Committee on the
date the option is granted. However, the exercise price of a non-qualified stock
option may not be less than 100% of the fair market value of Class B Nonvoting
Common Stock if the option is granted at any time after the initial public
offering of such stock.
Options granted under the Stock Option Plan are nontransferable except by
will and the laws of descent and distribution. Options granted under the Stock
Option Plan typically expire after seven years and vest over a five-year period
based on timing as well as achieving financial performance targets.
Under the Stock Option Plan, as of July 3, 1999, there were outstanding
options to purchase an aggregate of 50,354 shares of Class B Nonvoting Common
Stock to 67 employees of Berry Plastics, at an exercise price between $100 and
$122 per share. Of that amount, options to purchase an aggregate of 21,504
shares have been issued to the Named Executive Officers in October 1996, at an
exercise price of $100 per share, including 8,472 to Mr. Imbler, 5,214 to each
of Messrs. Bell and Boots, 3,259 to each of Messrs. Beeler and Kratochvil, and
1,300 to Mr. Willbrandt.
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<PAGE>
PRINCIPAL STOCKHOLDERS
All of our outstanding capital stock is owned by BPC Holding. The
following table sets forth certain information regarding the ownership of the
capital stock of BPC Holding with respect to the following:
o each person known by BPC Holding to own beneficially more than 5% of
the outstanding shares of any class of its voting capital stock;
o each of BPC Holding's directors;
o the Named Executive Officers; and
o all directors and officers as a group.
Except as otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares beneficially owned. Unless otherwise
indicated, the address for each stockholder is c/o Berry Plastics Corporation,
101 Oakley Street, Evansville, Indiana 47710.
<TABLE>
<CAPTION>
Shares of Shares of Percentage of
Voting Nonvoting All Classes of
Common Stock(1) Percentage of Common Stock(1) Common Stock
Name and Address of Voting (Fully
Beneficial Owner Class A Class B Common Stock Class A Class B Class C -Diluted)
------- ------- -------------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Atlantic Equity Partners
International II, L.P.(2) ........ -- 128,142 54.4% -- 3,385 11,470 22.3%
Chase Venture Capital
Associates, L.P.(3) .............. 52,000 5,623 23.9 148,000 17,837 -- 34.8
BPC Equity, LLC(5) .................. 31,200 -- 13.2 88,800 -- -- 18.7
Roberto Buaron(6) ................... -- 128,142 54.4 -- 3,385 11,470 22.3
Martin R. Imbler .................... -- 3,629 1.5 -- 15,390(7) 664 3.1
Joseph S. Levy(8) ................... -- 42 * -- 118 14 *
Lawrence G. Graev(9) ................ -- -- -- -- -- -- --
Donald J. Hofmann, Jr..(10) ......... 52,000 5,623 23.9 148,000 17,837 -- 34.8
Mathew J. Lori(11) .................. 52,000 5,623 23.8 148,000 17,837 -- 34.8
David M. Clarke(12) ................. 31,200 -- 13.2 88,800 -- -- 18.7
Ira G. Boots ........................ -- 1,718 * -- 5,446(13) -- 1.1
James M. Kratochvil ................. -- 1,196 * -- 5,359(14) 391 1.1
R. Brent Beeler ..................... -- 1,196 * -- 5,359(15) 391 1.1
George A. Willbrandt ................ -- 520 * -- 2,260(16) 170 *
All officers and directors as a group
(16 persons) .................... 83,200 143,644 96.3 236,800 63,330 13,616 84.1
------- ------- -------------- ------- ------- ------- -----------
</TABLE>
- ----------------------------
* Less than one percent.
(1) Included in the amounts of common stock presented in this chart are
warrants to purchase shares of common stock of BPC Holding. The authorized
capital stock of BPC Holding consists of 3,500,000 shares of capital
stock, including 2,500,000 shares of common stock, $.01 par value, and
1,000,000 shares of Preferred Stock, $.01 par value. Of the 2,500,000
shares of common stock of BPC Holding, 500,000 shares are designated Class
A Voting Common Stock, 500,000 shares are designated Class A Nonvoting
Common Stock, 500,000 shares are designated Class B Voting Common Stock,
500,000 shares are designated Class B Nonvoting Common Stock, and 500,000
shares are designated Class C Nonvoting Common Stock. Of the 1,000,000
shares of preferred stock of BPC Holding, 800,000 shares are designated
Series A Senior Cumulative Exchangeable Preferred Stock, and 200,000
shares are designated Series B Cumulative Preferred Stock.
(2) Address is P. O. Box 847, One Capital Place, Fourth Floor, Grand Cayman,
Cayman Islands, British West Indies. Atlantic Equity Associates
International II, L.P., a Delaware limited partnership, is the sole
general partner of Atlantic Equity Partners International II and as such
exercises voting and/or investment power over shares of capital stock
owned by Atlantic Equity Partners International II, including the shares
of common stock of BPC Holding held by Atlantic Equity Partners
International
61
<PAGE>
II. Mr. Buaron is the sole shareholder of Buaron Holdings Ltd. Buaron
Holdings is the sole general partner of Atlantic Equity Associates
International II. As the general partner of Atlantic Equity Associates
International II, Buaron Holdings may be deemed to beneficially own the
shares of common stock of BPC Holding held by Atlantic Equity Partners
International II. Buaron Holdings disclaims any beneficial ownership of
any shares of capital stock owned by Atlantic Equity Partners
International II, including the shares of common stock of BPC Holding held
by Atlantic Equity Partners International II. Through his affiliation with
Buaron Holdings and Atlantic Equity Associates International II, Mr.
Buaron controls the sole general partner of Atlantic Equity Partners
International II and therefore has the authority to control voting and/or
investment power over, and may be deemed to beneficially own, the shares
of common stock of BPC Holding owned by Atlantic Equity Partners
International II. Mr. Buaron disclaims any beneficial ownership of any of
these shares.
(3) Address is 380 Madison Avenue, 12th Floor, New York, New York 10017.
(4) Represents warrants to purchase such shares of common stock held by Chase
Venture Capital Associates that are currently exercisable.
(5) Address is c/o Aetna Life Insurance Company, Private Equity Group, IG6U,
151 Farmington Avenue, Hartford, Connecticut 06156. Aetna Life Insurance
Company exercises voting and/or investment power over shares of capital
stock owned by BPC Equity, LLC, including shares of common stock of BPC
Holding held by BPC Equity.
(6) Address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New
York, New York 10022. Represents shares of common stock of BPC Holding
owned by Atlantic Equity Partners International II. Mr. Buaron is the sole
shareholder of Buaron Holdings. Buaron Holdings is the sole general
partner of Atlantic Equity Associates International II. Atlantic Equity
Associates International II is the sole general partner of Atlantic Equity
Partners International II and as such, exercises voting and/or investment
power over shares of capital stock owned by Atlantic Equity Partners
International II, including the shares of common stock of BPC Holding held
by Atlantic Equity Partners International II. Mr. Buaron, as the sole
shareholder and Chief Executive Officer of Buaron Holdings, controls the
sole general partner of Atlantic Equity Partners International II and
therefore has voting and/or investment power over, and may be deemed to
beneficially own, the shares of common stock of BPC Holding held by
Atlantic Equity Partners International II. Mr. Buaron disclaims any
beneficial ownership of the such shares.
(7) Includes 5,083 options granted to Mr. Imbler, which are presently
exercisable.
(8) Address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New
York, New York 10022.
(9) Address is c/o O'Sullivan Graev & Karabell, LLP, 30 Rockefeller Plaza, New
York, New York 10112.
(10) Address is c/o Chase Capital Partners, 380 Madison Avenue, 12th Floor, New
York, New York 10017. Represents shares owned by Chase Venture Capital
Associates. Mr. Hofmann is a General Partner of Chase Capital Partners,
which is the private equity investment arm of Chase Manhattan Corporation,
which is an affiliate of Chase Venture Capital Associates. Mr. Hofmann
disclaims any beneficial ownership of the shares of common stock of BPC
Holding held by Chase Venture Capital Associates.
(11) Address is c/o Chase Capital Partners, 380 Madison Avenue, 12th Floor, New
York, New York 10017. Represents shares owned by Chase Venture Capital
Associates. Mr. Lori is a Principal of Chase Capital Partners, which is
the private equity investment arm of Chase Manhattan Corporation, which is
an affiliate of Chase Venture Capital Associates. Mr. Lori disclaims any
beneficial ownership of the shares of common stock of BPC Holding held by
Chase Venture Capital Associates.
(12) Address is c/o Aetna Life Insurance Company, Private Equity Group, IG6U,
151 Farmington Avenue, Hartford, Connecticut 06156. Represents shares
owned by BPC Equity. Mr. Clarke is a Managing Director of Aetna, Inc., an
affiliate of Aetna Life Insurance Company, which is a member of BPC
Equity. Mr. Clarke disclaims any beneficial ownership of the shares of
common stock of BPC Holding held by BPC Equity.
(13) Includes 3,128 options granted to Mr. Boots, which are currently
exercisable.
(14) Includes 1,955 options granted to Mr. Kratochvil, which are currently
exercisable.
(15) Includes 1,955 options granted to Mr. Beeler, which are currently
exercisable.
(16) Includes 780 options granted to Mr. Willbrandt, which are currently
exercisable.
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CERTAIN TRANSACTIONS
FIRST ATLANTIC
Pursuant to the Management Agreement between us and First Atlantic
Capital, First Atlantic Capital provides us with financial advisory and
management consulting services in exchange for an annual fee of $750,000 and
reimbursement for out-of-pocket costs and expenses. We paid First Atlantic fees
and expenses of about $835,000 for fiscal 1998, $771,200 for fiscal 1997 and
$787,600 for fiscal 1996 for these services. The management agreement also
provides for a fee for services rendered in connection with certain transactions
equal to the lesser of 1% of the total transaction value and $1,250,000 for any
such transaction consummated plus out-of-pocket expenses, whether or not
consummated. In connection with the recapitalization of BPC Holding in 1996, BPC
Holding paid a fee of about $1,250,000 plus reimbursement for out-of-pocket
expenses to First Atlantic Capital for advisory services. These services
included originating, structuring and negotiating the recapitalization of BPC
Holding. First Atlantic Capital received advisory fees of about $287,500 for
originating, structuring and negotiating the acquisition of PackerWare and about
$28,700 for providing similar services in connection with the acquisition of
Container Industries. In May 1997, First Atlantic Capital received advisory fees
of about $117,900 for originating, structuring and negotiating the acquisition
of Virginia Design. In August 1997, First Atlantic Capital received advisory
fees of about $531,600 for providing services with respect to the acquisition of
Venture. First Atlantic Capital received advisory fees of about $140,000 in July
1998 for originating, structuring and negotiating the acquisition of Norwich,
and in October 1998 First Atlantic Capital received advisory fees of about
$180,000 for providing services with respect to the acquisition of Knight. Upon
completion of the Cardinal acquisition, First Atlantic received advisory fees of
about $695,000 for services provided with respect to the acquisition.
Mr. Buaron, the Chairman and a director of BPC Holding and Berry Plastics,
is the Chairman and Chief Executive Officer of First Atlantic Capital. As an
officer and the sole stockholder of First Atlantic Capital, Mr. Buaron is
entitled to receive any bonuses paid and any dividends declared by First
Atlantic Capital on its capital stock, including any bonuses paid as a result
of, and any dividends paid out of, the $1,250,000 fee paid by BPC Holding to
First Atlantic Capital in connection with the recapitalization of BPC Holding in
1996 or any of the fees paid with respect to the acquisitions described above.
Mr. Graev is also a director of First Atlantic Capital, and Mr. Levy is an
officer of First Atlantic Capital. First Atlantic Capital is engaged by Atlantic
Equity Partners International II to provide certain financial and management
consulting services for which it receives annual fees. First Atlantic Capital
and Atlantic Equity Partners International II have completely distinct ownership
and equity structures.
Atlantic Equity Partners, L.P., a stockholder of BPC Holding prior to the
consummation of the recapitalization of BPC Holding in 1996, received about
$67.6 million from the sale of its common stock in BPC Holding and warrants to
purchase common stock. First Atlantic is engaged by Atlantic Equity Partners to
provide certain financial and management consulting services for which it
receives annual fees. First Atlantic and Atlantic Equity Partners have
completely distinct ownership and equity structures. Atlantic Equity Associates,
L.P., is the sole general partner of Atlantic Equity Partners. Mr. Buaron is the
sole shareholder of Buaron Capital, and Buaron Capital is the managing and sole
general partner of Atlantic Equity Associates. By virtue of their direct and
indirect ownership interests in Atlantic Equity Partners, Mr. Levy is entitled
to receive $178,000 and Buaron Capital is entitled to receive $4,672,000 from
the proceeds from the sale of equity interests in BPC Holding.
THE 1996 TRANSACTION
On June 18, 1996, our parent, BPC Holding, consummated the transaction
described below. BPC Mergerco, Inc. was organized by Atlantic Equity Partners
International II, Chase Venture Capital Associates, L.P., and other
institutional investors to acquire a majority of the outstanding capital stock
of BPC Holding. Pursuant to a Stock Purchase and Recapitalization Agreement
dated as of June 12, 1996, certain of the Common Stock Purchasers purchased
shares of common stock of BPC Mergerco. In addition, pursuant to a Preferred
Stock and Warrant Purchase Agreement dated as of June 12, 1996, Chase Venture
Capital Associates and the Northwestern Mutual Life Insurance Company (the
"Preferred Stock Purchasers") purchased shares of preferred stock of BPC
Mergerco and warrants (the "1996 Warrants") to purchase shares of common stock
of BPC Mergerco. Immediately after the
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purchase of the common stock, the preferred stock and the 1996 Warrants of BPC
Mergerco, BPC Mergerco merged with and into BPC Holding, with BPC Holding being
the surviving corporation. Upon the consummation of this merger, (1) each share
of Class A Common Stock, $.00005 par value, and Class B Common Stock, $.00005
par value, of BPC Holding and certain previously held warrants exercisable for
such Class A and Class B Common Stock were converted into the right to receive
cash equal to the purchase price per share for the common stock into which such
warrants were exercisable less the amount of the nominal exercise price
therefor, (2) all other classes of common stock of BPC Holding, a majority of
which was held by members of management, were converted into shares of common
stock of the surviving corporation (constituting about 19% of the post-merger
common stock of the surviving corporation) and (3) the common stock, preferred
stock and 1996 Warrants of Mergerco were converted into common stock, preferred
stock and warrants of the surviving corporation, respectively. In addition, upon
the consummation of the merger, the holders of the warrants (the "1994
Warrants") to purchase capital stock of BPC Holding that were issued in
connection with the offering of the 1994 Notes became entitled to receive cash
equal to the purchase price per share for the common stock into which such
warrants were exercisable less the amount of the exercise price therefor.
The aggregate consideration paid to the sellers of the equity interests in
BPC Holding, including the holders of the 1994 Warrants, was about $119.6
million in cash. In order to finance the recapitalization of BPC Holding,
including the payment of related fees and expenses: (1) BPC Holding issued the
1996 Notes for net proceeds of about $100.2 million (or $64.6 million after
deducting the amount of such net proceeds used to purchase marketable securities
available for payment of interest on the 1996 Notes); (2) the Common Stock
Purchasers, the Preferred Stock Purchasers and certain members of management
made equity and rollover investments in the aggregate amount of $70.0 million
(which amount included rollover investments of about $7.1 million by certain
members of management and $3.0 million by an existing institutional
shareholder); and (3) BPC Holding received an aggregate of about $0.9 million in
connection with the exercise of management stock options to purchase common
stock of BPC Holding.
In connection with the recapitalization of BPC Holding, Atlantic Equity
Partners International II, Chase Venture Capital Associates, certain other
institutional investors and certain members of management entered into a
Stockholders Agreement pursuant to which certain stockholders, among other
things, (1) were granted certain registration rights and (2) under certain
circumstances, have the right to force a sale of BPC Holding.
MANAGEMENT
In connection with the recapitalization of BPC Holding in 1996, Mr. Imbler
received about $5.9 million, Mr. Bell received about $2.5 million, Mr. Boots
received about $2.4 million, and Messrs. Kratochvil and Beeler each received
about $1.3 million from their sale of certain equity interests in BPC Holding.
In connection with the 1994 Transaction, we paid a $50.0 million dividend on our
common stock to BPC Holding, and BPC Holding distributed that amount to its
holders of equity interests. In connection therewith, BPC Holding agreed to pay
cash bonuses, upon the occurrence of certain events, to the members of
management who held options under BPC Holding's 1991 Stock Option Plan in
amounts equal to the amounts they would have been entitled to had the shares of
common stock underlying their unvested options been outstanding at the time of
the declaration of the $50.0 million dividend by BPC Holding. As a result of the
recapitalization of BPC Holding in 1996, bonuses were paid to Mr. Imbler in the
amount of about $594,000, to Mr. Bell in the amount of about $238,000, to Mr.
Boots in the amount of about $238,000, to Mr. Kratochvil in the amount of about
$119,000 and to Mr. Beeler in the amount of about $119,000.
STOCKHOLDERS AGREEMENTS
In connection with the recapitalization of BPC Holding, BPC Holding
entered into a Stockholders Agreement dated as of June 18, 1996 (the
"Stockholders Agreement") with the Common Stock Purchasers, certain Management
Stockholders (as defined herein) and, for limited purposes thereunder, the
Preferred Stock Purchasers. The Stockholders Agreement grants the Common Stock
Purchasers rights and obligations, including the following: (1) until the
occurrence of events specified in the New Stockholders Agreement, to designate
the members of a seven person Board of Directors as follows: (A) one director
will be Roberto Buaron or his designee; (B) Atlantic
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Equity Partners International II will have the right to designate three
directors (who are currently Messrs. Graev, Imbler and Levy); (C) Chase Venture
Capital Associates will have the right to designate two directors (who are
currently Messrs. Hofmann and Lori); and (D) the institutional holders
(excluding Atlantic Equity Partners International II and Chase Venture Capital
Associates) will have the right to designate one director (who is currently Mr.
Clarke); (2) in the case of certain Common Stock Purchasers, to subscribe for a
proportional share of future equity issuances by BPC Holding; (3) under certain
circumstances and in the case of Atlantic Equity Partners International II or
Chase Venture Capital Associates, to cause the initial public offering of equity
securities of BPC Holding or a sale of BPC Holding subsequent to the fifth
anniversary of the closing of the recapitalization of BPC Holding and (4) under
certain circumstances and in the case of a majority in interest of the
institutional holders, to cause the initial public offering of equity securities
of BPC Holding or a sale of BPC Holding subsequent to the sixth anniversary of
the closing of the recapitalization of BPC Holding. Provisions under the
Stockholders Agreement also (1) prohibits BPC Holding from taking certain
actions without the consent of holders of a majority of voting stock held by
Chase Venture Capital Associates and the institutional holders other than
Atlantic Equity Partners International II (or, following the occurrence of
certain events, the consent of Atlantic Equity Partners International II),
including certain transactions between BPC Holding and any subsidiary, on the
one hand, and First Atlantic Capital or any of its affiliates, on the other
hand; (2) obligates BPC Holding to provide certain Common Stock Purchasers with
financial and other information regarding BPC Holding and to provide access and
inspection rights to all Common Stock Purchasers; and (3) restricts transfers of
equity by the Common Stock Purchasers, subject to certain exceptions (including
transfers of up to 10% of the equity (including warrants to purchase equity)
held by each Common Stock Purchaser on the date of the Stockholders Agreement).
Pursuant to the Stockholders Agreement, under certain circumstances the
Preferred Stock Purchasers (and their transferees) have tag-along rights with
respect to the 1996 Warrants and the common stock of BPC Holding issuable upon
exercise of the 1996 Warrants. Under specified circumstances and subject to
certain exceptions, the Preferred Stock Purchasers (and their transferees) are
entitled to include a pro rata share of their preferred stock in a transaction
(or series of related transactions) involving the transfer by Atlantic Equity
Partners International II, Chase Venture Capital Associates and the specified
institutional holders of more than 50% of the aggregate amount of securities
held by them immediately following the closing of the 1996 Transaction.
The Stockholders Agreement grants specified registration rights to the
Common Stock Purchasers. Atlantic Equity Partners International II and Chase
Venture Capital Associates each have the right, on three occasions, to demand
registration, at BPC Holding's expense, of their shares of common stock of BPC
Holding. Under certain circumstances, a majority in interest of the
institutional holders (excluding Atlantic Equity Partners International II and
Chase Venture Capital Associates) have the right, on one occasion, to demand
registration, at BPC Holding's expense, of their shares of common stock of BPC
Holding. The Stockholders Agreement provides that if BPC Holding proposes to
register any of its securities, either for its own account or for the account of
other stockholders, BPC Holding will be required to notify all Common Stock
Purchasers and to include in such registration the shares of common stock of BPC
Holding requested to be included by them. All shares of common stock of BPC
Holding owned by the Common Stock Purchasers requested to be included in a
registration will be subject to cutbacks under specified circumstances in
connection with an underwritten public offering.
The provisions of the Stockholders Agreement regarding voting rights,
negative covenants, information/inspection rights, the right to force a sale of
BPC Holding, preemptive rights and transfer restrictions generally will expire
on the earlier to occur of:
o the fifth anniversary of the closing of the
recapitalization of BPC Holding in 1996, if an
underwritten public offering of equity securities of BPC
Holding resulting in gross proceeds of at least $20.0
million occurs prior to such fifth anniversary;
o the occurrence of such underwritten public offering that
occurs subsequent to such fifth anniversary of the closing
of the recapitalization of BPC Holding in 1996;
o the twentieth anniversary of the closing of the
recapitalization of BPC Holding in 1996; and
o a sale of BPC Holding.
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In addition, the Stockholders Agreement provides that certain rights of a
Common Stock Purchaser (to the extent such rights apply to such Common Stock
Purchaser) to designate members of the Board of Directors of BPC Holding and/or
to approve certain actions by BPC Holding will terminate under specific
circumstances.
BPC Holding is also party to the Amended and Restated Stockholders
Agreement dated June 18, 1996 (the "Management Stockholders Agreement"), with
Atlantic Equity Partners International II and all management shareholders
including, among others, Messrs. Imbler, Boots, Kratochvil, Beeler, and
Willbrandt (collectively, the "Management Stockholders"). The Management
Stockholders Agreement contains provisions that:
o limit transfers of equity by the Management Stockholders;
o require the Management Stockholders to sell their shares as
designated by BPC Holding or Atlantic Equity Partners II upon the
consummation of certain transactions;
o grant the Management Stockholders certain rights of co-sale in
connection with sales by Atlantic Equity Partners International
II;
o grant BPC Holding rights to repurchase capital stock from the
Management Stockholders upon the occurrence of certain events; and
o require the Management Stockholders to offer shares to BPC Holding
prior to any permitted transfer.
CHASE SECURITIES INC.
In connection with the recapitalization of BPC Holding in 1996, Chase
Securities, an affiliate of Chase Venture Capital Associates and Messrs. Hofmann
and Lori, who are members of the Board of Directors of BPC Holding and Berry
Plastics, received a fee of $500,000 for arranging the sale of $15.0 million of
BPC Holding's Common Stock to certain of the Common Stock Purchasers and the
sale of $15.0 million of BPC Holding Preferred Stock to Chase Venture Capital
Associates. Chase Manhattan Investment Holdings, Inc., an affiliate of Chase
Securities and Messrs. Hofmann and Lori, received about $13.6 million from the
sale of equity interests of BPC Holding in the recapitalization of BPC Holding.
LEGAL SERVICES
Mr. Graev is the Chairman of the law firm of O'Sullivan Graev & Karabell,
LLP, New York, New York. O'Sullivan Graev & Karabell, LLP provides legal
services to us and to BPC Holding in connection with certain matters,
principally relating to transactional, securities law, general corporate and
litigation matters.
TRANSACTIONS WITH AFFILIATES
The indentures governing the 1994 Notes, the 1996 Notes, the 1998 Notes,
the Notes, the Stockholders Agreement, and our credit facility restrict our and
our affiliates' ability to enter into transactions with affiliates, including
officers, directors and principal stockholders.
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DESCRIPTION OF CERTAIN OTHER DEBT
BPC HOLDING 1996 NOTES
On June 18, 1996, BPC Holding, as part of a recapitalization, issued
12.50% Senior Secured Notes due 2006 for net proceeds, after expenses, of about
$100.2 million (or $64.6 million after deducting the amount of such net proceeds
used to purchase marketable securities available for payment of interest on the
notes). These notes were exchanged in October 1996 for the 12.50% Series B
Senior Secured Notes due 2006. Interest on the 1996 Notes is payable
semi-annually on June 15 and December 15 of each year. In addition, from
December 15, 1999 until June 15, 2001, BPC Holding may, at its option, pay
interest, at an increased rate of 0.75% per annum, in additional 1996 Notes
valued at 100% of the principal amount thereof.
In connection with the 1996 Notes, $35.6 million was placed in escrow to
pay three years' interest on the notes. The escrow account was depleted on June
15, 1999.
The 1996 Notes rank senior in right of payment to all existing and future
subordinated debt of BPC Holding and all other obligations of Berry Plastics,
including BPC Holding's subordinated guarantee of the 1994 Notes, the 1998 Notes
and the Notes and PARI PASSU in right of payment with all senior debt of BPC
Holding. The 1996 Notes are structurally subordinated to all existing and future
senior debt of Berry Plastics, including borrowings under the credit facility
and our Nevada Industrial Revenue Bonds.
BERRY PLASTICS 1994 NOTES AND 1998 NOTES
On April 21, 1994, Berry Plastics completed an offering of 100,000 units
consisting of $100.0 million aggregate principal amount of 12.25% Berry Plastics
Corporation Senior Subordinated Notes due 2004 and 100,000 warrants to purchase
1.13237 shares of Class A Common Stock, $.00005 par value, of BPC Holding. The
1994 Notes mature on April 15, 2004 and interest is payable semi-annually on
October 15 and April 15 of each year and commenced on October 15, 1994. The 1994
Notes are unconditionally guaranteed on a senior subordinated basis by the
Guarantors. The net proceeds to Berry Plastics from the sale of the 1994 Notes,
after expenses, were $93.0 million.
On August 24, 1998, Berry Plastics issued $25 million aggregate principal
amount of 12.25% Berry Plastics Corporation Series B Senior Subordinated Notes
due 2004. The 1998 Notes mature on April 15, 2004 and interest is payable
semi-annually on October 15 and April 15 of each year and commenced on October
15, 1998. The 1998 Notes are unconditionally guaranteed on a senior subordinated
basis by the Guarantors. The net proceeds to Berry Plastics from the sale of the
1998 Notes, after expenses, were $25.2 million.
Berry Plastics is not required to make mandatory redemption or sinking
fund payments with respect to the 1994 Notes or 1998 Notes. The 1994 Notes and
1998 Notes may be redeemed at the option of Berry Plastics, in whole or in part,
at redemption prices ranging from 106.125% beginning on April 15, 1999 and par
after April 15, 2002. Upon a change in control, as defined in the indentures
governing the 1994 Notes and 1998 Notes, each holder of 1994 Notes and 1998
Notes will have the right to require Berry Plastics to repurchase all or any
part of such holder's notes at a repurchase price in cash equal to 101% of the
aggregate principal amount thereof plus accrued interest.
The 1994 Notes and 1998 Notes rank PARI PASSU with the Notes and PARI
PASSU with or senior in right of payment to all existing and future subordinated
debt of Berry Plastics. The 1994 Notes and 1998 Notes rank junior in right of
payment to all existing and future senior debt of Berry Plastics, including
borrowings under our credit facility and our Nevada Industrial Revenue Bonds.
The indentures governing the 1994 Notes and 1998 Notes contain certain
covenants which, among other things, limit Berry Plastics and its subsidiaries'
ability to incur debt, merge or consolidate, sell, lease or transfer assets,
make dividend payments and engage in transactions with affiliates.
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The terms of the 1998 Notes are identical in all material respects to the
terms of the 1994 Notes, except that the 1994 Notes have a priority upon the
payment of proceeds pursuant to an Asset Sale. In addition, since the 1998 Notes
are issued pursuant to a separate indenture from the 1994 Notes, holders of the
1998 Notes vote as a separate class from holders of the 1994 Notes.
THE CREDIT FACILITY
Our credit facility with NationsBank, N.A. provides for aggregate
borrowing up to a maximum of about $142.9 million including:
o a $70.0 million revolving line of credit, subject to a borrowing
base formula. At July 3, 1999, on a pro forma basis giving effect
to the acquisition of Cardinal and a $20.0 million concurrent
increase in our credit facility, we had unused borrowing capacity
under our credit facility's revolving line of credit of about
$35.8 million;
o a (pound)1.5 million revolving line of credit, subject to a
borrowing base;
o a $58.6 million term loan facility;
o a (pound)3.8 million term loan facility; and
o a $5.6 million standby letter of credit facility to support our
and our subsidiaries' obligations under our Nevada Industrial
Revenue Bonds.
The debt under our credit facility is guaranteed by BPC Holding and
substantially all of our subsidiaries.
The credit facility matures on January 21, 2002 unless previously
terminated by us or by the lenders upon an Event of Default as defined in the
Credit Agreement. The term loan facilities require periodic principal payments,
varying in amount through the maturity of the facility. Such periodic payments
will aggregate about $19.0 million for fiscal 1999 and about $19.9 million for
fiscal 2000. Interest on borrowings under the credit facility is based on
either:
o the lender's base rate (which is the higher of the lender's prime
rate and the federal funds rate plus 0.50%) plus an applicable
margin of 0.50%; or
o LIBOR (adjusted for reserves) plus an applicable margin of 2.0%,
at our option. Following receipt of the quarterly financial
statements, the agent under our credit facility has the option to
change the applicable interest rate margin on loans (other than
under the UK Revolver and UK Term Loan) once per quarter to a
specified margin determined by the ratio of funded debt to EBITDA
of Berry Plastics and our subsidiaries. Notwithstanding the
foregoing, interest on borrowings under the UK Revolver and the UK
Term Loan is based on LIBOR (adjusted for reserves) plus 2.50%.
The credit facility contains various covenants which include, among other
things:
o maintenance of certain financial ratios and compliance with
certain financial tests and limitations;
o limitations on the issuance of additional debt; and
o limitations on capital expenditures.
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NEVADA INDUSTRIAL REVENUE BONDS
We are party to a Financing Agreement with the City of Henderson, Nevada
Public Improvement Trust, pursuant to which we have agreed to pay amounts
sufficient to pay principal, interest and any premium on the Nevada Industrial
Revenue Bonds.
The Nevada Industrial Revenue Bonds bear interest at a variable rate (3.0%
at January 2, 1999 and 4.6% at December 27, 1997), require annual principal
payments of $0.5 million on each April 1 until maturity, are collateralized by
irrevocable letters of credit issued by NationsBank under our credit facility
and mature in April 2007.
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DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." In this description, the word
"Company" refers only to Berry Plastics Corporation and not to any of its
subsidiaries and the word "Holding" refers to BPC Holding Corporation and not to
any of its subsidiaries.
The Company will issue the Notes under an Indenture (the "Indenture")
among itself, the Guarantors and United States Trust Company of New York, as
trustee (the "Trustee"), in a private transaction that is not subject to the
registration requirements of the Securities Act. See "Notice to Investors." 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 (the
"Trust Indenture Act").
The following description is a summary of certain 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. Copies of the Indenture and the
Registration Rights Agreement will be made available to prospective investors as
set forth below under "--Additional Information." Certain defined terms used in
this description but not defined below under "--Certain Definitions" have the
meanings assigned to them in the Indenture.
As of the date of the Indenture, all of our subsidiaries will be
"Restricted Subsidiaries." However, under the circumstances described below
under the subheading "--Certain Covenants--Designation of Restricted and
Unrestricted Subsidiaries," we will be permitted to designate certain of our
subsidiaries as "Unrestricted Subsidiaries." Unrestricted Subsidiaries will not
be subject to many of the restrictive covenants in the Indenture. Unrestricted
Subsidiaries will not guarantee these Notes.
BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES
THE NOTES
The Notes:
o are general unsecured obligations of the Company;
o are junior in right of payment to all existing and future Senior
Indebtedness of the Company, including borrowings under the Credit
Facility and the Nevada Bonds;
o are PARI PASSU in right of payment with the 1994 Notes and the
1998 Notes and PARI PASSU with or senior in right of payment to
all existing and future subordinated Indebtedness of the Company;
and
o are unconditionally guaranteed by the Guarantors.
THE GUARANTEES
The Notes are guaranteed by all of the Guarantors.
Each Guarantee of the Notes:
o is a general unsecured obligation of the Guarantor;
o is junior in right of payment to all existing and future Senior
Indebtedness of the Guarantor, including the Guarantor's Guarantee
of borrowings under the Credit Facility and the Nevada Bonds; and
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o is PARI PASSU in right of payment with the Guarantor's Guarantee
of the 1994 Notes and the 1998 Notes and PARI PASSU with or senior
in right of payment with any existing and future subordinated
Indebtedness of the Guarantor.
PRINCIPAL, MATURITY AND INTEREST
Notes with a maximum aggregate principal amount of $75.0 million will be
issued in this offering. The Company may issue additional notes (the "Additional
Notes") from time to time after this offering. Any offering of Additional Notes
is subject to the covenant described below under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Disqualified 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
Company will issue Notes in denominations of $1,000 and integral multiples of
$1,000. The Notes will mature on July 15, 2007.
Interest on the Notes will accrue at the rate of 11% per annum and will be
payable semi-annually in arrears on January 15 and July 15, commencing on
January 15, 2000. The Company 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.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
The Company will pay all principal, interest and premium and Liquidated
Damages, if any, on the Notes at the office or agency of the Paying Agent and
Registrar within the City and State of New York unless the Company elects to
make interest and Liquidated Damages, if any, payments by check mailed to the
Holders of the Notes at their respective addresses set forth in the register of
Holders of Notes.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustee will initially act as Paying Agent and Registrar. The Company
may change the Paying Agent or Registrar without prior notice to the Holders,
and the Company or any of its 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 Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
OPTIONAL REDEMPTION
At any time prior to July 15, 2002, the Company may on any one or more
occasions redeem up to 35% of the aggregate principal amount of Notes issued
under the Indenture at a redemption price of 111% 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 a public offering of common stock
of the Company or a capital contribution to the Company's common equity made
with the net cash proceeds of an Initial Public Offering; provided that:
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(1) at least 65% 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
(2) the redemption must occur within 45 days of the date of the closing of
such public offering or the making of such capital contribution.
Except pursuant to the preceding paragraph, the Notes will not be
redeemable at the Company's option prior to July 15, 2003.
After July 15, 2003, the Company may redeem all or a part of the Notes
upon not less than 30 nor more than 60 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, to the applicable
redemption date, if redeemed during the twelve-month period beginning on July 15
of the years indicated below:
YEAR PERCENTAGE
2003........................................................... 105.500%
2004........................................................... 103.667%
2005........................................................... 101.833%
2006 and thereafter............................................ 100.000%
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of that Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount of Notes repurchased plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the date of
purchase. Within 10 days following any Change of Control, the Company will mail
a notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to the
covenant entitled "Change of Control" and that all Notes tendered will
be accepted for payment;
(2) the purchase price and the purchase date, which will be no earlier
than 30 days nor later than 60 days from the date the notice is mailed
(the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change
of Control Offer will cease to accrue interest after the Change of
Control Payment Date;
(5) 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;
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(6) 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 telegram,
telex, 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 such
Notes purchased; and
(7) 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 Company 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 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 the Indenture, the Company 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 Company will, to the extent
lawful:
(1) accept for payment Notes or portions thereof 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 tendered to the Company.
The Paying Agent will promptly mail to each Holder of Notes so accepted
the Change of Control Payment for such Notes, and the Trustee will 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, if any; PROVIDED that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof.
Prior to making the Change of Control Payment, but in any event within 90
days following a Change of Control, the Company will either repay all
outstanding Designated Senior Indebtedness or obtain the requisite consents, if
any, under all agreements governing outstanding Designated Senior Indebtedness
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.
One of the events that constitutes a Change of Control is a sale, lease or
transfer of all or substantially all of Holding's or the Company's assets. The
Indenture will be governed by New York law, and there is no established
quantitative definition under New York law of "substantially all" of the assets
of a corporation. Accordingly, if Holding or the Company were to engage in a
transaction in which it disposed of less than all of their respective assets, a
question of interpretation could arise as to whether such disposition was
"substantially all" of their respective assets and whether the Company was
required to make a Change of Control Offer. In such cases, the Company might not
be required to make a Change of Control Offer and would be permitted, subject to
the restrictions contained in the Indenture, including the covenant described
below under the caption "--Certain Covenants--Restricted Payments," to find
alternative uses for the proceeds of that sale. Pursuant to the terms of the
Indenture, however, the Company could be required to make an Asset Sale Offer in
those circumstances.
Neither the Board of Directors of Holding nor the Trustee may waive the
operation of the Change of Control covenant.
The Credit Facility provides that certain change of control events will
constitute an event of default thereunder. Upon the occurrence of an event of
default under the Credit Facility, all amounts outstanding thereunder
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may become due and payable. All indebtedness of the Company under the Credit
Facility is Senior Indebtedness. Accordingly, in the event of an event of
default under the Credit Facility, including with respect to an event similar to
a Change of Control, the subordination provisions contained in the Indenture
will prohibit the Company (if the holders of Senior Indebtedness issue a notice
to the Company to such effect) from making any payment on the Notes until such
event of default is cured or upon the expiration of 179 days (unless the holders
of Senior Indebtedness accelerate the maturity of the Senior Indebtedness). See
"--Subordination."
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders of Notes to
require that the Company repurchase the Notes in the event of a highly leveraged
transaction or certain transactions with Holding's management or affiliates,
including a reorganization, restructuring, merger or similar transaction
(including, in certain circumstances, an acquisition of Holding by its
management or affiliates) involving Holding that may adversely affect Holders of
Notes. A transaction involving Holding's management or affiliates, or a
transaction involving a recapitalization of Holding, may result in a Change of
Control if it is the type of transaction specified by such definition.
The Change of Control purchase feature of the Notes may in certain
circumstances make more difficult or discourage a takeover of Holding, and,
thus, the removal of incumbent management. The Change of Control purchase
feature, however, is not the result of management's knowledge of any specific
effort to accumulate Holding's stock or to obtain control of Holding by means of
a merger, tender offer, solicitation or otherwise, or part of a plan by
management to adopt a series of anti-takeover provisions. Instead, the Change of
Control purchase feature is a result of negotiations between the Company and the
Initial Purchasers. Management has no present intention to engage in a
transaction involving a Change of Control, although it is possible that Holding
would decide to do so in the future. Subject to the limitations discussed below,
Holding could, in the future, enter into certain transactions including
acquisitions, refinancings or other recapitalizations, that would not constitute
a Change of Control under the Indenture, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect Holding's capital
structure or credit ratings.
The Company 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 Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
ASSET SALES
The Company will not, and will not permit any of its Restricted
Subsidiaries to, conduct 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 sold or otherwise disposed of;
(2) such fair market value is determined by the Company's Board of
Directors and evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee no later
than immediately prior to the consummation of such proposed Asset Sale
with respect to any Asset Sale involving aggregate payments in excess
of $2.0 million; and
(3) at least 75% of the consideration therefor received by the Company or
such Restricted Subsidiary is in the form of cash. 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 or in the notes thereto),
of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Notes or
any Note Guarantee) that are assumed by the transferee of any such
assets; and
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(b) any securities, notes or other obligations received by the Company
or any such Restricted Subsidiary from such transferee that are
immediately converted by the Company or such Restricted Subsidiary
into cash (to the extent of the cash received).
Within 180 days after any Asset Sale, the Company may apply the Net
Proceeds from such Asset Sale to either:
(1) permanently reduce Senior Indebtedness; or
(2) make an investment in another business, make a capital expenditure or
acquire other long-term tangible assets, in each case, in the same or
a similar line of business as the Company or any Restricted Subsidiary
was engaged in on the date of the Indenture.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce Senior Bank Indebtedness or otherwise invest such Net
Proceeds in Cash Equivalents.
Any Net Proceeds from the Asset Sale that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." If the
aggregate amount of Excess Proceeds exceeds $5.0 million, upon completion of the
Asset Sale Offers required under the 1994 Indenture and the 1998 Indenture, the
Company 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 is in an integral
multiple of $1,000, that may be purchased out of the Excess Proceeds, if any,
remaining upon completion of the Asset Sale Offers required under the 1994
Indenture and the 1998 Indenture. The offer price in any Asset Sale Offer will
be equal to 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase, and will be
payable in cash. If the aggregate amount of Notes and such other PARI PASSU
Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use such deficiency for general corporate purposes. If
the aggregate principal amount of Notes and such other PARI PASSU Indebtedness
surrendered by Holders 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 in the manner described under the caption
"--Selection and Notice" below. Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds shall be reset to zero.
The Company 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 Company 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 Credit Facility restricts the Company from purchasing any Notes prior
to the termination thereof and provides that certain change of control events
with respect to Holding and asset sales would constitute a default thereunder.
Any future credit agreements or other agreements relating to Senior Indebtedness
to which the Company becomes a party may contain similar or more restrictive
provisions. In the event a Change of Control or Asset Sale occurs at a time when
the Company is prohibited from purchasing Notes, the Company could seek the
consent of its lenders to the purchase of Notes or could attempt to refinance
the borrowings that contain such prohibition. If the Company does not obtain
such a consent or repay such borrowings, the Company will remain prohibited from
purchasing Notes. In such case, the Company's failure to purchase tendered Notes
would constitute an Event of Default under the Indenture which would, in turn,
constitute a default under the Credit Facility. 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 purchased in an Asset Sale Offer
or redeemed at any time, the Trustee will select Notes for purchase or
redemption as follows:
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(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 purchase or redemption date to each Holder of Notes to be
purchased or redeemed at its registered address. Notices of purchase or
redemption may not be conditional.
If any Note is to be purchased or redeemed in part only, the notice of
redemption that relates to that Note shall state the portion of the principal
amount thereof to be purchased or redeemed. A new Note in principal amount equal
to the unpurchased or 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 purchase or redemption become due on the date fixed for purchase or
redemption. On and after the purchase or redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
NOTE GUARANTEES
The Guarantors will jointly and severally guarantee the Company's
obligations under the Notes. Each Note Guarantee will be subordinated to the
prior payment in full of all Senior Indebtedness of that Guarantor. The
obligations of each Guarantor under its Note Guarantee will be limited as
necessary to prevent that Note Guarantee from constituting a fraudulent
conveyance under applicable law. See "Risk Factors--Under specific
circumstances, the Notes and Guarantees may be voided."
A 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
Guarantor is the surviving Person), another Person, other than the Company or
another Guarantor, unless subject to the provisions of the following paragraph
and certain other provisions of the Indenture:
(1) immediately after giving effect to that transaction, no Default or
Event of Default exists; and
(2) in the case of any Guarantor other than Holding, the Person acquiring
the property in such sale or disposition or the Person formed by or
surviving any such consolidation or merger will, at the time of such
transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable
four-quarter period, 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 caption "--Incurrence of Indebtedness and Issuance of
Disqualified Stock."
The Note Guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (other than
Holding), by way of merger or consolidation or otherwise, to a Person
that is not (either before or after giving effect to such transaction)
a Subsidiary of the Company, if the 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 the sale or other disposition of all of the Capital
Stock of any Guarantor to a Person that is not (either before or after
giving effect to such transaction) a Subsidiary of the Company, if the
Company applies the Net Proceeds of that sale or other disposition in
accordance with the "Asset Sale" provisions of the Indenture; or
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(3) if the Company properly designates any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in accordance with the
provisions described below under "--Certain Covenants--Designation of
Restricted Subsidiaries and Unrestricted Subsidiaries."
See "--Repurchase at the Option of Holders--Asset Sales."
SUBORDINATION
The payment of principal of, premium, if any, interest and Liquidated
Damages, if any, on the Notes will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company, including
Senior Indebtedness of the Company incurred after the date of the Indenture.
The holders of Senior Indebtedness of the Company will be entitled to
receive payment in full of all Obligations due in respect of Senior Indebtedness
(including interest after the commencement of any bankruptcy proceeding at the
rate specified in the applicable Senior Indebtedness of the Company, whether or
not such interest was an allowed claim) before the Holders of Notes will be
entitled to receive any payment with respect 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"), in
the event of any distribution to creditors of the Company:
(1) in a liquidation or dissolution of the Company;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of the Company's assets and liabilities.
The Company also may not make any payment in respect of the Notes (except
in Permitted Junior Securities or from the trust described under "--Legal
Defeasance and Covenant Defeasance") if:
(1) a default in the payment, when due, whether upon acceleration or
otherwise, of the principal, premium, if any, or interest on any
Senior Indebtedness of the Company occurs and is continuing; or
(2) any other default occurs and is continuing on any series of Designated
Senior Indebtedness and the Trustee receives a notice of such default
(a "Payment Blockage Notice") from the Company or from, or on behalf
of, the holders of any Designated Senior Indebtedness.
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 the case of a nonpayment default, on the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the
date on which the applicable Payment Blockage Notice is received,
unless the maturity of any such Designated Senior Indebtedness has
been accelerated.
No new period of payment blockage may be commenced within 365 days after
the receipt by the Trustee of any prior Payment Blockage Notice.
If the Trustee or any Holder of the Notes receives a payment in respect of
the Notes (except in Permitted Junior Securities or from the trust described
under "--Legal Defeasance and Covenant Defeasance") when:
(1) the payment is prohibited by these subordination provisions; and
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(2) the Trustee or the Holder has actual knowledge that the payment is
prohibited;
the Trustee or the Holder, as the case may be, shall hold the payment in trust
for the benefit of the holders of Senior Indebtedness. Upon the proper written
request of the holders of Senior Indebtedness, the Trustee or the Holder, as the
case may be, shall deliver the amounts in trust to the holders of Senior
Indebtedness or their proper representative.
The Company must promptly notify each representative of holders of Senior
Indebtedness of the Company 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 the Company, Holders
of Notes may recover less, ratably, than creditors of the Company who are
holders of Senior Indebtedness or of other indebtedness which is not
subordinated to the Notes. See "Risk Factors."
Holders of Senior Indebtedness are third party beneficiaries of the
subordination provisions of the Indenture and no amendment thereof shall be
effected without the prior written consent of the holders of a majority of the
outstanding principal amount of Senior Indebtedness.
CERTAIN 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 distribution on account of the
Company's or any of its Restricted Subsidiaries' Equity Interests
(other than dividends or distributions payable in Equity Interests of
the Person making such dividend or distribution, other than
Disqualified Stock; or dividends or distributions payable to the
Company or any Wholly Owned Restricted Subsidiary of the Company that
is a Guarantor);
(2) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any Restricted Subsidiary or other
Affiliate of the Company (other than any such Equity Interests owned
by the Company or any Wholly Owned Restricted Subsidiary of the
Company that is a Guarantor);
(3) purchase, redeem or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes or the Note Guarantees,
except a payment of interest or principal at the Stated Maturity
(other than intercompany Indebtedness between or among the Company and
any of its Wholly Owned Restricted Subsidiaries that is a Guarantor);
(4) directly or indirectly make any loan or advance to, or make any other
payment to, Holding; or
(5) make any Restricted Investment (all such payments and other actions
set forth in clauses (1) through (5) above being collectively referred
to as "Restricted Payments"),
unless, at the time of 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 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 covenant
described below under the caption "--Incurrence of Indebtedness and
Issuance of Disqualified Stock;" and
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(3) 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 the Indenture (excluding Restricted
Payments permitted by clauses (2), (3), (5), (6) and (7) of the next
succeeding paragraph), is less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income and Consolidated Step-Up
Depreciation and Amortization of the Company for the period (taken
as one accounting period) from the beginning of the first fiscal
quarter commencing after the date of the Indenture 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 plus
Consolidated Step-Up Depreciation and Amortization for such period
is a deficit, less 100% of such deficit); PLUS
(b) 100% of the aggregate net cash proceeds 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 for cash or otherwise liquidated
or repaid for cash, the lesser of (i) the cash return of capital
with respect to such Restricted Investment (less the cost of
disposition, if any) and (ii) the initial amount of such
Restricted Investment.
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 subordinated Indebtedness of the Company or any
Guarantor or of any 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 other Equity
Interests of the Company (other than Disqualified Stock); 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 defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Guarantor in a
Permitted Refinancing;
(4) a Restricted Payment to Holding pursuant to the Tax Sharing Agreement
as the same may be amended from time to time in a manner that is not
materially adverse to the Company;
(5) a Restricted Payment to Holding to pay its operating and
administrative expenses including, without limitation, directors fees,
legal and audit expenses, Commission compliance expenses and corporate
franchise and other taxes, in an aggregate amount not to exceed
$500,000 in any fiscal year;
(6) a Restricted Payment to Holding to pay management fees in an aggregate
amount not to exceed $750,000 in any fiscal year of the Company;
(7) the payment of any dividend by a Restricted Subsidiary of the Company
to the holders of its common Equity Interests on a pro rata basis;
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(8) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Holding from any current or former
employee of Holding, the Company or any Subsidiary of the Company;
PROVIDED, HOWEVER, that (a) the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $1.0 million in any fiscal year, net of cash proceeds received
from the sale of Equity Interests to employees and (b) no Default or
Event of Default shall have occurred and be continuing immediately
after such transaction;
(9) Investments by the Company in joint ventures or similar projects in a
business similar to that conducted by the Company and its Restricted
Subsidiaries on the date of the Indenture in an aggregate amount not
to exceed $5.0 million;
(10)a Restricted Payment to Holding to pay cash interest payments on
Holding's 12 1'2% Senior Secured Notes due 2006 and on any Refinancing
Indebtedness incurred to refund, refinance or replace Holding's 12
1'2% Senior Secured Notes due 2006 in a Permitted Refinancing; and
(11)other Restricted Payments in an aggregate amount not to exceed $5.0
million since the date of the Indenture.
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 its 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 Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee if the fair market value
exceeds $1.0 million. The Board of Directors' 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 Company 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
the covenant entitled "Restricted Payments" were computed, which calculations
may be based upon the Company's latest available financial statements.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED 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 with respect to (collectively, "incur" and
correlatively, an "incurrence" of) any Indebtedness (including Acquired Debt),
and the Company will not issue any, and will not permit any of its Subsidiaries
to issue any, shares of Disqualified Stock; PROVIDED, HOWEVER, that the Company
and its Subsidiaries may incur Indebtedness (including Acquired Debt) or issue
Disqualified 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 is issued would have been at
least 2.25 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom and including the pro forma earnings
of any business acquired by the Company or any of its Subsidiaries with the
proceeds therefrom), as if the additional Indebtedness had been incurred 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 term
Indebtedness, revolving credit Indebtedness and letters of credit
under the Credit Facility in an aggregate principal amount at any one
time outstanding under this clause (1) not to exceed the greater of:
(a) $150.0 million in principal amount (with letters of credit being
deemed to have a principal amount equal to the maximum potential
liability of the Company thereunder), less the aggregate amount of
all Net Proceeds of Asset Sales that have been applied by the
Company or any of its Restricted Subsidiaries since the date of
the Indenture to repay any term Indebtedness under a
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Credit Facility pursuant to the covenant described above under the
caption "--Repurchase at the Option of Holders--Asset Sales;" and
(b) the Borrowing Base;
(2) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness
represented by the Notes and the related Note Guarantees to be issued
on the date of the Indenture and the New Notes and the related Note
Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by the Company or any Restricted Subsidiary 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
aggregate principal amount, including all Refinancing Indebtedness
incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (4) in a Permitted Refinancing, not to exceed
$10.0 million at any time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries of
Refinancing Indebtedness; PROVIDED, HOWEVER, that such Refinancing
Indebtedness is a Permitted Refinancing;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Wholly Owned Restricted Subsidiaries that is a Guarantor; PROVIDED,
HOWEVER, that:
(a) if the Company or any Guarantor is the obligor on such
Indebtedness, 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 Company, or the Note Guarantee,
in the case of a 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 Wholly Owned Restricted Subsidiary that is
a Guarantor 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 of Indebtedness between the Company and
Holding; PROVIDED that the advances evidenced by such Indebtedness are
permitted under the covenant described above under the caption
"--Restricted Payments;"
(8) the incurrence by the Company or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of the Indenture to be
outstanding; and
(9) the guarantee by the Company or any of the 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;
(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).
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(11)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;
and
(12)the incurrence by the Company or its Restricted Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other
clause of this paragraph) in an aggregate principal amount, including
all Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (12) in a Permitted
Refinancing, not to exceed the sum of $25.0 million at any time
outstanding.
The Company will not incur any Indebtedness (including Permitted Debt)
that is contractually subordinated in right of payment to any other Indebtedness
of the Company unless such Indebtedness is also contractually subordinated in
right of payment to the Notes on substantially identical terms; PROVIDED,
HOWEVER, that no Indebtedness of the Company shall be deemed to be contractually
subordinated in right of payment to any other Indebtedness of the Company solely
by virtue of being unsecured.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Disqualified 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 (12) 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.
LIENS
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly create, incur, assume or suffer to exist any Lien of any
kind securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, except Permitted Liens.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or cause or suffer to exist or
become effective any 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 reasons of:
(1) Existing Indebtedness as in effect on the date of the Indenture and
any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof,
PROVIDED that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no
more restrictive with respect to such dividend and other payment
restrictions than those contained in such Existing Indebtedness, as in
effect on the date of the Indenture;
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(2) the 1994 Indenture, the 1994 Notes and the guarantees thereof, the
1998 Indenture and the 1998 Notes and the guarantees thereof;
(3) the Indenture, the Notes and the Note Guarantees;
(4) applicable law;
(5) any instrument governing Indebtedness or Capital Stock 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,
PROVIDED that the Consolidated Cash Flow of such Person, to the extent
of such restriction, is not taken into account in determining whether
such acquisition was permitted by the terms of the Indenture;
(6) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(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; and
(8) Refinancing Indebtedness that is a Permitted Refinancing, PROVIDED
that the restrictions contained in the agreements governing such
Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company may not: (1) consolidate or merge with or into another Person
(whether or not the Company is the surviving corporation); or (2) sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company and its Subsidiaries taken as a whole, in
one or more related transactions, to another Person; unless:
(1) the Company is the surviving corporation; or the Person formed by or
surviving any such consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation 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 the Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made
assumes all the obligations of the Company pursuant to agreements
reasonably satisfactory to the Trustee, under the Notes, the Indenture
and the Registration Rights Agreement;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) the Company or any Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made will, at
the time of such transaction and after giving pro forma effect thereto
as if such transaction had occurred at the beginning of the applicable
four-quarter period, 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 caption "--Incurrence of Indebtedness and Issuance of
Disqualified Stock."
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TRANSACTIONS WITH AFFILIATES
The Company will not, and will not permit any of its Restricted
Subsidiaries to sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or Guarantee with, or for
the benefit of, any Affiliate (each, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Company or
such Restricted Subsidiary with a Person who was not an Affiliate; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction involving aggregate
payments in excess of $2.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with this covenant and that
such Affiliate Transaction is approved by a majority of the Board
of Directors; and
(b) with respect to any Affiliate Transaction involving aggregate
payments in excess of $5.0 million, an opinion as to the fairness
to the Holders 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 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 Holding, the Company and/or its
Restricted Subsidiaries;
(3) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of the Company;
(4) Restricted Payments that are permitted by the provisions of the
Indenture described above under the caption "--Restricted Payments;"
and
(5) the payment of annual fees and expenses to First Atlantic (PROVIDED
that such payment is permitted by the provisions of the Indenture
described above under the caption "--Restricted Payments").
NO SENIOR SUBORDINATED INDEBTEDNESS
The Company 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 Indebtedness of the Company and senior in any respect in
right of payment to the Notes. No Guarantor will incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate or
junior in right of payment to its Senior Indebtedness and senior in any respect
in right of payment to its Note Guarantee.
ADDITIONAL NOTE GUARANTEES
If the Company or any of its Subsidiaries transfers or causes to be
transferred, in one or a series of related transactions, other than a
transaction or series of related transactions constituting a Restricted Payment
permitted by the provisions of the covenant described above under the caption
"--Restricted Payments," any assets, businesses, divisions, real property or
equipment having a book value in excess of $1.0 million to any Subsidiary that
is not a Guarantor or if the Company or any of its Subsidiaries shall acquire
another Domestic Restricted Subsidiary having (a) total assets with a book value
in excess of $1.0 million or (b) Consolidated Cash Flow in excess of $1.0
million,
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then such transferee or acquired Subsidiary (if other than a Subsidiary that has
been properly designated as an Unrestricted Subsidiary in accordance with the
terms of the Indenture) shall execute a Note Guarantee and deliver an opinion of
counsel as to the enforceability of such Note Guarantee, in accordance with the
terms of the Indenture.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors 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 will be deemed to be an
Investment made as of the time of such designation and will reduce the amount
available for Restricted Payments under the first paragraph of the covenant
described above under the caption "--Restricted Payments" or Permitted
Investments, as applicable. That designation will only be permitted if such
Restricted Payment would be permitted at that time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The
Board of Directors may redesignate any Unrestricted Subsidiary to be a
Restricted Subsidiary if the redesignation would not cause a Default.
REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any Notes are outstanding, the Company will furnish to the Trustee and
to all Holders of Notes, within the time periods specified in the Commission's
rules and regulations 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.
In addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and any other
information required by Section 13 or 15(d) of the Exchange Act 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 file such information with the Trustee and make such information
available to investors who request it in writing. Notwithstanding the foregoing,
to the extent permitted under the rules and regulations of the Commission, the
Company may instead supply such information with respect to Holding. In
addition, the Company and the Guarantors have agreed that, for so long as any
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 paragraphs 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 and Liquidated
Damages, if any, on the Notes, whether or not prohibited by the
subordination provisions of the Indenture;
(2) default in payment when due of the principal of, or premium, if any,
on the Notes, whether or not prohibited by the subordination
provisions of the Indenture;
(3) failure by the Company to comply with the provisions described under
the captions "--Repurchase at the Option of Holders--Change of
Control," "--Repurchase at the Option of Holders--Asset Sales,"
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"--Certain Covenants--Restricted Payments" and "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Disqualified
Stock;"
(4) failure by the Company or the Guarantors for 60 days after notice to
comply with any of the other agreements in the Indenture or the Notes;
(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, Holding or any of
their respective Subsidiaries (or the payment of which is guaranteed
by the Company, Holding or any of their respective 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 of, premium, if any, or
interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness (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 $2.0 million or more;
(6) failure by the Company, Holding or any of their respective
Subsidiaries to pay final judgments aggregating in excess of $2.0
million, which judgments are not paid, discharged or stayed for a
period of 60 days;
(7) except as permitted by the Indenture, any Note Guarantee 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 Guarantor
(or its successors or assigns), or any Person acting on behalf of any
Guarantor (or its successors or assigns), shall deny or disaffirm its
obligations or shall fail to comply with any obligations under its
Note Guarantee; and
(8) certain events of bankruptcy or insolvency with respect to the
Company, Holding or any of their respective Subsidiaries.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, Holding or any of their
respective Subsidiaries, 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 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 immediately; PROVIDED, HOWEVER, that if any Indebtedness is
outstanding pursuant to the Credit Facility, upon a declaration of acceleration,
the principal and interest on the Notes shall be payable upon the earlier of (1)
the day which is five business days after notice of acceleration is given to the
Company and the lender under the Credit Facility or (2) the date of acceleration
of the Indebtedness under the Credit Facility.
Under certain circumstances, the Holders of at least a majority in
aggregate principal amount of the outstanding Notes may rescind any acceleration
with respect to the Notes and its consequences. Holders of the Notes 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 or Liquidated Damages) if it determines
that withholding notice is in their interest.
The Holders of not less than 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 or Liquidated Damages on, or the principal of, any
Note held by a non-consenting Holder.
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In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to the optional
redemption provisions of the Indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs prior to July 15, 2003,
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to July 15, 2003, then the premium specified in
the Indenture shall also become immediately due and payable to the extent
permitted by law upon the acceleration of the Notes.
The Company is 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 Company is required to deliver to the Trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or any Guarantor under the Notes, the
Indenture, the Notes 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 and the Note Guarantees waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes and
the Note Guarantees. The waiver may not be effective to waive liabilities under
the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes and all obligations
of the Guarantors discharged with respect to their Note Guarantees ("Legal
Defeasance") except for:
(1) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, and premium, if any, interest and
Liquidated Damages, if any, on such Notes when such payments are due;
(2) the Company's and the Guarantors' 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 Company's and the Guarantors' obligations in connection therewith;
and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company and the Guarantors released with respect to
certain 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, certain events (not including nonpayment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "--Events of
Default and Remedies" 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 Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in U.S. dollars,
non-callable 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, and premium, if any, interest and Liquidated Damages, if
any, on
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the outstanding Notes on the stated maturity or on the applicable
redemption date, as the case may be, of such principal or installment
of principal of, or premium, if any, interest or Liquidated Damages,
if any on the outstanding Notes;
(2) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that (a) the Company has 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 Company 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 incurrence of Indebtedness all or a
portion of the proceeds of which will be used to defease the Notes
pursuant to the terms of the Indenture concurrently with such
incurrence); or (b) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on
the day on which all applicable preference periods have run;
(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 Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that, assuming no intervening bankruptcy of the Company
or any Guarantor between the date of deposit and the day on which all
applicable preferences have run and assuming that no Holder is an
"insider" of the Company under applicable bankruptcy law, after the
day on which all applicable preferences have run, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders of Notes over the other creditors
of the Company or the Guarantors with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or the
Guarantors; and
(8) the Company shall have delivered 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 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 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 or the Notes
may be waived with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or Exchange Offer for Notes).
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Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting Holder of Notes):
(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 or waive the provisions with respect to the redemption of the
Notes;
(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
premium, if any, interest 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 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 waivers
of past Defaults or the rights of Holders of Notes to receive payments
of principal of, or premium, if any, interest or Liquidated Damages,
if any, on the Notes;
(7) waive a redemption payment with respect to any Note;
(8) make any change to the subordination provisions of the Indenture that
adversely affects Holders;
(9) release any Guarantor from any of its obligations under its Note
Guarantee or the Indenture, except in accordance with the terms of the
Indenture or change any Note Guarantee in any manner that would
adversely affect Holders; or
(10) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company, the 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 or any Guarantor's
obligations to Holders of the Notes in the case of a merger or
consolidation or sale of all or substantially all of the Company's
assets;
(4) to make any change that would provide any additional rights or
benefits to the Holders of the Notes (including providing for
additional Note Guarantees pursuant to the provisions described above
under the caption "--Certain Covenants--Additional Guarantees") or
that does not adversely affect the legal rights under the Indenture of
any such Holder;
(5) to provide for the issuance of Additional Notes in accordance with the
provisions of the Indenture; or
(6) to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture
Act.
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CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of the Company, the Guarantors or any
Affiliate of the Company or the Guarantors, the Indenture limits its right to
obtain payment of claims in certain cases, or to realize on certain 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
certain 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 Berry Plastics
Corporation, 101 Oakley Street, Evansville, Indiana 47710, Attention:
Corporate Secretary.
BOOK-ENTRY, DELIVERY AND FORM
The New Notes will initially be represented by one or more permanent
global notes in definitive, fully registered book-entry form, without interest
coupons (the "Global Notes") that will be deposited with, or on behalf of,
Depository Trust Company ("DTC") and registered in the name of DTC or its
nominee, on behalf of the acquirers of New Notes represented thereby for credit
to the respective accounts of the acquirers, or to such other accounts as they
may direct, at DTC, or Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System ("Euroclear"), or Cedel Bank,
societe anonyme ("Cedel"). See "The Exchange Offer--Book Entry Transfer".
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, solely to another nominee of DTC or to a successor of DTC or
its nominee. Beneficial interests in the global notes may not be exchanged for
notes in physical, certificated form except in the limited circumstances
described below.
All interests in the Global Notes, including those held through Euroclear
or Cedel, may be subject to the procedures and requirements of DTC. Those
interests held through Euroclear or Cedel may also be subject to the procedures
and requirements of such systems.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC,
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 Company takes no
responsibility for these operations and procedures and urges investors to
contact the system or their participants directly to discuss these matters.
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to 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 certain other organizations. Access to
DTC's system is also available to other
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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 DTC 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 DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised the Company that, pursuant to procedures established
by it:
(1) upon deposit of the Global Notes, DTC 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 DTC (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 Rule 144A Global Notes who are Participants in DTC's
system may hold their interests therein directly through DTC. Investors in the
Rule 144A Global Notes who are not Participants may hold their interests therein
indirectly through organizations (including Euroclear and Cedel) which are
Participants in such system. Investors in the Regulation S Global Notes must
initially hold their interests therein through Euroclear or Cedel, if they are
participants in such systems, or indirectly through organizations that are
participants in such systems. After the expiration of the Restricted Period (but
not earlier), investors may also hold interests in the Regulation S Global Notes
through Participants in the DTC system other than Euroclear and Cedel. Euroclear
and Cedel will hold interests in the Regulation S Global Notes on behalf of
their participants through customers' securities accounts in their respective
names on the books of their respective depositories, which are Morgan Guaranty
Trust Company of New York, Brussels office, as operator of Euroclear, and
Citibank, N.A., as operator of Cedel. All interests in a Global Note, including
those held through Euroclear or Cedel, may be subject to the procedures and
requirements of DTC. 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 certain 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 DTC 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
DTC 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 INTERESTS 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 DTC or
its nominee will be payable to DTC in its capacity as the registered Holder
under the Indenture. Under the terms of the Indenture, the Company 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 Company, the
Trustee nor any agent of the Company or the Trustee has or will have any
responsibility or liability for:
(1) any aspect of DTC'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 DTC'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 DTC or any
of its Participants or Indirect Participants.
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DTC has advised the Company 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 DTC 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 DTC. 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 DTC, the Trustee or the Company. Neither the Company
nor the Trustee will be liable for any delay by DTC or any of its Participants
in identifying the beneficial owners of the Notes, and the Company and the
Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
Subject to the transfer restrictions set forth under "Notice to
Investors," transfers between Participants in DTC will be effected in accordance
with DTC'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 DTC,
on the one hand, and Euroclear or Cedel participants, on the other hand, will be
effected through DTC in accordance with DTC'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 DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Cedel participants may
not deliver instructions directly to the depositories for Euroclear or Cedel.
DTC has advised the Company 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 DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate 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, DTC reserves the right
to exchange the Global Notes for legended Notes in certificated form, and to
distribute such Notes to its Participants.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures
to facilitate transfers of interests in the Rule 144A Global Notes and the
Regulation S Global Notes among participants in DTC, 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 Company nor the
Trustee nor any of their respective agents will have any responsibility for the
performance by DTC, Euroclear or Cedel or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive Notes in registered
certificated form ("Certificated Notes") if:
(1) DTC (a) notifies the Company that it is unwilling or unable to
continue as depositary for the Global Notes and the Company fails to
appoint a successor depositary or (b) has ceased to be a clearing
agency registered under the Exchange Act;
(2) the Company, at its 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.
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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 DTC 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.
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 proposed form of Registration Rights
Agreement in its entirety because it, and not this description, defines your
registration rights as Holders of these Notes. See "--Additional Information."
The Company, the Guarantors and the Initial Purchasers entered into the
Registration Rights Agreement on July 6, 1999. Pursuant to the Registration
Rights Agreement, the Company and the Guarantors agreed to file with the
Commission the Exchange Offer Registration Statement on the appropriate form
under the Securities Act with respect to the New Notes. Upon the effectiveness
of the Exchange Offer Registration Statement, the Company and the Guarantors
will offer to the holders of Transfer Restricted Securities pursuant to the
Exchange Offer who are able to make certain representations the opportunity to
exchange their Transfer Restricted Securities for New Notes.
If:
(1) the Company and the Guarantors are not
(a) required to file the Exchange Offer Registration Statement; or
(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 Company
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 New 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 Notes acquired directly from
the Company or an affiliate of the Company,
the Company and the Guarantors will file with the Commission a Shelf
Registration Statement to cover resales of the Notes by the holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement.
The Company and the 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 foregoing, "Transfer Restricted Securities" means each
Note (together with any Note Guarantees) until:
(1) the date on which such Note has been exchanged by a Person other than
a broker-dealer for a New Note in the Exchange Offer;
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(2) following the exchange by a broker-dealer in the Exchange Offer of a
Note for an New Note, the date on which such New 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 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 Note is distributed to the public pursuant to
Rule 144 under the Securities Act.
The Registration Rights Agreement will provide:
(1) the Company and the Guarantors will file an Exchange Offer
Registration Statement with the Commission on or prior to 45 days
after the date of the Indenture;
(2) the Company and the Guarantors will use their best efforts to have the
Exchange Offer Registration Statement declared effective by the
Commission on or prior to 210 days after the date of the Indenture;
(3) unless the Exchange Offer would not be permitted by applicable law or
Commission policy, the Company and the 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 Statement was
declared effective by the Commission, New Notes in exchange for
all Notes tendered prior thereto in the Exchange Offer; and
(4) if obligated to file the Shelf Registration Statement, the Company and
the Guarantors will use their best efforts to file the Shelf
Registration Statement with the Commission on or prior to 45 days
after such filing obligation arises and to cause the Shelf
Registration to be declared effective by the Commission on or prior to
90 days after such obligation arises.
If:
(1) the Company and the 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"); or
(3) the Company and the 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 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 Company and the Guarantors will pay Liquidated Damages to each Holder
of 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 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 Notes with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to
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a maximum amount of Liquidated Damages for all Registration Defaults of $.50 per
week per $1,000 principal amount of Notes.
All accrued Liquidated Damages will be paid by the Company and the
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 Notes will be required to make certain representations to the
Company and the Guarantors (as described in the Registration Rights Agreement)
in order to participate in the Exchange Offer and will be required to deliver
certain 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 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
Company and the Guarantors against certain losses arising out of information
furnished by such Holder in writing for inclusion in any Shelf Registration
Statement.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein 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 merged with or into or became a 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 Subsidiary of such specified Person; and
(2) Indebtedness 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; PROVIDED, HOWEVER, that beneficial ownership of 10% or
more of the voting securities of a Person shall be deemed to be control. For
purposes of this definition, the terms "controlling," "controlled by" and "under
common control with" shall have correlative meanings. Neither Chase Venture
Capital Associates, L.P., nor its Affiliates will be deemed an Affiliate of
Holding, the Company or any of its Subsidiaries for purposes of this definition
by reason of its direct or indirect beneficial ownership of 30% or less of the
voting Common Stock of Holding or by reason of any employee thereof being
appointed to the Board of Directors of Holding.
"ASSET SALE" means:
(1) the sale, lease, conveyance or other disposition of any property or
assets of the Company or any Restricted Subsidiary, including by way
of a sale-and-leaseback, other than sales of inventory in the ordinary
course of business; PROVIDED that the sale, conveyance or other
disposition of all or substantially all of the assets of the Company
and its Restricted Subsidiaries will be governed by the provisions of
the Indenture described above under the caption "--Repurchase at the
Option of Holders--Change of Control" and/or the provisions described
above under the caption "--Certain Covenants--Merger, Consolidation or
Sale of Assets" and not by the provisions of the Asset Sale covenant;
or
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(2) the issuance or sale of Equity Interests of any of the Company's
Restricted Subsidiaries,
in the case of either clause (1) or (2) above, whether in a single transaction
or a series of related transactions.
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 equal to or less than $1.0 million
or for Net Proceeds equal to or less than $1.0 million;
(2) a transfer of assets between or among the Company and its Wholly Owned
Restricted Subsidiaries,
(3) any Restricted Payment, dividend or purchase or retirement of Equity
Interests that is permitted by the covenant described above under the
caption "--Certain Covenants--Restricted Payments;"
(4) the issuance or sale of Equity Interests of any Restricted Subsidiary
of the Company; PROVIDED that such Equity Interests are issued or sold
in consideration for the acquisition of assets by such Restricted
Subsidiary or in connection with a merger or consolidation of another
Person into such Restricted Subsidiary;
(5) the sale or lease of equipment, inventory, accounts receivable or
other assets in the ordinary course of business; and
(6) the sale or other disposition of cash or Cash Equivalents.
"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; and
(3) with respect to any other Person, the board or committee of such
Person serving a similar function.
"BORROWING BASE" means, as of any date, an amount equal to:
(1) 85% of the face amount of all accounts receivable owned by the Company
and its Subsidiaries as of such date that were not more than 90 days
past due; PLUS
(2) 65% of the book value (calculated on a first in first out basis) of
all inventory owned by the Company and its Subsidiaries as of such
date,
all calculated on a consolidated basis and in accordance with GAAP. To the
extent that information is not available as to the amount of accounts receivable
or inventory as of a specific date, the Company may utilize the most recent
available information for purposes of calculating the Borrowing Base.
"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 so required to be capitalized on a balance sheet prepared in
accordance with GAAP.
"CAPITAL STOCK" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, with respect to partnerships, partnership interests (whether
general or limited) and 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 such partnership.
"CASH EQUIVALENTS" means:
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(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality 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 from the date of
acquisition and overnight bank deposits, in each case, with any lender
party to the Credit Facility or with any domestic commercial bank
having capital and surplus in excess of $500.0 million;
(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; and
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in
each case maturing within six months after the date of acquisition.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of Holding's or the
Company's assets to any "person" or "group" (as those terms are used
in Section 13(d)(3) of the Exchange Act) other than the Principal and
his Related Parties;
(2) the adoption of a plan relating to the liquidation or dissolution of
Holding or the Company;
(3) the acquisition by any "person" or "group" (as defined above), other
than by the Principal and his Related Parties, of a direct or indirect
interest in more than 35% of the voting power of the voting stock of
Holding by way of purchase, merger or consolidation or otherwise if:
(a) such person or group (as defined above), other than the Principal
and his Related Parties, owns, directly or indirectly, more of the
voting power of the voting stock of Holding than the Principal and
his Related Parties; and
(b) such acquisition occurs prior to an Initial Public Offering;
(4) the acquisition by any person or group (as such term is used in
Section 13(d)(3) of the Exchange Act) (other than by the Principal and
his Related Parties) of a direct or indirect interest in more than 50%
of the voting power of the voting stock of Holding by way of purchase,
merger or consolidation or otherwise if such acquisition occurs
subsequent to an Initial Public Offering; or
(5) the first day on which a majority of the members of the Board of
Directors of Holding are not Continuing Directors.
"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 Consolidated Net Income; PLUS
(2) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent such provision
for taxes was included in computing Consolidated Net Income; PLUS
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(3) Consolidated Interest Expense of such Person and its Restricted
Subsidiaries for such period to the extent such expense was deducted
in computing Consolidated Net Income; PLUS
(4) Consolidated Depreciation and Amortization Expense of such Person and
its Restricted Subsidiaries for such period to the extent such expense
was deducted in computing Consolidated Net Income; PLUS
(5) other non-cash charges (including, without limitation, repricing of
stock options, to the extent deducted in computing Consolidated Net
Income; but excluding any non-cash charge that requires an accrual or
reserve for cash expenditures in future periods or which involved a
cash expenditure in a prior period), in each case, on a consolidated
basis and determined in accordance with GAAP.
"CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means, with respect
to any Person for any period, the total amount of depreciation and amortization
expense (including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) of such
Person for such period on a consolidated basis as determined in accordance with
GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for
any period, the sum of:
(1) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, to the extent
such expense was deducted in computing Consolidated Net Income
(including amortization of original issue discount, non-cash interest
payments, the interest component of capital leases, and net payments
(if any) pursuant to Hedging Obligations);
(2) commissions, discounts and other fees and charges paid or accrued with
respect to letters of credit and bankers' acceptance financing; and
(3) interest for such period whether or not paid by such Person or its
Restricted Subsidiaries under a Guarantee of Indebtedness of any other
Person.
"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 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 to the specified Person or a Guarantor;
(2) the Net Income of any Person that is a Restricted Subsidiary (other
than a Wholly Owned Restricted Subsidiary) shall be included only to
the extent of the amount of dividends or distributions paid to the
specified Person or a Guarantor;
(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; and
(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 Subsidiaries.
"CONSOLIDATED STEP UP DEPRECIATION AND AMORTIZATION" means, with respect
to any Person for any period, the total amount of depreciation related to the
write up of assets and amortization of such Person for such period on a
consolidated basis as determined in accordance with GAAP to the extent such
depreciation was deducted in computing Consolidated Net Income.
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"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of Holding who:
(1) was a member of such Board of Directors on the date of the
Indenture; or
(2) was nominated for election or elected to such Board of Directors with
the affirmative vote of a majority of the Continuing Directors who
were members of such Board at the time of such nomination or election.
"CREDIT FACILITY" means the Second Amended and Restated Financing and
Security Agreement dated as of July 2, 1998 as amended through the date hereof,
by and among the Company, NIM Holdings, Norwich Injection Moulders, the
financial institutions party thereto and NationsBank, N.A., as collateral and
administrative agent, providing for up to $142.9 million of borrowings,
including any related notes, Guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced 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 SENIOR INDEBTEDNESS" means:
(1) the Senior Bank Indebtedness; and
(2) any other Senior Indebtedness permitted to be incurred under the
Indenture the principal amount of which is $15.0 million or more and
that has been designated in the instrument creating or evidencing such
Senior Indebtedness as "Designated Senior
Indebtedness."
"DISQUALIFIED STOCK" means any Capital Stock 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, 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. 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 caption "--Certain
Covenants--Restricted Payments."
"DOMESTIC RESTRICTED 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).
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Facility) in existence on
the date of the Indenture, until such amounts are repaid.
"FIRST ATLANTIC" means First Atlantic Capital, Ltd.
"FIXED CHARGES" means, with respect to any specified Person for any
period, the sum, without duplication, of:
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(1) the Consolidated Interest Expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, to the extent
such expense was deducted in computing Consolidated Net Income; PLUS
(2) the product of (a) all cash dividend payments and noncash dividend
payments in the form of securities (other than Disqualified Stock) on
any series of preferred stock of such Person and its Restricted
Subsidiaries, times (b) except to the extent such dividend payments
are deemed tax deductible, 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.
"FIXED CHARGE COVERAGE RATIO" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person 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
revolving credit 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 but 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.
For purposes of calculating the Fixed Charge Coverage Ratio, acquisitions,
dispositions and discontinued operations (as determined in accordance with GAAP)
that have been made by the specified Person or any of its Restricted
Subsidiaries, including all mergers and 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 (and the reduction of any associated fixed charge
obligations resulting therefrom) had occurred on the first day of the
four-quarter reference period.
"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.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"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, through letters of credit
and reimbursement agreements in respect thereof, of all or any part of any
Indebtedness.
"GUARANTORS" means each of:
(1) each Domestic Restricted Subsidiary of the Company;
(2) NIM Holdings Limited and Norwich Injection Moulders Limited; and
(3) any other Restricted Subsidiary that executes a Note Guarantee in
accordance with the provisions of the Indenture; and their respective
successors and assigns.
"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
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(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"INDEBTEDNESS" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(3) representing Capital Lease Obligations;
(4) in respect of 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
(5) 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 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, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"INITIAL PUBLIC OFFERING" means a public offering of the common stock of
Holding that first results in the common stock of Holding becoming listed for
trading on a Stock Exchange.
"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), advances or capital contributions (excluding
commission, travel and similar advances to officers, directors, consultants and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities and all other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Restricted 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 Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of the
covenant described above under the caption "--Certain Covenants--Restricted
Payments." The acquisition by the Company or any Restricted 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 Restricted 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 caption "--Certain
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.
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"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 preferred stock dividends, excluding, however:
(1) any gain (but not loss), together with any related provision for taxes
on such gain (but not loss), realized in connection with any Asset
Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions); and
(2) any extraordinary gain (but not loss), together with any related
provision for taxes 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, net of the
direct costs relating to such Asset Sale, including, without limitation, legal,
accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof, taxes 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 secured by a Lien on the asset or
assets that are the subject of such Asset Sale and any reserve for
indemnification adjustment in respect of the sale price of such asset or assets.
"1998 INDENTURE" means the Indenture dated August 24, 1998 among the
Company, the Guarantors named therein and the Trustee, governing the 1998 Notes.
"1994 INDENTURE" means the Indenture dated April 21, 1994 among the
Company, the Guarantors named therein and the Trustee, governing the 1994 Notes.
"1998 NOTES" means the $25.0 million in principal amount of the Company's
12 1'4% Senior Subordinated Notes due 2004.
"1994 NOTES" means the $100.0 million in principal amount of the Company's
12 1'4% senior Subordinated Notes due 2004.
"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) is
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 INVESTMENTS" means:
(1) any Investments in the Company or in a Wholly Owned Restricted
Subsidiary of the Company;
(2) any Investment in Cash Equivalents;
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(3) any Investment by the Company or any Subsidiary of the Company in a
Person, if as a result of such Investment:
(a) such Person becomes a Wholly Owned 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 Wholly Owned 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 caption
"--Repurchase at the Option of Holders--Asset Sales;"
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company; and
(6) Hedging Obligations.
"PERMITTED JUNIOR SECURITIES" means:
(1) Equity Interests in the Company or any Guarantor; or
(2) debt securities that are subordinated to all Senior Indebtedness and
any debt securities issued in exchange for Senior Indebtedness to
substantially the same extent as, or to a greater extent than, the
Notes and the Note Guarantees are subordinated to Senior Indebtedness
under the Indenture.
"PERMITTED LIENS" means:
(1) Liens of the Company and any Guarantor securing Senior Indebtedness
that was permitted by the terms of the Indenture to be incurred;
(2) Liens in favor of the Company or the 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 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 "--Certain Covenants--Incurrence of Indebtedness and
Disqualified 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,
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PROVIDED that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(9) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse
Debt of Unrestricted Subsidiaries; and
(10)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.
"PERMITTED REFINANCING" means Refinancing Indebtedness if:
(1) the principal amount of Refinancing Indebtedness does not exceed the
principal amount of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of premiums, accrued
interest and reasonable expenses incurred in connection therewith);
(2) the Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes,
the Refinancing Indebtedness has a final maturity date 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, government or any agency or political subdivision thereof or
any other entity.
"PRINCIPAL" means Roberto Buaron.
"REFINANCING INDEBTEDNESS" means Indebtedness issued in exchange for, or
the proceeds of which are used to extend, refinance, renew, replace, defease or
refund Indebtedness referred to in the first paragraph of or in clauses (2),
(3), (4) and (12) of the second paragraph of the covenant entitled "Incurrence
of Indebtedness and Issuance of Disqualified Stock."
"RELATED PARTY" means with respect to the Principal:
(1) any spouse, sibling or descendant of the Principal, whether or not
such relationship arises from birth, adoption or marriage or despite
such relationship being dissolved by divorce; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially
holding a controlling interest of which consist of the Principal
and/or such other Persons referred to in the immediately preceding
clause (1).
"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.
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"SENIOR BANK INDEBTEDNESS" means the Indebtedness outstanding under the
Credit Facility as such agreement may be restated, further amended, supplemented
or otherwise modified or replaced from time to time hereafter, together with any
refunding or replacement of any such Indebtedness.
"SENIOR INDEBTEDNESS" means:
(1) the Senior Bank Indebtedness;
(2) any other Indebtedness permitted to be incurred by the Company or a
Guarantor, as the case may be, under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred
expressly provides that it is PARI PASSU with or subordinated in right
of payment to the Notes or a Note Guarantee, as the case may be; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2).
Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness will not include:
(1) any liability for Federal, state, local or other taxes owed or owing
by the Company or a Guarantor, as the case may be;
(2) any Indebtedness of the Company or a Guarantor, as the case may be, to
Holding or to any of Holding's other Subsidiaries or other Affiliates;
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in violation of the
Indenture.
"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.
"STOCK EXCHANGE" means the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market.
"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.
"TAX SHARING AGREEMENT" means that certain Tax Sharing Agreement, as in
effect on the date of the Indenture, between the Company and Holding.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company that is
designated by the Board of Directors 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;
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(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
caption "--Certain 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 caption "Incurrence of Indebtedness
and Issuance of Disqualified Stock," the Company shall be in default of such
covenant. The Board of Directors 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 caption "Certain
Covenants--Incurrence of Indebtedness and Issuance of Disqualified 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.
"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 due
date 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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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
SCOPE OF DISCUSSION
This general discussion of certain United States federal income and estate
tax consequences applies to you if you acquire the Notes at original issue for
cash and hold the Notes as a "capital asset," generally, for investment, under
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). This
summary, however, does not consider state, local or foreign tax laws. In
addition, it does not include all of the rules which may affect the United
States tax treatment of your investment in the Notes. For example, special rules
not discussed here may apply to you if you are:
o a broker-dealer, a dealer in securities or a financial institution;
o an S corporation;
o an insurance company;
o a tax-exempt organization;
o subject to the alternative minimum tax provisions of the Code;
o holding the Notes as part of a hedge, straddle or other risk reduction
or constructive sale transaction;
o a nonresident alien or foreign corporation subject to net-basis United
States federal income tax on income or gain derived from a Note because
such income or gain is effectively connected with the conduct of a
United States trade or business; or
o an expatriate.
This discussion only represents our best attempt to describe certain
federal income tax consequences that may apply to you based on current United
States federal tax law. This discussion may in the end inaccurately describe the
federal income tax consequences which are applicable to you because the law may
change, possibly retroactively, and because the Internal Revenue Service (the
"IRS") or any court may disagree with this discussion.
THIS SUMMARY MAY NOT COVER YOUR PARTICULAR CIRCUMSTANCES BECAUSE IT DOES
NOT CONSIDER FOREIGN, STATE OR LOCAL TAX RULES, DISREGARDS CERTAIN FEDERAL TAX
RULES, AND DOES NOT DESCRIBE FUTURE CHANGES IN FEDERAL TAX RULES. PLEASE CONSULT
YOUR TAX ADVISOR RATHER THAN RELYING ON THIS GENERAL DESCRIPTION.
UNITED STATES HOLDERS
If you are a "United States Holder," as defined below, this section
applies to you. Otherwise, the next section, "Non-United States Holders,"
applies to you.
DEFINITION OF UNITED STATES HOLDER. You are a "United States Holder"
if you hold the Notes and you are:
o a citizen or resident of the United States, including an alien
individual who is a lawful permanent resident of the United States or
meets the "substantial presence" test under Section 7701(b) of the Code;
o a corporation or partnership created or organized in the United States
or under the laws of the United States or of any political subdivision
of the United States (except that under the regulations to be published,
certain partnerships created or organized under the foreign laws may be
classified as a domestic partnership if such classification is more
appropriate);
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o an estate, the income of which is subject to United States federal
income tax regardless of its source; or
o a trust, if a United States court can exercise primary supervision over
the administration of the trust and one or more United States persons
can control all substantial decisions of the trust, or if the trust was
in existence on August 20, 1996 and has elected to continue to be
treated as a United States person.
TAXATION OF STATED INTEREST. You must generally include the interest
on the Notes in ordinary income:
o when it accrues, if you use the accrual method of accounting for United
States federal income tax purposes; or
o when you receive it, if you use the cash method of accounting for United
States federal income tax purposes.
SALE OR OTHER TAXABLE DISPOSITION OF THE NOTES. You must recognize taxable
gain or loss on the sale, exchange, redemption, retirement or other taxable
disposition of a Note. The amount of your gain or loss equals the difference
between the amount you receive for the Note (in cash or other property, valued
at fair market value), minus the amount attributable to accrued interest on the
Note, minus your adjusted tax basis in the Note. Your initial tax basis in a
Note equals the price you paid for the Note.
Your gain or loss will generally be a long-term capital gain or loss if
you have held the Note for more than one year. Otherwise, it will be a
short-term capital gain or loss. Payments attributable to accrued interest which
you have not yet included in income will be taxed as ordinary interest income.
LIQUIDATED DAMAGES/EXCHANGE WITH REGISTERED NOTES. We intend to take the
position that the likelihood of our failing to exchange the Notes with the
registered Notes pursuant to the Registration Rights Agreement is remote.
Accordingly, you must include the payment of Liquidated Damages as ordinary
income only when they are accrued or paid, in accordance with your own method of
accounting. The exchange of Notes with the registered Notes pursuant to the
Registration Rights Agreement will not be a taxable event. Your basis in the
Notes will carry over to the registered Notes received and the holding period of
the registered Notes will include the holding period of the Notes surrendered.
BACKUP WITHHOLDING. You may be subject to a 31% backup withholding tax
when you receive interest payments on the Note or proceeds upon the sale or
other disposition of a Note. Certain holders (including, among others,
corporations and certain tax-exempt organizations) are generally not subject to
backup withholding. In addition, the 31% backup withholding tax will not apply
to you if you provide your taxpayer identification number ("TIN") in the
prescribed manner unless:
o the IRS notifies us or our agent that the TIN you provided is incorrect;
o you fail to report interest and dividend payments that you receive on
your tax return and the IRS notifies us or our agent that withholding is
required; or
o you fail to certify under penalties of perjury that you are not subject
to backup withholding.
If the 31% backup withholding tax does apply to you, you may use the
amounts withheld as a refund or credit against your United States federal income
tax liability as long as you provide certain information to the IRS.
NON-UNITED STATES HOLDERS
DEFINITION OF NON-UNITED STATES HOLDER. A "Non-United States Holder" is
any person other than a United States Holder. Please note that if you are
subject to United States federal income tax on a net basis on income or gain
with respect to a Note because such income or gain is effectively connected with
the conduct of a United States trade or business, this disclosure does not cover
the United States federal tax rules that apply to you.
108
<PAGE>
INTEREST.
PORTFOLIO INTEREST EXEMPTION. You will generally not have to pay United
States federal income tax on interest paid on the Notes because of the
"portfolio interest exemption" if either:
o you represent that you are not a United States person for United States
federal income tax purposes and you provide your name and address to us
or our paying agent on a properly executed IRS Form W-8 (or a suitable
substitute form) signed under penalties of perjury; or
o a securities clearing organization, bank, or other financial institution
that holds customers' securities in the ordinary course of its business
holds the Note on your behalf, certifies to us or our agent under
penalties of perjury that it has received IRS Form W-8 (or a suitable
substitute) from you or from another qualifying financial institution
intermediary, and provides a copy to us or our agent.
You will not, however, qualify for the portfolio interest exemption
described above if:
o you own, actually or constructively, 10% or more of the total combined
voting power of all classes of our capital stock;
o you are a controlled foreign corporation with respect to which we are a
"related person" within the meaning of Section 864(d)(4) of the Code; or
o you are a bank receiving interest described in Section 881(c)(3)(A) of
the Code.
WITHHOLDING TAX IF THE INTEREST IS NOT PORTFOLIO INTEREST. If you do not
claim, or do not qualify for, the benefit of the portfolio interest exemption,
you may be subject to a 30% withholding tax on interest payments made on the
Notes. However, you may be able to claim the benefit of a reduced withholding
tax rate under an applicable income tax treaty. The required information for
claiming treaty benefits is generally submitted, under current regulations, on
Form 1001. Successor forms will require additional information, as discussed
below under the heading "Non-United States Holders--New Withholding
Regulations."
REPORTING. We may report annually to the IRS and to you the amount of
interest paid to, and the tax withheld, if any, with respect to you.
SALE OR OTHER DISPOSITION OF THE NOTES. You will generally not be subject
to United States federal income tax or withholding tax on gain recognized on a
sale, exchange, redemption, retirement, or other disposition of a Note. You may,
however, be subject to tax on such gain if you are an individual who was present
in the United States for 183 days or more in the taxable year of the
disposition, in which case you may have to pay a United States federal income
tax of 30% (or a reduced treaty rate) on such gain.
UNITED STATES FEDERAL ESTATE TAXES. If you qualify for the portfolio
interest exemption under the rules described above when you die, the Notes will
not be included in your estate for United States federal estate tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING.
PAYMENTS FROM UNITED STATES OFFICE. If you receive payments of interest or
principal directly from us or through the United States office of a custodian,
nominee, agent or broker, there is a possibility that you will be subject to
both backup withholding at a rate of 31% and information reporting.
With respect to interest payments made on the Note, however, backup
withholding and information reporting will not apply if you certify, generally
on a Form W-8 or substitute form, that you are not a United States person in the
manner described above under the heading "Non-United States Holders--Interest."
109
<PAGE>
Moreover, with respect to proceeds received on the sale, exchange,
redemption, or other disposition of a Note, backup withholding or information
reporting generally will not apply if you properly provide, generally on Form
W-8 or a substitute form, a statement that you are an "exempt foreign person"
for purposes of the broker reporting rules, and other required information. If
you are not subject to United States federal income or withholding tax on the
sale or other disposition of a Note, as described above under the heading
"Non-United States Holders--Sale or Other Disposition of Notes," you will
generally qualify as an "exempt foreign person" for purposes of the broker
reporting rules.
PAYMENTS FROM FOREIGN OFFICE. If payments of principal and interest are
made to you outside the United States by or through the foreign office of your
foreign custodian, nominee or other agent, or if you receive the proceeds of the
sale of a Note through a foreign office of a "broker," as defined in the
pertinent United States Treasury Regulations, you will generally not be subject
to backup withholding or information reporting. You will, however, be subject to
backup withholding and information reporting if the foreign custodian, nominee,
agent or broker has actual knowledge or reason to know that the payee is a
United States person. You will also be subject to information reporting, but not
backup withholding, if the payment is made by a foreign office of a custodian,
nominee, agent or broker that is a United States person or a controlled foreign
corporation for United States federal income tax purposes, or that derives 50%
or more of its gross income from the conduct of a United States trade or
business for a specified three year period, unless the broker has in its records
documentary evidence that you are a Non-United States Holder and certain other
conditions are met.
REFUNDS. Any amounts withheld under the backup withholding rules may be
refunded or credited against the Non-United States Holder's United States
federal income tax liability, provided that the required information is
furnished to the IRS.
NEW WITHHOLDING REGULATIONS. New regulations relating to withholding tax
on income paid to foreign persons (the "New Withholding Regulations") will
generally be effective for payments made after December 31, 2000, subject to
certain transition rules. The New Withholding Regulations modify and, in
general, unify the way in which you establish your status as a Non-United States
"beneficial owner" eligible for withholding exemptions including the portfolio
interest exemption, a reduced treaty rate or an exemption from backup
withholding. For example, the New Withholding Regulations will require new
forms, which you will generally have to provide earlier than you would have had
to provide replacements for expiring existing forms.
The New Withholding Regulations clarify withholding agents' reliance
standards. They also require additional certifications for claiming treaty
benefits. The New Withholding Regulations also provide somewhat different
procedures for foreign intermediaries and flow-through entities (such as foreign
partnerships) to claim the benefit of applicable exemptions on behalf of
Non-United States beneficial owners for which or for whom they receive payments.
When you purchase the Notes, you will be required to submit certification
that complies with the temporary Treasury Regulations in order to obtain an
available exemption from or reduction in withholding tax. The New Withholding
Regulations provide that certifications satisfying the requirements of the New
Withholding Regulations will be deemed to satisfy the requirements of the
Treasury Regulations now in effect. If you are a Non-United States Holder
claiming benefit under an income tax treaty (and not relying on the portfolio
interest exemption), you should be aware that you may be required to obtain a
taxpayer identification number and to certify your eligibility under the
applicable treaty's limitations on benefits article in order to comply with the
New Withholding Regulations' certification requirements.
The New Withholding Regulations are complex and this Summary does not
completely describe them. Please consult your tax advisor to determine how the
New Withholding Regulations will affect your particular circumstances.
110
<PAGE>
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, we believe that the exchange notes
issued pursuant to the exchange offer in exchange for outstanding notes may be
offered for resale, resold and otherwise transferred by any holder thereof
(other than any such holder that is an "affiliate" of Berry Plastics within the
meaning of Rule 405 promulgated under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that such exchange notes are acquired in the ordinary course of such
holder's business, such holder has no arrangement with any person to participate
in the distribution of such exchange notes and neither such holder nor any such
other person is engaging in or intends to engage in a distribution of such
exchange notes. Accordingly, any holder who is an affiliate of Berry Plastics or
any holder using the exchange offer to participate in a distribution of the
exchange notes will not be able to rely on such interpretations by the staff to
the Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a resale transaction.
Notwithstanding the foregoing, 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 such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with any resale of exchange notes received in
exchange for outstanding notes where such outstanding notes were acquired as a
result of market-making activities or other trading activities (other than
outstanding notes acquired directly from Berry Plastics). Berry Plastics and the
guarantors have agreed that, for a period of one year from the date of this
prospectus, they will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until November , 1999 (90 days from the date of this prospectus), all
dealers effecting transactions in the exchange notes may be required to deliver
a prospectus.
Berry Plastics will not receive any proceeds from any sale of exchange
notes by broker-dealers. Exchange notes received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the outstanding notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such 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-dealer that participates
in a distribution of such exchange notes may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
exchange notes and any commissions or concessions received by any such persons
may be deemed to be underwriting compensation under the Securities Act. The
letter of transmittal states that by acknowledging that it will deliver, and by
delivering, a prospectus as required, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of one year from the date of this prospectus, Berry Plastics
will send a reasonable number of additional copies of this prospectus and any
amendment or supplement to this prospectus to any broker-dealer that requests
such documents in the letter of transmittal. Berry Plastics will pay all the
expenses incident to the exchange offer (including the expenses of one counsel
for the holders) other than commissions or concessions of any broker-dealers.
Berry Plastics and the guarantors have agreed to indemnify the Initial
Purchasers and any broker-dealers participating in the exchange offer against
certain liabilities, including liabilities under the Securities Act.
This prospectus has been prepared for use in connection with the exchange
offer and may be used by the Initial Purchasers in connection with offers and
sales related to market-making transactions in the Notes. The Initial Purchasers
may act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale. Berry Plastics
will not receive any of the proceeds of such sales. The Initial Purchasers has
no obligation to make a market in the notes and may discontinue its
market-making activities at any time without notice, at its sole discretion. We
have agreed to indemnify the Initial Purchasers against certain liabilities,
including liabilities under the Securities Act, and to contribute to payments
which the Initial Purchasers might be required to make in respect thereof.
111
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with this offering and the exchange
notes will be passed upon for us by O'Sullivan Graev & Karabell, LLP, New
York, New York. Lawrence G. Graev, one of our directors, is the Chairman of
O'Sullivan Graev & Karabell, LLP. See "Certain Transactions--Legal Services."
EXPERTS
The consolidated financial statements of BPC Holding Corporation as of
December 27, 1997 and January 2, 1999, and for each of the three years in the
period ended January 2, 1999 and of Knight Engineering and Plastics Division of
Courtaulds Packaging Inc. as of and for the year ended March 31, 1998 included
elsewhere in this Registration Statement and Prospectus have been audited by
Ernst & Young LLP, independent auditors, as stated in their reports appearing
elsewhere herein, and are included in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of CPI Holding, Inc. as of November
30, 1998 and 1997, and for the years ended November 30, 1998 and 1997 and for
the period January 26, 1996 to November 30, 1996 included in this Registration
Statement have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein, and are included in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Norwich Injection Moulders
Limited for the years ended October 31, 1997, 1996 and 1995 included in this
Registration Statement have been audited by Lovewell Blake, independent
auditors, as stated in their report appearing herein.
112
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
BPC HOLDING AUDITED FINANCIAL STATEMENTS
Report of Independent Auditors.............................................F-3
Consolidated Balance Sheets at January 2, 1999 and December 27, 1997.......F-4
Consolidated Statements of Operations for the three years in the period
ended January 2, 1999...................................................F-6
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
for the three years in the period ended January 2, 1999.................F-7
Consolidated Statements of Cash Flows for the three years in the period
ended January 2, 1999...................................................F-8
Notes to Consolidated Financial Statements ................................F-9
BPC HOLDING UNAUDITED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets at July 3, 1999 and January 2,
1999...................................................................F-22
Condensed Consolidated Statements of Operations for the Thirteen and
Twenty-Six Weeks ended July 3, 1999 and June 27, 1998..................F-24
Condensed Consolidated Statements of Cash Flows for the Twenty-Six
Weeks ended July 3, 1999 and June 27, 1998.............................F-25
Notes to Condensed Consolidated Financial Statements......................F-26
CPI HOLDING, INC. AUDITED FINANCIAL STATEMENTS
Report of Independent Auditors............................................F-30
Consolidated Balance Sheets at November 30, 1998 and 1997.................F-31
Consolidated Statements of Income for the three years in the period
ended November 30, 1998................................................F-33
Consolidated Statements of Mandatorily Redeemable Preferred Stock and
Shareholders' Equity for the three years in the period ended
November 30, 1998......................................................F-34
Consolidated Statements of Cash Flows for the three years in the period
ended November 30, 1998................................................F-37
Notes to Consolidated Financial Statements ...............................F-38
CPI HOLDING, INC. UNAUDITED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets at May 31, 1999.....................F-46
Condensed Consolidated Statements of Operations for the 26 weeks ended
May 31, 1999 and 1998..................................................F-48
Condensed Consolidated Statements of Cash Flows for the 26 weeks ended
May 31, 1999 and 1998..................................................F-49
Notes to Condensed Consolidated Financial Statements......................F-50
KNIGHT ENGINEERING AND PLASTICS DIVISION OF COURTAULDS PACKAGING, INC.
AUDITED FINANCIAL STATEMENTS
Report of Independent Auditors............................................F-52
Balance Sheet at March 31, 1998...........................................F-53
Statement of Operations for the year ended March 31, 1998.................F-54
Statement of Cash Flows for the year ended March 31, 1998.................F-55
Notes to Financial Statements ............................................F-56
KNIGHT ENGINEERING AND PLASTICS DIVISION OF COURTAULDS PACKAGING, INC.
UNAUDITED INTERIM FINANCIAL STATEMENTS
Condensed Balance Sheet at September 30, 1998.............................F-58
Condensed Statement of Operations for the six months ended September
30, 1998 and 1997.........................................................F-59
Condensed Statement of Cash Flows for the six months ended September
30, 1998 and 1997.........................................................F-60
Notes to Condensed Financial Statements...................................F-61
NORWICH INJECTION MOULDERS LIMITED AUDITED FINANCIAL STATEMENTS
Report of Independent Auditors............................................F-62
Profit and Loss Account for the three years in the period ended October
31, 1997...............................................................F-65
Balance Sheet at October 31, 1997, 1996, and 1995.........................F-66
Cash Flow Statement for the three years in the period ended October 31,
1997...................................................................F-67
F-1
<PAGE>
Notes to the Accounts.....................................................F-68
NORWICH INJECTION MOULDERS LIMITED UNAUDITED INTERIM FINANCIAL
STATEMENTS
Profit and Loss Account for the 6 months ended April 30, 1998 and 1997....F-81
Balance Sheet at April 30, 1998...........................................F-82
Cash Flow Statement for the 6 months ended April 30, 1998 and 1997........F-83
Notes to the Accounts.....................................................F-84
F-2
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Stockholders and Board of Directors
BPC Holding Corporation
We have audited the accompanying consolidated balance sheets of BPC Holding
Corporation and subsidiaries as of January 2, 1999 and December 27, 1997, and
the related consolidated statements of operations, changes in stockholders'
equity (deficit) and cash flows for each of the three years in the period ended
January 2, 1999. These financial statements are the responsibility of Holding's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of BPC
Holding Corporation and subsidiaries at January 2, 1999 and December 27, 1997,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended January 2, 1999, in conformity with
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Indianapolis, Indiana
February 19, 1999
F-3
<PAGE>
BPC HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
JANUARY 2, DECEMBER 27,
1999 1997
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................ $ 2,318 $ 2,688
Accounts receivable (less allowance for doubtful
accounts of $1,651 at January 2, 1999 and $1,038
at December 27, 1997) .......................... 29,951 28,385
Inventories:
Finished goods ................................. 23,146 22,029
Raw materials and supplies ..................... 8,556 7,429
-------- ------------
31,702 29,458
Prepaid expenses and other receivables ........... 1,665 1,834
Income taxes recoverable ......................... 577 1,167
-------- ------------
Total current assets ................................ 66,213 63,532
Assets held in trust ................................ 6,679 19,738
Property and equipment:
Land ............................................. 7,769 5,811
Buildings and improvements ....................... 38,960 33,891
Machinery, equipment and tooling ................. 141,054 122,991
Automobiles and trucks ........................... 1,386 1,241
Construction in progress ......................... 11,780 10,357
-------- ------------
200,949 174,291
Less accumulated depreciation .................... 80,944 66,073
-------- ------------
120,005 108,218
Intangible assets:
Deferred financing and origination fees, net ..... 10,327 10,849
Covenants not to compete, net .................... 4,071 3,940
Excess of cost over net assets acquired, net ..... 44,536 30,303
Deferred acquisition costs ....................... 20 13
-------- ------------
58,954 45,105
Deferred income taxes ............................... 2,758 2,049
Other ............................................... 708 802
-------- ------------
Total assets ........................................ $255,317 $ 239,444
======== ============
</TABLE>
F-4
<PAGE>
BPC HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
JANUARY 2, DECEMBER 27,
1999 1997
---------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable .................................................. $ 18,059 $ 16,732
Accrued expenses and other liabilities ............................ 10,863 7,162
Accrued interest .................................................. 4,166 3,612
Employee compensation and payroll taxes ........................... 8,953 7,489
Income taxes ...................................................... 22 55
Current portion of long-term debt ................................. 19,388 7,619
---------- ------------
Total current liabilities ........................................... 61,451 42,669
Long-term debt, less current portion ................................ 303,910 298,716
Accrued dividends on preferred stock ................................ 7,225 3,674
Deferred income taxes ............................................... 497 --
Other liabilities ................................................... 2,591 3,360
---------- ------------
375,674 348,419
STOCKHOLDERS' EQUITY (DEFICIT):
Series A Preferred Stock; 800,000 shares
authorized; 600,000 shares issued and
outstanding (net of discount of $2,770 at
January 2, 1999 and $3,062 at December 27, 1997) ............... 11,801 11,509
Series B Preferred Stock; 200,000 shares
authorized, issued and outstanding ............................. 5,000 5,000
Class A Common Stock; $.01 par value:
Voting; 500,000 shares authorized; 91,000
shares issued and outstanding .................................. 1 1
Nonvoting; 500,000 shares authorized; 259,000
shares issued and outstanding .................................. 3 3
Class B Common Stock; $.01 par value:
Voting; 500,000 shares authorized; 145,058
shares issued and 144,546 shares outstanding ................... 1 1
Nonvoting; 500,000 shares authorized; 58,612
shares issued and 56,937 shares outstanding .................... 1 1
Class C Common Stock; $.01 par value: Nonvoting;
500,000 shares authorized; 17,000 shares issued
and 16,833 shares outstanding .................................. -- --
Treasury stock: 512 shares Class B Voting Common
Stock; 1,675 shares Class B Nonvoting Common
Stock; and 167 shares Class C Nonvoting Common
Stock .......................................................... (280) (22)
Additional paid-in capital ....................................... 45,611 49,374
Warrants ......................................................... 3,511 3,511
Retained earnings (deficit) ...................................... (185,923) (178,353)
Accumulated other comprehensive income (loss) .................... (83) --
---------- ------------
Total stockholders' equity (deficit) ................................ (120,357) (108,975)
---------- ------------
Total liabilities and stockholders' equity (deficit) ................ $ 255,317 $ 239,444
========== ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
BPC HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------------
JANUARY 2, DECEMBER 27, DECEMBER 28,
1999 1997 1996
---------- ------------ ------------
<S> <C> <C> <C>
Net sales ............................ $ 271,830 $ 226,953 $ 151,058
Cost of goods sold ................... 199,227 180,249 110,110
---------- ------------ ------------
Gross margin ......................... 72,603 46,704 40,948
Operating expenses:
Selling ............................ 14,780 11,320 6,950
General and administrative ......... 19,308 11,505 13,769
Research and development ........... 1,690 1,310 858
Amortization of intangibles ........ 4,139 2,226 524
Other expenses ..................... 4,084 4,144 1,578
---------- ------------ ------------
Operating income ..................... 28,602 16,199 17,269
Other expenses:
Loss on disposal of property
and equipment ...................... 1,865 226 302
---------- ------------ ------------
Income before interest and taxes ..... 26,737 15,973 16,967
Interest:
Expense ............................ (35,555) (32,237) (21,364)
Income ............................. 999 1,991 1,289
---------- ------------ ------------
Loss before income taxes ............. (7,819) (14,273) (3,108)
Income taxes (benefit) ............... (249) 138 239
---------- ------------ ------------
Net loss ............................. (7,570) (14,411) (3,347)
Preferred stock dividends ............ (3,551) (2,558) (1,116)
Amortization of preferred stock
discount ............................. (292) (74) --
---------- ------------ ------------
Net loss attributable to common
shareholders ......................... $ (11,413) $ (17,043) $ (4,463)
========== ============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-6
<PAGE>
BPC HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK ADDITIONAL
------------------------- ----------------- TREASURY PAID-IN RETAINED
CLASS A CLASS B CLASS C CLASS A CLASS B STOCK CAPITAL WARRANTS EARNINGS
------- ------- ------- ------- ------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995(1) .... $ -- $ -- $ -- $ -- $ -- $ (58) $ 960 $ 4,034 $ (37,420)
Net loss ........................... -- -- -- -- -- -- -- -- (3,347)
Market value adjustment - warrants . -- -- -- -- -- -- (1,145) 9,399 (8,254)
Exercise of stock options .......... -- -- -- -- -- -- 1,130 -- --
Distribution on sale of equity
interests .......................... -- -- -- -- -- 58 (1,424) (13,433) (114,921)
Proceeds from newly issued equity .. 4 2 -- 14,571 -- -- 52,797 -- --
Payment of deferred compensation ... -- -- -- -- -- -- 479 -- --
Issuance of private warrants ....... -- -- -- (3,511) -- -- -- 3,511 --
Accrued dividends on preferred stock -- -- -- -- -- -- (1,116) -- --
Amortization of preferred stock
discount ........................... -- -- -- 156 -- -- -- -- --
Purchase treasury stock from
management ......................... -- -- -- -- -- (22) -- -- --
Balance at December 28, 1996 ....... 4 2 -- 11,216 -- (22) 51,681 3,511 (163,942)
Net loss ........................... -- -- -- -- -- -- -- -- (14,411)
Sale of stock to management ........ -- -- -- -- -- -- 325 -- --
Issuance of preferred stock ........ -- -- -- -- 5,000 -- -- -- --
Accrued dividends on preferred stock -- -- -- -- -- -- (2,558) -- --
Amortization of preferred stock
discount ........................... -- -- -- 293 -- -- (74) -- --
------- ------- ------- ------- ------- -------- ----------- -------- ---------
Balance at December 27, 1997 ....... 4 2 -- 11,509 5,000 (22) 49,374 3,511 (178,353)
------- ------- ------- ------- ------- -------- ----------- -------- ---------
Net loss ........................... -- -- -- -- -- -- -- -- (7,570)
Sale of stock to management ........ -- -- -- -- -- -- 80 -- --
Purchase treasury stock from
management ......................... -- -- -- -- -- (258) -- -- --
Translation loss ................... -- -- -- -- -- -- -- -- --
Accrued dividends on preferred stock -- -- -- -- -- -- (3,551) -- --
Amortization of preferred stock
discount ........................... -- -- -- 292 -- -- (292) -- --
------- ------- ------- ------- ------- -------- ----------- -------- ---------
Balance at January 2, 1999 ......... $ 4 $ 2 $ -- $11,801 $ 5,000 $ (280) $ 45,611 $ 3,511 $(185,923)
------- ------- ------- ------- ------- -------- ----------- -------- ---------
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive Comprehensive
Income (Loss) Total Income (Loss)
-------------- --------- --------------
<S> <C> <C> <C>
Balance at December 31, 1995(1) .... $ -- $ (32,484) $ --
Net loss ........................... -- (3,347) (3,347)
Market value adjustment - warrants . -- -- --
Exercise of stock options .......... -- 1,130 --
Distribution on sale of equity
interests .......................... -- (129,720) --
Proceeds from newly issued equity .. -- 67,374 --
Payment of deferred compensation ... -- 479 --
Issuance of private warrants ....... -- -- --
Accrued dividends on preferred stock -- (1,116) --
Amortization of preferred stock
discount ........................... -- 156 --
Purchase treasury stock from
management ......................... -- (22) --
Balance at December 28, 1996 ....... -- (97,550) (3,347)
Net loss ........................... -- (14,411) (14,411)
Sale of stock to management ........ -- 325 --
Issuance of preferred stock ........ -- 5,000 --
Accrued dividends on preferred stock -- (2,558) --
Amortization of preferred stock
discount ........................... -- 219 --
Balance at December 27, 1997 ....... -- (108,975) (14,411)
Net loss ........................... -- (7,570) (7,570)
Sale of stock to management ........ -- 80 --
Purchase treasury stock from
management ......................... -- (258) --
Translation loss ................... (83) (83) (83)
Accrued dividends on preferred stock -- (3,551) --
Amortization of preferred stock
discount ........................... -- -- --
Balance at January 2, 1999 ......... $ (83) $(120,357) $ (7,653)
-------------- --------- --------------
</TABLE>
(1)Old Class A and Class B Common Stock was redeemed in connection with the
1996 Transaction (see Note 9).
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-7
<PAGE>
BPC HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------
JANUARY 2, DECEMBER 27, DECEMBER 28,
1999 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss .................................... $ (7,570) $ (14,411) $ (3,347)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation ........................... 20,690 16,800 10,807
Non-cash interest expense .............. 1,765 2,005 1,212
Amortization ........................... 4,140 2,226 524
Interest funded by assets held in trust 13,059 11,255 5,412
Non-cash compensation .................. 600 -- 358
Write-off of deferred acquisition costs -- 515 --
Loss on sale of property and equipment . 1,865 226 302
Deferred income taxes .................. (709) -- 53
Changes in operating assets and
liabilities:
Accounts receivable, net ............ 4,413 (2,290) (1,716)
Inventories ......................... (252) 2,767 (1,710)
Prepaid expenses and other
receivables ......................... 1,016 (137) 520
Other assets ........................ (43) (225) (5)
Accounts payable and accrued
expenses ............................ (4,810) (4,516) 1,899
Income taxes payable ................ (33) (61) 117
--------- --------- ---------
Net cash provided by operating activities ... 34,131 14,154 14,426
INVESTING ACTIVITIES
Additions to property and equipment ......... (22,595) (16,774) (13,581)
Proceeds from disposal of property and
equipment ................................... 4,471 1,078 94
Acquisitions of businesses .................. (33,996) (86,406) (1,152)
--------- --------- ---------
Net cash used for investing activities ...... (52,120) (102,102) (14,639)
FINANCING ACTIVITIES
Proceeds from long-term borrowings .......... 44,044 85,703 105,000
Payments on long-term borrowings ............ (24,906) (2,821) (717)
Purchase of treasury stock from management .. (258) -- --
Exercise of management stock options ........ -- -- 1,130
Proceeds from issuance of common stock ...... 80 325 52,797
Proceeds from issuance of preferred stock
and warrants ................................ -- -- 14,571
Rollover investments and share repurchases .. -- -- (125,219)
Assets held in trust ........................ -- -- (35,600)
Net payments to public warrant holders ...... -- -- (4,502)
Debt issuance costs ......................... (1,341) (2,763) (5,090)
--------- --------- ---------
Net cash provided by financing activities ... 17,619 80,444 2,370
--------- --------- ---------
Net increase (decrease) in cash and cash
equivalents ................................. (370) (7,504) 2,157
Cash and cash equivalents at beginning of
year ........................................ 2,688 10,192 8,035
--------- --------- ---------
Cash and cash equivalents at end of year .... $ 2,318 $ 2,688 $ 10,192
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-8
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
NOTE 1. ORGANIZATION
BPC Holding Corporation ("Holding"), through its subsidiaries Berry
Plastics Corporation ("Berry" or the "Company"), Berry Iowa Corporation ("Berry
Iowa"), Berry Sterling Corporation ("Berry Sterling"), Berry Tri-Plas
Corporation ("Berry Tri-Plas"), Berry Plastics Design Corporation ("Berry
Design"), PackerWare Corporation ("PackerWare"), Venture Packaging, Inc.
("Venture Packaging") and its subsidiaries Venture Packaging Midwest, Inc. and
Venture Packaging Southeast, Inc., NIM Holdings Limited and its subsidiary
Norwich Injection Moulders Limited, and Knight Plastics, Inc., manufactures and
markets plastic packaging products through its facilities located in Evansville,
Indiana; Henderson, Nevada; Iowa Falls, Iowa; Charlotte, North Carolina; York,
Pennsylvania; Suffolk, Virginia; Woodstock, Illinois; North Walsham, England;
Monroeville, Ohio; and Lawrence, Kansas.
In conjunction with the PackerWare acquisition in January 1997 (see Note
3), the Company also acquired a manufacturing facility in Reno, Nevada. This
facility was closed in 1997, and its operations were consolidated into the
Henderson, Nevada facility. In March 1998, Berry announced the consolidation of
its Anderson, South Carolina facility with other Company locations with the
majority of the business moving to the Charlotte, North Carolina and
Monroeville, Ohio facilities.
Holding's fiscal year is a 52/53 week period ending generally on the
Saturday closest to December 31. All references herein to "1998", "1997," and
"1996" relate to the fiscal years ended January 2, 1999, December 27, 1997, and
December 28, 1996, respectively.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION AND BUSINESS
The consolidated financial statements include the accounts of Holding and
its subsidiaries all of which are wholly-owned. Intercompany accounts and
transactions have been eliminated in consolidation. Holding, through its wholly-
owned subsidiaries, operates in two primary industry segments. The Company is a
manufacturer and marketer of plastic packaging, with sales concentrated in three
product groups within this market: plastic aerosol overcaps, rigid open-top
containers, and plastic drink cups. In addition, the Company is a manufacturer
in the retail housewares/lawn and garden market. The Company's customers are
located principally throughout the United States, without significant
concentration in any one region or any one customer. The Company performs
periodic credit evaluations of its customers' financial condition and generally
does not require collateral.
Purchases of various densities of plastic resin used in the manufacture of
the Company's products aggregated approximately $62 million in 1998 (excluding
specialty resins). Dow Chemical Corporation is the principal supplier
(approximately 54%) of the Company's total resin material requirements. The
Company also uses other suppliers such as Union Carbide, Chevron, Phillips and
Equistar to meet its resin requirements. The Company does not anticipate any
material difficulty in obtaining an uninterrupted supply of raw materials at
competitive prices in the near future. However, should a significant shortage of
the supply of resin occur, changes in both the price and availability of the
principal raw material used in the manufacture of the Company's products could
occur and result in financial disruption to the Company.
The Company is subject to existing and potential federal, state, local and
foreign legislation designed to reduce solid waste in landfills. While the
principal resins used by the Company are recyclable and, therefore, reduce the
Company's exposure to legislation promulgated to date, there can be no assurance
that future legislation or regulatory initiatives would not have a material
adverse effect on the Company. Legislation, if promulgated, requiring plastics
to be degradable in landfills or to have minimum levels of recycled content
would have a
F-9
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
significant impact on the Company's business as would legislationproviding for
disposal fees or limiting the use of plastic products.
CASH AND CASH EQUIVALENTS
All highly liquid investments with a maturity of three months or less at
the date of purchase are considered to be cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost (first in, first out method)
or market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed
primarily by the straight-line method over the estimated useful lives of the
assets ranging from three to 25 years.
INTANGIBLE ASSETS
Origination fees relating to the 1994 Notes, 1996 Notes, 1998 Notes and
deferred financing fees are being amortized using the straight-line method over
the lives of the respective debt agreements.
Covenants not to compete are being amortized over the respective lives of
the agreements.
The costs in excess of net assets acquired represent the excess purchase
price over the fair value of the net assets acquired in the original acquisition
of Berry Plastics and subsequent acquisitions. These costs are being amortized
over a range of 15 to 20 years.
Holding periodically evaluates the value of intangible assets to determine
if an impairment has occurred. This evaluation is based on various analyses
including reviewing anticipated cash flows.
REVENUE RECOGNITION
Revenue from sales of products is recognized at the time product is
shipped to the customer.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts on the 1997 and 1996 financial statements have been
reclassified to conform with the 1998 presentation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
On December 28, 1997, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (FAS 130) which
establishes new rules for the reporting and display of comprehensive income and
its components (net income and "other comprehensive income"). Adoption of the
Statement had no impact on the Company's financial position.
F-10
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
In fiscal 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (FAS 131) which changes the basis on which public business
enterprises report information about operating segments. The Company has two
reportable segments: packaging products and housewares products. The Company's
packaging business consists of three primary market groups: plastic aerosol
overcaps, containers, and plastic drink cups. The Company's housewares business
consists of semi-disposable plastic housewares and plastic lawn and garden
products, sold primarily through major national retail marketers and national
chain stores.
The Company evaluates performance and allocates resources based on
operating income before depreciation and amortization of intangibles adjusted to
exclude (i) market value adjustment related to stock options, (ii) other
non-recurring or "one-time" expenses, (iii) management fees and reimbursed
expenses paid to First Atlantic and (iv) certain legal expenses associated with
unusual litigation ("Adjusted EBITDA"). The accounting policies of the
reportable segments are the same as those described in the summary of
significant accounting policies. The Company's reportable segments are business
units that offer different products to different markets.
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------
JANUARY 2, DECEMBER 27, DECEMBER 28,
1999 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Net sales:
Packaging products .................. $ 250,270 $ 209,433 $ 151,058
Housewares products ................. 21,560 17,520 --
Adjusted EBITDA:
Packaging products .................. 56,102 38,016 34,068
Housewares products ................. 3,662 2,253 --
Total assets:
Packaging products .................. 218,537 202,198 145,798
Housewares products ................. 36,780 37,246 --
Reconciliation of Adjusted EBITDA to
loss before income taxes:
Adjusted EBITDA for reportable
segments ............................ $ 59,764 $ 40,269 $ 34,068
Net interest expense ................ (34,556) (30,246) (20,075)
Depreciation ........................ (20,690) (16,800) (10,807)
Amortization ........................ (4,140) (2,226) (524)
Loss on disposal of property
and equipment ....................... (1,865) (226) (302)
One-time expenses ................... (4,860) (4,216) (4,361)
Stock option market value
adjustment .......................... (600) -- (358)
Management fees ..................... (872) (828) (749)
--------- --------- ---------
Loss before income taxes ............ $ (7,819) $ (14,273) $ (3,108)
========= ========= =========
</TABLE>
NOTE 3. ACQUISITIONS
On January 17, 1997, the Company acquired certain assets and assumed
certain liabilities of Container Industries, Inc. ("Container Industries") of
Pacoima, California for $2.9 million. The purchase was funded out of operating
funds. The operations of Container Industries are included in the Company's
operations since the acquisition date using the purchase method of accounting.
On January 21, 1997, the Company acquired the outstanding stock of
PackerWare Corporation, a Kansas corporation, for aggregate consideration of
approximately $28.1 million and merged PackerWare with a newly-formed, wholly-
owned subsidiary of the Company (with PackerWare being the surviving
corporation). The purchase was primarily financed through the Credit Facility
(see Note 5). The operations of PackerWare are included in the Company's
operations since the acquisition date using the purchase method of accounting.
F-11
<PAGE>
On May 13, 1997, Berry Design, a newly-formed wholly-owned subsidiary of
the Company, acquired substantially all of the assets and assumed certain
liabilities of Virginia Design Packaging Corp. ("Virginia Design") for
approximately $11.1 million. The purchase was financed through the Credit
Facility (see Note 5). The operations of Berry Design are included in the
Company's operations since the acquisition date using the purchase method of
accounting.
On August 29, 1997, the Company acquired the outstanding common stock of
Venture Packaging for aggregate consideration of $43.7 million and merged
Venture Packaging with a newly formed subsidiary of the Company (with Venture
Packaging being the surviving corporation). The purchase was primarily financed
through the Credit Facility (see Note 5). Additionally, preferred stock and
warrants were issued to certain selling shareholders of Venture Packaging (see
Note 9). The operations of Venture Packaging are included in the Company's
operations since the acquisition date using the purchase method of accounting.
On July 2, 1998, NIM Holdings, a newly-formed, wholly-owned subsidiary of
Berry, acquired all of the capital stock of Norwich Moulders of Norwich, England
for aggregate consideration of approximately $14.0 million. The purchase was
primarily financed through the Credit Facility (see Note 9). The operations of
Norwich Moulders are included in Berry's operations since the acquisition date
using the purchase method of accounting.
On October 16, 1998, Knight Plastics, Inc. ("Knight"), a newly formed
wholly-owned subsidiary of Berry, acquired substantially all of the assets of
the Knight Engineering and Plastics Division of Courtaulds Packaging Inc. for
aggregate consideration of approximately $18.0 million. The purchase was
financed through the Credit Facility's revolving line of credit.
The pro forma results listed below are unaudited and reflect purchase
accounting adjustments assuming the Container Industries, PackerWare, Virginia
Design, and Venture acquisitions occurred on December 31, 1995; and the Norwich
Moulders and Knight acquisitions occurred on December 29, 1996.
YEAR ENDED
------------------------------------------
JANUARY 2, DECEMBER 27, DECEMBER 28,
1999 1997 1996
---------- ------------ ------------
Net sales ................... $ 296,485 $ 298,679 $ 257,098
Loss before income taxes .... (8,924) (19,808) (9,932)
Net loss .................... (8,791) (20,178) (10,171)
The pro forma financial information is presented for informational
purposes only and is not necessarily indicative of the operating results that
would have occurred had the acquisitions been consummated at the above dates,
nor are they necessarily indicative of future operating results. Further, the
information gathered on the acquired companies is based upon unaudited internal
financial information and reflects only pro forma adjustments for additional
interest expense and amortization of the excess of the cost over the underlying
net assets acquired, net of the applicable income tax effects.
NOTE 4.INTANGIBLE ASSETS
Intangible assets consist of the following:
January 2, December 27,
1999 1997
--------- ---------
Deferred financing and origination fees ...... $ 15,817 $ 14,578
Covenants not to compete ..................... 6,233 4,598
Excess of cost over net assets acquired ...... 49,197 32,464
Deferred acquisition costs ................... 20 13
Accumulated amortization ..................... (12,313) (6,548)
-------- --------
$ 58,954 $ 45,105
======== ========
F-12
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
Excess of cost over net assets acquired increased due to the acquisitions
of Norwich Moulders and Knight to the extent the purchase price exceeded the
fair value of the net assets acquired.
NOTE 5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
January 2, 1999 December 27, 1997
--------------- -----------------
<S> <C> <C>
Holding 12.50% Senior Secured Notes ................ $ 105,000 $ 105,000
Berry 12.25% Senior Subordinated Notes ............. 125,000 100,000
Term loans ......................................... 71,243 58,300
Revolving line of credit ........................... 16,162 25,654
Nevada Industrial Revenue Bonds .................... 4,500 5,000
Iowa Industrial Revenue Bonds ...................... -- 5,400
South Carolina Industrial Development Bonds ........ -- 6,985
Capital lease obligation payable through
December 1999 ...................................... 561 547
Debt premium (discount), net ....................... 832 (551)
--------------- -----------------
323,298 306,335
Less current portion of long-term debt ............. 19,388 7,619
--------------- -----------------
$ 303,910 $ 298,716
=============== =================
</TABLE>
HOLDING 12.50% SENIOR SECURED NOTES
On June 18, 1996, Holding, as part of a recapitalization (see Note 9),
issued 12.50% Senior Secured Notes due 2006 (the "1996 Offering") for net
proceeds, after expenses, of approximately $100.2 million (or $64.6 million
after deducting the amount of such net proceeds used to purchase marketable
securities available for payment of interest on the notes). These notes were
exchanged in October 1996 for the 12.50% Series B Senior Secured Notes due 2006
(the "1996 Notes"). Interest is payable semi-annually on June 15 and December 15
of each year. In addition, from December 15, 1999 until June 15, 2001, Holding
may, at its option, pay interest, at an increased rate of 0.75% per annum, in
additional 1996 Notes valued at 100% of the principal amount thereof.
In connection with the 1996 Notes, $35.6 million was placed in escrow,
which has been invested in U.S. government securities, to pay three years'
interest on the notes. Pending disbursement, the trustee will have a first
priority lien on the escrow account for the benefit of the holders of the 1996
Notes. Funds may be disbursed from the escrow account only to pay interest on
the 1996 Notes and, upon certain repurchases or redemptions of the notes, to pay
principal of and premium, if any, thereon. The balance in the escrow account as
of January 2, 1999 is $6.7 million.
The 1996 Notes rank senior in right of payment to all existing and future
subordinated debt of Holding, including Holding's subordinated guarantee of the
1994 Notes and 1998 Notes (as defined hereinafter) and PARI PASSU in right of
payment with all senior debt of Holding. The 1996 Notes are effectively
subordinated to all existing and future senior debt of Berry, including
borrowings under the Credit Facility and the Nevada Industrial Revenue Bond.
F-13
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
BERRY 12.25% SENIOR SUBORDINATED NOTES
On April 21, 1994, Berry completed an offering of 100,000 units consisting
of $100.0 million aggregate principal amount of 12.25% Berry Plastics
Corporation Senior Subordinated Notes, due 2004 (the "1994 Notes") and 100,000
warrants to purchase 1.13237 shares of Class A Common Stock, $.00005 par value
(collectively the "1994 Transaction"), of Holding. The net proceeds to Berry
from the sale of the 1994 Notes, after expenses, were $93.0 million. On August
24, 1998, Berry completed an additional offering of $25.0 million aggregate
principal amount of 12.25% Series B Senior Subordinated Notes due 2004 (the
"1998 Notes"). The net proceeds to Berry from the sale of the 1998 Notes, after
expenses, were $25.2 million. The 1994 Notes and 1998 Notes mature on April 15,
2004 and interest is payable semi-annually on October 15 and April 15 of each
year and commenced on October 15, 1994 and October 15, 1998 for the 1994 Notes
and 1998 Notes respectively. Holding and all of Berry's subsidiaries fully,
jointly, and severally, and unconditionally guarantee on a senior subordinated
basis the 1994 Notes and 1998 Notes. There are no nonguarantor subsidiaries.
Berry is not required to make mandatory redemption or sinking fund
payments with respect to the 1994 Notes and 1998 Notes. Subsequent to April 15,
1999, the 1994 Notes and 1998 Notes may be redeemed at the option of Berry, in
whole or in part, at redemption prices ranging from 106.125% in 1999 to 100% in
2002 and thereafter. Upon a change in control, as defined in the indenture
entered into in connection with the 1994 Transaction (the "1994 Indenture") and
the 1998 Transaction ("1998 Indenture"), each holder of notes will have the
right to require Berry to repurchase all or any part of such holder's notes at a
repurchase price in cash equal to 101% of the aggregate principal amount thereof
plus accrued interest.
The 1994 Notes and 1998 Notes rank PARI PASSU with or senior in right of
payment to all existing and future subordinated debt of Berry. The notes rank
junior in right of payment to all existing and future senior debt of Berry,
including borrowings under the Credit Facility and the Nevada Industrial Revenue
Bonds.
The 1994 Indenture and 1998 Indenture contains certain covenants which,
among other things, limit Berry and its subsidiaries' ability to incur debt,
merge or consolidate, sell, lease or transfer assets, make dividend payments and
engage in transactions with affiliates.
CREDIT FACILITY
Concurrent with the Venture Packaging Acquisition, the Company amended its
then existing financing and security agreement (the "Security Agreement") with
NationsBank, N.A. for a senior secured line of credit to increase the
commitments thereunder to an aggregate principal amount of $127.2 million (the
"Credit Facility"). Concurrently with the Norwich Acquisition, the Credit
Facility was amended and increased to $132.6 million (plus an additional
revolving credit facility of ?1.5 million (the "UK Revolver") and a term loan
facility of ?4.5 million (the "UK Term Loan"), each for NIM Holdings and
Norwich). The debt under the Credit Facility is guaranteed by Holding and
substantially all of its subsidiaries. The obligations of the Company and the
subsidiaries under the Credit Facility and the guarantees thereof are secured
primarily by all of the assets of such persons. The Credit Facility replaced the
facility previously provided by Fleet Capital Corporation.
The Credit Facility provides the Company with (i) a $50.0 million
revolving line of credit, subject to a borrowing base formula, (ii) the UK
Revolver, subject to a borrowing base, (iii) a $63.7 million term loan facility,
(iv) the UK Term Loan and (v) a $5.6 million standby letter of credit facility
to support the Company's and its subsidiaries' obligations under the Nevada
Bonds. The Credit Facility also provides for a $5.4 million term loan facility,
the proceeds of which were used to retire in July 1998 the Company's and its
subsidiaries' obligations under the Iowa Bonds, on which Berry Iowa had agreed,
pursuant to a Loan and Trust Agreement with The City of Iowa Falls, Iowa, to pay
amounts sufficient to pay principal, interest and any premium with respect to
the Iowa Bonds. Also, the Credit Facility provided a term loan facility to
support the Company's and its subsidiaries' obligations under the South Carolina
Industrial Development Bonds. In August 1998, in conjunction with the closing
and sale of the Anderson, South Carolina Facility, the Bonds were paid by the
Company. The difference between the repayment of the development bonds and other
related liabilities and the net proceeds from the sale of the facility of
approximately $3.0 million has been financed with borrowings under the term loan
facility. The Company borrowed
F-14
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
all amounts available under the term loan facility and the UK Term Loan to
finance the PackerWare Acquisition, the Virginia Design Acquisition, the Venture
Packaging Acquisition and the Norwich Acquisition. At January 2, 1999, the
Company had unused borrowing capacity under the Credit Facility's revolving line
of credit of approximately $26.3 million.
The Credit Facility matures on January 21, 2002 unless previously
terminated by the Company or by the lenders upon an Event of Default as defined
in the Security Agreement. The term loan facility requires periodic payments,
varying in amount, through the maturity of the facility. Interest on borrowings
under the Credit Facility is based on either (i) the lender's base rate (which
is the higher of the lender's prime rate and the federal funds rate plus 0.50%)
plus an applicable margin of 0.50% or (ii) LIBOR (adjusted for reserves) plus an
applicable margin of 2.0%, at the Company's option (7.0% at January 2, 1999 and
8.0% at December 27, 1997). Following receipt of the quarterly financial
statements, the agent under the Credit Facility has the option to change the
applicable interest rate margin on loans (other than under the UK Revolver and
UK Term Loan) once per quarter to a specified margin determined by the ratio of
funded debt to EBITDA of the Company and its subsidiaries. Notwithstanding the
foregoing, interest on borrowings under the UK Revolver and the UK Term Loan is
based on LIBOR (adjusted for reserves) plus 2.50%.
The Credit Facility contains various covenants which include, among other
things: (i) maintenance of certain financial ratios and compliance with certain
financial tests and limitations, (ii) limitations on the issuance of additional
debt and (iii) limitations on capital expenditures.
NEVADA INDUSTRIAL REVENUE BONDS
The Nevada Industrial Revenue Bonds bear interest at a variable rate (3.0%
at January 2, 1999 and 4.6% at December 27, 1997), require annual principal
payments of $0.5 million on April 1, are collateralized by irrevocable letters
of credit issued by NationsBank under the Credit Facility and mature in April
2007.
OTHER
Future maturities of long-term debt are as follows: 1999, $19,388; 2000,
$20,386; 2001, $16,105; 2002, $34,763; 2003, $500, and $231,324 thereafter.
Interest paid was $33,236, $29,927 and $19,744 for 1998, 1997 and 1996,
respectively. Interest capitalized was $777, $341 and $225 for 1998, 1997 and
1996, respectively.
NOTE 6. LEASE AND OTHER COMMITMENTS
Certain property and equipment are leased using capital and operating
leases. Capitalized lease property consisted of manufacturing equipment with a
cost of $2,970 and $1,661 and related accumulated amortization of $1,468 and
$831 at January 2, 1999, and December 27, 1997, respectively. Capital lease
amortization is included in depreciation expense. Total rental expense for
operating leases was approximately $5,414, $3,332, and $2,344 for 1998, 1997,
and 1996, respectively.
Future minimum lease payments for capital leases and noncancellable
operating leases with initial terms in excess of one year are as follows:
At January 2, 1999
-----------------------------------
Capital Leases Operating Leases
---------------- ----------------
1999 ............................... $ 606 $ 3,834
2000 ............................... -- 3,724
2001 ............................... -- 3,422
2002 ............................... -- 2,805
2003 ............................... -- 2,207
Thereafter ......................... -- 1,921
---------------- ----------------
606 $ 17,913
Less: amount representing interest 45 --
================ ================
Present value of net minimum lease
payments ........................... $ 561 --
---------------- ----------------
F-15
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
NOTE 7. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
deferred tax liabilities and assets at January 2, 1999 and December 27, 1997 are
as follows:
January 2, December 27,
1999 1997
------------ ------------
Deferred tax liabilities:
Tax over book depreciation ................... $ 11,080 $ 11,073
Deferred tax assets:
Allowance for doubtful accounts .............. 633 590
Inventory .................................... 900 1,391
Compensation and benefit accruals ............ 1,592 1,198
Insurance reserves ........................... 436 338
Net operating loss carryforwards ............. 10,012 8,372
Alternative minimum tax (AMT) credit
carryforwards ................................ 2,758 2,049
------------ ------------
Total deferred tax assets ................. 16,331 13,938
------------ ------------
5,251 2,865
------------ ------------
Valuation allowance ............................ (2,493) (816)
------------ ------------
Net deferred tax asset ......................... $ 2,758 $ 2,049
============ ============
Income tax expense consists of the following:
January 2, December 27, December 28,
1999 1997 1996
------------ ------------ ------------
Current
Federal ..................... $ (493) $ -- $ --
Foreign ..................... 152 -- --
State ....................... 92 138 186
Deferred
Federal ..................... -- -- 69
State ....................... -- -- (16)
------------ ------------ ------------
Income tax expense (benefit).... $ (249) $ 138 $ 239
============ ============ ============
Holding has unused operating loss carryforwards of approximately $26.0
million for federal income tax purposes which begin to expire in 2010. AMT
credit carryforwards are available to Holding indefinitely to reduce future
years' federal income taxes. A tax sharing agreement is in place that allows
Holding to make losses available to Berry.
Income taxes paid during 1998, 1997 and 1996 approximated $526, $47, and
$528 respectively.
F-16
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
A reconciliation of income tax expense, computed at the federal statutory
rate, to income tax expense, as provided for in the financial statements, is as
follows:
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------
January 2, December 27, December 28,
1999 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Income tax expense (benefit)
computed at statutory rate ..... $ (2,658) $ (4,853) $ (1,057)
State income tax expense, net of
federal benefit ................ 90 138 112
Amortization of goodwill .......... 339 285 --
Expenses not deductible for income
tax purposes ................... 432 219 51
Change in valuation allowance ..... 1,677 4,298 1,103
Other ............................. (129) 51 30
------------ ------------ ------------
Income tax expense (benefit) ...... $ (249) $ 138 $ 239
============ ============ ============
</TABLE>
NOTE 8. EMPLOYEE RETIREMENT PLANS
Berry sponsors a defined contribution 401(k) retirement plan covering
substantially all employees. Contributions are based upon a fixed dollar amount
for employees who participate and percentages of employee contributions at
specified thresholds. Contribution expense for this plan was approximately $933,
$629, and $531 for 1998, 1997 and 1996, respectively.
NOTE 9. STOCKHOLDERS' EQUITY
COMMON STOCK
On June 18, 1996, Holding consummated the transaction described below (the
"1996 Transaction"). BPC Mergerco, Inc. ("Mergerco"), a wholly owned subsidiary
of Holding, was organized by Atlantic Equity Partners International II, L.P.
("International"), Chase Venture Capital Associates, L.P. ("CVCA"), and certain
other institutional investors to effect the acquisition of a majority of the
outstanding capital stock of Holding. Pursuant to the terms of a Common Stock
Purchase Agreement dated as of June 12, 1996 each of International, CVCA and
certain other equity investors (collectively the "Common Stock Purchasers")
subscribed for shares of common stock of Mergerco. In addition, pursuant to the
terms of a Preferred Stock Purchase Agreement dated as of June 12, 1996 (the
"Preferred Stock Purchase Agreement"), CVCA and an additional institutional
investor (the "Preferred Stock Purchasers") purchased shares of preferred stock
of Mergerco (the "Preferred Stock") and warrants (the "1996 Warrants") to
purchase shares of common stock of Mergerco. Immediately after the purchase of
the common stock, the preferred stock and the 1996 Warrants of Mergerco,
Mergerco merged (the "Merger") with and into Holding, with Holding being the
surviving corporation. Upon the consummation of the Merger: each share of the
Class A Common Stock, $.00005 par value, and Class B Common Stock, $.00005 par
value, of Holding and certain privately-held warrants exercisable for such Class
A and Class B Common Stock were converted into the right to receive cash equal
to the purchase price per share for the common stock into which such warrants
were exercisable less the amount of the nominal exercise price therefor, and all
other classes of common stock of Holding, a majority of which was held by
certain members of management, were converted into shares of common stock of the
surviving corporation. In addition, upon the consummation of the Merger, the
holders of the warrants (the "1994 Warrants") to purchase capital stock of
Holding that were issued in connection with the 1994 Transaction became entitled
to receive cash equal to the purchase price per share for the common stock into
which such warrants were exercisable less the amount of the exercise price
therefor. The Company's common stock shareholders who held common stock
immediately preceding the 1996 Transaction retained 78% of the common stock.
Additionally, a $2,762 bonus was paid to management employees who held unvested
stock options at the time of the 1994 Transaction which is included in 1996
general and administrative expenses.
The authorized capital stock of Holding consists of 3,500,000 shares of
capital stock, including 2,500,000 shares of Common Stock, $.01 par value (the
"Holding Common Stock"). Of the 2,500,000 shares of Holding
F-17
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
Common Stock, 500,000 shares are designated Class A voting Common Stock (the
"Class A Voting Stock"), 500,000 shares are designated Class A Nonvoting Common
Stock (the "Class A Nonvoting Stock"), 500,000 shares are designated Class B
Nonvoting Common Stock (the "Class B Nonvoting Stock"), and 500,000 shares are
designated Class C Nonvoting Common Stock (the "Class C Nonvoting Stock").
PREFERRED STOCK AND WARRANTS
In connection with the 1996 Transaction, for aggregate consideration of
$15.0 million, Mergerco issued units (the "Units") comprised of Series A Senior
Cumulative Exchangeable Preferred Stock, par value $.01 per share (the
"Preferred Stock"), and detachable warrants to purchase shares of Class B Common
Stock (voting and non-voting) constituting 6% of the issued and outstanding
Common Stock of all classes, determined on a fully-diluted basis (the
"Warrants").
Dividends accrue at a rate of 14% per annum, payable quarterly in arrears
(each date of payment, a "Dividend Payment Date") and will accumulate until
declared and paid. Dividends declared and accruing prior to the first Dividend
Payment Date occurring after the sixth anniversary of the issue date (the "Cash
Dividend Date") may, at the option of Holding, be paid in cash in full or in
part or accrue quarterly on a compound basis. Thereafter, all dividends are
payable in cash in arrears. The dividend rate is subject to increase to a rate
of (i) 16% per annum if (and for so long as) Holding fails to declare and pay
dividends in cash for any quarterly period following the Cash Dividend Date and
(ii) 15% per annum if (and for so long as) Holding fails to comply with its
obligations relating to the rights and preferences of the Preferred Stock. If
Holding fails to pay in full, in cash, (a) all accrued and unpaid dividends on
or prior to the twelfth anniversary of the issue date or (b) all accrued
dividends on any Dividend Payment Date following the twelfth anniversary of the
issue date, the holders of Preferred Stock will be permitted to elect a majority
of the Board of Directors of Holding.
The Preferred Stock ranks prior to all other classes of stock of Holding
upon liquidation and is entitled to receive, out of assets available for
distribution, cash in the aggregate amount of $15.0 million, plus all accrued
and unpaid dividends thereon. Subject to the terms of the 1996 Indenture, on any
Dividend Payment Date, Holding has the option of exchanging the Preferred Stock,
in whole but not in part, for Senior Subordinated Exchange Notes, at the rate of
$25 in principal amount of notes for each $25 of liquidation preference of
Preferred Stock held; provided, however, that no shares of Preferred Stock may
be exchanged for so long as any shares of Preferred Stock are held by CVCA or
its affiliates. Upon such exchange, Holding will be required to pay in cash all
accrued and unpaid dividends.
Pursuant to the Preferred Stock Purchase Agreement, the holders of
Preferred Stock and Warrants have unlimited incidental registration rights
(subject to cutbacks under certain circumstances). The exercise price of the
Warrants is $.01 per Warrant and the Warrants are exercisable immediately upon
issuance. All unexercised warrants will expire on the tenth anniversary of the
issue date. The number of shares issuable upon exercise of a Warrant are subject
to anti-dilution adjustments upon the occurrence of certain events.
In conjunction with the Venture Packaging acquisition, Holding authorized
and issued 200,000 shares of Series B Cumulative Preferred Stock to certain
selling shareholders of Venture Packaging. The Preferred Stock has a stated
value of $25 per share, and dividends accrue at a rate of 14.75% per annum and
will accumulate until declared and paid. The Preferred Stock ranks junior to the
Series A Preferred Stock and prior to all other capital stock of Holding. In
addition, Warrants to purchase 9,924 shares of Class B Non-Voting Common Stock
at $108 per share were issued to the same selling shareholders of Venture
Packaging.
STOCK OPTION PLAN
Pursuant to the provisions of the BPC Holding Corporation 1996 Stock
Option Plan (the "Option Plan") as amended, whereby 51,620 shares have been
reserved for future issuance, Holding has granted options to certain officers
and key employees to acquire shares of Class B Nonvoting Common Stock. These
options are subject to various agreements, which among other things, set forth
the class of stock, option price and performance thresholds to determine
exercisability and vesting requirements. The Option Plan expires October 3, 2003
or such earlier date
F-18
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
on which the Board of Directors of Holding, in its sole discretion, determines.
Option prices range from $100 to $122 per share. Options granted under the
Option Plan typically expire after seven years and vest over a five-year period
with half of each person's award based on continued employment and half based on
the Company achieving financial performance targets.
FASB Statement 123, ACCOUNTING FOR STOCK-BASED COMPENSATION ("Statement
123"), prescribes accounting and reporting standards for all stock- based
compensation plans. Statement 123 provides that companies may elect to continue
using existing accounting requirements for stock-based awards or may adopt a new
fair value method to determine their intrinsic value. Holding has elected to
continue following Accounting Principles Board Opinion No. 25, ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES ("APB 25") to account for its employee stock options.
Under APB 25, because the exercise price of Holding's employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized at the grant date.
Information related to the Option Plan is as follows:
<TABLE>
<CAPTION>
January 2, 1999 December 27, 1997
--------------------------- ----------------------------
Weighted Weighted
Number Average Number Average
of Exercise of Exercise
Shares Price Shares Price
-------------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Options outstanding,
beginning of year ........ 47,708 $ 101 43,393 $ 100
Options granted ............. 11,005 122 5,425 106
Options exercised ........... -- -- -- --
Options canceled ............ 7,984 100 (1,110) 100
-------------- ---------- -------------- ----------
Options outstanding, end of
year ..................... 50,729 105 47,708 101
============== ========== ============== ==========
Option price range at end of
year ..................... $100 - $122 $100 - $108
Options exercisable at end of
year ..................... 25,191 13,561
Options available for grant
at year end .............. 891 3,912
Weighted average fair value
of options granted during
year ..................... $ 122 $ 106
</TABLE>
The following table summarizes information about the options outstanding at
January 2, 1999:
Weighted
Number Average Weighted
Range of Outstanding Remaining Average Number
Exercise at January 2, Contractual Exercise Exercisable at
Prices 1999 Life Price January 2, 1999
- --------- ------------- ----------- --------- ----------------
$100 - $122 50,729 3 years $105 25,191
Disclosure of pro forma financial information is required by Statement 123
as if the Company had accounted for its employee stock options using the fair
value method as defined by the Statement. The fair value for options granted by
the Company have been estimated at the date of grant using a Black Scholes
option pricing model with the following weighted average assumptions:
Year Ended
--------------------------------------------
January 2, December 27, December 28,
1999 1997 1996
------------ ------------ ------------
Risk-free interest rate ........ 6.4% 6.4% 6.5%
Dividend yield ................. 0.0% 0.0% 0.0%
Volatility factor .............. .20 .07 .01
Expected option life ........... 4.0 years 4.0 years 5.0 years
F-19
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
For purposes of the pro forma disclosures, the estimated fair value of the
stock options are amortized to expense over the related vesting period. Because
compensation expense is recognized over the vesting period, the initial impact
on pro forma net loss may not be representative of compensation expense in
future years, when the effect of amortization of multiple awards would be
reflected in the Consolidated Statement of Operations. The Company's pro forma
net losses giving effect to the estimated compensation expense related to stock
options are as follows:
Year Ended
--------------------------------------------
January 2, December 27, December 28,
1999 1997 1996
------------ ------------ ------------
Net loss................... $ (7,198) $ (14,594) $ (3,389)
STOCKHOLDERS AGREEMENTS
Holding entered into a new stockholders agreement (the "New Stockholders
Agreement") dated as of June 18, 1996 with the Common Stock Purchasers, certain
management stockholders and, for limited purposes thereunder, the Preferred
Stock Purchasers. The New Stockholders Agreement grants certain rights
including, but not limited to, designation of members of Holding's Board of
Directors, the initiation of an initial public offering of equity securities of
the Company or a sale of Holding. The agreement also restricts certain transfers
of Holding's equity.
Holding entered into an amended and restated agreement with its management
stockholders and International on June 18, 1996. The agreement contains
provisions (i) limiting transfers of equity by the management stockholders; (ii)
requiring the management stockholders to sell their shares as designated by
Holding or International upon the consummation of certain transactions; (iii)
granting the management stockholders certain rights of co-sale in connection
with sales by International; (iv) granting rights to repurchase capital stock
from the management stockholders upon the occurrence of certain events; and (v)
requiring the management stockholders to offer shares to Holding prior to any
permitted transfer.
NOTE 10. RELATED PARTY TRANSACTIONS
The Company is party to a management agreement (the "Management
Agreement") with First Atlantic Capital, Ltd. ("First Atlantic"). In connection
with the 1996 Transaction, Holding paid a fee of $1,250 plus reimbursement for
out-of-pocket expenses to First Atlantic for advisory services, including
originating, structuring and negotiating the 1996 Transaction. First Atlantic
also received advisory fees of $966 for originating, structuring and negotiating
the 1997 acquisitions and advisory fees of approximately $140 and $180 in July
1998 and October 1998, respectively, for originating, structuring and
negotiating the Norwich Acquisition and the Knight Acquisition, respectively.
In consideration of financial advisory and management consulting services,
the Company paid First Atlantic fees and expenses of $835, $771 and $788 for
fiscal 1998, 1997, and 1996, respectively.
NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS INFORMATION
The Company's financial instruments generally consist of cash and cash
equivalents and the Company's long-term debt. The carrying amounts of the
Company's financial instruments approximate fair value at January 2, 1999,
except for the 1994 Notes and the 1996 Notes for which the fair value exceed the
carrying value by approximately $4.5 million and $4.2 million, respectively.
F-20
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
NOTE 12. SUMMARY FINANCIAL INFORMATION (IN THOUSANDS)
The following summarizes consolidated financial information of Holding's
wholly- owned subsidiary, Berry Plastics Corporation and subsidiaries:
January 2, December 27,
1999 1997
--------- ------------
CONSOLIDATED BALANCE SHEETS
Current assets .................................... $ 65,590 $ 62,824
Property and equipment - net of accumulated
depreciation ...................................... 120,005 108,218
Other noncurrent assets ........................... 58,716 44,480
Current liabilities ............................... 60,210 42,158
Noncurrent liabilities ............................ 210,093 205,172
Equity (deficit) .................................. (25,992) (31,808)
<TABLE>
<CAPTION>
Year Ended
-----------------------------------------
January 2, December 27, December 28,
1999 1997 1996
---------- ------------ ------------
<S> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales ................................ $ 271,830 $ 226,954 $ 151,058
Cost of goods sold ....................... 199,226 180,249 110,110
Income (loss) before income taxes ........ 5,650 (2,493) 6,490
Net income (loss) ........................ 5,899 (2,631) 5,989
</TABLE>
The following summarizes parent company only financial information of
Berry:
January 2, December 27,
1999 1997
---------- ------------
BALANCE SHEET
Current assets ................................... $ 28,579 $ 31,492
Property and equipment - net of accumulated
depreciation ..................................... 48,220 45,091
Investment in/due from subsidiaries .............. 120,230 87,613
Other noncurrent assets .......................... 15,629 14,111
Current liabilities .............................. 41,325 53,506
Noncurrent liabilities ........................... 197,325 156,609
Equity (deficit) ................................. (25,992) (31,808)
Year Ended
-----------------------------------------
January 2, December 27, December 28,
1999 1997 1996
---------- ------------ ------------
STATEMENTS OF OPERATIONS
Net sales .......................... $ 140,856 $ 140,976 $ 108,253
Cost of goods sold ................. 91,763 101,769 75,861
Income (loss) before income taxes... 5,650 (2,493) 6,490
Net income (loss) .................. 5,899 (2,631) 5,989
F-21
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
July 3, January 2,
1999 1999
-------- ----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 2,993 $ 2,318
Accounts receivable (less allowance for doubtful
accounts of $1,507
at July 3, 1999 and $1,651 at January 2, 1999) ... 40,842 29,951
Inventories:
Finished goods .................................... 23,967 23,146
Raw materials and supplies ........................ 8,347 8,556
-------- ----------
32,314 31,702
Prepaid expenses and other receivables .............. 2,575 1,665
Income taxes recoverable ............................ 83 577
-------- ----------
Total current assets ................................... 78,807 66,213
Assets held in trust ................................... 252 6,679
Property and equipment:
Land ................................................ 7,762 7,769
Buildings and improvements .......................... 39,047 38,960
Machinery, equipment and tooling .................... 140,801 141,054
Automobiles and trucks .............................. 1,405 1,386
Construction in progress ............................ 21,766 11,780
-------- ----------
210,781 200,949
Less accumulated depreciation ....................... 90,510 80,944
-------- ----------
120,271 120,005
Intangible assets:
Deferred financing and origination fees, net ........ 9,765 10,327
Covenants not to compete, net ....................... 4,068 4,404
Excess of cost over net assets acquired, net ........ 41,971 44,536
Deferred acquisition costs .......................... 146 20
-------- ----------
55,950 59,287
Deferred income taxes .................................. 2,758 2,758
Other .................................................. 371 375
-------- ----------
Total assets ........................................... $258,409 $ 255,317
======== ==========
F-22
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
July 3, January 2,
1999 1999
--------- ----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable ...................................... $ 20,664 $ 18,059
Accrued expenses and other liabilities ................ 8,590 9,944
Accrued interest ...................................... 3,795 4,166
Employee compensation and payroll taxes ............... 12,156 8,953
Income taxes .......................................... 1,534 941
Current portion of long-term debt ..................... 20,297 19,388
--------- ----------
Total current liabilities ................................ 67,036 61,451
Long-term debt, less current portion ..................... 300,187 303,910
Accrued dividends on preferred stock ..................... 9,188 7,225
Deferred income taxes .................................... 472 497
Other liabilities ........................................ 2,193 2,591
--------- ----------
379,076 375,674
Stockholders' equity (deficit):
Series A Preferred Stock; 800,000 shares authorized;
600,000 shares issued and outstanding (net of
discount of $2,624 at July 3, 1999 and $2,770 at
January 2, 1999) .................................. 11,947 11,801
Series B Preferred Stock; 200,000 shares authorized,
issued and outstanding ............................ 5,000 5,000
Class A Common Stock; $.01 par value:
Voting; 500,000 shares authorized; 91,000 shares
issued and outstanding ......................... 1 1
Nonvoting; 500,000 shares authorized; 259,000
shares issued and outstanding .................. 3 3
Class B Common Stock; $.01 par value:
Voting; 500,000 shares authorized; 145,058 shares
issued and 144,546 shares outstanding .......... 1 1
Nonvoting; 500,000 shares authorized; 58,612 shares
issued and 56,842 shares outstanding ........... 1 1
Class C Common Stock; $.01 par value:
Nonvoting; 500,000 shares authorized; 17,000 shares
issued and 16,833 shares outstanding ........... -- --
Treasury stock: 512 shares Class B Voting Common
Stock; 1,770 shares Class B Nonvoting Common
Stock; and 167 shares Class C Nonvoting Common
Stock ............................................. (296) (280)
Additional paid-in capital ........................... 43,502 45,611
Warrants ............................................. 3,511 3,511
Retained earnings (deficit) .......................... (183,801) (185,923)
Accumulated other comprehensive loss ................. (536) (83)
--------- ----------
Total stockholders' equity (deficit) ..................... (120,667) (120,357)
--------- ----------
Total liabilities and stockholders' equity (deficit) ..... $ 258,409 $ 255,317
========= ==========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-23
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
---------------------- ----------------------
July 3, June 27, July 3, June 27,
1999 1998 1999 1998
--------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Net sales ........................................... $ 82,392 $ 69,586 $ 159,852 $ 136,317
Cost of goods sold .................................. 58,259 50,768 112,782 100,016
--------- --------- --------- ---------
Gross margin ........................................ 24,133 18,818 47,070 36,301
Operating expenses:
Selling ......................................... 4,323 3,487 8,553 7,112
General and administrative ...................... 5,845 4,400 11,883 8,799
Research and development ........................ 633 347 1,175 743
Amortization of intangibles ..................... 1,275 828 2,550 1,708
Other ........................................... 711 1,230 1,667 2,363
--------- --------- --------- ---------
Operating income .................................... 11,346 8,526 21,242 15,576
Other income and expense:
Loss on disposal of property and equipment ...... 169 297 778 430
--------- --------- --------- ---------
Income before interest and income taxes ............. 11,177 8,229 20,464 15,146
Interest:
Expense ......................................... (8,736) (8,776) (18,022) (17,441)
Income .......................................... 62 337 162 575
--------- --------- --------- ---------
Income (loss) before income taxes ................... 2,503 (210) 2,604 (1,720)
Income tax expense .................................. 289 13 482 26
--------- --------- --------- ---------
Net income (loss) ................................... 2,214 (223) 2,122 (1,746)
Preferred stock dividends ........................... (998) (869) (1,962) (1,783)
Amortization of preferred stock discount ............ (73) (73) (146) (146)
--------- --------- --------- ---------
Net income (loss) attributable to Common Stockholders $ 1,143 $ (1,165) $ 14 $ (3,675)
========= ========= ========= =========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
F-24
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
Twenty-Six Weeks Ended
--------------------
July 3, June 27,
1999 1998
-------- --------
(Unaudited)
OPERATING ACTIVITIES
Net income (loss) ..................................... $ 2,122 $ (1,746)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation .................................... 11,560 10,075
Non-cash interest expense ....................... 872 884
Amortization .................................... 2,550 1,708
Interest funded by assets held in trust ......... 6,427 6,393
Loss on sale of property and equipment .......... 778 430
Changes in operating assets and
liabilities:
Accounts receivable, net ..................... (11,058) (5,565)
Inventories .................................. (636) 1,950
Prepaid expenses and other receivables ....... (910) 534
Other assets ................................. (126) (169)
Payables and accrued expenses ................ 4,557 (114)
-------- --------
Net cash provided by operating activities ............. 16,136 14,380
INVESTING ACTIVITIES
Additions to property and equipment ................... (13,461) (7,854)
Proceeds from disposal of property and equipment ...... 408 95
-------- --------
Net cash used for investing activities ................ (13,053) (7,759)
FINANCING ACTIVITIES
Proceeds from long-term borrowings .................... 7,672 --
Payments on long-term borrowings ...................... (10,058) (6,524)
Payment of refinancing fees ........................... -- (46)
Purchase of stock from management ..................... (16) (59)
-------- --------
Net cash used for financing activities ................ (2,402) (6,629)
Effect of exchange rate changes on cash ............... (6) --
-------- --------
Net increase (decrease) in cash and cash equivalents .. 675 (8)
Cash and cash equivalents at beginning of period ...... 2,318 2,688
-------- --------
Cash and cash equivalents at end of period ............ $ 2,993 $ 2,680
======== ========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
F-25
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of BPC
Holding Corporation and its subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the periods presented are not necessarily
indicative of the results that may be expected for the full fiscal year. The
accompanying financial statements include the results of BPC Holding Corporation
("Holding") and its wholly-owned subsidiary, Berry Plastics Corporation
("Berry"), and its wholly-owned subsidiaries: Berry Iowa Corporation, Berry
Tri-Plas Corporation, Berry Sterling Corporation, AeroCon, Inc., PackerWare
Corporation, Berry Plastics Design Corporation, Venture Packaging, Inc., Venture
Packaging Midwest, Inc., Venture Packaging Southeast, Inc., NIM Holdings Limited
("NIM Holdings"), Norwich Injection Moulders Limited ("Norwich Moulders"), and
Knight Plastics, Inc. For further information, refer to the consolidated
financial statements and footnotes thereto included in Holding's and Berry's
Form 10-K's filed with the Securities and Exchange Commission for the year ended
January 2, 1999.
Certain amounts on the 1998 financial statements have been reclassified to
conform with the 1999 presentation.
2. ACQUISITIONS
On July 2, 1998, NIM Holdings, a newly-formed, wholly-owned subsidiary of
Berry, acquired all of the capital stock of Norwich Moulders of Norwich, England
for aggregate consideration of approximately $14.0 million. The purchase was
primarily financed through Berry's credit facility (see Note 3). The operations
of Norwich Moulders are included in Berry's operations since the acquisition
date using the purchase method of accounting.
On October 16, 1998, Knight Plastics, Inc. ("Knight"), a newly formed
wholly-owned subsidiary of Berry, acquired substantially all of the assets of
the Knight Engineering and Plastics Division of Courtaulds Packaging Inc. for
aggregate consideration of approximately $18.0 million. The purchase was
financed through Berry's revolving line of credit.
The pro forma results listed below are unaudited and reflect purchase
accounting adjustments assuming the Norwich Moulders and Knight acquisitions
occurred on December 28, 1997.
Thirteen Weeks Ended Twenty-six Weeks Ended
June 27, 1998 June 27, 1998
-------------------- ----------------------
Net sales ................... $ 78,976 $ 155,012
Loss before income taxes .... (646) (2,956)
Net loss .................... (717) (3,098)
The pro forma financial information is presented for informational
purposes only and is not necessarily indicative of the operating results that
would have occurred had the acquisitions been consummated at the above date, nor
are they necessarily indicative of future operating results. Further, the
information gathered on the acquired companies is based upon unaudited internal
financial information and reflects only pro forma adjustments for additional
interest expense and amortization of the excess of the cost over the underlying
net assets acquired, net of the applicable income tax effects.
F-26
<PAGE>
3. LONG-TERM DEBT
Long-term debt consists of the following:
July 3, January 2,
1999 1999
-------- ----------
Holding 12.50% Senior Secured Notes .............. $105,000 $105,000
Berry 12.25% Senior Subordinated Notes ........... 125,000 125,000
Term loans ....................................... 61,151 71,243
Revolving line of credit ......................... 23,835 16,162
Nevada Industrial Revenue Bonds .................. 4,000 4,500
Capital leases ................................... 740 561
Debt premium, net ................................ 758 832
-------- ----------
320,484 323,298
Less current portion of long-term debt ........... 20,297 19,388
-------- ----------
$300,187 $ 303,910
======== ==========
The current portion of long-term debt consists of $19.6 million of
quarterly installments on the term loans, a $0.5 million repayment of the
industrial bonds and the monthly principal payments related to capital lease
obligations.
The debt under our credit facility is guaranteed by BPC Holding and
substantially all of our subsidiaries. As of July 3, 1999, the credit facility
provided an aggregate commitment of about $119.7 million including (i) $50.0
million revolving line of credit (which was increased by $20.0 million
concurrently with the Cardinal acquisition - See Note 7), subject to a borrowing
base formula; (ii) (pound)1.5 million revolving line of credit, subject to a
borrowing base ("UK Revolver"); (iii) $56.0 million term loan facility; (iv)
(pound)3.6 million term loan facility ("UK Term Loan"); and (v) $5.6 million
standby letter of credit facility to support our and our subsidiaries'
obligations under our Nevada Industrial Revenue Bonds. At July 3, 1999, we had
unused borrowing capacity under our credit facility's revolving line of credit
of about $28.9 million.
The credit facility matures on January 21, 2002 unless previously
terminated by us or by the lenders upon an Event of Default as defined in the
Security Agreement. The term loan facilities require periodic principal
payments, varying in amount through the maturity of the facility. Such periodic
payments will aggregate about $19.0 million for fiscal 1999 and about $19.9
million for fiscal 2000. Interest on borrowings under the credit facility is
based on either the lender's base rate (which is the higher of the lender's
prime rate and the federal funds rate plus 0.50%) plus an applicable margin of
0.50%; or LIBOR (adjusted for reserves) plus an applicable margin of 2.0%, at
our option. Following receipt of the quarterly financial statements, the agent
under our credit facility has the option to change the applicable interest rate
margin on loans (other than under the UK Revolver and UK Term Loan) once per
quarter to a specified margin determined by the ratio of funded debt to EBITDA
of Berry Plastics and our subsidiaries. Notwithstanding the foregoing, interest
on borrowings under the UK Revolver and the UK Term Loan is based on LIBOR
(adjusted for reserves) plus 2.50%.
The credit facility contains various covenants which include, among other
things (i) maintenance of certain financial ratios and compliance with certain
financial tests and limitations, (ii) limitations on the issuance of additional
debt, and (iii) limitations on capital expenditures.
4. BERRY PLASTICS CORPORATION SUMMARY FINANCIAL INFORMATION
The following summarizes financial information of Holding's wholly-owned
subsidiary, Berry Plastics Corporation, and its subsidiaries.
F-27
<PAGE>
July 3, January 2,
1999 1999
--------- ----------
CONSOLIDATED BALANCE SHEETS
Current assets ...................................... $ 78,436 $ 65,590
Property and equipment - net of accumulated
depreciation ........................................ 120,271 120,005
Other noncurrent assets ............................. 55,624 58,716
Current liabilities ................................. 65,839 60,210
Noncurrent liabilities .............................. 205,948 210,093
Equity (deficit) .................................... (17,456) (25,992)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
--------------------- ----------------------
July 3, June 27, July 3, June 27,
1999 1998 1999 1998
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
Net sales .......................... $ 82,392 $ 69,586 $ 159,851 $ 136,317
Cost of goods sold ................. 58,259 50,768 112,782 100,016
Income before income taxes ......... 5,946 2,888 9,465 4,571
Net income ......................... 5,655 2,875 8,989 4,546
</TABLE>
The following summarizes parent company only financial information of
Berry:
July 3, January 2,
1999 1999
--------- ---------
CONSOLIDATED BALANCE SHEETS
Current assets ................................... $ 40,328 $ 28,579
Property and equipment - net of accumulated
depreciation ..................................... 48,937 48,220
Investment in/due from subsidiaries .............. 122,100 120,230
Other noncurrent assets .......................... 14,947 15,629
Current liabilities .............................. 44,970 41,325
Noncurrent liabilities ........................... 198,798 197,325
Equity (deficit) ................................. (17,456) (25,992)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
----------------------- -----------------------
July 3, June 27, July 3, June 27,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
Net sales .............................. $ 40,675 $ 37,263 $ 76,207 $ 72,408
Cost of goods sold ..................... 26,187 24,375 48,642 47,554
Income before income taxes ............. 5,946 2,888 9,465 4,571
Net income ............................. 5,655 2,875 8,989 4,546
</TABLE>
5. SEGMENT REPORTING
The Company has two reportable segments: plastic packaging products and
plastic housewares products. The Company's plastic packaging business consists
of three primary market groups: aerosol overcaps, containers, and plastic drink
cups. The Company's plastic housewares business consists of semi-disposable
plastic housewares and plastic lawn and garden products, sold primarily through
major national retail marketers and national chain stores.
The Company evaluates performance and allocates resources based on
operating income before depreciation and amortization of intangibles adjusted to
exclude (i) market value adjustment related to stock options, (ii) other
non-recurring or
F-28
<PAGE>
"one-time" expenses, (iii) management fees and reimbursed expenses paid to First
Atlantic Capital, Ltd. and (iv) certain legal expenses associated with unusual
litigation ("Adjusted EBITDA"). The accounting policies of the reportable
segments are the same as those described in the summary of significant
accounting policies. The Company's reportable segments are business units that
offer different products to different markets.
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
------------------------- ------------------------
July 3, June 27, July 3, June 27,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales:
Plastic packaging products .................. $ 75,279 $ 62,259 $ 140,443 $ 120,897
Plastic housewares products ................. 7,113 7,327 19,409 15,420
Adjusted EBITDA:
Plastic packaging products .................. 18,349 14,572 33,912 27,172
Plastic housewares products ................. 982 1,317 3,741 2,896
Reconciliation of Adjusted EBITDA to income
(loss) before income taxes:
Adjusted EBITDA for reportable segments ..... $ 19,331 $ 15,889 $ 37,653 $ 30,068
Net interest expense ........................ (8,674) (8,439) (17,860) (16,866)
Depreciation ................................ (5,687) (5,187) (11,560) (10,075)
Amortization ................................ (1,275) (828) (2,549) (1,708)
Loss on disposal of property and equipment .. (169) (297) (778) (430)
One-time expenses ........................... (711) (1,120) (1,667) (2,264)
Stock option market value adjustment ........ (94) (10) (198) (10)
Management fees ............................. (218) (218) (437) (435)
---------- ---------- ---------- ----------
Income (loss) before income taxes ........... $ 2,503 $ (210) $ 2,604 $ (1,720)
========== ========== ========== ==========
</TABLE>
6. COMPREHENSIVE INCOME
Comprehensive income (loss) was $1.7 million and $(0.2) million for the
thirteen weeks ended July 3, 1999 and June 27, 1998, respectively, and $1.6
million and $(1.7) million for the twenty-six weeks ended July 3, 1999 and June
27, 1998, respectively.
7. SUBSEQUENT EVENTS
On July 6, 1999, Berry acquired all of the outstanding capital stock of
CPI Holding Corporation, the parent company of Cardinal Packaging, Inc., for
aggregate consideration of approximately $72.0 million, including acquisition
related costs. The purchase was financed through the issuance by Berry of $75.0
million of 11% Senior Subordinated Notes.
F-29
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
CPI Holding, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheets of CPI
Holding, Inc. and Subsidiary as of November 30, 1998 and 1997, and the related
consolidated statements of income, mandatorily redeemable preferred stock and
shareholders' equity, and cash flows for the years ended November 30, 1998 and
1997 and for the period January 26, 1996 (Date of Acquisition) to November 30,
1996. 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 consolidated 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 consolidated
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 CPI Holding, Inc. and
Subsidiary as of November 30, 1998 and 1997, and the results of their operations
and their cash flows for the years ended November 30, 1998 and 1997 and for the
period January 26, 1996 (Date of Acquisition) to November 30, 1996 in conformity
with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Cleveland, Ohio
June 11, 1999
F-30
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
ASSETS (NOTE 4) 1998 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .................................. $ 101,748 $ 18,624
Accounts receivable, less allowances of $163,000 and $72,000 5,397,359 5,260,109
Inventories ................................................ 7,553,127 7,878,158
Prepaid expenses ........................................... 579,064 455,492
Prepaid income taxes ....................................... 428,019 50,600
Deferred income taxes (Note 7) ............................. 305,000 215,000
----------- -----------
Total current assets ..................................... 14,364,317 13,877,983
----------- -----------
PROPERTY AND EQUIPMENT:
Land ....................................................... 295,000 295,000
Building and improvements .................................. 3,597,818 3,526,034
Machinery and equipment .................................... 24,587,601 22,222,100
Molds ...................................................... 12,486,433 10,720,280
----------- -----------
Total .................................................... 40,963,852 36,763,414
Less accumulated depreciation and amortization ............. 9,271,295 5,670,397
----------- -----------
Property and equipment, net ................................ 31,692,557 31,093,017
----------- -----------
GOODWILL, less accumulated amortization of $1,078,511
in 1998 and $734,756 in 1997 ............................. 14,147,546 14,491,301
----------- -----------
OTHER ASSETS (Note 3) ......................................... 1,004,109 1,267,964
----------- -----------
TOTAL ......................................................... $61,208,529 $60,730,265
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
F-31
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (CONTINUED)
NOVEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt (Note 4) ................................ $ 4,060,780 $ 3,519,064
Current portion of long service executive nonqualified pension (Note 5) ... 420,310 380,000
Accounts payable .......................................................... 2,595,014 2,922,093
Accrued liabilities ....................................................... 547,524 881,507
------------ ------------
Total current liabilities ............................................... 7,623,628 7,702,664
LONG-TERM DEBT, less current portion (Note 4) ................................ 28,388,825 28,132,857
LONG SERVICE EXECUTIVE NONQUALIFIED PENSION, less
current portion (Note 5) .................................................. 544,424 968,000
DEFERRED INCOME TAXES (Note 7) ............................................... 5,182,000 4,611,000
------------ ------------
Total liabilities ....................................................... 41,738,877 41,414,521
------------ ------------
MANDATORILY REDEEMABLE PREFERRED STOCK (Note 9) .............................. 18,761,668 17,171,325
------------ ------------
SHAREHOLDERS' EQUITY (Notes 4 and 10):
Common stock:
Class A (voting), $.01 par value, authorized 500,000 shares, 89,281.5
in 1998 and 90,114.8 in 1997 issued and outstanding ................... 893 901
Class B (non-voting), $.01 par value, authorized 300,000 shares, 124,760
issued and outstanding ................................................ 1,247 1,247
Class C (non-voting), $.01 par value, authorized 200,000 shares, 90,791.6
issued and outstanding ................................................ 908 908
Additional paid-in capital .............................................. 883,848 2,392,768
ESOP receivable (Note 8) ................................................ (113,912) (186,405)
Stock subscription receivable ........................................... (65,000) (65,000)
------------ ------------
Total shareholders' equity ............................................. 707,984 2,144,419
------------ ------------
TOTAL ........................................................................ $ 61,208,529 $ 60,730,265
============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
F-32
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED NOVEMBER 30,1998 AND 1997 AND FOR THE PERIOD
JANUARY 26, 1996 (DATE OF ACQUISITION) TO NOVEMBER 30, 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
(10 MONTHS)
<S> <C> <C> <C>
NET SALES ............................... $ 53,970,517 $ 54,387,787 $ 45,416,838
COST OF SALES ........................... 43,066,403 42,421,263 34,275,302
------------ ------------ ------------
GROSS PROFIT ............................ 10,904,114 11,966,524 11,141,536
------------ ------------ ------------
OPERATING EXPENSES:
Selling .............................. 3,087,033 3,113,293 2,790,338
General and administrative (Note 11) . 3,176,276 2,949,312 2,164,232
ESOP contribution (Note 8) ........... 26,720 30,999 209,780
------------ ------------ ------------
Total operating expenses .......... 6,290,029 6,093,604 5,164,350
------------ ------------ ------------
INCOME FROM OPERATIONS .................. 4,614,085 5,872,920 5,977,186
OTHER INCOME (EXPENSE):
Interest expense ..................... (3,383,736) (3,531,327) (3,188,345)
Miscellaneous, net ................... 5,602 (8,225) 1,500
------------ ------------ ------------
INCOME BEFORE INCOME TAXES .............. 1,235,951 2,333,368 2,790,341
INCOME TAXES (Note 7) ................... 438,700 797,000 1,056,000
------------ ------------ ------------
NET INCOME .............................. $ 797,251 $ 1,536,368 $ 1,734,341
============ ============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
F-33
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF MANDATORILY REDEEMABLE PREFERRED STOCK AND
SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
MANDATORILY REDEEMABLE ---------------------------------
PREFERRED STOCK COMMON STOCK ADDITIONAL
----------------------- ------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL
-------- ------------ -------- -------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 1, 1997 .......... 141,134 $ 17,171,325 305,666 $ 3,056 $ 2,392,768
REDEMPTION OF STOCK:
Common stock ...................... (833) (8) (22,145
Preferred stock ................... (167) (20,347)
NET INCOME ..........................
TAX BENEFIT OF DIVIDENDS
PAID TO ESOP FOR
UNALLOCATED SHARES ................
REPAYMENT OF ESOP
RECEIVABLE ........................
DIVIDENDS:
Paid ($8.75 per Class A
Preferred Shares outstanding) ... (700,000)
Increase in accumulated but not
declared dividends on mandatorily
redeemable preferred stock ...... 2,310,690 (1,486,775
-------- ------------ -------- -------- -----------
BALANCE, NOVEMBER 30, 1998 .......... 140,967 $ 18,761,668 304,833 $ 3,048 $ 883,848
======== ============ ======== ======== ===========
<CAPTION>
SHAREHOLDERS' EQUITY
------------------------------------------------------
STOCK TOTAL
RETAINED ESOP SUBSCRIPTION SHAREHOLDERS'
EARNINGS RECEIVABLE RECEIVABLE EQUITY
--------- ---------- ------------ -------------
BALANCE - DECEMBER 1, 1997 .......... $ (186,405) $ (65,000) $ 2,144,419
REDEMPTION OF STOCK:
Common stock ...................... (22,153)
Preferred stock ...................
NET INCOME .......................... $ 797,251 797,251
TAX BENEFIT OF DIVIDENDS
PAID TO ESOP FOR
UNALLOCATED SHARES ................ 26,664 26,664
REPAYMENT OF ESOP
RECEIVABLE ........................ 72,493 72,493
DIVIDENDS:
Paid ($8.75 per Class A
Preferred Shares outstanding) ...
Increase in accumulated but not
declared dividends on mandatorily
redeemable preferred stock ...... (823,915) (2,310,690)
--------- ---------- ------------ -------------
BALANCE, NOVEMBER 30, 1998 .......... -- $ (113,912) $ (65,000) $ 707,984
========= ========== ============ =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
(Continued)
F-34
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF MANDATORILY REDEEMABLE PREFERRED STOCK AND
SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
MANDATORILY REDEEMABLE -----------------------------
PREFERRED STOCK COMMON STOCK ADDITIONAL
---------------------- --------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL
-------- ----------- ------- ------ -----------
<S> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 1, 1996 .................... 140,867 $15,872,343 304,333 $3,043 $ 2,988,955
ISSUANCE OF STOCK:
Common stock ........................... 1,333 13 13,318
Preferred stock ........................ 267 26,668
NET INCOME ....................................
TAX BENEFIT OF DIVIDENDS
PAID TO ESOP FOR
UNALLOCATED SHARES ......................
REPAYMENT OF ESOP
RECEIVABLE ..............................
DIVIDENDS:
Paid ($11.97 per Class A Preferred Shares
outstanding) ......................... (943,559)
Increase in accumulated but not
declared dividends on mandatorily
redeemable preferred stock ............ 2,215,873 (609,505)
-------- ----------- ------- ------ -----------
BALANCE, NOVEMBER 30, 1997 .................... 141,134 $17,171,325 305,666 $3,056 $ 2,392,768
======== =========== ======= ====== ===========
<CAPTION>
SHAREHOLDERS' EQUITY
-------------------------------------------------------
STOCK TOTAL
RETAINED ESOP SUBSCRIPTION SHAREHOLDERS'
EARNINGS RECEIVABLE RECEIVABLE EQUITY
----------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
BALANCE - DECEMBER 1, 1996 .................... $ (360,000) $ (65,000) $ 2,566,998
ISSUANCE OF STOCK:
Common stock ........................... 13,331
Preferred stock ........................ --
NET INCOME .................................... $ 1,536,368 $ 1,536,368
TAX BENEFIT OF DIVIDENDS
PAID TO ESOP FOR
UNALLOCATED SHARES ...................... 70,000 70,000
REPAYMENT OF ESOP
RECEIVABLE .............................. $ 173,595 173,595
DIVIDENDS:
Paid ($11.97 per Class A Preferred Shares
outstanding) .........................
Increase in accumulated but not
declared dividends on mandatorily
redeemable preferred stock ............ (1,606,368) (2,215,873)
----------- ---------- ------------ -------------
BALANCE, NOVEMBER 30, 1997 .................... -- $ (186,405) $ (65,000) $ 2,144,419
=========== ========== ============ =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
(Continued)
F-35
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF MANDATORILY REDEEMABLE PREFERRED STOCK AND
SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
MANDATORILY REDEEMABLE ---------------------------- -
PREFERRED STOCK COMMON STOCK ADDITIONAL
-------------------- --------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL
------- ----------- ------- ------ -----------
<S> <C> <C> <C> <C> <C>
ISSUANCE OF STOCK:
Class A Preferred ............................... 80,000 $ 8,000,000
Class B Preferred ............................... 60,000 6,000,000
Class A Common .................................. 88,782 $ 888 $ 886,928
Class B Common .................................. 124,760 1,248 1,246,352
Class C Common .................................. 86,458 864 863,720
ESOP RECEIVABLE ACQUIRED IN ACQUISITION FOR
GUARANTEE OF FUTURE DEBT PAYMENTS ...............
ISSUANCE OF STOCK UNDER EXECUTIVE STOCK AGREEMENTS:
Class C Common .................................. 4,333 43 43,289
Class B Preferred ............................... 867 86,668
NET INCOME ........................................
REDUCTION OF ESOP RECEIVABLE ......................
DIVIDENDS:
Increase in accumulated but not declared
dividends on redeemable preferred stock ......... 1,785,675 (51,334)
------- ----------- ------- ------ -----------
BALANCE, NOVEMBER 30, 1996 ........................ 140,867 $15,872,343 304,833 $3,043 $ 2,988,955
======= =========== ======= ====== ===========
<CAPTION>
SHAREHOLDERS' EQUITY
-------------------------------------------------------
STOCK TOTAL
RETAINED ESOP SUBSCRIPTION SHAREHOLDERS'
EARNINGS RECEIVABLE RECEIVABLE EQUITY
----------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
ISSUANCE OF STOCK:
Class A Preferred ............................... --
Class B Preferred ............................... --
Class A Common .................................. $ 887,816
Class B Common .................................. 1,247,600
Class C Common .................................. 864,584
ESOP RECEIVABLE ACQUIRED IN ACQUISITION FOR
GUARANTEE OF FUTURE DEBT PAYMENTS ............... $ (540,000) (540,000)
ISSUANCE OF STOCK UNDER EXECUTIVE STOCK AGREEMENTS:
Class C Common .................................. $ (21,666) 21,666
Class B Preferred ............................... (43,334) (43,334)
NET INCOME ........................................ $ 1,734,341 1,734,341
REDUCTION OF ESOP RECEIVABLE ...................... 180,000 180,000
DIVIDENDS:
Increase in accumulated but not declared
dividends on redeemable preferred stock ......... (1,734,341) (1,785,675)
----------- ---------- ------------ -------------
BALANCE, NOVEMBER 30, 1996 ........................ -- $ (360,000) $ (65,000) $ 2,566,998
=========== ========== ============ =============
</TABLE>
(Concluded)
F-36
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS CASH FLOWS
FOR THE YEARS ENDED NOVEMBER 30, 1998 AND 1997 AND FOR THE PERIOD
JANUARY 26, 1996 (DATE OF ACQUISITION) TO NOVEMBER 30, 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------ ----------- ------------
(10 MONTHS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ....................................................................... $ 797,251 $ 1,536,368 $ 1,734,341
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ................................................. 4,167,042 3,849,775 2,954,524
(Gain) loss on disposals of property and equipment ............................ (5,602) 8,225 (1,500)
Deferred income taxes ......................................................... 481,000 20,000 303,000
Tax benefit of dividends paid to ESOP ......................................... 26,664 70,000 --
Change in operating assets and liabilities:
Accounts receivable ....................................................... (137,250) 113,169 346,751
Inventories ............................................................... 325,031 344,427 (1,908,856)
Prepaid expenses, prepaid income taxes, and deposits ...................... (444,735) 145,576 (388,988)
Accounts payable .......................................................... (327,079) (1,187,703) (501,026)
Accrued liabilities ....................................................... (333,983) (241,057) 497,245
Income taxes payable ...................................................... -- (203,900) 283,300
------------ ----------- ------------
Net cash provided by operating activities ........................................ 4,548,339 4,454,880 3,318,791
------------ ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of stock of Cardinal Packaging, Inc. along with land and buildings from
a related partnership, including acquisition costs and net of cash received of
$28,946......................................................................... (39,363,708)
Purchase of property and equipment ............................................... (4,207,586) (3,160,719) (2,882,380)
Proceeds from disposal of property and equipment ................................. 7,500 2,500 1,500
Investment in patents ............................................................ (9,540) -- --
------------ ----------- ------------
Net cash used in investing activities ............................................ (4,209,626) (3,158,219) (42,244,588)
------------ ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred dividends paid ......................................................... (700,000) (943,559) --
Repayment of ESOP receivable ..................................................... 72,493 173,595 --
Proceeds from issuance of (payments for redemption of):
Common Stock .................................................................. (22,153) 13,331 3,021,666
Mandatorily redeemable preferred stock ........................................... (20,347) 26,668 6,043,334
Proceeds from long-term debt ..................................................... 4,190,822 2,508,745 30,993,349
Payments on long-term debt, and long service executive nonqualified pension ...... (3,776,404) (3,112,774) (1,076,595)
------------ ----------- ------------
Net cash (used in) provided by financing activities .............................. (255,589) (1,333,994) 38,981,754
------------ ----------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................................... 83,124 (37,333) 55,957
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ........................................... 18,624 55,957 --
------------ ----------- ------------
CASH AND CASH EQUIVALENTS, END OF YEAR ................................................. $ 101,748 $ 18,624 $ 55,957
============ =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes ..................................................................... $ 335,119 $ 925,942 $ 415,525
Interest ......................................................................... $ 3,776,313 $ 3,384,339 $ 2,240,510
============ =========== ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
The Company received stock subscriptions of $65,000 in 1996.
In conjunction with the acquisition in 1996, the Company recorded
liabilities to the former shareholders totaling $1,960,000 and issued
preferred stock valued at $8,000,000 in exchange for previously issued
common shares of Cardinal.
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
F-37
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
- ------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED NOVEMBER 30, 1998 AND 1997 AND FOR THE PERIOD
JANUARY 26, 1996 (DATE OF ACQUISITION) TO NOVEMBER 30, 1996
1. NATURE OF OPERATIONS AND ORGANIZATION
CPI Holding, Inc. ("CPI" or the "Company") was organized under the laws of
the State of Delaware for the purpose of acquiring an injection molding
manufacturer. On January 26, 1996, CPI acquired 100 percent of the common
stock of Cardinal Packaging, Inc. ("Cardinal"). The Company, through its
wholly-owned subsidiary, Cardinal, is a manufacturer of rigid thin-walled
polyethylene and polypropylene containers and sells its products to customers
located throughout the United States and Canada. The majority of the
Company's products are used in the frozen dessert and refrigerated product
industries in the form of premium round containers. In addition, the Company
provides containers for selected industrial customers and seasonal retailers.
The Company maintains ongoing credit evaluations of its customers and
generally does not require collateral. The Company provides reserves for
potential credit losses and such losses historically have not exceeded
management's estimates. The Company is headquartered in Streetsboro, Ohio.
Additional manufacturing facilities are located in Minneapolis, Minnesota and
Ontario, California.
CPI acquired, along with land and buildings previously owned by a related
partnership, 70 percent of the common stock of Cardinal for $39,392,654,
including acquisition costs. The remaining 30 percent of the common stock of
Cardinal was acquired from the Cardinal Packaging, Inc. Employee Stock
Ownership Plan ("ESOP") in exchange for 80,000 shares of CPI Class A
redeemable preferred stock valued at $8,000,000. In addition, and in
conjunction with the acquisition, the Company entered into an agreement to
pay the sellers $2,460,000 (which includes imputed interest of $500,000) in
monthly payments through January 2001 (see Note 5).
The total purchase price, including acquisition costs, has been allocated to
the assets acquired and liabilities assumed based on their estimated fair
values, except for the portion related to the ESOP's ownership which is
accounted for at historical costs, using the purchase method of accounting.
In addition, goodwill was reduced by $745,000 because of the deferred tax
asset recorded for the future tax benefits of the long service executive
nonqualified pension payments (See Note 7). Accordingly, the amounts recorded
for this acquisition were as follows:
Current Assets, including $28,946 of cash ..................... $12,435,461
Property ...................................................... 30,557,656
Other assets .................................................. 1,743,858
-----------
Total assets acquired ..................................... 44,736,975
Liabilities assumed ........................................... 11,355,378
-----------
Net assets acquired ........................................... 33,381,597
Goodwill ...................................................... 15,226,057
-----------
Total purchase price, including acquisition costs ............. $48,607,654
===========
As a result of the acquisition in 1996, the inventory on January 26, 1996 was
increased by $296,712 based on the fair market value of the acquired inventory
at the date of acquisition. Cost of sales for the period January 26, 1996 (date
of acquisition) to November 30, 1996 includes $296,712 related to this
adjustment.
F-38
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION--The consolidated financial statements
include the accounts of CPI and its wholly-owned subsidiary. All significant
intercompany balances and transactions are eliminated in consolidation.
USE OF ESTIMATES--The preparation of financial statements in accordance 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 as of the
financial statement date and the reported amounts of revenues and expenses
for the reporting period. Actual amounts could differ from those estimates.
REVENUE RECOGNITION--Sales and cost of sales are recognized upon shipment of
product.
CASH AND CASH EQUIVALENTS--The Company considers all highly liquid
investments with original maturities of three months or less, when purchased,
to be cash equivalents.
INVENTORIES--Inventories are valued at the lower of cost, using the first-in,
first-out basis, or market. Inventories consist of the following at November
30:
1998 1997
---------- ----------
Raw materials ..................... $2,433,849 $1,700,765
Finished Good ..................... 5,119,278 6,177,393
---------- ----------
Total ............................. $7,553,127 $7,878,158
========== ==========
PROPERTY AND EQUIPMENT--Property and equipment is stated at cost. Additions,
renewals and betterments are capitalized; maintenance and repairs, which do
not extend the useful life of the asset, are expensed as incurred.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, which range from ten to 40 years for buildings,
related building improvements and leasehold improvements, 12 to 15 years for
manufacturing machinery and equipment, seven years for molds, five years for
office furniture and fixtures, and three years for vehicles. Equipment under
capitalized leases is amortized over the terms of the leases, which do not
exceed the estimated useful life of the leased equipment.
GOODWILL AND INTANGIBLE ASSETS--The Company's intangible assets consist of
goodwill, deferred financing costs, and patent costs. Amortization is
recorded over the estimated economic lives. Goodwill is amortized over 40
years. Deferred financing costs are amortized over the terms of the related
loans with the amortization included in interest expense. Patent costs are
amortized over 17 years, beginning when the patent approval is obtained.
The Company evaluates the unamortized cost of these intangible assets to
determine if the carrying amount exceeds the recoverable amount and to record
an impairment loss, if necessary. This determination is based on an
evaluation of such factors as the occurrence of a significant event, a
significant change in the environment in which the business operates or,
primarily for goodwill, the expected undiscounted future net cash flows.
INCOME TAXES--Deferred income taxes are recognized for the expected future
tax consequences of events that have been recognized in the financial
statements or tax returns. Deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax bases of
various assets and liabilities using enacted rates in effect for the year in
which the differences are expected to reverse.
NEW ACCOUNTING PRONOUNCEMENTS--In 1998, Cardinal adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," and SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits". SFAS No. 130 established
standards for reporting and displaying comprehensive income and its
components in a full set of general-purpose financial statements. SFAS No.
131 requires that a public business enterprise report financial and
F-39
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
descriptive information about its reportable operating segments such as a
measure of segment profit or loss, certain specific revenue and expense
items, and segment assets. SFAS No. 132 standardized the disclosure
requirements for pensions and other postretirement benefits. The adoption of
these statements did not have a material impact on the Company's financial
statements.
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective for fiscal
quarters of fiscal years beginning after June 15, 1999. The Company has not
completed its evaluation of this statement but does not anticipate a material
impact on the financial statements from the adoption of this accounting
standard.
RECLASSIFICATIONS--Certain reclassifications were made to the 1996 and 1997
financial statements to conform to the presentation used in the 1998
financial statements.
3. OTHER ASSETS
Other assets consist of the following at November 30:
1998 1997
---------- ----------
Deferred financing costs, less accumulated
amortization of $607,139 in 1998 and
$392,855 in 1997 .......................... $ 892,861 $1,107,145
Deposits ..................................... 65,106 115,062
Patents, less accumulated amortization of
$18,566 in 1998 and $15,711 in 1997 ....... 46,142 39,457
Miscellaneous ................................ 6,300
---------- ----------
Total .................................. $1,004,109 $1,267,964
========== ==========
4. LONG-TERM DEBT
Long-term debt consists of the following as of November 30:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Note payable to financial institution with quarterly
principal payments at scheduled amounts, plus interest at
a variable rate (7.8125 percent as of November 30,1998),
due March 1, 2001 ........................................ $10,500,000 $13,500,000
Note payable to financial institution with quarterly
principal payments at scheduled amounts beginning in 2001,
plus interest at a variable rate (8.3125 percent as of
November 30,1998), due March 1, 2001 ..................... 10,000,000 10,000,000
Revolving credit facility payable to financial institution
with interest at a variable rate (7.8125 percent as of
November 30,1998), due March 1, 2003 ..................... 7,002,522 5,615,116
Capital expansion note payable to financial institution
with quarterly interest payments at a variable rate
(8.3125 percent as of November 30, 1998), fifteen equal
quarterly principal payments, plus interest, beginning
September 1, 1999, due March 2003 ........................ 4,681,646 1,886,980
</TABLE>
F-40
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
ESOP loan to bank with semi-annual principal payments of
$90,000, plus monthly interest (6.5875 percent as of
November 30, 1998) at 85 percent of the bank's prime rate,
through January 2000; collateralized by the common stock
of the Company ........................................... 113,912 186,405
Note payable to financing company with monthly principal
and interest payments of $3,690, through October 1999;
interest at 6.755 percent a year, collateralized by
specific equipment ....................................... 39,252 79,399
Other notes payable to banks paid off in 1998 ........... -- 3,481
Capital lease obligations for equipment, payable to
various banks and leasing companies in aggregate monthly
principal and interest payments of $20,583 through July
2000; interest at 6.75 percent to 10.85 percent a year;
collateralized by equipment with an aggregate net book
value of $810,344 and $1,454,135 as of November 30, 1998
and November 30, 1997, respectively ...................... 112,273 380,540
----------- -----------
Total .................................................... 32,449,605 31,651,921
Less current portion ..................................... 4,060,780 3,519,064
----------- -----------
Amount due after one year ................................ $28,388,825 $28,132,857
=========== ===========
</TABLE>
The notes payable, revolving credit facility, and capital expansion note are
collateralized by substantially all of the assets of the Company. The credit
agreement includes financial covenants with respect to capital expenditure
limits; rent payments under operating leases; earnings before depreciation,
amortization, interest and income taxes; and fixed charge and interest
coverage ratios. As of November 30, 1998, the Company has violated certain of
these covenants related to minimum EBITDA, as defined, fixed charges coverage
ratio, interest coverage ratio, and maximum capital expenditures, for which
the lender has waived the covenant violations.
At November 30, 1998, required annual principal payments on long-term debt
are:
YEAR ENDING NOVEMBER 30,
1999........................................ $ 4,060,780
2000........................................ 5,765,206
2001........................................ 6,248,439
2002........................................ 6,248,439
2003........................................ 10,126,741
-----------
Total....................................... $32,449,605
===========
F-41
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Future minimum lease payments under capital leases, included above, as of
November 30, 1998 are as follows:
YEAR ENDING NOVEMBER 30,
1999........................................ $109,337
2000........................................ 7,080
--------
Total minimum lease payments................ 116,417
Less amount representing interest........... 4,144
--------
Present value of capital lease obligations
included with long-term debt at November
30, 1998................................. $112,273
========
5. LONG SERVICE EXECUTIVE NONQUALIFIED PENSION AND CONSULTING AGREEMENTS
Under the terms of the purchase agreement for the common stock of Cardinal,
the Company agreed to make payments to the previous shareholders of $41,000 a
month through January 2001 for long service executive nonqualified pension
payments. These future payments have been recorded as a liability at their
net present value. In addition, the Company paid $20,000 a year to the
previous shareholders under a consulting agreement from February 1996 through
January 1998. Consulting expense was $3,333 for 1998, $20,000 for 1997, and
$16,660 for the period January 26, 1996 to November 30, 1996.
At November 30, 1998, future payments under the long service executive
nonqualified pension agreement are as follows:
YEAR ENDING NOVEMBER 30,
1999........................................ $492,000
2000........................................ 492,000
2001........................................ 82,000
---------
Total Payments.............................. 1,066,000
Less amount representing interest (at 9.25
percent).................................. 101,266
---------
Present value of long service executive
nonqualified pension........................ 964,734
Current portion............................. 420,310
---------
Noncurrent portion.......................... $544,424
=========
6. OPERATING LEASES
The Company leases specific equipment, vehicles, and its Minneapolis,
Minnesota and Ontario, California office and plant facilities under operating
leases from unrelated parties. These leases expire at various dates through
November 2003.
Total rent expense, including month-to-month rentals, was $1,588,000 for
1998, $1,538,000 for 1997.
Future minimum lease payments under noncancellable operating leases as of
November 30, 1998 are:
YEAR ENDING NOVEMBER 30,
1999........................................ $1,479,200
2000........................................ 1,218,900
2001........................................ 999,300
2002........................................ 945,300
2003........................................ 855,600
----------
Total....................................... $5,498,300
==========
F-42
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES
The provision (benefit) for income taxes consists of:
1998 1997 1996
--------- --------- ----------
(10 MONTHS)
Federal:
Current ............ $(122,300) $ 649,000 $ 618,000
Deferred ........... 267,000 31,000 245,000
State and local:
Current ............ 80,000 128,000 135,000
Deferred ........... 214,000 (11,000) 58,000
--------- --------- ----------
Total ................. $ 438,700 $ 797,000 $1,056,000
========= ========= ==========
The consolidated tax provision differs from the tax provision computed at the
statutory United States tax rate of approximately 34 percent for the
following reasons:
1998 1997 1996
--------- --------- -----------
Tax provision at statutory federal rate .. $ 420,000 $ 785,000 $ 949,000
Amortization of goodwill ................. 117,000 136,000 114,000
Dividends paid to Employee Stock Ownership
Plan on allocated shares .............. (163,000) (189,000) --
State and local income taxes ............. 294,000 117,000 193,000
Other .................................... (229,300) (52,000) (200,000)
--------- --------- -----------
Total .............................. $ 438,700 $ 797,000 $ 1,056,000
========= ========= ===========
The tax benefit of the deductible portion of the Class A preferred dividends
paid on the unallocated shares held by the ESOP that were utilized by the
ESOP to make debt payments was charged directly to retained earnings.
The approximate tax effect of each type of temporary difference that gave
rise to the Company's deferred tax assets and liabilities as of November 30,
is as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Current deferred income tax assets (liabilities):
Inventories ..................................... $ 73,000 $ 53,000
(Prepaid) accrued state income taxes ............ 6,000 (13,000)
Accrued liabilities ............................. 4,000 3,000
Long service executive nonqualified pension -
current ......................................... 160,000 145,000
Allowance for doubtful accounts ................. 62,000 27,000
----------- -----------
305,000 215,000
----------- -----------
Noncurrent deferred income tax assets (liabilities):
Basis of property ............................... (5,878,000) (5,509,000)
Long service executive nonqualified pension -
noncurrent ...................................... 206,000 367,000
Net operating loss carryforward ................. 102,000
Alternative minimum tax credit carryforwards .... 388,000 531,000
----------- -----------
(5,182,000) (4,611,000)
----------- -----------
Net deferred income tax liability .................. $(4,877,000) $(4,396,000)
=========== ===========
</TABLE>
F-43
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. EMPLOYEE STOCK OWNERSHIP PLAN
In 1988, Cardinal established an employee stock ownership plan. On December
14, 1989, the ESOP used $1,800,000 of proceeds from a bank loan to purchase
30 percent of Cardinal's common stock. In conjunction with the acquisition of
Cardinal by CPI in which the ESOP exchanged its 30 percent investment in
Cardinal for a 22 percent investment in CPI, the Company assumed the
remaining bank obligation of $720,000 at January 26, 1996. As of November 30,
1998, $113,912 remains outstanding on this loan. As a result of the Company
assuming the bank obligation, the Company also recorded a loan receivable
from the ESOP, which is reported as a reduction of shareholders' equity. The
Company is obligated to make contributions to the ESOP that are used by the
ESOP to pay the loan principal and interest to the bank. Shares of stock
acquired by the ESOP are allocated to each eligible employee in amounts based
on the employee's compensation. Company contributions charged to expense were
$26,720 in 1998, $30,999 in 1997 and $209,780 for the period January 26, 1996
to November 30, 1996. The Company paid Class A preferred dividends of
$700,000 in 1998 and $943,559 in 1997 to the ESOP. The ESOP used a portion of
the dividends to make the required principal payments.
9. MANDATORILY REDEEMABLE PREFERRED STOCK
MANDATORILY REDEEMABLE PREFERRED STOCK--The Company is authorized to issue
100,000 nonvoting shares of Class A redeemable preferred stock and 100,000
non-voting shares of Class B redeemable preferred stock, each with a par
value of $.01 per share. There are 80,000 shares of Class A redeemable
preferred stock outstanding as of November 30, 1998 and 1997. There are
60,966.69 shares of Class B redeemable preferred stock outstanding as of
November 30, 1998 and 61,133.36 shares outstanding as of November 30, 1997,
including 866.68 shares issued under Executive Stock Agreements described in
Note 10. Accumulating dividends accrue daily at 8.75 percent of the
liquidation value ($100 per share) plus any accumulated dividends on the
Class A redeemable preferred stock. Accumulating dividends accrue at 10
percent of the liquidation value ($100 per share) plus any accumulated
dividends on the Class B redeemable preferred stock. Unpaid accumulating
dividends are deemed to be accumulated dividends for purposes of calculating
the accumulating and nonaccumulating dividends. Nonaccumulating dividends
accrue daily at 10 percent of the liquidation value plus any accumulated
dividends on the Class A redeemable preferred stock only. Unpaid
nonaccumulating dividends are not deemed to be accumulated dividends for
purposes of calculating the accumulating and nonaccumulating dividends.
Accumulating dividends were $1,483,077 for the year ended November 30, 1998
and $1,385,329 for the year ended November 30, 1997. The nonaccumulating
dividends were $827,613 for the year ended November 30, 1998 and $830,544 for
the year ended November 30, 1997. These amounts have been recorded as an
increase in the redeemable preferred stock and as a reduction of retained
earnings and of additional paid-in capital in the accompanying consolidated
statements of mandatorily redeemable preferred stock and shareholders'
equity. As of November 30, 1998, the unpaid accumulating dividends were
$2,331,161 and the unpaid nonaccumulating dividends were $2,331,864.
On June 30, 2003, the Company shall redeem all outstanding shares of the
Class A and Class B redeemable preferred stock for the aggregate liquidation
value plus all unpaid dividends. The aggregate liquidation value and unpaid
dividends of the Class A and Class B redeemable preferred stock is
$18,761,668 as of November 30, 1998 and $17,171,325 as of November 30, 1997.
The Class A redeemable preferred stock is convertible at the shareholders'
option into Class A common stock at any time based on the liquidation value
of the shares to be converted at the then current conversion price.
10. COMMON STOCK
The authorized shares of stock and the number of shares outstanding as of
November 30, 1998 and 1997 are as follows:
COMMON STOCK--The Company has three classes of common stock of which Class A
is voting and Class B and C are non-voting.
Holders of Class B common stock are entitled to convert such shares into the
same number of shares of Class A or Class C common stock at any time.
F-44
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Holders of Class C common stock are entitled to convert such shares into the
same number of shares of Class A common stock upon the occurrence of a
Conversion Event as defined in the Company's Certificate of Amendment to
Certificate of Incorporation. Class C common stock includes 4,333.2 shares
issued under Executive Stock Agreements described below, as of November 30,
1998 and 1997.
EXECUTIVE STOCK AGREEMENTS--The Company has entered into agreements with
certain members of its management under which shares of Class B redeemable
preferred stock and Class C common stock have been issued. The Company has
notes receivable aggregating $65,000 from manager shareholders for the
purchase of one-half of their shares at November 30, 1998 and 1997. These
notes bear interest at 8.25 percent a year and are reported as stock
subscriptions receivable as a reduction of shareholders' equity. One-half of
the shares of common stock and one-half of the shares of redeemable preferred
stock vest immediately and the remaining shares vest upon the payment in full
of the receivables plus any accrued interest. In the event a shareholder
manager ceases to be employed by the Company, the Company and certain
shareholders have the right to repurchase all or a portion of these shares
from the individual at the fair value of the vested shares and the lower of
the fair value of shares or the original cost of the unvested shares held as
of the date of termination.
11. RELATED PARTY TRANSACTIONS
The following amounts were paid to shareholders of the Company:
1998 1997 1996
-------- -------- ----------
Management fees ................. $200,000 $200,000 $ 200,000
Transaction costs ............... -- -- 1,285,000
-------- -------- ----------
Total ...................... $200,000 $200,000 $1,485,000
======== ======== ==========
The management fees are included in general and administrative expense in the
accompanying statements of income. The transaction costs were capitalized as
of the acquisition date.
* * * * * *
F-45
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
MAY 31, 1999
------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents ....................................... $ 31
Accounts receivable (less allowance for doubtful accounts of
$156) ........................................................... 6,910
Inventories:
Finished goods ............................................... 5,705
Raw materials and supplies ................................... 2,338
-------
8,043
Prepaid expenses and other receivables .......................... 323
Deferred income taxes ........................................... 305
-------
Total current assets ................................................. 15,612
Property and equipment:
Land ............................................................ 295
Buildings and improvements ...................................... 3,499
Machinery, equipment and tooling ................................ 37,407
Automobiles and trucks .......................................... 54
Construction in progress ........................................ 1,914
-------
43,169
Less accumulated depreciation ................................... 11,213
-------
31,956
Intangible assets:
Deferred financing and origination fees, net .................... 786
Excess of cost over net assets acquired, net .................... 13,957
-------
14,743
Other ................................................................ 112
-------
Total assets ......................................................... $62,423
=======
F-46
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In Thousands of Dollars)
MAY 31, 1999
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable .............................................. $ 4,205
Accrued expenses and other liabilities ........................ 157
Current portion of long-term debt ............................. 4,987
Total current liabilities .......................................... 9,349
Long-term debt, less current portion ............................... 28,078
Deferred income taxes .............................................. 5,182
42,609
Mandatorily Redeemable Preferred Stock ............................ 19,348
Stockholders' equity:
Class A Common Stock (voting); $.01 par value:
500,000 shares authorized; 89,281.5 shares issued and
outstanding ................................................ 1
Class B Common Stock (non-voting); $.01 par value:
300,000 shares authorized; 124,760 shares issued and
outstanding ................................................ 1
Class C Common Stock (non-voting); $.01 par value: 200,000
shares authorized; 90,791.6 shares issued and outstanding .. 1
Additional paid-in capital .................................... 349
Retained earnings ............................................. 293
Less: ESOP receivable ........................................ (114)
Stock subscription receivable ............................ (65)
Total stockholders' equity ......................................... 466
Total liabilities and stockholders' equity ......................... $ 62,423
========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
F-47
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars)
TWENTY-SIX WEEKS ENDED
----------------------
MAY 31, MAY 31,
1999 1998
------- -------
(UNAUDITED)
Net sales ........................................ $28,465 $26,418
Cost of goods sold ............................... 23,407 21,247
Gross margin ..................................... 5,058 5,171
------- -------
Operating expenses:
Selling ...................................... 1,447 1,550
General and administrative ................... 1,310 1,296
Amortization of intangibles .................. 301 311
Other ........................................ 61 43
Operating income ................................. 1,939 1,971
------- -------
Interest expense ............................. 1,400 1,639
Income before income taxes ....................... 539 332
------- -------
Income tax expense ............................... 202 114
Net income ....................................... $ 337 $ 218
======= =======
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
F-48
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TWENTY-SIX WEEKS ENDED
MAY 31, MAY 31,
1999 1998
(UNAUDITED)
- -------------------------------------------------------------
OPERATING ACTIVITIES
Net income................................................. $ 337 $ 218
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation.......................................... 1,942 1,746
Amortization.......................................... 298 307
Deferred income taxes................................. --- 28
Changes in operating assets and liabilities:
Accounts receivable, net.......................... (1,513) (1,399)
Inventories....................................... (490) 723
Prepaid expenses and other receivables............ 684 (210)
Other assets...................................... (1) 38
Payables and accrued expenses..................... 1,219 101
Net cash provided by operating activities.................. 2,476 1,552
- -------------------------------------------------------------
INVESTING ACTIVITIES
Additions to property and equipment........................ (2,205) (2,594)
Net cash used for investing activities..................... (2,205) (2,594)
- -------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term borrowings......................... 1,460 3,299
Payments on long-term borrowings........................... (1,809) (1,876)
Proceeds (payments) from Preferred equity.................. 7 (348)
Net cash provided by (used for) financing activities....... (342) 1,075
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents....... (71) 33
Cash and cash equivalents at beginning of period........... 102 19
Cash and cash equivalents at end of period................. $ 31 $ 52
- ---------------------------------------------------------------------------------------
==============================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
F-49
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of dollars, except as otherwise noted)
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of CPI
Holding, Incorporated and its subsidiary, Cardinal Packaging, Incorporated (the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the periods
presented are not necessarily indicative of the results that may be expected for
the full fiscal year. The accompanying financial statements include the results
of CPI Holding, Incorporated ("Holding") and its wholly-owned subsidiary,
Cardinal Packaging, Incorporated ("Cardinal").
2. LONG-TERM DEBT
Long-term debt consists of the following:
MAY 31,
1999
----------
Note payable to financial institution with quarterly principal
payments at scheduled amounts, plus interest at a variable rate, due
March 1, 2000....................................................... $9,000
Note payable to financial institution with quarterly principal
payments at scheduled amounts beginning in 2001, plus interest at a
variable rate, due March 1, 2003.................................... 10,000
Revolving credit facility payable to financial institution with
interest at a variable rate, due March 1, 2003...................... 8,117
Capital expansion note payable to financial institution with
quarterly interest payments at a variable rate, fifteen equal
quarterly principal payments, plus interest, beginning September 1,
1999, due March 2003................................................ 5,000
ESOP loan to bank with semi-annual principal payments of $90, plus
monthly interest at 85 percent of the bank's prime rate, through
January 2000; collateralized by the common stock of the Company..... 114
Note payable to financing company with monthly principal and interest
payments of $4, through October 1999; interest at 6.755 percent a
year, collateralized by specific equipment.......................... 18
Capital lease obligations for equipment, payable to various banks and
leasing companies in aggregate monthly principal and interest
payments of $20 through July 2000; interest at 6.75 percent to 10.85
percent a year; collateralized by specific equipment................ 57
Long service executive nonqualified pension agreements payable to the
previous shareholders. The pension agreements are payable at $41 per
month through January 2001 and are recorded at their net present
value with a discount rate of 9.25 percent.......................... 759
33,065
Less current portion of long-term debt.............................. 4,987
$28,078
-----------------------------------------------------------------------
==============================================================================
F-50
<PAGE>
CPI HOLDING, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. LONG-TERM DEBT (CONTINUED)
The current portion of long-term debt consists of $4.5 million of
principal payments outlined in the table above, and $0.4 million of payments
related to the Long service executive nonqualified pension agreement.
The notes payable, revolving credit facility, and capital expansion note
are collateralized by substantially all of the assets of the Company. The credit
agreement includes financial covenants with respect to capital expenditure
limits; rent payments under operating leases; earnings before depreciation,
amortization, interest and income taxes; and fixed charge and interest coverage
ratios.
3. CARDINAL PACKAGING, INCORPORATED SUMMARY FINANCIAL INFORMATION
The following summarizes parent company only financial information of
Holding:
MAY 31,
1999
---------
CONSOLIDATED BALANCE SHEETS
Current assets......................................................... $ 7
Investment in subsidiary............................................... 19,807
Other noncurrent assets................................................ ---
Current liabilities.................................................... ---
Noncurrent liabilities................................................. ---
Equity (deficit)....................................................... 19,814
26 WEEKS ENDED
----------------------
MAY 31, MAY 31,
1999 1998
----------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales.............................................. $ --- $ ---
Cost of goods sold..................................... --- ---
Income before income taxes ............................ 539 332
Net income ............................................ 337 218
4. SEGMENT REPORTING
The Company has one reportable segment of plastic packaging products.
F-51
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Knight Engineering & Plastics
Division of Courtaulds Packaging Inc.
We have audited the accompanying balance sheet of Knight Engineering & Plastics
Division of Courtaulds Packaging Inc. (the Division) as of March 31, 1998 and
the related statement of operations, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Division at March 31, 1998,
and the results of its operations and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Indianapolis, Indiana
May 19, 1999
F-52
<PAGE>
KNIGHT ENGINEERING & PLASTICS
DIVISION OF COURTAULDS PACKAGING INC.
BALANCE SHEET
MARCH 31, 1998
ASSETS
Current assets
$
Cash............................................................. 719,004
Accounts receivable, less allowance for doubtful accounts of
$52,061.......................................................... 3,625,898
Inventories:
Finished goods................................................ 586,035
Raw materials and supplies.................................... 1,192,082
1,778,117
Prepaid expenses................................................. 195,799
Total current assets................................................ 6,318,818
Property and equipment
Land and improvements............................................ 877,410
Buildings and improvements....................................... 5,754,664
Machinery, equipment and tooling................................. 21,102,328
Construction in progress......................................... 2,085,286
29,819,688
- ----------------------------------------------------------------------
Less accumulated depreciation.................................... 16,348,730
- ----------------------------------------------------------------------
13,470,958
- ----------------------------------------------------------------------
Goodwill, net of accumulated amortization of $854,972............... 2,402,064
- ----------------------------------------------------------------------
$ 22,191,840
- ----------------------------------------------------------------------
LIABILITIES AND DIVISION EQUITY
======================================================================
Current liabilities
======================================================================
$
Note payable, parent............................................. 3,477,089
======================================================================
Accounts payable................................................. 2,336,323
======================================================================
Accrued expenses and other liabilities........................... 2,493,482
======================================================================
Total current liabilities........................................... 8,306,894
======================================================================
Division equity..................................................... 13,884,946
======================================================================
$ 22,191,840
- ----------------------------------------------------------------------
==============================================================================
SEE ACCOMPANYING NOTES.
F-53
<PAGE>
KNIGHT ENGINEERING & PLASTICS
DIVISION OF COURTAULDS PACKAGING INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1998
$
Net sales......................................................... 23,836,485
Cost of goods sold................................................ 21,058,181
Gross margin...................................................... 2,778,304
Operating expenses:
Selling, general and administrative............................. 3,219,902
Amortization of intangibles..................................... 162,852
Operating income (loss)........................................... (604,450)
Other income (expense):
Gain on disposal of property and equipment...................... 41,400
Interest income................................................. 3,590
Interest (expense), parent...................................... (261,325)
$
Division (loss)................................................... (820,785)
- --------------------------------------------------------------------
==============================================================================
SEE ACCOMPANYING NOTES.
F-54
<PAGE>
KNIGHT ENGINEERING & PLASTICS
DIVISION OF COURTAULDS PACKAGING INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MARCH 31, 1998
OPERATING ACTIVITIES
$
Division loss....................................................... (820,785)
Adjustments to reconcile division loss to net cash provided by
operating activities:
Depreciation..................................................... 1,702,511
Amortization..................................................... 162,852
Gain on sale of property and equipment........................... (41,400)
Changes in operating assets and liabilities:
Accounts receivable, net...................................... (168,875)
Inventories................................................... 67,937
Prepaid expenses.............................................. 253,840
Accounts payable and accrued expenses......................... 1,009,378
Net cash provided by operating activities 2,165,458
INVESTING ACTIVITIES
Purchases of machinery and equipment................................ (1,530,295)
Division equity contribution from parent............................ 261,000
Proceeds from disposal of property and equipment.................... 41,400
Net cash used in investing activities............................... (1,227,895)
FINANCING ACTIVITIES
Net payments on note payable, parent................................ (456,893)
Net cash used in financing activities............................... (456,893)
Net increase in cash................................................ 480,670
Cash at beginning of year........................................... 238,334
$
Cash at end of year................................................. 719,004
- ----------------------------------------------------------------------
==============================================================================
SEE ACCOMPANYING NOTES.
F-55
<PAGE>
KNIGHT ENGINEERING & PLASTICS
DIVISION OF COURTAULDS PACKAGING INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Knight Engineering
and Plastics Division of Courtaulds Packaging Inc., a West Virginia Corporation
(the Division). Courtaulds Packaging, Inc. (Parent) is owned by Courtaulds PLC,
a public limited company organized under the laws of England and Wales. The
Division was not a legal entity and operated as a component of a larger
business. The Division's financial statements includes only assets, liabilities
and results of operations which comprise the specific division. The balance
sheet and statement of operations, which have been prepared from the historical
accounting records of the Division, include all revenues and costs directly
attributable to the Division's business, including costs of facilities,
employees and related support functions. The Division has not been charged for
the cost of certain functions and services performed by the Parent or other
related entities on behalf of the Division. Similarly, the Division has not been
allocated any income tax expense or benefit during the year ended March 31,
1998. Management believes that the impact of costs performed by Parent and other
related entities on behalf of the Division would not be significant to the
accompanying financial statements.
The Division manufactures and markets plastic packaging products, primarily
proprietary and custom molded plastic overcaps and closures. During the year
ended March 31, 1998, the Division operated manufacturing facilities located in
Woods tock and Arlington Heights, Illinois. The Division's customers are located
principally throughout the United States.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES
Inventories are valued at the lower of cost (first in, first out method) or
market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed primarily by
the straight-line method over the estimated useful lives of the assets ranging
from three to fifty years.
GOODWILL
The cost in excess of net assets acquired represent the excess purchase price
over the fair value of the net assets acquired in the original acquisition of
the Division. These costs are being amortized over 20 years.
The Division periodically evaluates the value of intangible assets to determine
if an impairment has occurred. This evaluation is based on various analyses
including reviewing anticipated cash flows.
REVENUE RECOGNITION
Revenue from sales of products is recognized at the time product is shipped to
the customer.
RETIREMENT PLANS
During the year ended March 31, 1998, the Division had two defined contribution
benefit plans, a retirement and a employee thrift plan. The Plans covered
substantially all the Division's employees. The retirement plan provides for an
annual employer contribution of 4% of gross wages. The employee thrift plan
provides for a 75% to a 100% annual match on employee deferrals of up to 6%. The
plans expenses were approximately $291,000 for the year ended March 31, 1998.
F-56
<PAGE>
KNIGHT ENGINEERING & PLASTICS
DIVISION OF COURTAULDS PACKAGING INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INCOME TAXES
The taxable income of the Division was included in the tax returns of Courtaulds
Packaging Inc. As such, separate income tax returns were not prepared or filed
for the Division.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results may differ from those estimates.
3. NOTE PAYABLE, PARENT
At March 31, 1998, the Division had a note payable to Courtaulds Packaging Inc.
The note was used to fund the Division's working capital requirements with no
stated maturity. Interest was charged to the Division at a rate of approximately
7%.
4. SALES INFORMATION
For the year ended March 31, 1998, 38% of the Division's revenues were derived
from three customers. The accounts receivables related to these customers at
March 31, 1998 was approximately $560,000.
5. LEASES
The Division leases certain warehouse buildings under a month to month lease
arrangements. Rent expense for the year ended March 31, 1998 was approximately
$145,000.
6. RELATED PARTY TRANSACTIONS
The Division has engaged in business transactions with a related party, Thatcher
Tubes, Inc., throughout the year. Thatcher Tubes is a fully consolidated
subsidiary of Courtaulds Packaging Inc. During the year ended March 31, 1998,
the Division had sales of approximately $1,845,000 to Thatcher. In addition, the
related accounts receivable balance at March 31, 1998 was approximately
$354,000.
7. SUBSEQUENT EVENTS
On October 16, 1998, a newly formed, wholly-owned subsidiary of Berry Plastics
Corporation acquired substantially all of the assets of the Division for
aggregate consideration of approximately $18 million.
F-57
<PAGE>
KNIGHT ENGINEERING AND PLASTICS
DIVISION OF COURTAULDS PACKAGING INC.
CONDENSED BALANCE SHEET
(In Thousands of Dollars)
SEPTEMBER 30,
1998
---------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 790
..Accounts receivable (less allowance for doubtful
accounts of $50).................................... 2,785
Inventories:
Finished goods..................................... 522
Raw materials and supplies.......................... 1,256
1,778
Prepaid expenses and other receivables................. 199
Total current assets..................................... 5,552
Property and equipment:
Land................................................... 877
Buildings and improvements............................. 6,059
Machinery, equipment and tooling....................... 22,456
Construction in progress............................... 2,620
32,012
Less accumulated depreciation.......................... 18,678
- ----------------------------------------------------------- ---------------
13,334
Goodwill (net of accumulated amortization of $936) ...... 2,321
$ 21,207
LIABILITIES AND DIVISION EQUITY Current liabilities:
Notes payable, parent.................................. $ 3,186
Accounts payable....................................... 2,443
Accrued expenses and other liabilities................. 2,024
Total current liabilities................................ 7,653
Division equity.......................................... 13,554
- -----------------------------------------------------------
$ 21,207
- -----------------------------------------------------------
==============================================================================
SEE ACCOMPANYING NOTES.
F-58
<PAGE>
KNIGHT ENGINEERING AND PLASTICS
DIVISION OF COURTAULDS PACKAGING INC.
CONDENSED STATEMENT OF OPERATIONS
(In Thousands of Dollars)
SIX-MONTHS ENDED
----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
----------------------------
(Unaudited)
Net sales........................... $11,893 $11,721
Cost of goods sold.................. 10,596 11,097
Gross margin........................ 1,297 624
Operating expenses:
Selling, general and
administrative.................. 1,377 1,244
Amortization of intangibles..... 81 81
Operating income, (loss) ........... (161) (701)
Other income and expense:
Gain on sale of property and
equipment....................... - 9
Interest expense, parent........ (169) (226)
Interest income................. - 2
----------------------------
--------------------------------------
Division loss....................... $(330) $(916)
============================
SEE ACCOMPANYING NOTES.
F-59
<PAGE>
KNIGHT ENGINEERING AND PLASTICS
DIVISION OF COURTAULDS PACKAGING INC.
CONDENSED STATEMENT OF CASH FLOWS
(In Thousands of Dollars)
SIX-MONTHS ENDED
-------------------------------
SEPTEMBER
SEPTEMBER 30, 30,
1998 1997
--------------- -------------
-------------------------------
(UNAUDITED)
OPERATING ACTIVITIES
Division loss................................... $ (330) $ (916)
Adjustments to reconcile net loss to net cash
provided by operating
..........................activities:
Depreciation............................... 918 1,030
Amortization............................... 81 81
Gain on sale of property and equipment..... --- (9)
Changes in operating assets and liabilities:
Accounts receivable, net................. 841 257
Inventories.............................. --- 115
Prepaid expenses and other receivables... (4) 153
Payables and accrued expenses............ (363) (313)
Net cash provided by operating activities....... 1,143 398
- ---------------------------------------------------
INVESTING ACTIVITIES
Additions to property and equipment............. (781) (59)
Proceeds from disposal of property and equipment --- 9
Division equity contribution from parent........ --- 133
Net cash provided by (used in) investing
activities...................................... (781) 83
- ---------------------------------------------------
FINANCING ACTIVITIES
Net payments on note payable, parent............ (291) (286)
Net cash used in financing activities........... (291) (286)
- ---------------------------------------------------
- ---------------------------------------------------
Net increase in cash and cash equivalents....... 71 195
- ---------------------------------------------------
Cash and cash equivalents at beginning of period 719 238
- ---------------------------------------------------
Cash and cash equivalents at end of period...... $790 $433
- ---------------------------------------------------
==============================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
F-60
<PAGE>
KNIGHT ENGINEERING AND PLASTICS
DIVISION OF COURTAULDS PACKAGING INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED)
(Unaudited)
1.....BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Knight Engineering
and Plastics Division of Courtaulds Packaging Inc., a West Virginia Corporation
(the Division). Courtaulds Packaging, Inc. (Parent) is owned by Courtauld PLC, a
public limited company organized under the laws of England and Wales. The
Division was not a legal entity and operated as a component of a larger
business. The Division's financial statement includes only assets, liabilities
and results of operations which comprise the specific division. The balance
sheet and statement of operations, which have been prepared from the historical
accounting records of the Division, include all revenues and costs directly
attributable to the Division's business, including costs of facilities,
employees and related support functions. The Division has not been charged for
the cost of certain functions and services performed by the Parent or other
related entities on behalf of the Division. Similarly, the Division has not been
allocated any income tax expense or benefit. Management believes that the impact
of costs performed by Parent and other related entities on behalf of the
Division would not be significant to the accompanying financial statements.
2. NOTE PAYABLE, PARENT
At September 30, 1998, the Division had a note payable to Courtaulds Packaging
Inc. The note was used to fund the Division's working capital requirements with
no stated maturity. Interest was charged to the Division at a rate of
approximately 7%.
3. SUBSEQUENT EVENT
On October 16, 1998, a newly formed, wholly-owned subsidiary of Berry Plastics
Corporation acquired substantially all of the assets of the Division for
aggregrate consideration of approximately $18 million.
F-61
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
DIRECTORS
J E Barlow (Chairman)
A R Sandell (Managing)
T D Johnson
SECRETARY REGISTERED OFFICE
Mrs. J Barlow Stanford Tuck Road
North Walsham
Norfolk
AUDITORS
Lovewell Blake
Chartered Accountants
102 Prince of Wales Road
Norwich
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31ST OCTOBER 1997
The directors present herewith the audited accounts for the year ended 31st
October 1997.
DIRECTORS' RESPONSIBILITIES
Company law requires the directors to prepare accounts that give a true and fair
view of the state of affairs of the company and of the profit or loss for its
financial year. In doing so the directors are required to:
o select suitable accounting policies and apply them consistently;
o make judgements and estimates that are reasonable and prudent;
o state whether applicable accounting standards have been followed,
o subject to any material departures disclosed and explained in the
accounts;
o prepare the accounts on the going concern basis unless it is
inappropriate
o to presume that the company will continue in business.
The directors are responsible for maintaining proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the accounts comply with the Companies
Act 1985. They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
REVIEW OF ACTIVITIES
The company's main activities are unchanged since last year and are principally
those of the production of plastic goods by injection moulding.
In the opinion of the directors the company will be able to maintain its present
level of turnover for the foreseeable future.
The profit for the year has been added to the balance on the profit and loss
account.
F-62
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
REPORT OF THE DIRECTORS (CONTINUED)
DIRECTORS
The directors named above held office throughout the year.
In accordance with the articles of association T D Johnson will retire at the
annual general meeting and, being eligible, offers himself for re-election.
The interests of the directors of the company at 31st October 1997 in the shares
of the company, according to the register required to be kept by Section 325 of
the Companies Act 1985 were as follows:
31ST OCTOBER 31ST OCTOBER
1997 ORDINARY 1996 ORDINARY 31ST OCTOBER 1995
SHARES SHARES ORDINARY SHARES
FULLY PAID FULLY PAID FULLY PAID PARTLY PAID
-------------- -------------- ----------- -----------
J E Barlow........... 60 60 11 49
A R Sandell.......... 29 29 -- 29
T D Johnson.......... 11 11 -- 11
MARKET VALUE OF INTEREST IN LAND
In the opinion of the directors, the current open market value on an existing
use basis of the freehold land and buildings exceeds the net book value as shown
in the balance sheet at the 31st October 1997 by (pound)80,711.
CLOSE COMPANY PROVISIONS
The company is a close company within the provisions of the Income and
Corporation Taxes Act 1988.
AUDITORS
A resolution to re-appoint Lovewell Blake will be proposed at the annual general
meeting.
By order of the board
J BARLOW
Secretary
North Walsham 22nd December 1997
F-63
<PAGE>
REPORT OF INDEPENDENT AUDITORS
TO THE DIRECTORS OF
NORWICH INJECTION MOULDERS LIMITED
To the Directors of
Norwich Injection Moulders Limited
We have audited the balance sheets of Norwich Injection Moulders Limited
as at 31st October 1997, 31st October 1996 and 31st October 1995, and the
related profit and loss accounts and cash flow statements for each of the three
years in the period ended 31st October 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with United Kingdom auditing
standards which do not differ in any significant respect from United States
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 evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Norwich Injection Moulders
Limited at 31st October 1997, 1996 and 1995, and the results of its operations
and its cash flows for each of the three years in the period ended 31st October
1997 in conformity with accounting principles generally accepted in the United
Kingdom which differ in certain respects from those generally accepted in the
United States (see Note 24 of Notes to the Accounts).
/S/ LOVEWELL BLAKE
Chartered Accountants
Norwich, England
22nd December 1997 in respect of accounts
to 31st October 1997
31st January 1997 in respect of accounts
to 31st October 1996
11th March 1996 in respect of accounts
to 31st October 1995
except for Note 24 Differences between
United Kingdom and United States
Generally Accepted Accounting Principles
as to which the date is 18th May 1999
F-64
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
YEAR ENDED 31ST YEAR ENDED 31ST YEAR ENDED 31ST
NOTES OCTOBER 1997 OCTOBER 1996 OCTOBER 1995
----------- ----------------- ----------------- ---------------
(POUND) (POUND) (POUND)
<S> <C> <C> <C> <C>
Turnover ....................................... 2 8,117,742 7,308,368 5,046,307
Change in stock of finished goods .............. 5,908 26,405 15,783
----------- ---------- -----------
8,123,650 7,334,773 5,062,090
Other operating income ......................... 3 21,738 6,823 3,749
----------- ---------- -----------
8,145,388 7,341,596 5,065,839
Raw materials and consumables .................. 3,772,741 3,521,241 2,270,368
Other external charges ......................... 677,847 616,428 468,515
Staff costs .................................... 4 1,510,732 1,421,872 1,073,648
Depreciation ................................... 6 441,666 338,363 293,657
Other operating charges ........................ 537,182 482,605 432,372
Interest payable and similar charges ........... 7 103,769 120,943 128,526
----------- ---------- -----------
7,043,937 6,501,452 4,666,086
----------- ---------- -----------
Profit on ordinary activities before
taxation ..................................... 8 1,101,451 840,144 399,753
Tax on profit on ordinary activities ........... 9 261,160 4,618 98,035
----------- ---------- -----------
Profit on ordinary activities after
taxation ..................................... * 840,291 835,526 301,718
Balance 1st November 1996 ...................... 2,209,809 1,374,283 1,072,565
----------- ---------- -----------
Balance 31st October 1997 ...................... 3,050,100 2,209,809 1,374,283
=========== ========== ===========
</TABLE>
There are no movements in shareholders funds other than the increase to the
retained profits for the years ended 31st October 1997, 31st October 1996 and
31st October 1995.
There were no recognized gains or losses other than the profit of (pound)840,291
in the year ended 31st October 1997, (pound)835,526 in the year ended 31st
October 1996 and (pound)301,718 in the year ended 31st October 1995.
*A summary of the significant adjustments to the profit on ordinary activities
after taxation (net income) that would be required if US Generally Accepted
Accounting Principles were to be applied instead of those generally accepted in
the United Kingdom is set out in Note 24 of Notes to the Accounts.
F-65
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
BALANCE SHEET
<TABLE>
<CAPTION>
Notes 31st October 1997 31st October 1996 31st October 1995
--------- ------------------ ----------------- -----------------
(pound) (pound) (pound)
<S> <C> <C> <C> <C>
FIXED ASSETS
Tangible assets ..................................... 10 3,839,712 3,507,176 2,978,664
CURRENT ASSETS
Stock and work in progress .......................... 11 342,324 313,971 231,064
Debtors ............................................. 12 1,622,209 1,582,819 1,234,573
Bank balances ....................................... 510,081 560,087 --
Cash in hand ........................................ 464 338 669
---------- ---------- ----------
2,475,078 2,457,215 1,466,306
CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR ........ 13 2,384,216 2,696,054 1,783,404
NET CURRENT
ASSETS/(LIABILITIES) ................................ 90,862 (238,839) (317,098)
TOTAL ASSETS LESS
CURRENT LIABILITIES ................................. 3,930,574 3,268,337 2,661,566
---------- ---------- ----------
CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN
ONE YEAR ............................................ 14 880,374 1,058,428 1,098,041
PROVISIONS FOR LIABILITIES AND CHARGES
DEFERRED TAXATION ................................... 15 -- -- 189,227
---------- ---------- ----------
3,050,200 2,209,909 1,374,298
========== ========== ==========
CAPITAL AND RESERVES
Called up share capital ............................. 16 100 100 15
Profit and loss account ............................. 3,050,100 2,209,809 1,374,283
---------- ---------- ----------
3,050,200 2,209,909 1,374,298
========== ========== ==========
</TABLE>
JE BARLOW - Director ...... AR SANDELL - Director
The statutory accounts for the year to 31st October 1997 were approved by the
board of directors on 22nd December 1997.
The statutory accounts for the year to 31st October 1997 were approved by the
board of directors on 31st January 1997.
The statutory accounts for the year to 31st October 1997 were approved by the
board of directors on 27th February 1996.
o A summary of the significant adjustments to capital and reserves
(shareholders funds) that would be required if US Generally Accepted
Accounting Principles were to be applied instead of those generally
accepted in the United Kingdom is set out in Note 24 of Notes to the
Accounts.
F-66
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
CASH FLOW STATEMENT
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
31ST 31ST 31ST
OCTOBER OCTOBER OCTOBER
NOTES 1997 1996 1995
----- ---------- ---------- ----------
(POUND) (POUND) (POUND)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES ....... 20 1,520,397 1,443,181 781,305
RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE ................................ 21 (84,576) (122,884) (126,426)
TAXATION .................................. (193,817) (70,214) (50,052)
CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENT ................................ 21 (980,793) (635,844) (924,113)
CASH INFLOW BEFORE USE OF LIQUID
RESOURCES AND FINANCING ................... 261,211 614,239 (319,286)
FINANCING - DECREASE IN DEBT .............. 21 (251,086) (9,654) 379,110
- CALLS ON SHARE CAPITAL .......... 21 -- 85 --
INCREASE IN CASH IN THE YEAR .............. 22 10,125 604,760 59,824
RECONCILIATION OF NET CASH FLOW TO MOVEMENT
IN NET DEBT
INCREASE IN CASH IN THE YEAR .............. 10,125 604,760 59,824
CASH OUTFLOW/(INFLOW) FROM
DECREASE/INCREASE IN DEBT AND LEASE
FINANCING ................................. 21 251,086 9,564 (379,110)
MOVEMENT IN NET DEBT IN THE PERIOD ........ 261,211 614,324 (319,286)
NET DEBT AT 1ST NOVEMBER .................. (921,849) (1,536,173) (1,216,887)
NET DEBT AT 31ST OCTOBER .................. 22 (660,638) (921,849) (1,536,173)
---- ---------- ---------- ----------
</TABLE>
The significant differences between the cashflow statement presented above and
that required under US Generally Accepted Accounting Principles are set out in
Note 24 of Notes to the Accounts.
F-67
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS
1. PRINCIPAL ACCOUNTING POLICIES
(A) BASIS OF ACCOUNTING
The accounts are prepared under the historical cost basis of accounting
and in accordance with applicable UK accounting standards.
(B) DEPRECIATION
Depreciation is provided on fixed assets at rates sufficient to write off,
on a straight line basis, the cost of the assets over their expected
useful lives. It is the company's policy to maintain its freehold property
to such a standard that its residual disposal value will at least equal
its book value and accordingly no provision for depreciation has been
made. The principal annual rates used for this purpose which are
consistent with those of last year are:
Freehold land and buildings Not depreciated
Leasehold property expenditure Over period of the lease
Plant and machinery 10% - 50%
Motor vehicles 20% - 25%
Loose tools Written off on a usage basis
(C) STOCK AND WORK IN PROGRESS
Stock and work in progress are stated at the lower of cost and net
realisable value. In general cost is determined on a first in first out
basis and includes transport and handling costs. In the case of work in
progress cost includes all direct expenditure and production overheads
based on the normal level of activity. Net realisable value is the price
at which stock can be sold in the normal course of business after allowing
for the costs of realisation and, where appropriate, the cost of
conversion from their existing state to a finished condition. Provision is
made where necessary for obsolete, slow moving and defective stock.
(D) FINANCE LEASE AND HIRE PURCHASE CONTRACTS
Assets held under finance leases, other than hire purchase contracts, are
capitalized at their fair value and are depreciated over either the lease
term, or the useful working life of the asset, whichever is the shorter.
Fair value is usually the cost at which the company could have purchased
the asset.
Future rental payments due during the primary lease period are shown as
creditors.
The difference between the total primary lease payments and the fair value of
the asset is treated as a finance charge and is charged to the profit and
loss account on a straight line basis over the primary lease period.
Secondary lease rentals are charged to profit and loss account in the period
in which they are paid.
Assets held under hire purchase contracts are capitalized at their fair value
and are depreciated over their useful working life on the same basis as set
out in note 1(b).
F-68
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
1. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
(E) OPERATING LEASES
Operating lease rentals are charged to profit and loss account in the period
in which they are incurred.
(F) DEFERRED TAXATION
Provision is made for deferred taxation where, in the opinion of the
directors, it is likely to be payable in the foreseeable future.
(G) PENSION SCHEME
The company operates defined contribution schemes. The assets of the schemes
are held separately from those of the company in independently administered
funds. The charge in the profit and loss accounts represents the
contributions payable by the company to the funds for the year.
(H) FOREIGN CURRENCIES
Assets and liabilities in foreign currencies are translated into sterling at
the rates of exchange ruling on the balance sheet date. Transactions in
foreign currencies are recorded at the rate ruling at the date of the
transaction. Significant differences arising due to exchange fluctuations
have been reflected in the profit and loss account.
2. TURNOVER
The contribution to turnover and profit before taxation arises from the
production of plastic goods by injection moulding.
1997 1996 1995
--------- --------- ---------
(POUND) (POUND) (POUND)
Geographical analysis of turnover
United Kingdom......... 7,890,743 7,160,110 4,887,260
Rest of Europe......... 226,999 148,258 159,047
--------- --------- ---------
8,117,742 7,308,368 5,046,307
========= ========= =========
3. OTHER OPERATING INCOME
1997 1996 1995
--------- --------- ---------
(POUND) (POUND) (POUND)
Training grants........ 500 2,589 3,700
Interest received (gross) 21,238 4,234 49
--------- --------- ---------
21,738 6,823 3,749
========= ========= =========
F-69
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
4. EMPLOYEE INFORMATION
The average number of persons employed by the company during the year
including directors is analyzed below:
1997 1996 1995
-------- -------- --------
Manufacturing and packing .................... 57 52 42
Selling and administration ................... 18 17 16
Former employees ............................. 2 2 2
-------- -------- --------
77 71 60
======== ======== ========
1997 1996 1995
--------- --------- ---------
(POUND) (POUND) (POUND)
Staff costs
Wages and salaries paid to the
company's employees ............... 1,313,859 1,264,343 926,530
Pensions to former employees ...... 14,905 14,905 14,905
Social security costs ............. 139,201 107,619 98,325
Pension contributions ............. 42,767 35,005 33,888
--------- --------- ---------
1,510,732 1,421,872 1,073,648
========= ========= =========
5. DIRECTORS' EMOLUMENTS
1997 1996 1995
--------- --------- ---------
(POUND) (POUND) (POUND)
Management remuneration ......... 271,217 363,153 206,546
Pension contributions ........... 15,818 16,043 15,449
Taxable benefits ................ 27,301 28,608 29,403
--------- --------- ---------
314,336 407,804 251,398
========= ========= =========
The directors' emoluments disclosed above (excluding pension contributions)
include amounts paid to:
(POUND) (POUND) (POUND)
--------- --------- ---------
The Highest Paid Director.............. 106,903 137,910 86,398
Retirement benefits in respect of the three directors are accruing under a
defined contribution scheme. The contributions paid in respect of the highest
paid director were (pound)5,488 ((pound)5,583 in the year ended 31st October
1996 and (pound)5,365 in the year ended 31st October 1995).
F-70
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
6. DEPRECIATION
The charge for the year is made up as under:
1997 1996 1995
------- ------- -------
(POUND) (POUND) (POUND)
The charge for the year is made up as under:
Depreciation of tangible
fixed assets
Owned assets ............................... 342,082 193,832 143,785
Assets held under finance lease
and hire purchase contracts ................ 116,103 169,931 151,738
------- ------- -------
458,185 363,763 295,523
(16,519) (25,400) (1,866)
------- ------- -------
Profit on sale of tangible fixed
assets ..................................... 441,666 338,363 293,657
------- ------- -------
7. INTEREST PAYABLE AND SIMILAR CHARGES
1997 1996 1995
------- ------- -------
(POUND) (POUND) (POUND)
Bank loan and overdraft ............ 63,718 69,425 80,945
Finance leases and hire
purchase
contracts expiring
within five years ................. 40,051 51,518 47,581
------- ------- -------
103,769 120,943 128,526
------- ------- -------
8. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
The profit on ordinary activities before taxation is stated after charging
the following amounts:
1997 1996 1995
------- ------- -------
(POUND) (POUND) (POUND)
Hire of equipment .................. 55,698 71,616 72,385
Rent of land and buildings ......... 22,080 22,127 28,203
Auditors remuneration .............. 3,000 3,000 2,750
------- ------- -------
F-71
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
9. TAX ON PROFIT ON ORDINARY ACTIVITIES
1997 1996 1995
------- ------- -------
(POUND) (POUND) (POUND)
Corporation tax for the
year at 30% (1996 30%, 1995 25%)
Taxation payable ...................... 261,163 193,845 70,043
Overprovision in previous year ........ (3) -- --
Decrease in provision for
deferred tax ......................... -- (189,227) 27,992
------- ------- -------
261,160 4,618 98,035
F-72
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
10. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
EXPENDITURE
ON
SHORT MOTOR
FREEHOLD LEASEHOLD PLANT AND
TOTAL PROPERTY PROPERTY MACHINERY VEHICLES
------------ ------------ ------------ ------------ ------------
(POUND) (POUND) (POUND) (POUND) (POUND)
COST
<S> <C> <C> <C> <C> <C>
1st November 1994 ......... 3,211,137 921,157 298 2,167,594 122,088
Additions ................. 843,420 269,790 -- 546,130 27,500
Disposals ................. (109,265) -- -- (85,375) (23,890)
------------ ------------ ------------ ------------ ------------
31st October 1995 ......... 3,945,292 1,190,947 298 2,628,349 125,698
Additions ................. 967,725 1,719 -- 933,038 32,968
Disposals ................. (168,686) -- -- (137,011) (31,675)
------------ ------------ ------------ ------------ ------------
31st October 1995 ......... 4,744,331 1,192,666 298 3,424,376 126,991
Additions ................. 900,630 26,623 -- 779,975 94,032
Disposals ................. (365,688) -- -- (276,915) (88,773)
------------ ------------ ------------ ------------ ------------
31st October 1995 ......... 5,279,273 1,219,289 298 3,927,436 132,250
============ ============ ============ ============ ============
DEPRECIATION
1st November 1994 ......... 729,236 -- 225 696,176 32,835
Disposals ................. (58,131) -- -- (46,677) (11,454)
Charge for the year ....... 295,523 -- 12 265,347 30,146
------------ ------------ ------------ ------------ ------------
31st October 1995 ......... 966,628 -- 237 914,846 51,545
Disposals ................. (93,236) -- -- (70,136) (23,100)
Charge for the year ....... 363,763 -- 12 334,547 29,204
------------ ------------ ------------ ------------ ------------
31st October 1996 ......... 1,237,155 -- 249 1,179,257 57,649
Disposals ................. (255,779) -- -- (193,173) (62,606)
Charge for the year ....... 458,185 -- 12 431,284 26,889
------------ ------------ ------------ ------------ ------------
31st October 1997 ......... 1,439,561 -- 261 1,417,368 21,932
============ ============ ============ ============ ============
NET BOOK AMOUNT
31st October 1997 ......... 3,839,712 1,219,289 37 2,510,068 110,318
============ ============ ============ ============ ============
31st October 1996 ......... 3,507,176 1,192,666 49 2,245,119 69,342
============ ============ ============ ============ ============
31st October 1995 ......... 2,978,664 1,190,947 61 1,713,503 74,153
============ ============ ============ ============ ============
31st October 1994 ......... 2,481,901 921,157 73 1,471,418 89,253
============ ============ ============ ============ ============
</TABLE>
Details of fixed assets held under finance leases and hire purchase
contracts, which are included in the relevant headings in the table above,
are as follows:
1997 1996 1995
(pound) (pound) (pound)
------- --------- -------
Net book value at 31st October
1997............................ 808,682 1,080,707 954,467
F-73
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
11.STOCK AND WORK IN PROGRESS
The amounts attributable to the different categories are as follows:
1997 1996 1995
(POUND) (POUND) (POUND)
-------- ------- -------
Raw materials................... 200,506 200,719 129,345
Packing materials............... 9,698 11,492 15,035
Finished goods.................. 87,466 81,558 61,156
Work in progress................ 44,654 20,202 25,528
-------- ------- -------
342,324 313,971 231,064
======== ======= =======
12.DEBTORS
1997 1996 1995
(POUND) (POUND) (POUND)
--------- --------- ---------
Trade debtors................... 1,595,311 1,562,039 1,219,983
Loans........................... -- -- 160
Prepayments..................... 26,898 20,780 14,430
--------- --------- ---------
1,622,209 1,582,819 1,234,573
--------- --------- ---------
13.CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR
1997 1996 1995
--------- --------- ---------
(POUND) (POUND) (POUND)
Bank overdraft (see note (a)
below).......................... -- 60,005 105,009
Bank loan (see note (b) below).. 36,664 36,664 36,664
--------- --------- ---------
Bank loan and overdraft......... 36,664 96,669 141,673
Trade creditors................. 1,578,688 1,743,509 1,044,690
Corporation tax payable 1st
August 1998
(1996 - 1st August 1997, 1995
- 1st August 1996)........... 261,163 193,820 70,189
Taxation and social security
payments........................ 163,762 130,944 142,640
Hire purchase obligations (see
note (c) below)................. 254,145 327,177 297,128
Accruals........................ 89,794 203,935 87,084
--------- --------- ---------
2,384,216 2,696,054 1,783,404
--------- --------- ---------
(a) Secured by a fixed and floating charge over the other assets of the
company.
(b) Secured by a mortgage on the freehold premises.
(c) Secured on the assets concerned.
F-74
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
14.CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
1997 1996 1995
(POUND) (POUND) (POUND)
------- --------- ---------
Bank loan bearing interest at various rates
repayable by quarter installments
(see note (a) below).................... 705,742 742,406 779,070
(see note (b) below).................... 174,632 316,022 318,971
------- --------- ---------
880,374 1,058,428 1,098,041
------- --------- ---------
(a) Secured by a mortgage on the freehold
premises
(b) Secured on the assets concerned.
The bank loan above analyzed by due dates
of repayment
Repayable between one and two years......... 36,664 36,664 36,664
Repayable between two and five years........ 109,992 109,992 109,992
Repayable after more than five years by
installments................................ 559,086 595,750 632,414
705,742 742,406 779,070
15.DEFERRED TAXATION
1997 1996 1995
PROVIDED UNPROVIDED PROVIDED UNPROVIDED PROVIDED UNPROVIDED
-------- ---------- -------- ---------- -------- ----------
(POUND) (POUND) (POUND) (POUND) (POUND) (POUND)
Accelerated
capital
Allowances.. -- 373,364 -- 316,866 189,227 --
-------- ---------- -------- ---------- -------- ----------
16. SHARE CAPITAL
1997 1996 1995
------- ------- -------
(POUND) (POUND) (POUND)
AUTHORIZED
Ordinary shares of(pound)1 each.................... 100 100 100
CALLED UP SHARE CAPITAL
Shares issued at(pound)1 each (1997:100, 1996:100,
1995:11)....................................... 100 100 11
Shares issued at 5p each (1997:nil, 1996:nil,
1995:89)....................................... -- -- 4
100 100 15
17.LEASING COMMITMENTS
The company leases land and building in Norwich. At 31st October 1997 the
lease has an unexpired term of two years, at a rental of (pound)22,080.
F-75
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
18.CAPITAL EXPENDITURE
1997 1996 1995
------- ------- -------
(POUND) (POUND) (POUND)
Authorized and contracted for..................... 43,652 -- 175,108
======= ======= =======
19.CONTROLLING INTEREST
Mr. J E Barlow owns 60% of the issued share capital of the company and, as
such, controls the company.
20.NOTES TO CASHFLOW STATEMENT
Reconciliation of operating profit to net cash inflow from operating
activities.
1997 1996 1995
(pound) (pound) (pound)
--------- -------- --------
Operating profit......................... 1,101,451 840,144 399,753
Depreciation............................. 441,666 338,363 293,657
Interest payable and similar charges..... 103,769 120,943 128,526
Interest received........................ (21,238) (4,234) --
Increase in stocks....................... (28,353) (82,907) (59,607)
Increase in debtors...................... (39,390) (348,246) (290,978)
(Decrease)/Increase in creditors......... (37,508) 579,118 309,954
--------- -------- --------
Net cash inflow from operating activities 1,520,397 1,443,181 781,305
--------- -------- --------
21.ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
1997 1996 1995
------- -------- ---------
(POUND) (POUND) (POUND)
Interest received........................ 21,238 4,234 --
Interest paid............................ (63,598) (73,625) (81,245)
Interest element of finance lease rental
payments................................. (42,216) (53,493) (45,181)
------- -------- ---------
NET CASH (OUTFLOW) FOR RETURNS ON
INVESTMENTS AND SERVICING OF FINANCE.. (84,576) (122,884) (126,426)
======= ======== =========
CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENT
1997 1996 1995
------- -------- ---------
(POUND) (POUND) (POUND)
Purchase of tangible fixed assets........ (1,107,221) (736,694) (977,113)
Proceeds from the sale of fixed assets... 126,428 100,850 53,000
NET CASH (OUTFLOW) FOR CAPITAL EXPENDITURE
AND FINANCIAL) INVESTMENT............ (980,793) (635,844) (924,113)
F-76
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
21.ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
(CONTINUED)
FINANCING 1997 1996 1995
-------- ------- -------
(pound) (pound) (pound)
Loans advanced to company............. - - 250,000
Loans repaid by company............... (36,664) (36,664) (29,466)
Hire purchase advances to company..... 137,700 386,953 453,296
Hire purchase and finance lease
repayments............................ (352,122) (359,853) (294,720)
Calls on share capital................ - 85 -
-------- ------- -------
NET CASH (OUTFLOW)/INFLOW FROM
FINANCING............................. (251,086) (9,479) (379,110)
22. ANALYSIS OF CHANGES IN NET DEBT
AT AT
1ST 31ST
NOVEMBER CASH OTHER OCTOBER
1994 FLOWS CHANGES 1995
-------- ------- ------- -------
(POUND) (POUND) (POUND) (POUND)
Cash in hand, at bank..... 131 538 - 669
Overdraft................. (164,295) 59,286 - (105,009)
-------- ------- ------- -------
(164,164) 59,824 - (104,340)
Hire purchase and finance
leases.................... (457,523) (158,576) - (616,099)
Debt due within one year.. (25,600) 29,466 (40,530) (36,664)
Debt due after one year... (569,600) (250,000) 40,530 (779,070)
--------- --------- --------- -------
(1,216,887) (319,286) - (1,536,173)
=========== ========== = =========
AT AT
1ST 31ST
NOVEMBER CASH OTHER OCTOBER
1994 FLOWS CHANGES 1996
-------- ------- ------- -------
(POUND) (POUND) (POUND) (POUND)
Cash in hand, at bank..... 669 559,756 - 560,425
Overdraft................. (105,009) 45,004 - (60,005)
------- ------- ------- -------
(104,340) 604,760 - 500,420
Hire purchase and finance
leases ................... (616,099) (27,100) - (643,199)
Debt due within one year.. (36,664) 36,664 (36,664) (36,664)
Debt due after one year... (779,070) - 36,664 (742,406)
--------- - --------- -------
(1,536,173) 614,324 - (921,849)
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
22.ANALYSIS OF CHANGES IN NET DEBT (CONTINUED)
AT AT
1ST 31ST
NOVEMBER CASH OTHER OCTOBER
1994 FLOWS CHANGES 1997
-------- ------- ------- -------
(POUND) (POUND) (POUND) (POUND)
Cash in hand, at bank..... 560,425 (49,880) - 510,545
Overdraft................. (60,005) 60,005 - -
-------- --------- --------- --------
500,420 10,125 - 510,545
Hire purchase and finance
leases ................... (643,199) 214,422 - (428,777)
Debt due within one year.. (36,664) 36,664 (36,664) (36,664)
Debt due after one year... (742,406) - 36,664 (705,742)
--------- -------- --------- ---------
(921,849) 261,211 (660,638)
========== ======== ========= =========
23.COMPANIES ACT 1985
These financial statements do not comprise the Company's statutory accounts
within the meaning of section 240 of the Companies Act 1985 of Great Britain.
Statutory accounts for the years ended 31st October 1997, 1996 and 1995, on
which the auditors' reports were unqualified, have been delivered to the
Registrar of Companies for England and Wales.
24.DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES.
The company's accounts are prepared in accordance with accounting principles
generally accepted in the United Kingdom ("UK GAAP") which differ from United
States generally accepted accounting principles ("US GAAP"). The significant
differences applicable to the company are summarized below.
DEPRECIATION OF FREEHOLD PROPERTY
Under UK GAAP, the company does not depreciate its freehold property. Under
US GAAP, depreciation would be provided.
FINANCE LEASES AND HIRE PURCHASE CONTRACTS
Under UK GAAP, the finance charge relating to finance (capital) leases and
hire purchase contracts is charged to the profit and loss account on a
straight line basis. Under US GAAP, such finance charges would be charged to
income over the period of the lease so as to provide a constant rate of
interest on the remaining balance of the capital obligation. It is considered
that the difference between the two methods in this case does not have a
material effect on either the balance sheets as at 31st October 1995, 31st
October 1996 and 31st October 1997 or the reported results for the years then
ended.
F-78
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
24.DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (CONTINUED)
DEFERRED TAXATION
Under UK GAAP, provision for deferred taxation is only made where in the
opinion of the directors it is likely to be payable in the foreseeable
future.
Under US GAAP, deferred taxation is computed for all temporary differences
between the tax and book bases of assets and liabilities. Deferred tax assets
are recognized to the extent their realisation is more likely than not.
The following is a summary of the significant adjustments to income and
shareholders' funds which would be required if US GAAP were to be applied
instead of UK GAAP.
INCOME
YEAR YEAR YEAR
ENDED ENDED ENDED
31ST 31ST 31ST
OCTOBER OCTOBER OCTOBER
1997 1996 1995
---------- ---------- -----
(pound) (pound) (pound)
Profit on ordinary activities after
taxation as
reported in the profit and loss
account ........................... 840,291 835,526 301,718
---------- ---------- -----
Adjustments
Depreciation....................... (22,160) (21,627) (21,593)
Deferred taxation - methodology.... (73,260) (250,215) (9,789)
- on above adjustments. 6,648 6,488 6,478
---------- ---------- -----
Net income as adjusted to accord with
US GAAP Net income................. 751,519 570,172 276,814
========= ======== =======
SHAREHOLDERS' FUNDS
YEAR YEAR YEAR
ENDED ENDED ENDED
31ST 31ST 31ST
OCTOBER OCTOBER OCTOBER
1997 1996 1995
---------- ------- ------
(POUND) (POUND) (POUND)
Capital and reserves as reported ..... 3,050,200 2,209,909 1,374,298
Adjustments
Fixed assets
Tangible assets-freehold property
depreciation.......................... (97,427) (75,267) (53,640)
Deferred taxation - methodology. (361,320) (288,060) (37,845)
- on above
adjustments 29,228 22,580 16,092
---------- ------- ------
Shareholders' funds as adjusted to
accord
with US GAAP....................... 2,620,681 1,869,162 1,298,905
========== ========= =========
STATEMENT OF CASH FLOWS
The statement of cash flows prepared under UK GAAP presents substantially the
same information as that required under US GAAP but it differs with regard to
the classification of items within it and as regards the definition of cash
under UK GAAP and cash and cash equivalents under US GAAP.
Under UK GAAP, cash flows are presented separately for operating activities,
returns on investments and servicing of finance, taxation, capital
expenditure and financial investment and financing. US GAAP require only
three categories of cash flow activity to be reported, operating, investing
and financing. Cash flows from
F-79
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
taxation and returns on investments and servicing shown under UK GAAP would
be included within operating activities under US GAAP. Capital expenditure
and financial investment would be included within investing activities under
US GAAP.
Under UK GAAP, cash is defined as cash in hand and deposits repayable on
demand less bank overdrafts repayable on demand. Under US GAAP, cash and cash
equivalents would not include bank overdrafts but would include cash deposits
repayable within three months at their inception.
The categories of cash flows under US GAAP can be summarized as follows:
YEAR YEAR YEAR
ENDED ENDED ENDED
31ST 31ST 31ST
OCTOBER OCTOBER OCTOBER
1997 1996 1995
(pound) (pound) (pound)
----------------------------------------
Cash inflow from operating activities. 1,242,004 1,250,083 604,827
----------------------------------------
Cash outflow on investing activities.. (980,793) (635,844) (924,113)
----------------------------------------
Cash outflow from financing activities (251,086) (9,479) 379,110
----------------------------------------
(Decrease)/Increase in cash and cash
equivalents........................... (49,880) 559,756 538
----------------------------------------
Cash and cash equivalents
----------------------------------------
At 1st November.................... 560,425 669 131
----------------------------------------
At 31st October.................... 510,545 560,425 669
<PAGE>
F:\Active\BerryPlastics_S-4__8-4-99\orig\155467(f-pages)c.doc F-84
NORWICH INJECTION MOULDERS LIMITED
PROFIT AND LOSS ACCOUNT
6 MONTHS 6 MONTHS
ENDED ENDED
30 APRIL 30 APRIL
1998 1997
(pound) (pound)
----------------------------------------
Turnover.............................. 4,294,764 3,954,620
----------------------------------------
Change in stock of finished goods..... (8,941) (5,726)
----------------------------------------
3,948,894
----------------------------------------
Other operating income................ 11,663 10,707
----------------------------------------
4,297,486 3,959,601
----------------------------------------
----------------------------------------
Raw materials and consumables......... 1,813,051 1,735,182
----------------------------------------
Other external charges................ 272,590 316,745
----------------------------------------
Staff costs........................... 812,776 731,892
----------------------------------------
Depreciation.......................... 251,990 201,514
----------------------------------------
Other operating charges............... 405,219 434,945
----------------------------------------
Interest payable and similar charges.. 47,096 53,500
----------------------------------------
----------------------------------------
----------------------------------------
Profit on ordinary activities before
taxation.............................. 694,754 485,823
----------------------------------------
Tax on profit on ordinary activities.. 225,798 115,140
----------------------------------------
Profit on ordinary activities after
taxation.............................. 468,956 370,683
----------------------------------------
Balance 1st November.................. 3,050,100 2,209,809
----------------------------------------
Balance 30th April 3,519,056 2,580,492
----------------------------------------
==============================================================================
There are no movements in shareholders funds other than the increase to
the retained profits for the six month periods ended 30th April 1998 and 30th
April 1997.
There were no recognized gains or losses other than the profit of
(pound)468,956 in the six months ended 30th April 1998, and (pound)370,683 in
the six months ended 30th April 1997.
* A summary of the significant adjustments to the profit on ordinary activities
after taxation (net income) that would be required if US Generally Accepted
Accounting Principles were to be applied instead of those generally accepted
in the United Kingdom is set out in the Notes to the Accounts.
F-81
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
BALANCE SHEET
-----------
30 APRIL
1998
(poUnd)
FIXED ASSETS
Tangible Assets....................... 3,907,483
CURRENT ASSETS
Stock and work in progress............ 307,332
Debtors............................... 1,651,367
Cash at bank and in hand.............. 886,682
--------------------------------------
CREDITORS - AMOUNTS FALLING DUE
WITHIN ONE YEAR....................... 2,240,635
NET CURRENT ASSETS/(LIABILITIES)...... 604,746
NET ASSETS LESS CURRENT LIABILITIES... 4,512,229
CREDITORS - AMOUNTS FALLING DUE AFTER
MORE THAN ONE YEAR.................... 993,073
PROVISIONS FOR LIABILITIES AND
CHARGES
DEFERRED TAXATION..................... -
3,519,156
CAPITAL AND RESERVES*.................
Called up share capital............... 100
Profit and loss account............... 3,519,056
3,519,156
----------------------------------------
==============================================================================
* A summary of the significant adjustments to capital and reserves (shareholders
funds) that would be required if US Generally Accepted Accounting Principles
were to be applied instead of those generally accepted in the United Kingdom
is set out in the Notes to the Accounts.
F-82
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
CASH FLOW STATEMENT
6 MONTHS
ENDED
6 MONTHS ------------
ENDED 30TH 30TH APRIL
APRIL 1998 1997
(pound) (pound)
CASH FLOW FROM OPERATING ACTIVITIES... 887,585 585,484
RETURNS ON INVESTMENTS AND SERVING OF
FINANCE............................... (35,433) (42,793)
TAXATION - -
CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENT............................ (319,771) (422,933)
Cash inflow before use of liquid
resources and financing............... 532,381 119,758
FINANCING - Decrease in debt.......... (156,244) (159,666)
INCREASE/(DECREASE) IN CASH IN THE
PERIOD................................ 376,137 (39,908)
RECONCILIATION OF NET CASH FLOW TO
MOVEMENT IN NET DEBT
INCREASE/(DECREASE) IN CASH IN THE
PERIOD................................ 376,137 (39,908)
Cash outflow/(inflow) from
decrease/increase in debt and lease
financing............................. 156,244 159,666
MOVEMENT IN THE NET DEBT IN THE PERIOD 532,381 119,758
NET DEBT AT 1ST NOVEMBER.............. (660,638) (921,849)
NET DEBT AT 30TH APRIL (128,257) (802,091)
----------------------------------------
The significant differences between the cashflow statement presented
above and that required under the US Generally Accepted Accounting Principles
are set out in Note 4 of the Notes to the Accounts.
F-83
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS
1. PRINCIPAL ACCOUNTING POLICIES
The accounts are prepared under the historical cost basis of accounting
and in accordance with applicable UK accounting standards.
2. CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR
1998 1997
(pound) (pound)
----------------------------------------
----------------------------------------
Bank loan (see note (a) below)........ 36,664 36,664
----------------------------------------
Bank loan and overdraft...............
----------------------------------------
----------------------------------------
Trade creditor........................ 1,544,442 1,747,629
----------------------------------------
Corporation tax payable 1st August.... 261,163 193,820
----------------------------------------
Taxation and social security payments. 187,366 172,042
----------------------------------------
Hire purchase obligations (see (b)
below)................................ 211,000 211,000
----------------------------------------
2,240,635 2,361,155
----------------------------------------
(a) Secured by a mortgage on a freehold premises.
==============================================================================
(b) Secured on the assets concerned.
3. CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
1998 1997
(pound) (pound)
----------------------------------------
----------------------------------------
Bank loan bearing interest at various
rates repayable by quarterly
installments (see note (a) below)..... 687,410 724,074
----------------------------------------
Hire purchase obligations............. 79,865 290,865
----------------------------------------
Corporation Tax....................... 225,798 115,140
----------------------------------------
----------------------------------------
(a) Secured by a mortgage on the freehold premises.
==============================================================================
(b) Secured on the assets concerned.
1998 1997
(pound) (pound)
----------------------------------------
The bank loan above analyzed by due
dates of repayment
----------------------------------------
Repayable between one and two years... 36,664 36,664
----------------------------------------
Repayable between two and five years.. 109,992 109,992
----------------------------------------
Repayable after more than five years
by installments....................... 540,754 577,418
----------------------------------------
----------------------------------------
==============================================================================
4. DIFFERENCE BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES.
The company's accounts are prepared in accordance with accounting
principles generally accepted in the United Kingdom ("UK GAAP") which differ
from United States generally accepted accounting principles ("US GAAP"). The
significant differences applicable to the company are summarized below.
F-84
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
DEPRECIATION OF FREEHOLD PROPERTY
Under UK GAAP, the company does not depreciate its freehold property.
Under US GAAP, depreciation would be provided.
FINANCE LEASES AND HIRE PURCHASE CONTRACTS
Under UK GAAP, the finance charge relating to finance (capital) leases and
hire purchase contracts is charged to the profit and loss account on a straight
line basis. Under US GAAP, such finance charges would be charged to income over
the period of the lease so as to provide a constant rate of interest on the
remaining balance of the capital obligation. It is considered that the
difference between the two methods in this case does not have a material effect
on either the balance sheets as at 30th April 1997 and 30th April 1998 or the
reported results for the six month periods then ended.
DEFERRED TAXATION
Under UK GAAP, provision for deferred taxation is only made where in the
opinion of the directors it is likely to be payable in the foreseeable future.
Under US GAAP, deferred taxation is computed for all temporary differences
between the tax and book bases of assets and liabilities. Deferred tax assets
are recognized to the extent their realization is more likely than not.
The following is a summary of the significant adjustments to income and
shareholders' funds which would be required if US GAAP were to be applied
instead of UK GAAP.
INCOME
6 MONTHS
ENDED
6 MONTHS ------------
ENDED 30TH 30TH APRIL
APRIL 1998 1997
(pound) (pound)
Profit on ordinary activities after
taxation as reported on the profit
and loss account...................... 468,956 370,683
Adjustments
Depreciation (11,080) (10,814)
Deferred taxation - methodology....... (37,420) (36,630)
- an
above adjustments..................... 3,324 3,244
Net income as adjusted to accord with
US GAAP Net income.................... 423,780 326,483
SHAREHOLDERS' FUNDS
6 MONTHS
ENDED
6 MONTHS ------------
ENDED 30TH 30TH APRIL
APRIL 1998 1997
(pound) (pound)
Capital and reserves as reported...... 3,519,156 2,580,592
Adjustments
Fixed Assets
Tangible Assets - freehold property
depreciation.......................... (108,507) (86,347)
Deferred taxation -
methodology........................... (397,950) (324,690)
- on above adjustments................ 32,550 25,904
Shareholders' funds as adjusted to
accord with US GAAP................... 3,045,249 2,195,459
----------------------------------------
F-85
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
NOTES TO THE ACCOUNTS (CONTINUED)
STATEMENT OF CASH FLOWS
The statement of cash flows prepared under UK GAAP presents substantially
the same information as that required under US GAAP but it differs with regard
to the classification of items within it and as regards the definition of cash
under UK GAAP and cash and cash equivalents under US GAAP.
Under UK GAAP, cash flows are presented separately for operating
activities, returns on investments and servicing of finance, taxation, capital
expenditure and financial investment and financing. US GAAP require only three
categories of cash flow activity to be reported, operating, investing and
financing. Cash flows from taxation and returns on investments and servicing
shown under UK GAAP would be included within operating activities under US GAAP.
Capital expenditure and financial investment would be included within investing
activities under US GAAP.
Under UK GAAP, cash is defined as cash in hand and deposits repayable on
demand less bank overdrafts repayable on demand. Under US GAAP, cash and cash
equivalents would not include bank overdrafts but would include cash deposits
repayable within three months at their inception.
The categories of cash flows under US GAAP can be summarized as follows:
6 MONTHS
ENDED
6 MONTHS ------------
ENDED 30TH 30TH APRIL
APRIL 1998 1997
(pound) (pound)
Cash inflow from operating activities. 676,633 501,630
Cash outflow on investing activities.. (319,771) (422,933)
Cash outflow from financing activities (156,244) (159,666)
(Decrease)/Increase in cash and cash
equivalents........................... 376,137 (39,908)
Cash and cash equivalents
At 1st November.............. 510,545 500,420
At 30th April................ 886,682 460,512
F-86
<PAGE>
- ------------------------------------------------------------
BERRY PLASTICS CORPORATION
$75,000,000
11% SENIOR SUBORDINATED NOTES DUE 2007
- ------------------------------------------------------------
--------------------------------
PROSPECTUS
--------------------------------
- --------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this offering memorandum or to make
representations as to matters not stated in this offering memorandum. You must
not rely on unauthorized information. This offering memorandum is not an offer
to sell these securities or our solicitation of your offer to buy these
securities in any jurisdiction where that would not be permitted or legal.
Neither the delivery of this offering memorandum nor any sales made hereunder
after the date of this offering memorandum shall create an implication that the
information contained herein or our affairs have not changed since the date
hereof.
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate or Articles of Incorporation of the Company and each of
the Guarantors (except Norwich), in each case as amended, provide that the
Company and the Guarantors shall indemnify their respective directors to the
fullest extent permitted under the DGCL and the laws of England and Wales
(collectively, the "Corporation Law"), as applicable.
The Corporation Law provides for indemnification by the Company and each
of the Guarantors of their respective directors and officers. In addition, the
By-laws of each of the Company and each Guarantor require the respective company
to indemnify its current or former directors and officers to the fullest extent
permitted by the applicable Corporation Law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
2.1 Asset Purchase Agreement dated February 12, 1992, among the Company,
Berry Iowa, Berry Carolina, Inc., Genpak Corporation, a New York
corporation, and Innopac International Inc., a public Canadian
corporation (filed as Exhibit 10.1 to the Registration Statement on
Form S-1 filed on February 24, 1994 (Registration No. 33-75706) (the
"Form S-1") and incorporated herein by reference)
2.2 Asset Purchase Agreement dated December 24, 1994, between the
Company and Berry Plastics, Inc. (filed as Exhibit 10.2 to the Form
S-1 and incorporated herein by reference)
2.3 Asset Purchase Agreement dated March 1, 1995, among Berry Sterling,
Sterling Products, Inc. and the stockholders of Sterling Products,
Inc. (filed as Exhibit 2.3 to the Annual Report on Form 10-K filed on
March 31, 1995 (the "1994 Form 10-K") and incorporated herein by
reference)
2.4 Asset Purchase Agreement dated December 21, 1995, among Berry
Tri-Plas, Tri-Plas, Inc. and Frank C. DeVore (filed as Exhibit 2.4 to
the Annual Report on Form 10-K filed on March 28, 1996 (the "1995 Form
10-K") and incorporated herein by reference)
2.5 Asset Purchase Agreement dated January 23, 1996, between the
Company and Alpha Products, Inc. (filed as Exhibit 2.5 to the 1995
Form 10-K and incorporated herein by reference)
2.6 Stock Purchase and Recapitalization Agreement dated as of June 12,
1996, by and among Holding, BPC Mergerco, Inc. ("Mergerco") and the
other parties thereto (filed as Exhibit 2.1 to the Current Report on
Form 8-K filed on July 3, 1996 (the "Form 8-K") and incorporated
herein by reference)
II-1
<PAGE>
2.7 Preferred Stock and Warrant Purchase Agreement dated as of June 12,
1996, by and among Holding, Mergerco, Chase Venture Capital
Associates, L.P. ("CVCA") and The Northwestern Mutual Life Insurance
Company ("Northwestern") (filed as Exhibit 2.2 to the Form 8-K and
incorporated herein by reference)
2.8 Agreement and Plan of Merger dated as of June 18, 1996, by and between
Holding and Mergerco (filed as Exhibit 2.3 to the Form 8-K and
incorporated herein by reference)
2.9 Certificate of Merger of Mergerco with and into Holding, dated as of
June 18, 1996 (filed as Exhibit 2.9 to the Registration Statement on
Form S-4 filed on July 17, 1996 (Registration No. 333-08313) (the
"1996 Form S-4") and incorporated herein by reference)
2.10 Agreement and Plan of Reorganization dated as of January 14, 1997 (the
"PackerWare Reorganization Agreement"), among the Company, PackerWare
Acquisition Corporation, PackerWare Corporation and the shareholders
of PackerWare (filed as Exhibit 2.1 to the Current Report on Form 8-K
filed on February 4, 1997 (the "1997 8-K") and incorporated herein by
reference)
2.11 Amendment to the PackerWare Reorganization Agreement dated as of
January 20, 1997 (filed as Exhibit 2.2 to the 1997 8-K and
incorporated herein by reference)
2.12 Asset Purchase Agreement dated as of January 17, 1997, among the
Company, Container Industries and the shareholders of Container
Industries (filed as Exhibit 2.12 to the Annual Report on Form 10-K
for the fiscal year ended December 28, 1996 (the "1996 Form 10-K") and
incorporated herein by reference)
2.13 Agreement and Plan of Reorganization dated as of January 14, 1997, as
amended on January 20, 1997, among the Company, PackerWare Acquisition
Corporation, PackerWare Corporation and the Shareholders of PackerWare
Corporation (filed as Exhibits 2.1 and 2.2 to the Current Report on
Form 8-K filed February 3, 1997 and incorporated herein by reference)
2.14 Asset Purchase Agreement dated May 13, 1997, among the Company, Berry
Design, Virginia Design Packaging Corp. and the shareholders of
Virginia Design Packaging Corp. (filed as Exhibit 2.14 to the Annual
Report on Form 10-K for the fiscal year ended December 27, 1997 (the
"1997 Form 10-K") and incorporated herein by reference)
2.15 Agreement for the Sale and Purchase of the Entire Issued Share Capital
of Norwich Injection Moulders Limited dated July 2, 1998, among the
Company, NIM Holdings Limited and the persons listed on Schedule 1
thereto
II-2
<PAGE>
2.16 Stock Purchase Agreement dated June 18, 1999 among the Company, CPI
Holding, Cardinal and the Shareholders of CPI Holding (filed as
Exhibit 2.1 to the Current Report on Form 8-K filed on July 21, 1999
and incorporated herein by reference).
3.1 Amended and Restated Certificate of Incorporation of Holding (filed as
Exhibit 3.1 to the 1996 Form S-4 and incorporated herein by reference)
3.2 By-laws of Holding (filed as Exhibit 3.2 to the Form S-1 and
incorporated herein by reference)
3.3 Certificate of Incorporation of the Company (filed as Exhibit 3.3
to the Form S-1 and incorporated herein by reference)
3.4 By-laws of the Company (filed as Exhibit 3.4 to the Form S-1 and
incorporated herein by reference)
3.5 Certificate of Incorporation of Berry Iowa (filed as Exhibit 3.5 to
the Form S-1 and incorporated herein by reference)
3.6 By-laws of Berry Iowa (filed as Exhibit 3.6 to the Form S-1 and
incorporated herein by reference)
3.7 Certificate of Incorporation of Berry Tri-Plas (filed as Exhibit 3.7
to the Form S-1 and incorporated herein by reference)
3.8 By-laws of Berry Tri-Plas (filed as Exhibit 3.8 to the Form S-1 and
incorporated herein by reference)
3.9 Certificate of Amendment to the Certificate of Incorporation of Berry
Tri-Plas (filed as Exhibit 3.9 to the 1996 Form 10-K and incorporated
herein by reference)
3.10 Certificate of Designation, Preferences, and Rights of Series B
Cumulative Preferred Stock of Holding (filed as Exhibit 3.10 to the
1997 Form 10-K and incorporated herein by reference)
3.11 Certificate of Incorporation of Berry Sterling
3.12 By-laws of Berry Sterling
3.13 Certificate of Incorporation of AeroCon
3.14 By-laws of AeroCon
3.15 Articles of Incorporation of PackerWare
3.16 By-laws of PackerWare
II-3
<PAGE>
3.17 Certificate of Incorporation of Berry Design
3.18 By-laws of Berry Design
3.19 Certificate of Incorporation of Venture Holdings
3.20 By-laws of Venture Holdings
3.21 Articles of Incorporation of Venture Midwest
3.22 Code of Regulations of Venture Midwest
3.23 Articles of Incorporation for a Statutory Close Corporation of
Venture Southeast
3.24 By-laws of Venture Southeast
3.25 Memorandum of Association of NIM Holdings
3.26 Articles of Association of NIM Holdings
3.27 Memorandum of Association of Norwich
3.28 Articles of Association of Norwich
3.29 Certificate of Incorporation of Knight Plastics
3.30 By-laws of Knight Plastics
* 4.1 Indenture dated April 21, 1994 between the Company and United
States Trust Company of New York, as Trustee (including the form of
Note and Guarantees as Exhibits A and B thereto respectively)
4.2 Warrant Agreement between Holding and United States Trust Company of
New York, as Warrant Agent (filed as Exhibit 4.2 to the Form S-1 and
incorporated herein by reference)
4.3 Indenture dated as of June 18, 1996, between Holding and First Trust
of New York, National Association, as Trustee (the "Trustee"),
relating to Holding's Series A and Series B 12.5% Senior Secured Notes
Due 2006
4.4 Pledge, Escrow and Disbursement Agreement dated as of June 18, 1996,
by and among Holding, the Trustee and First Trust of New York,
National Association, as Escrow Agent (filed as Exhibit 4.4 to the
1996 Form S-4 and incorporated herein by reference)
II-4
<PAGE>
4.5 Holding Pledge and Security Agreement dated as of June 18, 1996,
between Holding and First Trust of New York, National Association, as
Collateral Agent (filed as Exhibit 4.5 to the 1996 Form S-4 and
incorporated herein by reference)
4.6 Registration Rights Agreement dated as of June 18, 1996, by and among
Holding and DLJ (filed as Exhibit 4.6 to the 1996 Form S-4 and
incorporated herein by reference)
4.7 BPC Holding Corporation 1996 Stock Option Plan (filed as Exhibit 4.7
to the 1996 Form 10-K and incorporated herein by reference)
4.8 Form of Nontransferable Performance-Based Incentive Stock Option
Agreement (filed as Exhibit 4.7 to the 1996 Form 10-K and incorporated
herein by reference)
4.9 Indenture dated as of August 24, 1998 among the Company, the
Guarantors and United States Trust Company of New York, as trustee
4.10 Registration Rights Agreement dated as of August 24, 1998 by and among
the Company, the Guarantors and DLJ
*5 Opinion of O'Sullivan Graev & Karabell, LLP (including the consent
of such firm) regarding the legality of the securities being offered
8 Opinion of O'Sullivan Graev & Karabell, LLP regarding the material
United States Federal income tax consequences to the holders of the
securities being offered
10.1 Second Amended and Restated Financing and Security Agreement dated as
of July 2, 1998, as amended, by and among the Company, NIM Holdings,
Norwich, Fleet Capital Corporation, General Electric Capital
Corporation, Heller Financial, Inc. and NationsBank, N.A.
10.2 Employment Agreement dated December 24, 1990, as amended, between the
Company and Martin R. Imbler ("Imbler") (filed as Exhibit 10.9 to the
Form S-1 and incorporated herein by reference)
10.3 Amendment to Imbler Employment Agreement dated November 30, 1995
(filed as Exhibit 10.6 to the 1995 Form 10-K and incorporated herein
by reference)
10.4 Amendment to Imbler Employment Agreement dated June 30, 1996 (filed as
Exhibit 10.4 to the 1996 Form S-4 and incorporated herein by
reference)
10.5 Employment Agreement dated December 24, 1990, as amended, between the
Company and R. Brent Beeler ("Beeler") (filed as Exhibit 10.10 to the
Form S-1 and incorporated herein by reference)
10.6 Amendment to Beeler Employment Agreement dated November 30, 1995
(filed as Exhibit 10.8 to the 1995 Form 10-K and incorporated herein
by reference)
II-5
<PAGE>
10.7 Amendment to Beeler Employment Agreement dated June 30, 1996 (filed as
Exhibit 10.7 to the 1996 Form S-4 and incorporated herein by
reference)
10.8 Employment Agreement dated December 24, 1990, as amended, between the
Company and James M. Kratochvil ("Kratochvil") (filed as Exhibit 10.12
to the Form S-1 and incorporated herein by reference)
10.9 Amendment to Kratochvil Employment Agreement dated November 30, 1995
(filed as Exhibit 10.12 to the 1995 Form 10-K and incorporated herein
by reference)
10.10 Amendment to Kratochvil Employment Agreement dated June 30, 1996
(filed as Exhibit 10.13 to the 1996 Form S-4 and incorporated herein
by reference)
10.11 Employment Agreement dated as of January 1, 1993, between the Company
and Ira G. Boots ("Boots") (filed as Exhibit 10.13 to the Form S-1 and
incorporated herein by reference)
10.12 Amendment to Boots Employment Agreement dated November 30, 1995 (filed
as Exhibit 10.14 to the 1995 Form 10-K and incorporated herein by
reference)
10.13 Amendment to Boots Employment Agreement dated June 30, 1996 (filed as
Exhibit 10.16 to the 1996 Form S-4 and incorporated herein by
reference)
10.14 Financing Agreement dated as of April 1, 1991, between the City of
Henderson, Nevada Public Improvement Trust and the Company (including
exhibits) (filed as Exhibit 10.17 to the Form S-1 and incorporated
herein by reference)
10.15 Letter of Credit of NationsBank, N.A. dated April 16, 1997
10.16 Purchase Agreement dated as of June 12, 1996, between Holding and DLJ
relating to the 12.5% Senior Secured Notes due 2006 (filed as Exhibit
10.22 to the 1996 Form S-4 and incorporated herein by reference)
10.17 Stockholders Agreement dated as of June 18, 1996, among Holding,
Atlantic Equity Partners International II, L.P., CVCA and the other
parties thereto (filed as Exhibit 10.23 to the 1996 Form S-4 and
incorporated herein by reference)
10.18 Warrant to purchase Class B Common Stock of Holding dated June 18,
1996, issued to CVCA (Warrant No. 1) (filed as Exhibit 10.24 to the
1996 Form S-4 and incorporated herein by reference)
10.19 Warrant to purchase Class B Common Stock of Holding dated June 18,
1996, issued to CVCA (Warrant No. 2) (filed as Exhibit 10.25 to the
1996 Form S-4 and incorporated herein by reference)
II-6
<PAGE>
10.20 Warrant to purchase Class B Common Stock of Holding dated June 18,
1996, issued to The Northwestern Mutual Life Insurance Company
(Warrant No. 3) (filed as Exhibit 10.26 to the 1996 Form S-4 and
incorporated herein by reference)
10.21 Warrant to purchase Class B Common Stock of Holding dated June 18,
1996, issued to The Northwestern Mutual Life Insurance Company
(Warrant No. 4) (filed as Exhibit 10.27 to the 1996 Form S-4 and
incorporated herein by reference)
10.22 Amended and Restated Stockholders Agreement dated June 18, 1996, among
Holding and certain stockholders of Holding (filed as Exhibit 10.28 to
the 1996 Form S-4 and incorporated herein by reference)
10.23 Second Amended and Restated Management Agreement dated June 18, 1996,
between First Atlantic Capital, Ltd. and the Company (filed as Exhibit
10.29 to the 1996 Form S-4 and incorporated herein by reference)
10.24 Warrant to purchase Class B Non-Voting Common Stock of BPC Holding
Corporation, dated August 29, 1997, issued to Willard J. Rathbun
(filed as Exhibit 10.30 to the 1997 Form 10-K and incorporated herein
by reference)
10.25 Warrant to purchase Class B Non-Voting Common Stock of BPC Holding
Corporation, dated August 29, 1997, issued to Craig Rathbun (filed as
Exhibit 10.31 to the 1997 Form 10-K and incorporated herein by
reference)
10.26 Purchase Agreement dated August 19, 1998 among the Company, the
Guarantors and DLJ (filed as Exhibit 10.26 to the Registration
Statement on Form S-4 filed September 29, 1998)
*10.27 Indenture dated as of July 6, 1999 among the Company, the Guarantors
and United States Trust Company of New York , as trustee
*10.28 Registration Rights Agreement dated as of July 6, 1999 by and among
the Company, the Guarantors, DLJ and Chase Securities, Inc.
21 List of Subsidiaries
23.1 Consent of O'Sullivan Graev & Karabell, LLP (included as part of its
opinion filed as Exhibit 5 hereto)
*23.2 Consent of Ernst & Young LLP, independent auditors
*23.3 Consent of Deloitte & Touche LLP, independent auditors
*23.4 Consent of Lovewell Blake, independent auditors
*24 Powers of Attorney
II-7
<PAGE>
25 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of United States Trust Company of New York,
as Trustee (separately bound)
27 Financial Data Schedule
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4 Form of Letter to Clients
* Filed herewith.
(b) FINANCIAL STATEMENT SCHEDULES
Report of Independent Auditors S-1
Schedule I -- Condensed Financial Information of Registrant S-2
Schedule II -- Valuation and Qualifying Accounts S-6
Schedules other than the above have been omitted because they are either not
applicable or the required information has been disclosed in the financial
statements or notes thereto.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the Corporation Law, the Certificate of Incorporation
and By-laws, 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 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 and will be governed by the final adjudication
of such issue.
The 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;
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or
II-8
<PAGE>
in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of that time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrants hereby undertake to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 20th day of August, 1999.
BERRY PLASTICS CORPORATION
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of BERRY PLASTICS CORPORATION,
do hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Ira G. Boots
- ---------------------------
Ira G. Boots Director August 20, 1999
/S/ David M. Clarke
- ---------------------------
David M. Clarke Director August 20, 1999
/S/ Lawrence G. Graev
- ---------------------------
Lawrence G. Graev Director August 20, 1999
/S/ Donald J. Hofmann
- ---------------------------
Donald J. Hofmann Director August 20, 1999
/S/ Mathew J. Lori
- ---------------------------
Mathew J. Lori Director August 20, 1999
II-10
<PAGE>
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
BPC HOLDING CORPORATION
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President
POWER OF ATTORNEY
We, the undersigned directors and officers of BPC HOLDING CORPORATION, do
hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
/S/ Martin R. Imbler President and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ David M. Clarke
- ---------------------------
David M. Clarke Director August 20, 1999
/S/ Lawrence G. Graev
- ---------------------------
Lawrence G. Graev Director August 20, 1999
/S/ Donald J. Hofmann
- ---------------------------
Donald J. Hofmann Director August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
/S/ Mathew J. Lori
- ---------------------------
Mathew J. Lori Director August 20, 1999
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
BERRY IOWA CORPORATION
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of BERRY IOWA CORPORATION, do
hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
BERRY TRI-PLAS CORPORATION
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of BERRY TRI-PLAS CORPORATION,
do hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
BERRY STERLING CORPORATION
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of BERRY STERLING CORPORATION,
do hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
AEROCON, INC.
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of AEROCON, INC., do hereby
constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or either of
them, our true and lawful attorneys and agents, to do any and all acts and
things in our name and on our behalf in our capacities as directors and officers
and to execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said Corporation to comply with the Securities
Act of 1933 and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement, including
specifically, but without limitation, power and authority to sign for us or any
of us in our names in the capacities indicated below, any and all amendments
(including post-effective amendments) hereto; and we do hereby ratify and
confirm all that said attorneys and agents, or either of them, shall do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
President, Chief Executive
Officer and Chairman of the
/S/ Martin R. Imbler Board of Directors
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
PACKERWARE CORPORATION
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of PACKERWARE CORPORATION, do
hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
PACKERWARE CORPORATION
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of PACKERWARE CORPORATION, do
hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
BERRY PLASTICS DESIGN CORPORATION
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of BERRY PLASTICS DESIGN
CORPORATION, do hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R.
IMBLER, or either of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable said Corporation to
comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto; and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
VENTURE PACKAGING, INC.
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of VENTURE PACKAGING, INC., do
hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
VENTURE PACKAGING MIDWEST, INC.
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of VENTURE PACKAGING MIDWEST,
INC., do hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
VENTURE PACKAGING SOUTHEAST, INC.
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of VENTURE PACKAGING SOUTHEAST,
INC., do hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
VENTURE PACKAGING SOUTHEAST, INC.
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of VENTURE PACKAGING SOUTHEAST,
INC., do hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER,
or either of them, our true and lawful attorneys and agents, to do any and all
acts and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
NIM HOLDINGS LIMITED
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of NIM HOLDINGS LIMITED, do
hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Martin R. Imbler Chairman of the Board of
- --------------------------- Directors (Principal
Martin R. Imbler Executive Officer) August 20, 1999
/S/ James M. Kratochvil
- --------------------------- Director (Principal Financial
James M. Kratochvil and Accounting Officer) August 20, 1999
/S/ Trevor D. Johnson
- ---------------------------
Trevor D. Johnson Sales and Marketing Director August 20, 1999
/S/ Alan R. Sandell
- ---------------------------
Alan R. Sandell Managing Director August 20, 1999
/S/ Ira G. Boots
- ---------------------------
Ira G. Boots Director August 20, 1999
II-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
NORWICH INJECTION MOULDERS LIMITED
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of NORWICH INJECTION MOULDERS
LIMITED, do hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R.
IMBLER, or either of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable said Corporation to
comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto; and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Martin R. Imbler Chairman of the Board of
- --------------------------- Directors (Principal
Martin R. Imbler Executive Officer) August 20, 1999
/S/ James M. Kratochvil
- --------------------------- Director (Principal Financial
James M. Kratochvil and Accounting Officer) August 20, 1999
/S/ Trevor D. Johnson
- ---------------------------
Trevor D. Johnson Sales and Marketing Director August 20, 1999
/S/ Alan R. Sandell
- ---------------------------
Alan R. Sandell Managing Director August 20, 1999
/S/ Ira G. Boots
- ---------------------------
Ira G. Boots Director August 20, 1999
II-25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
KNIGHT PLASTICS, INC.
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of KNIGHT PLASTICS, INC., do
hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Martin R. Imbler Chairman of the Board of
- --------------------------- Directors (Principal
Martin R. Imbler Executive Officer) August 20, 1999
/S/ James M. Kratochvil Director
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Trevor D. Johnson
- ---------------------------
Alan R. Sandell Managing Director August 20, 1999
/S/ Ira G. Boots
- ---------------------------
Ira G. Boots Director August 20, 1999
II-26
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
BERRY PLASTICS ACQUISITION CORPORATION
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of BERRY PLASTICS ACQUISITION
CORPORATION, do hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R.
IMBLER, or either of them, our true and lawful attorneys and agents, to do any
and all acts and things in our name and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable said Corporation to
comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto; and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Martin R. Imbler Chairman of the Board of
- --------------------------- Directors (Principal
Martin R. Imbler Executive Officer) August 20, 1999
/S/ James M. Kratochvil
- --------------------------- Director (Principal Financial
James M. Kratochvil and Accounting Officer) August 20, 1999
/S/ Trevor D. Johnson
- ---------------------------
Joseph S. Levy Sales and Marketing Director August 20, 1999
/S/ Ira G. Boots
- ---------------------------
Ira G. Boots Director August 20, 1999
II-27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
CPI HOLDING CORPORATION
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of CPI HOLDING CORPORATION, do
hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
CARDINAL PACKAGING, INC.
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of CARDINAL PACKAGING, INC., do
hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Roberto Buaron
- --------------------------- Chairman of the Board of
Roberto Buaron Directors August 20, 1999
President, Chief Executive
/S/ Martin R. Imbler Officer and Director
- --------------------------- (Principal Executive
Martin R. Imbler Officer) August 20, 1999
Executive Vice President,
Chief Financial Officer,
/S/ James M. Kratochvil Treasurer and Secretary
- --------------------------- (Principal Financial and
James M. Kratochvil Accounting Officer) August 20, 1999
/S/ Joseph S. Levy
- ---------------------------
Joseph S. Levy Director August 20, 1999
II-29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 20th day of August, 1999.
NORWICH ACQUISITION LIMITED
By:___/S/ MARTIN R. IMBLER_____________
Martin R. Imbler
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of NORWICH ACQUISITION LIMITED,
do hereby constitute and appoint JAMES M. KRATOCHVIL and MARTIN R. IMBLER, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ Martin R. Imbler Chairman of the Board of
- --------------------------- Directors (Principal
Martin R. Imbler Executive Officer) August 20, 1999
/S/ James M. Kratochvil
- --------------------------- Director (Principal Financial
James M. Kratochvil and Accounting Officer) August 20, 1999
/S/ Trevor D. Johnson
- ---------------------------
Trevor D. Johnson Sales and Marketing Director August 20, 1999
/S/ Alan R. Sandell
- ---------------------------
Alan R. Sandell Managing Director August 20, 1999
/S/ Ira G. Boots
- ---------------------------
Ira G. Boots Director August 20, 1999
II-30
<PAGE>
REPORT OF INDEPENDENT AUDITORS ON
FINANCIAL STATEMENT SCHEDULES
We have audited the consolidated financial statements of BPC Holding Corporation
as of January 2, 1999, and for each of the three years in the period ended
January 2, 1999, and have issued our report thereon dated February 19, 1999
(included elsewhere in this Registration Statement). Our audits also included
the financial statement schedules listed in Item 21(b) of this Registration
Statement. These schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audit.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Indianapolis, Indiana
February 19, 1999
S-1
<PAGE>
BPC HOLDING CORPORATION
(PARENT COMPANY)
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANt
CONDENSED BALANCE SHEETS
JANUARY DECEMBER
2, 1999 27, 1997
(IN THOUSANDS)
- -----------------------------------------------
ASSETS
$
Cash 622 708
Other assets (principally investment in
subsidiary) (25,992) (31,808)
Assets held in trust 6,679 18,933
Intangible assets 3,704 4,281
Due from Berry Plastics Corporation 8,095 8,095
Other -- --
$
Total assets $(6,892) 209
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
$
Current liabilities $1,240 510
Accrued dividends 7,225 3,674
Long-term debt 105,000 105,000
Total liabilities 113,465 109,184
Preferred stock 16,801 16,509
Class A common stock 4 4
Class B common stock 2 2
Class C common stock -- --
Treasury stock 280 (22)
Additional paid-in capital 45,611 49,374
Warrants 3,511 3,511
Retained earnings (deficit) (185,923) (178,353)
Total stockholders' equity (deficit) (120,357) (108,975)
Total liabilities and stockholders' equity $
(deficit) $(6,892) 209
- -----------------------------------------------
S-2
<PAGE>
BPC HOLDING CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED
---------------------------------------
JANUARY 2, DECEMBER DECEMBER
1999 27, 1997 28, 1996
------------ ----------- ------------
(IN THOUSANDS)
$ $
Net sales -- -- $ --
Cost of goods sold -- -- --
Gross profit -- -- --
Operating expenses 749 220 3,304
Interest expense, net 12,720 11,560 6,294
---------
Loss before income taxes and equity in
net income (loss) of subsidiary (13,469) (11,780) (9,598)
Equity in net income (loss) of
subsidiary 5,899 (2,631) 5,989
Loss before income taxes (7,570) (14,411) (3,609)
Income taxes -- -- (262)
Net loss (7,570) (14,411) (3,347)
Preferred stock dividends (3,551) (2,558) (1,116)
Amortization of preferred stock discount (292) (74) --
- -----------------------------------------
Net loss attributable to common $ $
shareholders (11,413) (17,043) $ (4,463)
- -----------------------------------------
S-3
<PAGE>
BPC HOLDING CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
Year ended
--------------------------------------
-------------------------------------
January 2, December December
1999 27, 1997 28, 1996
(IN THOUSANDS)
- -------------------------------------
$ $
Net income (loss) $(7,570) (14,411) (3,347)
Adjustments to reconcile net loss
provided by operating activities:
Net loss (income) of
subsidiary (5,899) 2,631 (5,989)
Amortization and non cash
interest 500 726 441
Interest funded by assets
held in trust 12,221 11,256 5,412
Non-cash compensation -- -- 358
Changes in operating assets
and liabilities 840 (208) 427
Net cash provided by (used for)
operating
- ------------------------------------
activities 92 (6) (2,698)
Net cash provided by investing
activities -- -- --
Net cash provided by financing
activities:
Exercise of management stock
options -- -- 1,130
Proceeds from senior secured
notes -- -- 105,000
Proceeds from issuance of common --------- ---------- ---------
and preferred stock and warrants 80 325 67,369
Rollover investments and share
repurchases -- -- (125,219)
Assets held in trust -- -- (35,600)
Net payments to warrant holders -- -- (4,502)
Debt issuance costs -- -- (5,069)
Other (258) -- (22)
Net cash from financing activities (178) 325 3,087
- -------------------------------------
- -------------------------------------
Net increase in cash and cash
equivalents (86) 319 389
Cash and cash equivalents at
beginning of year 708 389 --
- -------------------------------------
Cash and equivalents at end of
year $622 $ 708 $ 389
S-4
<PAGE>
Notes to Condensed Financial Statements
(1) BASIS OF PRESENTATION. In the parent company-only financial statements,
Holding's investment in subsidiaries is stated at cost plus equity in
undistributed earnings of subsidiaries since date of acquisition. The parent
company-only financial statements should be read in conjunction with Holding's
consolidated financial statements, which are included beginning on page F-1.
(2) GUARANTEE. Berry had approximately $218.1 million and $201.3 million of
long-term debt outstanding at January 2, 1999 and December 27, 1997,
respectively. Under the terms of the debt agreements, Holding has guaranteed the
payment of all principal and interest.
S-5
<PAGE>
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTs
(IN THOUSANDS)
CHARGED
BALANCE CHARGED TO
AT TO OTHER BALANCE
BEGINNIN COSTS ACCOUNTS DEDUCTIONS AT
OF AND - - END OF
DESCRIPTION PERIOD GEXPENSES DESCRIBE DESCRIBE YEAR
------------------------- -------- --------- ---------- ----------- ---------
Year ended January 2,
1999:
Allowance for doubtful $ 280
accounts $ 1,038 $ 875 (2) $ 542 (1) $ 1,651
======== ========= ========== =========== =========
Year ended December 27,
1997:
Allowance for doubtful
accounts $ 618 $ 325 $358(2) $ 263 (1) $ 1,038
======== ========= ========== =========== =========
Year ended December 28,
1996:
Allowance for doubtful
accounts $ 737 $ 322 $-- $ 441 (1) $ 618
======== ========= ========== =========== =========
(1) Uncollectible accounts written off, net of recoveries.
(2) Primarily relates to purchase of accounts receivable and related
allowance through acquisitions.
S-6
EXHIBIT 4.1
EXECUTION COPY
================================================================================
BERRY PLASTICS CORPORATION
BPC HOLDING CORPORATION
BERRY IOWA CORPORATION
BERRY-CPI PLASTICS CORP.
12 1/4% SENIOR SUBORDINATED NOTES DUE 2004
______________________
INDENTURE
Dated as of April 21, 1994
______________________
______________________
UNITED STATES TRUST COMPANY 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)(1) 7.06
(b)(2) 7.06;7.07
(c) 7.06;12.02
(d) 7.06
314(a) 4.03; 12.02
(b) N.A.
(c)(1) 12.04
(c)(2) 12.Q4
(c)(3) N.A.
(d) 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) 6.07;9.02
(b) 6.07
(c) 2.13
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 the Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions 1
Section 1.02. Other Definitions 10
Section 1.03. Incorporation by Reference of Trust Indenture Act 10
Section 1.04. Rules of Construction 11
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating 11
Section 2.02. Execution and Authentication 12
Section 2.03. Registrar and Paying Agent 12
Section 2.04. Paying Agent to Hold Money in Trust 13
Section 2.05. Lists of Holders of the Notes 13
Section 2.06. Transfer and Exchange 13
Section 2.07. Replacement Notes 15
Section 2.08. Outstanding Notes 15
Section 2.09. Treasury Notes 16
Section 2.10. Temporary Notes 16
Section 2.11. Cancellation 16
Section 2.12. Defaulted Interest 16
Section 2.13. Record Date 17
Section 2.14. CUSIP Number 17
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee 17
Section 3.02. Selection of Notes to Be Redeemed 18
Section 3.03. Notice of Redemption 18
Section 3.04. Effect of Notice of Redemption 19
Section 3.05. Deposit of Redemption Price 19
Section 3.06. Notes Redeemed in Part 19
Section 3.07. Optional Redemption 19
Section 3.08. Mandatory Redemption 20
Section 3.09. Offer to Purchase by Application of Excess Proceeds 20
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes 22
Section 4.02. Maintenance of Office or Agency 22
Section 4.03. Reports 23
Section 4.04. Compliance Certificate 23
Section 4.05. Taxes 24
Section 4.06. Stay, Extension and Usury Laws 24
Section 4.07. Restricted Payments 24
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries 25
i
<PAGE>
Section 4.09. Incurrence of Indebtedness and Issuance of
Disqualified Stock 26
Section 4.10. Asset Sales 27
Section 4.11. Transactions with Affiliates 28
Section 4.12. Liens 28
Section 4.13. Additional Guarantees 29
Section 4.14. Corporate Existence 29
Section 4.15. Offer to Repurchase Upon Change of Control 29
Section 4.16. No Senior Subordinated Indebtedness 30
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets 30
Section 5.02. Successor Corporation Substituted 31
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default 31
Section 6.02. Acceleration 33
Section 6.03. Other Remedies 34
Section 6.04. Waiver of Past Defaults 34
Section 6.05. Control by Majority 35
Section 6.06. Limitation on Suits 35
Section 6.07. Rights of Holders of Notes to Receive Payment 35
Section 6.08. Collection Suit by Trustee
Section 6.09. Trustee May File Proofs of Claim 36
Section 6.10. Priorities 36
Section 6.11. Undertaking for Costs 37
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee 37
Section 7.02. Rights of Trustee 38
Section 7.03. Individual Rights of Trustee 38
Section 7.04. Trustee's Disclaimer 39
Section 7.05. Notice of Defaults 39
Section 7.06. Reports by Trustee to Holders of the Notes 39
Section 7.07. Compensation and Indemnity 39
Section 7.08. Replacement of Trustee 40
Section 7.09. Successor Trustee by Merger, etc 41
Section 7.10. Eligibility; Disqualification 41
Section 7.11. Preferential Collection of Claims Against Company 41
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance 42
Section 8.02. Legal Defeasance and Discharge 42
Section 8.03. Covenant Defeasance 42
Section 8.04. Conditions to Legal or Covenant Defeasance 43
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Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions 44
Section 8.06. Repayment to Company 44
Section 8.07. Reinstatement 45
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes 45
Section 9.02. With Consent of Holders of Notes 46
Section 9.03. Compliance with Trust Indenture Act 47
Section 9.04. Revocation and Effect of Consents 47
Section 9.05. Notation on or Exchange of Notes 47
Section 9.06. Trustee to Sign Amendments, etc 48
ARTICLE 10
NOTE GUARANTEES
Section 10.01. Note Guarantee 48
Section 10.02. Subordination 49
Section 10.03. Liquidation; Dissolution; Bankruptcy 50
Section 10.04. Default on Designated Senior Indebtedness of the Guarantor 50
Section 10.05. Acceleration of Notes 51
Section 10.06. When Distribution Must Be Paid Over 51
Section 10.07. Notice by a Guarantor 52
Section 10.08. Subrogation 52
Section 10.09. Relative Rights 52
Section 10.10. Subordination May Not Be Impaired By Any Guarantor 52
Section 10.11. Distribution or Notice to Representative 52
Section 10.12. Rights of Trustee and Paying Agent 53
Section 10.13. Authorization to Effect Subordination 53
Section 10.14. Limitation of Guarantor's Liability 53
Section l0.15. Execution and Delivery of Note Guarantee 54
Section 10.16. Guarantors May Consolidate, etc., on Certain Terms 54
Section 10.17. Releases Following Sale of Assets 54
ARTICLE 11
SUBORDINATION
Section 11.01. Subordination 55
Section 11.02. Liquidation; Dissolution; Bankruptcy 55
Section 11.03. Default on Senior Indebtedness 55
Section 11.04. Acceleration of Notes 56
Section 11.05. When Distribution Must Be Paid Over 56
Section 11.06. Notice by Company 57
Section 11.07. Subrogation 57
Section 11.08. Relative Rights 57
Section 11.09. Subordination May Not Be Impaired By Company 58
Section 11.10. Distribution or Notice to Representative 58
Section 11.11. Rights of Trustee and Paying Agent 58
Section 11.12. Authorization to Effect Subordination 58
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ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls 59
Section 12.02. Notices 59
Section 12.03. Communication by Holders of Notes with Other
Holders of Notes 60
Section 12.04. Certificate and Opinion as to Conditions Precedent 60
Section 12.05. Statements Required in Certificate or Opinion 60
Section 12.06. Rules by Trustee and Agents 61
Section 12.07. No Personal Liability of Directors, Officers, Employees
and Stockholders 61
Section 12.08. Governing Law 61
Section 12.09. No Adverse Interpretation of Other Agreements 61
Section 12.10. Successors 61
Section 12.11. Severability 61
Section 12.12. Counterpart Originals 61
Section 12.13. Table of Contents, Headings, etc 62
EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF NOTATION ON SENIOR SUBORDINATED
NOTE RELATING TO THE NOTE GUARANTEES
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INDENTURE dated as of April 21, 1994 among Berry Plastics Corporation, a
Delaware corporation (the "Company"), BPC Holding Corporation, a Delaware
corporation ("Holding"), Berry Iowa Corporation, a Delaware corporation ("Berry~
Iowa "), and Berry-CPI Plastics Corp., a Delaware corporation ("Berry-CPI
Plastics"; Berry-CPI Plastics, together with Holding and Berry Iowa, the
"Guarantors"), and United States Trust Company of New York, as trustee (the
"Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 12 1A % Senior Subordinated Notes due 2004 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACQUIRED DEBT" means, with respect to any specified Person: (i)
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary' of such specified Person
and (ii) Indebtedness encumbering any asset acquired by such specified Person.
"AFFILIATE," of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meattings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control. Neither Chase Bank, CITEI, nor their respective
Affiliates shall be deemed an Affiliate of the Company or any of its
Subsidiaries for purposes of this definition by reason of its direct or indirect
beneficial ownership of 15 % or less of the Common Stock of Holding or by reason
of any employee thereof being appointed to the Board of Directors of Holding.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"ASSET PURCHASE AGREEMENT" means the agreement pursuant to which Berry-CPI
Plastics will acquire substantially all of the assets and assume certain
indebtedness of CPI Plastics, Inc., CP Illinois, Inc. and CP Ohio, Inc.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition of
any property or assets of the Company or any Subsidiary (including by way of a
sale-and-leaseback) other than sales of inventory in the ordinary course of
business (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company shall be governed by Sections
4.15 and 5.01 hereof), or (ii) the issuance or sale of Equity Interests of any
of its Subsidiaries, in the case of either clause (i) or (ii) above, whether in
a single transaction or a series of related transactions, (a) that have a fair
market value in excess of $250,000, or ~) for net proceeds in excess of
$250,000. For purposes
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of this definition, the term "Asset Sale" shall not include (I) the transfer of
assets by the Company to a Wholly Owned Subsidiary of the Company or by a Wholly
Owned Subsidiary of the Company to the Company or to another Wholly Owned
Subsidiary of the Company, (ii) any Restricted Payment, dividend or purchase or
retirement of Equity Interests permitted under Section 4.07 hereof or (iii) the
issuance or sale of Equity Interests of any Subsidiary of the Company, PROVIDED
that such Equity Interests are issued or sold in consideration for the
acquisition of assets by such Subsidiary or in connection with a merger or
consolidation of another Person into such Subsidiary.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"BOARD OF DIRECTORS" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"BORROWING BASE" means, as of any date, an amount equal to the sum of (a)
85% of the face amount of all accounts receivable owned by the Company and its
Subsidiaries as of such date that are not more than 90 days past due, and ~) 65%
of the book value (calculated on a FIFO basis) of all inventory owned by the
Company and its Subsidiaries as of such date, all calculated on a consolidated
basis and in accordance with GAAP. To the extent that information is not
available as to the amount of accounts receivable or inventory as of a specific
date, the Company may utilize the most recent available information for purposes
of calculating the Borrowing Base.
"BUSINESS DAY" means any day other than a Legal Holiday.
"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 such time be so required to be capitalized on a balance sheet prepared
in accordance with GAAP.
"CAPITAL STOCK" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, with respect to partnerships, partnership interests (whether
general or limited) and 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, such partnership.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality 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 from
the date of acquisition and overnight bank deposits, in each case with any
lender party to the New Revolving Credit Facility or with any domestic
commercial bank having capital and surplus in excess of $500 million, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) entered into with
any financial institution meeting the qualifications specified in clause (iii)
above and (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within six months after the date of acquisition.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease or transfer, in one or a series of related transactions, of all or
substantially all of Holding's or the Company's assets to any person or group
(as such term is used in Section 13(d)(3) of the Exchange Act)
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(other than the Principals and their Related Parties), (ii) the adoption of a
plan relating to the liquidation or dissolution of Holding or the Company, (iii)
the acquisition by any person or group (as such term is used in Section 13(d)(3)
of the Exchange Act) (other than by the Principals and their Related Parties) of
a direct or indirect interest in more than 35% of the-voting power of the voting
stock of Holding by way of purchase, merger or consolidation or otherwise if (a)
such person or group (as defined above) (other than the Principals and their
Related Parties) owns, directly or indirectly, more of the voting power of the
voting stock of Holding than the Principals and their Related Parties and (b)
such acquisition occurs prior to the Initial Public Offering, (iv) the
acquisition by any person or group (as such term is used in Section 1 3(d)(3) of
the Exchange Act) (other than by the Principals and their Related Parties) of a
direct or indirect interest in more than 50% of the voting power of the voting
stock of Holding by way of purchase, merger or consolidation or otherwise if
such acquisition occurs subsequent to the Initial Public Offering or (v) the
first day on which a majority of the members of the Board of Directors of
Holding are not Continuing Directors.
"CHASE BANK" means The Chase Manhattan Bank, N.A.
"CITHI" means The CIT Group/Equity Investments, Inc.
"CLASS A COMMON STOCK" means the Class A Common Stock, $.OO()05 par value
per share, of Holding.
"COMMON STOCK OF HOLDING" means the Class A Common Stock and the Class B
Common Stock, $.0()005 par value per share, of Holding.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (a) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing Consolidated
Net Income), plus ~) provision for taxes based on income or profits of such
Person for such period, to the extent such provision for taxes was included in
computing Consolidated Net Income, plus (c) Consolidated Interest Expense of
such Person for such period to the extent such expense was deducted in computing
Consolidated Net Income, plus (d) Consolidated Depreciation and Amortization
Expense of such Person for such period to the extent such expense was deducted
in computing Consolidated Net Income, plus (e) other non-cash charges
(including, without limitation, repricing of stock options, to the extent
deducted in computing Consolidated Net Income; but excluding any non-cash charge
that requires an accrual or reserve for cash expenditures in future periods or
which involved a cash expenditure in a prior period), in each case, on a
consolidated basis and determined in accordance with GAAP.
"CONSOLIDATED STEP-UP DEPRECIATION AND AMORTIZATION" means, with respect
to any Person for any period, the total amount of depreciation related to the
write-up of assets and amortization of such Person for such period on a
consolidated basis as determined in accordance with GAAP.
CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means, with respect to
any Person for any period, the total amount of depreciation and amortization
expense (including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) of such
Person for such period on a consolidated basis as determined in accordance with
GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for any
period, the sum of (a) consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or
3
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accrued, to the extent such expense was deducted in computing Consolidated Net
Income (including amortization of original issue discount, non-cash interest
payments, the interest component of capital leases, and net payments (if any)
pursuant to Hedging Obligations), (b) commissions, discounts and other fees and
charges paid or accrued with respect to letters of credit and bankers'
acceptance financing, and (c) interest actually paid by such Person or its
Subsidiaries under a Guarantee of Indebtedness of any other Person.
"CONSOLIDATED NET IN COME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED, that (i) the Net Income of any Person that is not a 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 to the referent
Person or a Wholly Owned Subsidiary thereof that is a Guarantor, (ii) the Net
Income of any Person that is a Subsidiary (other than a wholly Owned Subsidiary)
shall be included only to the extent of the amount of dividends or distributions
paid to the referent Person or a Wholly Owned Subsidiary thereof that is a
Guarantor, (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 and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of Preferred Stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such Preferred Stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assetS of a going concern business made within 16 months after the acquisition
of such business) subsequent to the Issuance Date in the book value of any asset
owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of Holding who (i) was a member of such Board of
Directors on the Issuance Date or (ii) was nominated for election or elected to
such Board of Directors with the affirmative vote of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"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 written notice to the Company.
"CPI ACQUISITION" means, the acquisition of substantially all of the
assets and the assumption of certain indebtedness of CPI Plastics, Inc., CP
Illinois, Inc. and CP Ohio, Inc. by Berry-CPI Plastics pursuant to the Asset
Purchase Agreement.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"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.
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"DESIGNATED SENIOR INDEBTEDNESS" means (i) the Senior Bank Indebtedness
and (ii) any other Senior Indebtedness (a) permitted to be incurred under this
Indenture the principal amount of which is $15 million or more and ~) designated
in the instrument creating or evidencing such Senior Indebtedness as "Designated
Senior Indebtedness."
"DISQUALIFIED STOCK" means any Capital Stock 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, 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 July 15,
2004.
"DISTRIBUTION" means, for purposes of Articles 10 and 11, a distribution
consisting of cash, securities or other property, by set-off or otherwise.
"EQUITY INTERESTS" mean~ 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).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than under the New Revolving Credit Facility) in existence
on the Issuance Date, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any Person for any period, the sum
of (a) Consolidated Interest Expense of such Person for such period, whether
paid or accrued, to the extent such expense was deducted in computing
Consolidated Net Income and (1)) the product of (i) all cash dividend payments
(and non-cash dividend payments in the form of securities (other than
Disqualified Stock) of an issuer) on any series of Preferred Stock of such
Person, times (ii) 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, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues Preferred Stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but 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 or redemption of Indebtedness, or such
issuance or redemption of Preferred Stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. For purposes of
making the computation referred to above, acquisitions, dispositions and
discontinued operations (as determined in accordance with GAAP) that have been
made by the Company or any of its Subsidiaries, including all mergers and
consolidations, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be calculated on
a pro forma basis assuming that all such acquisitions, dispositions,
discontinued operations, mergers and consolidations (and the reduction of any
associated fixed charge obligations resulting therefrom) had occurred on the
first day of the four-quarter reference period.
5
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"GAAP" means general]y 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 Issuance Date.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"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.
"GUARANTORS" means each of (i) Holding, Berry Iowa and Berry-CPI Plastics
and (ii) any other Person that executes a Note Guarantee in accordance with the
provisions of this Indenture, and their respective successors and assigns.
"HEDGING OBLIGATIONS" means, with respect to any 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.
"HOLDER" means a Person in whose name a Note is registered.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing Capital Lease
Obligations or the balance deferred and unpaid of the purchase price of any
property or representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and also includes, to the extent not otherwise included,
the Guarantee of any Indebtedness of such Person or any other Person.
"INDENTURE" means this Indenture, as amended or supplemented from time to
time.
"INITIAL PUBLIC OFFERING" means a public offering of the Common Stock of
Holding that first results in the Common Stock of Holding becoming listed for
trading on a Stock Exchange.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans (including
Guarantees), advances or capital contributions (excluding commission, travel and
similar advances to officers, directors, consultants and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"ISSUANCE DATE" means the closing date for the sale and original issuance
of the Notes.
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"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 Business Day, and no interest shall accrue for the intervening
period.
"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).
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, any gain (1,ut not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), and
excluding any extraordinary gain but not loss), together with any related
provision for taxes on such extraordinary gain ~ut not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company
or any of its Subsidiaries in respect of any Asset Sale, net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that are the subject of such Asset Sale
and any reserve for indenmification or adjustment in respect of the sale price
of such asset or assets.
"NEW REVOLVING CREDIT FACILITY" means the New Revolving Credit Facility,
dated as of the closing date of the Offering, by and among the Company and
Barclays Business Credit, Inc., providing for up to $28 million of borrowings,
including any related notes, Guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING" means the public offering of the Units by the Company and
Holding.
"OFFICER" means, with respect to any unnatural 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 or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
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"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 Holding, any Subsidiary of
Holding or the Trustee.
"PERMITTED INVESTMENTS" means (a) any Investments in the Company or in a
Wholly Owned Subsidiary of the Company and that is engaged in the same or a
similar line of business as the Company and its Subsidiaries were engaged in on
the Issuance Date and (b) any Investments in Cash Equivalents.
"PERMITTED REFINANCING" means Refinancing Indebtedness if (a) the
principal amount of Refinancing Indebtedness does not exceed the principal
amount of Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of premiums, accrued interest and reasonable expenses
incurred in connection therewith); ~) the Refinancing Indebtedness has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (c) the Refinancing Indebtedness 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.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"PREFERRED STOCK" means any Equity Interest with preferential right in the
payment of dividends or liquidation or any Disqualified Stock.
"PRINCIPAL" means each of Roberto Buaron and Akros Finanziaria, S.p.A.
"REFINANCING INDEBTEDNESS" means Indebtedness issued in exchange for, or
the proceeds of which are used to extend, refinance, renew, replace, defease or
refund Indebtedness referred to in clauses (a) and (b) of the second paragraph
of Section 4.09 hereof.
"RELATED PARTY" means with respect to the Principal (A) in the case of an
individual, any spouse, sibling or descendant of such Principal (whether or not
such relationship arises from birth, adoption or marriage or despite such
relationship being dissolved by divorce) or (B) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons beneficially holding a controlling interest of which consist of such
Principal and/or such other Persons referred to in the immediately preceding
clause (A).
"REPRESENTATIVE" means, for purposes of Articles 10 and 11, the indenture
trustee or other trustee, agent or representative for any Senior Indebtedness
or, with respect to any Guarantor, for any Senior Indebtedness of such
Guarantor.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) 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.
"RESTRICTED INVESTMENT" means any Investment other than a Permitted
Investment.
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"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR BANK INDEBTEDNESS" means the Indebtedness outstanding under the
New Revolving Credit Facility as such agreement may be restated, further
amended, supplemented or otherwise modified or replaced from time to time
hereafter, together with any refunding or replacement of any such Indebtedness.
"SENIOR INDEBTEDNESS" means (i) the Senior Bank Indebtedness and (ii) any
other Indebtedness permitted to be incurred by the Company or a Guarantor, as
the case may be, under the terms of this Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is PARI PASSU
with or subordinated in right of payment to the Notes or a Note Guarantee, as
the case may be. Notwithstanding anything to the contrary in the foregoing,
Senior Indebtedness shall not include (w) any liability for federal, state,
local or other taxes owed or owing by the Company or a Guarantor, as the case
may be, (x) any Indebtedness of the Company or a Guarantor, as the case may be,
to Holding or to any of Holding's other Subsidiaries or other Affiliates, (y)
any trade payables or (z) any Indebtedness that is incurred in violation of this
Indenture.
"STOCK EXCHANGE" means the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market.
"SUBSIDIARY" means, with respect to any Person, 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.
"TAX SHARING AGREEMENT" means that certain Tax Sharing Agreement, dated as
of the closing date of the Offering, between the Company and Holding.
"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.
"TRUSTEE" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"UNITS" means the Notes of the Company and the Warrants of Holding.
"WARRANT" means any Warrant (as defined in the Warrant Agreement) from
time to time outstanding pursuant to the Warrant Agreement.
"WARRANT AGENT" means United States Trust Company of New York, until a
successor Warrant Agent shall have become such pursuant to the applicable
provisions of the Warrant Agreement and, thereafter, such successor.
"WARRANT AGREEMENT" means the Warrant Agreement dated as of April 21, 1994
between Holding and the Warrant Agent.
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"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 due date of such payment, by (b) the then outstanding
principal amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any Person means a 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 Subsidiaries of such Person and one or
more wholly Owned Subsidiaries of such Person.
"1994 BPC HOLDING CORPORATION EXTRAORDINARY BONUS AWARD PLAN" means the
1994 Extraordinary Bonus Award Plan to be adopted by the Board of Directors of
BPC Holding Corporation prior to the consummation of the Offering.
SECTION 1.02. OTHER DEFINITIONS.
DEFINED IN
TERM SECTION
"Affiliate Transaction" .............................. 4.11
"Asset Sale Offer" ................................... 3.09
"Benefitted Party" ................................... 10.01
"Change of Control Offer" ............................ 4.15
"Change of Control Payment" .......................... 4.15
"Change of Control Payment Date" ..................... 4.15
"Covenant Defeasance" ................................ 8.03
"Event of Default" ................................... 6.01
"Excess Proceeds" .................................... 4.10
"Guarantor Payment Blockage Notice ................... 10.04
"incur" .............................................. 4.09
"Legal Defeasance" ................................... 8.02
"Note Guarantee" ..................................... 10.01
"Offer Amount" ....................................... 3.09
"Offer Period" ....................................... 3.09
"Paying Agent" ....................................... 2.03
"Payment Blockage Notice" ............................ 11.03
"Payment Default" .................................... 6.01
"Purchase Date" ...................................... 3.09
"Registrar" .......................................... 2.03
"Restricted Payments" ................................ 4.07
"Termination Date" ................................... 2.06
SECTION 1.03. INCORPORATION DY 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:
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"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a 14older of a Note; INDENTURE TO BE
QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Notes means the Company, the Guarantors and any successor
obligor upon the Notes or any Note Guarantee, as the case may be.
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:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) or is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions; and
(6) 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 DAT1NG.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this indenture. The notation on each Note
relating to the Note Guarantee shall be substantially in the form set forth on
Exhibit B, which is part of this Indenture. The Notes may have notations,
legends or endorsements approved as to form by the Company and required by law,
stock exchange rule, agreements to which the Company or any Guarantor is subject
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be issuable only in denominations of $1,000 and integral multiples
thereof.
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SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Notes for the Company by manual
or facsimile signature. The Company's seal shall be reproduce~ on the Notes and
may be in facsimile form. An Officer of each Guarantor shall sign the Note
Guarantee for such Guarantor by manual or facsimile signature.
If an Officer of the Company or a Guarantor whose signature is on a Note or
a Note Guarantee, as the case may be, no longer holds that office at the time
the Note is authenticated, the Note or the Note Guarantee, as the case may be,
shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature of the Trustee shall be conclusive evidence that the
Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially as
set forth in Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed by two
Officers of the Company, authenticate Notes with the Note Guarantees endorsed
thereon for original issue up to an aggregate principal amount stated in
paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding at
any time shall not exceed the amount set forth herein except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or any Guarantor or an Affiliate of the Company
or any Guarantor.
Any authenticating agent may resign at any time by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of the authenticating agent by giving written notice of
termination to the authenticating agent and the Company. Upon receiving notice
of such resignation or upon such termination by the Trustee, the Trustee may
appoint a successor authenticating agent acceptable to the Company, in which
case it shall so notify the Holders. Upon its appointment hereunder, any
successor authenticating agent shall become vested with all the rights, powers
and duties of its predecessor hereunder.
The Company shall agree, by separate instrument, to pay each authenticating
agent from time to time reasonable compensation for its services.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company and the Guarantors shall maintain (i) an office or agency where
Notes may be presented for registration of transfer or for exchange (including
any co-registrar, the "REGISTRAR") and (ii) an office or agency where Notes may
be presented for payment ("PAYING AGENT"). The Registrar shall keep a register
of the Notes and of their transfer and exchange. The Company may appoint one or
more co-registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent, Registrar or co-registrar without prior notice to any Holder of a Note.
The Company shall notify the Trustee and the Trustee shall notify the Holders of
the Notes of the name and address of any Agent not a party to this Indenture.
The Company or any
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Guarantor may act as Paying Agent, Registrar or co-registrar. The Company shall
enter into an appropriate agency agreement with any Agent not a party to this
Indenture, which shall incorporate the provisions of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such, and shall be entitled to
appropriate compensation in accordance with Section 7.07 hereof.
The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of notices and demands in connection with the Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent shall hold in trust for the benefit of the
Holders of the Notes or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, and interest on the Notes, and shall
notify the Trustee of any Default by the Company or any Guarantor 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 Company 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 Guarantor)
shall have no further liability for the money delivered to the Trustee. If the
Company or a Guarantor acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders of the Notes all money held
by it as Paying Agent. Upon the occurrence of either event specified in Section
6.01(h) or (i), the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. LISTS OF HOLDERS OF THE NOTES.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of the Notes and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company arid/or any Guarantor shall furnish to
the Trustee at least seven Business Days before each interest payment date 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 Holders of the Notes, including the aggregate principal amount of
the Notes held by each thereof, and the Company and each Guarantor shall
otherwise comply with TIA ss. 312(a)
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) When Notes are presented to the Registrar with a request to register
the transfer or to exchange them for an equal principal amount of Notes of other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met; PROVIDED, HOWEVER, that any Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar and the Trustee duly executed by the Holder
thereof or by his attorney duly authorized in writing. To permit registrations
of transfer and exchanges, the Company shall issue and the Trustee shall
authenticate and deliver Notes at the Registrar's request, subject to such rules
as the Trustee may reasonably require.
Neither the Company nor the Registrar shall be required to (i) issue,
register the transfer of or exchange Notes during a period beginning at the
opening of business on a Business Day 15 days before
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the day of any selection of Notes for redemption under Section 3.02 hereof or
(ii) register the transfer of or exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part.
No service charge shall be made to any Holder of a Note for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than such transfer tax or similar governmental charge payable upon
exchanges pursuant to Sections 2. ~0, 3.06 or 9.05 hereof, which shall be paid
by the Company).
Prior to due presentment to the Trustee for registration of the transfer of
any Note, the Trustee, any AGENT, the Company and the Guarantors 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, premium, if any,
and interest on such Note and for all other purposes whatsoever, whether or not
such Note is overdue, and neither the Trustee, any Agent, the Company nor the
Guarantors shall be affected by notice to the contrary.
(b) The following restrictions and related provisions on transfer shall
apply with respect to the
Notes:
(i) Until the Separation Date, no Note may be sold, assigned or otherwise
transferred to any Person unless simultaneously with such transfer,
the Trustee receives confirmation from the Warrant Agent for the
Warrants that the Holder thereof has requested a transfer to the same
transferee of one Warrant (subject to an adjustment under Section 14
of the Warrant Agreement) for each $1,000 aggregate principal amount
of Notes so transferred. In connection with the foregoing, upon
original issuance (if prior to the Separation Date) and, thereafter
until the provisions of Section ofSection2.06~)(ii) hereof have been
satisfied, the certificates evidencing the Notes will bear the
following legend:
"UNTIL THE EARLIEST TO OCCUR OF (I) OCTOBER 15, 1994, (II) SUCH
EARLIER DATE AS MAY BE DETERMINED BY DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPO~ON ("DU") WITH THE CONSENT OF BPC HOLDING CORPORATION
("HOLDING"), WHICH CONSENT MAY NOT BE UNREASONABLY WITHHELD, (III) IN
THE EVENT OF A CHANGE OF CONTROL (AS DEFINED IN THE INDENTURE (THE
"INDEN'IURE") GOVERNING THE 121A% SEMOR SUBORDINATED NOTES DUE 2004
(THE '1NOTES") OF BERRY PLASTICS CORPORATION ("BERRY")), THE DATE
BERRY MAILS N~CE THEREOF TO HOLDERS OF NOTES AND (iv) IN THE EVENT OF
AN ASSET SALE OFFER (AS DEFINED IN THE INDENTURE), THE DATE BERRY
MAILS NOTICE THEREOF TO HOLDERS OF NOTES, THE NOTES EVIDENCED HEREBY
MAY NOT BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED TO ANY PERSON
UNLESS, SIMULTANEOUSLY WITH SUCH TRANSFER, THE HOLDER HEREOF TRANSFERS
TO THE SAME TRANSFEREE FOR EACH ONE WARRANT (SUBJECT TO AN ADJUSTMENT
UNDER SE~ON 14 OF THE WARAANT AGREEMENT, DATED AS OF APRIL 21,1994,
BETWEEN HOLDING AND UNITED STATES TRUST COMPANY OF NEW YORK, AS
WARRANT AGENT) TO PURCHASE 1.13237 SHARES OF CLASS A COMMON STOCK, PAR
VALUE $.00005 PER SHARE, OF HOLDING $1,000 PRINCIPAL AMOUNT OF NOTES
SO TRANSFERRED."
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For purposes of this Section 2.06, "Separation Date" shall mean the
earliest to occur of (1) October 15, 1994, (2) such earlier date as may be
determined by DLJ with the consent of Holding, which consent may not be
unreasonably withheld, (3) in the event a Change of Control, the date the
Company mails notice thereof to Holders of the Notes and (4) in the event
of an Asset Sale Offer, the date the Company mails notice thereof to
Holders of the Notes. The Company shall notify the Trustee of the
occurrence of the Separation Date on or prior to the date thereof.
(ii) On or following the Separation Date, a Holder may surrender the
certificate evidencing such Notes to the Trustee for the exchange of
such certificate for one or more certificates that do not bear the
legend set forth in Section 2.06~)(i) above, representing in the
aggregate a principal amount of Notes equal to the principal amount of
Notes represented by the certificate so surrendered.
(iii) If the Separation Date occurs prior to October 15, 1994, the Company
shall notify the Trustee and the Registrar thereof and shall, or shall
cause the Trustee to give, written notice thereof to each Holder by
first-class mail, postage prepaid.
SECTION 2.07 REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and the
Trustee receive evidence to their satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon the written order of
the Company signed by two Officers of the Company, shall authenticate and
deliver a replacement Note (accompanied by a notation of the Note Guarantees
duly endorsed by the Guarantors) if the Trustee's requirements for replacements
of Notes are met. If required by the Trustee, the Company or the Guarantors, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee, the Company and the Guarantors to protect the Company, the
Guarantors, the Trustee, any Agent or any authenticating agent from any loss
which any of them may suffer if a Note is replaced. Each of the Company, the
Guarantors and the Trustee may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and the
Guarantors and shall be entitled to all of the benefits of this Indenture
equally and proportionally 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 cancelled by it, those delivered to it for cancellation
and those described in this Section 2.08 as not outstanding.
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 ceases to be outstanding and interest on it ceases to accrue.
Subject to Section 2.09 hereof, a Note does not cease to be outstanding
because the Company, a Subsidiary of the Company or an Affiliate of the Company
holds the Note.
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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, Notes owned by the
Company, any Guarantor, any of their respective Subsidiaries or any Affiliate of
the Company or any Guarantor shall be considered as though not outstanding,
except that for purposes of determining whether the Trustee shall be protected
in relying on any such direction, waiver or consent, only Notes which a
Responsible Officer knows to be so owned shall be so considered. Notwithstanding
the foregoing, Notes that are to be acquired by the Company, any Guarantor, any
Subsidiary of the Company or any Guarantor or an Affiliate of the Company or a
fly Guarantor pursuant to an exchange offer, tender offer or other agreement
shall not be deemed to b e owned by the Company, a Guarantor, a Subsidiary of
the Company or a Guarantor or an Affiliate 0 f the Company or a Guarantor until
legal title to such Notes passes to the Company, Guarantor, Subsidiary of the
Company or a Guarantor or Affiliate of the Company or a Guarantor, as the case
may be.
SECTION 2. 10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes (accompanied by a notation of the
Note Guarantee duly endorsed by the Guarantors). Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company and the Trustee consider appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee, upon receipt of
the written order of the Company signed by two Officers of the Company, shall
authenticate definitive Notes (accompanied by a notation of the Note Guarantee
duly endorsed by the Guarantors) in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as definitive Notes.
SECTION 2.11. CANCELLATION.
The Company 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 shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall destroy cancelled Notes
(subject to the record retention requirement of the Exchange Act), unless the
Company directs cancelled Notes to be returned to it. The Company may not issue
new Notes to replace Notes that it has redeemed or paid or that have been
delivered to the Trustee for cancellation. All cancelled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
the Company, unless by a written order, signed by two Officers of the Company,
the Company shall direct that cancelled Notes be returned to it.
SECTION 2.12. DEFAULTED INTEREST.
If the Company or any Guarantor defaults in a payment of interest on the
Notes, the Company or such Guarantor (to the extent of their obligations under
the Note Guarantees) 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 of the Notes on a subsequent special record date, which date
shall be at the earliest practicable date but in all events at least five
Business Days prior to the payment date, in each case at the rate provided in
the Notes and in Section 4.01 hereof. The Company shall fix or cause to be fixed
each such special record date and payment date, and shall, promptly thereafter,
notify the Trustee
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<PAGE>
of any such date. The Company 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, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such defaulted interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Holders entitled
to such defaulted interest as in this Subsection provided. The Company 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, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such defaulted interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Holders entitled to such defaulted interest as in this Subsection
provided. At least 15 days before the special record date, the Company (or the
Trustee, in the name of and at the expense of the Company) shall mail to Holders
of the Notes a notice that states the special record date, the related payment
date and the amount of such interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders of the
Notes entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided for in TIA ss.
316(c).
SECTION 2.14. CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP" number and, if it does
so, the Trustee shall use the CUSIP number in notices of redemption or exchange
as a convenience to Holders; PROVIDED that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company will promptly
notify the Trustee of any change in the CUSIP number.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 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.
If the Company is required to make an offer to purchase Notes pursuant to
the provisions of Sections 4.10 or 4.15, it shall furnish to the Trustee, at
least 30 days before the scheduled purchase date, an Officers' Certificate
setting forth (i) the Section of this Indenture pursuant to which the offer to
purchase shall occur, (ii) the offer's terms, (iii) the purchase price, (iv) the
principal amount of the Notes to be purchased, and (v) further setting forth a
statement to the effect that (a) the Company or one of its Subsidiaries has made
an Asset Sale and there are Excess Proceeds aggregating more than $5.0 million
and the amount of such Excess Proceeds, or ~) a Change of Control has occurred,
as applicable.
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SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than a]] of the Notes are to be purchased in an Asset Sale Offer or
redeemed at any time, the Trustee shall select the Notes to be purchased- or
redeemed 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 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption. In the event that less than all of
the Notes properly tendered in an Asset Sale Offer are to be purchased, the
particular Notes to be purchased shall be selected promptly upon the expiration
of such Asset Sale Offer.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
purchase or redemption, the principal amount thereof to be purchased or
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
purchased or redeemed, the entire outstanding amount of Notes held by such
Holder, even if not a multiple of $1,000, shall be purchased or 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.
In the event the Company is required to make an Asset Sale Offer pursuant
to Sections 3.09 and 4.10 hereof and the amount of Excess Proceeds to be applied
to such purchase would result in the purchase of a principal amount of Notes
which is not evenly divisible by $1,000, the Trustee shall promptly refund to
the Company the portion of such Excess Proceeds that is not necessary to
purchase the immediately lesser principal amount of Notes that is so divisible.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a purchase or redemption
date, the Company 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 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, anew 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;
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(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases 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 Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; PROVIDED, HOWEVER, that the Company
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.
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 Company 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 Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies 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 Company 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 of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder and deliver at the expense of the Company a new Note (accompanied by a
notation of the Note Guarantee duly endorsed by the Guarantors) equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07 OPTIONAL REDEMPTION.
(a) Bxcept as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to April 15, 1999. Thereafter, the Company shall
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have the option to redeem the Notes, in whole or in part, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon, to the applicable redemption date, if
redeemed during the twelve-month period beginning on April 15 of the years
indicated below:
YEAR PERCENTAGE
1999 106.125%
2000 104.083%
2001 102.042%
2002 and thereafter 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to April 15, 1997, the Company may redeem up to 25% of the
initial principal amount of the Notes originally issued from the net proceeds of
one or more public offerings of the Common Stock of Holding, to the extent such
net proceeds are contributed or otherwise transferred to the Company as a
capital contribution or are used to purchase common equity securities of the
Company, at a redemption price equal to 111.25% of the principal amount thereof
plus accrued and unpaid interest, if any, to the redemption date; provided that
at least 75% of the principal amount of Notes originally issued remain
outstanding immediately after the occurrence of such redemption and that such
redemption occurs within 60 days following the closing of any such public
offering.
(c) my redemption pursuant to this section 3.07 shall be made pursuant
to the provisions of sections 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
The Company 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 Company 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 Company 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, if
any, 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.
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Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders. 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;
(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 Company defaults 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 only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(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, to the Company, a depositary, if appointed by the Company, or a
Paying Agent at the address specified in the notice at least three days
before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased pursuant to the terms of Section 3.02 hereof (with such
adjustments as may be deemed appropriate by the Company 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 (accompanied by a notation of the Note Guarantee duly
endorsed by the Guarantors) equal in principal amount to the unpurchased
portion of the Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, pursuant to the terms of Section 3.02 hereof, 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 Company in accordance with the
terms of this Section 3.09. The Company, the depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five 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
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company shall
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authenticate and mail or deliver such new Note (accompanied by a notation of the
Note Guarantee duly endorsed by the Guarantors) 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 Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale Offer
on the Purchase Date.
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. PAYMENT OF NOTES.
The Company 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 Guarantor, holds as
of 10:00 a.m. Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the Rate equal to
1 % per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company 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 Company or the Guarantors in respect of the Notes and this Indenture
may be served. The Company shall give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company 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 Company 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
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company 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 Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03.
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SECTION 4.03. REPORTS.
Whether or not required by the rules and regulations of the SEC, so long
as any Notes are outstanding, the Company shall (i) furnish to the Trustee and
to all Holders all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms l0-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 thereon by the Company's certified
independent accountants and (ii) file a copy of all such information and any
other information required by Section 13 or 15(d) of the Exchange Act with the
SEC for public availability (unless the SEC will not accept such a filing) and
file such information with the Trustee and make such information available to
investors, securities analysts and broker-dealers who request it in writing.
Notwithstanding the foregoing, to the extent permitted under the rules and
regulations of the SEC, the Company may instead supply such information with
respect to Holding. The Company shall at all times comply with TIA ss. 314(a).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) Each of the Company and the Guarantors 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 Company and its Subsidiaries and
the Guarantors during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company, its Subsidiaries or such Guarantors has kept, observed, performed and
fulfilled their respective 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 Company, its Subsidiaries or such Guarantors, as the
case may be, has kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company or such Guarantor, as the case may be, is taking or proposes
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
Company, its Subsidiaries or such Guarantor, as the case may be, is taking or
proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) Each of the Company and the Guarantors shall, so long as any of the
Notes are outstanding, deliver to the Trustee, forthwith upon any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company or such
Guarantor, as the case may be, is taking or proposes to take with respect
thereto.
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SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of it's 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.
Each of the Company and the Guarantors covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, 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
Company and the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, 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 Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any distribution
on account of the Company's or any of its Subsidiaries' Equity Interests (other
than: dividends or distributions payable in Equity Interests of the Person
making such dividend or distribution, other than Disqualified Stock; or
dividends or distributions payable to the Company or any Wholly Owned Subsidiary
of the Company that is a Guarantor); (ii) purchase, redeem or otherwise acquire
or retire for value any Equity Interests of the Company or any Subsidiary or
other Affiliate of the Company (other than any such Equity Interests owned by
the Company or any Wholly Owned Subsidiary of the Company that is a Guarantor);
(iii) purchase, redeem or otherwise acquire or retire for value any Indebtedness
(other than the Notes)' that is PARI PASSU with or subordinated to the Notes or
any Note Guarantee; (iv) directly or indirectly make any loan or advance to, or
make any payment to, Holding; or (v) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (v) above being
collectively referred to as "Restricted Payments"), unless, at the time of such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(b) 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 Section 4.09 hereof; and
(c) such Restricted Payment, (A) in the case of any Restricted Payment
other than as defined by clause (i) above, together with the aggregate of
all other Restricted Payments made by the Company and its Subsidiaries after
the Issuance Date (including Restricted Payments permitted by the next
succeeding paragraph (other than such Restricted Payments permitted by
clauses (iv), (v) and (vi) of the next succeeding paragraph)), or (B) in the
case of any Restricted Payment defined in clause (i) above, together with
the aggregate of all other Restricted Payments made by the Company and its
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by
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the next succeeding paragraph (other than Restricted Payments permitted by
clauses (iv) and (v) of the next succeeding paragraph)), is less than the
sum of (x) 50% of the sum of the Consolidated Net Income and Consolidated
Step-Up Depreciation and Amortization of the Company for the period (taken
as one accounting period) from the beginning of the first fiscal quarter
that begins after the Issuance Date 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 plus Consolidated Step-Up Depreciation and Amortization for such
period is a deficit, 100% of such deficit), plus (y) 100% of the aggregate
net cash proceeds received by the Company from the issue or sale since the
Issuance Date of Equity Interests of the Company or of debt securities of
the Company that have been converted into such Equity Interests (other than
Equity Interests (or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or debt securities that have
been converted into Disqualified Stock).
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 or other acquisition of
any Equity Interests of the Company in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a Subsidiary of the Company) of
other Equity Interests of the Company (other than any Disqualified Stock); (iii)
the defeasance, redemption or repurchase of PAN PASSU or subordinated
Indebtedness in a Permitted Refinancing; (iv) a Restricted Payment to Holding
pursuant to the Tax Sharing Agreement as the same may be amended from lime to
time in a manner that is not materially adverse to the Company; (v) a Restricted
Payment to Holding to pay its operating and administrative expenses including,
without limitation, directors fees, legal and audit expenses, SEC compliance
expenses and corporate franchise and other taxes, not to exceed in any fiscal
year $500,000; (vi) a Restricted Payment to Holding to pay management fees not
to exceed $750,000 in any fiscal year of the Company; (vii) a Restricted Payment
to Holding for the purpose of paying a dividend on the Common Stock of Holding
from the proceeds of the Offering in an amount not to exceed $50 million; (viii)
the repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of Holding pursuant to any management equity subscription
agreement or stock option agreement in effect as of the Issuance Date; PROVIDED,
HOWEVER, that (a) the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $1 million and (1)) no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction and (ix) Investments by the Company in joint ventures or
similar projects in a business similar to that conducted by the Company and its
Subsidiaries on the Issuance Date in an aggregate amount not to exceed $1
million.
Not later than the date of making any Restricted Payment, the Company
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 were computed, which calculations may be
based upon the Company's latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its 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 Subsidiary to
(a)(i) pay dividends or make any other distributions to the Company or any of
its Subsidiaries (A) on its Capital Stock or (B) with respect to any other
interest or participation in, or measured by, its profits, or (ii) pay any
indebtedness owed to the Company or any of its Subsidiaries, ~) make loans or
advances to the Company or any of its Subsidiaries or (c) transfer any of its
properties or assets to the Company or any of its Subsidiaries, except for such
encumbrances or restrictions existing
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under or by reasons of (i) Existing Indebtedness as in effect on the Issuance
Date, (ii) the New Revolving Credit Facility as in effect on the Issuance Date,
and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, PROVIDED that
such amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive with respect to
such dividend and other payment restrictions than those contained in the New
Revolving Credit Facility as in effect on the Issuance Date, (iii) this
Indenture and the Notes, (iv) applicable law, (v) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
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, PROVIDED that the Consolidated
Cash Flow of such Person, to the extent of such restriction, is not taken into
account in determining whether such acquisition was permitted by the terms of
this Indenture, (vi) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (vii) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature described in
clause (c) above on the property so acquired, or (viii) permitted Refinancing
Indebtedness, PROVIDED that the restrictions contained in the agreements
governing such Refinancing Indebtedness are no more restrictive than those
contained in the agreements governing the Indebtedness being refinanced.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable with respect to (collectively, "incur" and
correlatively, an "incurrence" of) any Indebtedness (including Acquired Debt)
and the Company shall not issue any, and shall not permit any of its
Subsidiaries to issue any, shares of Disqualified Stock; PROVIDED, HOWEVER, that
the Company may incur Indebtedness or issue shares of Disqualified 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 is issued would have been at least 2.00 to 1 if such
Indebtedness is incurred or such Disqualified Stock is issued on or before April
15, 1996 or at least 2.25 to 1 if such Indebtedness is incurred or such
Disqualified Stock is issued after April 15, 1996, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom and
including the earnings of any business acquired by the Company with the proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period; PROVIDED, HOWEVER, that until April 15, 1996, the Company
may incur Indebtedness that is PARI PASSU in right of payment with the Notes
pursuant to the foregoing Fixed Charge Coverage Ratio test only if the net
proceeds thereof are used for capital expenditures (including Capital Lease
Obligations), acquisitions of businesses and Permitted Investments. In addition,
each of the following Indebtedness shall be subordinated in right of payment to
the Notes or the Note Guarantees, as the case may be, at least to the same
extent as the Notes are subordinated to Senior Indebtedness: (A) all
Indebtedness that does not provide for all interest payments to be made in cash;
(B) all Indebtedness of the Company to any of its Subsidiaries; (C) any
Indebtedness of the Company and its Subsidiaries if at the time of incurrence
thereof, Indebtedness of the Company and the Guarantors that is PARI PASSU in
right of payment to the Notes and the Note Guarantees (including, on a pro forma
basis, the Indebtedness to be incurred) exceeds $100 million; and (D) all
obligations under the 1994 BPC Holding Corporation Extraordinary Bonus Award
Plan.
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The foregoing limitations shall not apply to (a) revolving credit
Indebtedness and letters of credit pursuant to the New Revolving Credit Facility
in an aggregate principal amount not to exceed at any one time outstanding the
greater of (i) $28 million in principal amount (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability of
the Company thereunder), less the aggregate amount of all repayments after the
Issuance Date that permanently reduce the commitment under the New Revolving
Credit Facility, and (ii) the Borrowing Base; (b) the Existing Indebtedness; (c)
the Notes or any Note Guarantee; (d) the incurrence by the Company of
Refinancing Indebtedness; PROVIDED, HOWEVER, that such Refinancing Indebtedness
is a Permitted Refinancing; (e) Indebtedness between or among the Company and
any of its Wholly Owned Subsidiaries that are Guarantors; (f) Indebtedness from
the Company to Holding PROVIDED that the advances evidenced by such Indebtedness
are permitted under Section 4.07 hereof; (g) Hedging Obligations that are
incurred 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; and (h) the incurrence by the Company or its Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause of this
paragraph) in an aggregate principal amount at any time outstanding not to
exceed the sum of $1 million at any one time.
Notwithstanding anything to the contrary, the Company and its
Subsidiaries shall not be permitted to incur any additional Senior Indebtedness
unless it is secured.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Subsidiaries to,
conduct an Asset Sale, unless (x) the Company (or the Subsidiary, as the case
may be) receives consideration at the time of such Asset Sale at least equal to
the fair market value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee no later than
immediately prior to the consummation of such proposed Asset Sale with respect
to any Asset Sale involving aggregate payments in excess of $1 million) of the
assets sold or otherwise disposed of and (y) at least 75% of the consideration
therefor received by the Company or such Subsidiary is in the form of cash;
PROVIDED, HOWEVER, that the amount of (A) any liabilities (as shown on the
Company's or such Subsidiary's most recent balance sheet or in the notes
thereto), of the Company or any Subsidiary (other than liabilities that are by
their terms subordinated to the Notes or any Guarantee thereof) that are assumed
by the transferee of any such assets and (B) any notes or other obligations
received by the Company or any such Subsidiary from such transferee that are
immediately converted by the Company or such Subsidiary into cash (to the extent
of the cash received), shall be deemed to be cash for purposes of this Section
4.10. Notwithstanding the foregoing, no sale, lease, conveyance or other
disposition of the property or assets in the Jerseyville, Illinois or Alliance,
Ohio facilities acquired in connection with the CPI Acquisition shall be subject
to clauses (x) and (y) of this paragraph.
Within 180 days after any Asset Sale, the Company may apply the Net
Proceeds from such Asset Sale to either (a) permanently reduce Senior
Indebtedness, or (b) make an investment in another business or capital
expenditure or other long-term/tangible assets, in each case, in the same or a
similar line of business as the Company was engaged in on the Issuance Date.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce Senior Bank Indebtedness or otherwise invest such Net
Proceeds in Cash Equivalents. Any Net Proceeds from the Asset Sale that are not
applied or invested as provided in the first sentence of this paragraph shall be
deemed to constitute "Excess Proceeds." If the aggregate amount of Excess
Proceeds exceeds $5 million, the Company shall make an Asset Sale Offer to all
Holders of Notes to purchase the maximum principal amount of Notes, that is an
integral multiple of $1,000, that may be purchased out of the Excess Proceeds,
at an offer price in cash in an amount equal to 101 % of the principal amount
thereof plus accrued and unpaid interest, if any, to
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the date of purchase, in accordance with the procedures set forth in Section
3.09 hereof. To the extent that the aggregate amount of Notes tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company may use
such deficiency for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased in the manner
described under Section 3.02 hereof. Upon completion of such offer to purchase,
the amount of Excess Proceeds shall be reset to zero. Any Asset Sale Offer
pursuant to this Section 4.10 shall be made pursuant to the provisions of
Section 3.09 hereof.
The Company 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 an Asset Sale.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into any contract,
agreement, understanding, loan, advance or Guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"), unless
(a) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with a Person who was
not an Affiliate and (b) the Company delivers to the Trustee (i) with respect to
any Affiliate Transaction involving aggregate payments in excess of $2 million,
a resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above and
that such Affiliate Transaction has been approved by a majority of the Board of
Directors and (ii) with respect to any Affiliate Transaction involving aggregate
payments in excess of $5 million, an opinion as to the fairness to the Company
or such Subsidiary from a financial point of view issued by an investment
banking firm of national standing; PROVIDED, HOWEVER, that (i) any employment
agreement entered into by the Company or any of its Subsidiaries in the ordinary
course of business and consistent with the past practice of the Company or such
Subsidiary; (ii) transactions between or among the Company and/or its
Subsidiaries; (iii) transactions permitted under Section 4.07 hereof; and (iv)
the $1.5 million advisory fee paid to First Atlantic Capital, Ltd. in
connection with the Offering and the CPI Acquisition, in each case, shall not be
deemed Affiliate Transactions.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly (i) create, incur, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired by the Company or any Subsidiary, or
any income or profits therefrom or (ii) assign or convey any right to receive
income therefrom, in any such case to secure any Indebtedness (other than Senior
Indebtedness of the Company or Senior Indebtedness of a Guarantor permitted to
be incurred pursuant to this Indenture) unless contemporaneously therewith or
prior thereto, effective provision is made (evidenced by a resolution of the
Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) whereby the Notes or a Note Guarantee are secured equally and ratably
with such other Indebtedness (or if such other Indebtedness is subordinated to
the Notes or a Note Guarantee, the Notes or a Note Guarantee, as the case may
be, are secured on a basis with the same relative priority to such other
Indebtedness).
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SECTION 4.13. ADDITIONAL GUARANTEES.
If the Company or any of its Subsidiaries shall (i) transfer or cause to
be transferred, in one or a series of related transactions (other than a
transaction or series of related transactions constituting a Restricted Payment
permitted pursuant to Section 4.07 hereof), any assets, businesses, divisions,
real property or equipment having a book value in excess of $1 million to any
Subsidiary that is not a Guarantor or (ii) acquire another Subsidiary having (a)
total assets with a book value in excess of $1 million or ~) Consolidated Cash
Flow in excess of $1 million, then the Company shall cause such transferee or
acquired Subsidiary to (A) execute and deliver to the Trustee a supplemental
indenture in form reasonably satisfactory to the Trustee pursuant to which such
transferee or acquired Subsidiary shall unconditionally guarantee (a "Note
Guarantee," as defined in Article 10 hereof), on a senior subordinated basis,
all of the Company's obligations under the Notes on the terms set forth in
Article 10 hereof and (B) deliver to the Trustee an Opinion of Counsel as to the
enforceability of such Note Guarantee.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 and Article 10 hereof, as the case may be, the
Company and each of the Guarantors shall do or cause to be done all things
necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership 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 Company, any such Guarantor or any
such Subsidiary, as the case may be, and (ii) the rights (charter and
statutory), licenses and franchises of the Company, the Guarantors and their
respective Subsidiaries; PROVIDED, HOWEVER, that the Company and the Guarantors
shall not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of their respective
Subsidiaries, if the Board of Directors of Holding shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company, the Guarantors 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.
Upon the occurrence of a Change of Control, the Company shall make an
offer to each Holder to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "CHANGE OF CONTROL OFFER") at an offer price in cash equal
to 101 % of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (the "CHANGE OF CONTROL PAYMENT").
Within 10 days following any Change of Control, the Company will 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 will be no earlier
than 30 days nor 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 Company defaults in the
payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer will cease to accrue interest after the
Change of Control Payment Date; (v) that 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 telegram, telex, facsimile transmission or letter setting forth the name
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of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have such Notes
purchased; and (vii) that Holders whose Notes are being purchased only in part
will be issued new Notes equ4 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 Company shall comply with
the requirements of Rule 14e- I 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 in connection with a
Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) 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 (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to each Holder of Notes so accepted the Change of Control Payment
for such Notes, and the Trustee shall promptly authenticate and mail to each
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered 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. Prior
to making the Change of Control Payment, but in any event within 90 days
following a Change of Control, the Company shall either repay all outstanding
Designated Senior Indebtedness or obtain the requisite consents, if any, under
all agreements governing outstanding Designated Senior Indebtedness to permit
the repurchase of Notes required by this Section 4.15. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
SECTION 4.16. NO SENIOR SUBORDINATED INDEBTEDNESS.
Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
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
Indebtedness and senior in any respect in right of payment to the Notes, and
(ii) no Guarantor shall incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to its Senior Indebtedness and senior in any respect in right of payment
to its Note Guarantee.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another Person unless (i) the
Company is the surviving Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation
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 Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made assumes all the obligations of the Company pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the Notes and
this Indenture; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) the
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Company or any Person formed by or surviving any such consolidation or merger,
or to which such sale. assignment, transfer, lease, conveyance or other
disposition shall have been made (A) shall have Consolidated Net Worth
(immediately after the transaction) equal to or greater than the Consolidated
Net Worth of the Company immediately preceding the transaction and (B) shall, at
the time of such transaction and after giving pro forma effect thereto as if
such transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in Section 4.09 hereof.
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 or the Company and its Subsidiaries on a consolidated basis 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" or the "Guarantor,9' as
the case may be, shall refer instead to the successor corporation and not to the
Company or the Guarantor, as the case may be), and may exercise every right and
power of the Company or the Guarantors, as the case may be, under this Indenture
with the same effect as if such successor Person had been named as the Company
or Guarantor, as the case may be, herein; PROVIDED, HOWEVER that the predecessor
Company and the predecessor Subsidiaries that are Guarantors 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.
The Trustee shall, at the written request of the Company and the
Holders, authenticate and deliver new Notes representing such successor pursuant
to the terms of Section 2.02 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company or the Guarantors default in the payment when
due of interest on the Notes (whether or not prohibited by the
subordination provisions of Article 10 or Article 11 hereof, as the case
may be) and such default continues for a period of 30 days;
(b) the Company or the Guarantors default in the payment when
due of principal of or premium, if any, on the Notes (whether or not
prohibited by the subordination provisions of Article 10 or Article 11
hereof, as the case may be) when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to
purchase) or otherwise;
(c) the Company fails to comply with any of the provisions of
Section 4.07, 4.09, 4.10 or 4.15 hereof;
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(d) the Company or the Guarantors 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 df at least 25% in principal amount of the Notes
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 borrowed by the Company, Holding or
any of their respective Subsidiaries (or the payment of which is
guaranteed by the Company, Holding or any of their respective
Subsidiaries) whether such Indebtedness or Guarantee now exists, or is
created after the Issuance Date, which default (i) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in
such Indebtedness (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 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 52 million or more;
(f) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the
Company, Holding or any of their respective Subsidiaries and such
judgment or judgments remain unpaid or undischarged for a period (during
which execution shall not be effectively stayed) of 60 days, PROVIDED
that the aggregate of all such undischarged judgments exceeds $2
million;
(g) except as permitted by this Indenture, any Note Guarantee
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
Guarantor (or its successors or assigns), or any Person acting on behalf
of such Guarantor (or its successors or assigns), shall deny or
disaffirm its obligations or shall fail to comply with any obligations
under its Note Guarantee.
(h) the Company, any Guarantor or any of their respective
Subsidiaries 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
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company, any Guarantor or
any of their respective Subsidiaries in an involuntary case;
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(ii) appoints a Custodian of the Company, any Guarantor
or any of their respective Subsidiaries or for all or
substantially all of the property of the Company, any Guarantor
or any of their respective Subsidiaries; or
(iii) orders the liquidation of the Company, any
Guarantor or any of their respective Subsidiaries; and the order
or decree remains unstayed and in effect for 60 consecutive
days.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof with respect to the Company, any
Guarantor or any of their respective Subsidiaries) 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 immediately;
PROVIDED, HOWEVER, that if any Indebtedness is outstanding pursuant to the New
Revolving Credit Facility, upon a declaration of acceleration, the principal and
interest on the Notes shall be payable, upon the earlier of (i) the day which is
five Business Days after notice of acceleration is given to the Company and the
lender under the New Revolving Credit Facility or (ii) the date of acceleration
of the Indebtedness under the New Revolving Credit Facility. Notwithstanding the
foregoing, if an Event of Default specified in clause (h) or (i) of Section 6.01
hereof occurs with respect to the Company, Holding or any of their respective
Subsidiaries, all outstanding Notes shall be due and payable immediately without
further action or notice. The Holders of at least 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 any acceleration of the Notes 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 that has become due solely because of the acceleration) have
been cured or waived.
If an Event of Default occurs on or after April 15, 1999 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to April 15, 1999
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on April 15 of the years
set forth below, as set forth below (expressed as a percentage of the principal
amount that would otherwise be due but for the provisions of this sentence):
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YEAR PERCENTAGE
---- ----------
1994......................... 112.250%
1995......................... 111.025%
1996......................... 109.800%
1997......................... 108.575%
1998......................... 107.350%
SECTION 6.03. OTHER REMEDIES.
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, including, but not limited to, notifying the Guarantors
pursuant to the terms hereof and the Note Guarantees.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
in respect of which such judgment has been recovered.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Notes, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any Holder to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this Article
Six or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than 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 hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an
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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 reasonably anticipated by the
Trustee in complying with such request;
(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 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, is absolute
and unconditional and 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) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company
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for the whole amount of principal of, premium, 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, expenses,
disbursements and advances 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, expenses,
disbursements and advances 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, including the Guarantors), its creditors
or its property and shall be entitled and empowered to collect, receive and
distribute any money or securities or other property payable or deliverable upon
the exchange of the Notes or upon any such clairns and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 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 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 the holders of Senior Indebtedness of the Company or the
Guarantors, as the case may be, to the extent required by Article 10 or Article
11 hereof, as applicable.
THIRD: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, 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 interest, respectively; and
FOURTH: to the Company or to such party as a court of competent
jurisdiction direct
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
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SECTION 6.11. UNDERTAKING FOR COST.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a Suit by the Trustee, a suit by a Holder 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 man would
exercise or use under the circumstances in the conduct of his own affairs.
(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, 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 (c) 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.
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(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 Company. 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 shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note 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, upon reasonable notice and during normal business hours, to examine
the books, records and premises of the Company, personally or by agent or
attorney so long as such examination does not interfere with the Company's
business.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. 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 and the written 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 Company shall be sufficient if
signed by an Officer of the Company.
(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 in the reasonable discretion of the Trustee, might be incurred by it in
compliance with such request or direction.
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 Company, the Guarantors or
any Affiliate of the Company or the Guarantors with the same rights 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
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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 Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's 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
known to 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 DY TRUSTEE TO HOLDERS OF TI"E NOTES.
Within 60 days after each May 15 beginning with the May 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.
3I3~)(2). The Trustee shall a]so 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 Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA ss. 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Guarantors shall pay to the Trustee from time to
time reasonable compensation 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 Company and the Guarantors
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company and the Guarantors shall indemnify the Trustee against any
and all losses, liabilities or expenses 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 Company and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether
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asserted by the Company, any Guarantor 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, liability or expense may
be attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company and the
Guarantors of their obligations hereunder. The Company and the Guarantors shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company and the Guarantors shall pay the
reasonable fees and expenses of such counsel. The Company and the Guarantors
need not pay for any settlement made without their consent, which consent shall
not be unreasonably withheld.
The obligations of the Company and the Guarantors under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantors' payment obligations in this
Section, the Trustee shall have, and the Company does hereby grant, assign and
convey to the Trustee, to the benefit of the Holders, a security interest in and
a Lien 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.
The Trustee's right to receive payment of any amounts due under this
Section 7.07 shall not be subordinate to any other liability or indebtedness of
the Company (even though the Notes may be subordinated) and the payments of
principal and interest on the Notes shall be subordinate to the Trustee's right
to receive such payment.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) 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 Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company 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;
(c) a Custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal ainount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, any
Guarantor, or the Holders of Notes 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.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note 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 Company. 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 of the Notes. 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 Company's and the Guarantors' 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 $100 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.ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310 (b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
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.
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ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASAN~.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate delivered to the Trustee, at
any time, elect to have either Section 8.02 or 8.03 hereof be applied to all
outstanding Notes upon compliance with the conditions set forth below in this
Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from its obligations with respect to all
outstanding Notes and Note Guarantees on the date the conditions set forth below
are satisfied (hereinafter, 'LEGAL DEFEASANCE"). For this purpose, Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Notes, 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 (1')
below, and to have satisfied all its other obligations under such Notes and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
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, premium, if
any, and interest on such Notes when such payments are due, ~) the Company's and
the Guarantors' 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 Company's and the Guarantors' obligations in
connection therewith and (d) this Article Eight. Subject to compliance with this
Article Eight, the Company 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 Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from its obligations under the covenants contained in Sections 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15 and 4.16 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, 'COVENANT DEFEASANCE"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company 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 shall be unaffected
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thereby. In addition, upon the Company's 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(e) through
6.01(f) and Section 6.01(h) 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:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, 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,
premium, if any, and interest on the outstanding Notes on the stated
date for payment thereof or on the applicable redemption date, as the
case may be, of such principal or installment of principal of, premium,
if any, or interest on the outstanding Notes;
(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the Issuance Date, 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
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 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;
(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(h) or 6.01(i) hereof is concerned, at any time in the
period ending on the day on which all applicable preference periods have
run;
(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 Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;
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(f) the Company shall have delivered to [he Trustee an Opinion
of Counsel to the effect that after the day on which all applicable
preference periods have run, 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 Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over the other creditors of the
Company or the Guarantors or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company or the
Guarantors; and
(h) the Company 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 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 Company and the Guarantors 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.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company 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 COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest, if any, on any Note and remaining unclaimed for two years after
such principal, and premium, if any, or interest, if any, have become due and
payable shall be paid to the Company on its written request accompanied by an
Officers' Certificate or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
PROVIDED, HOWEVER, that the Trustee or such Paying
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Agent, before being required to make any such repayment, may at the expense of
the Company cause to be published once, in the New York Times and The Wall
Street Journal (national edition), notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
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 Company's and the Guarantors' 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 Company
and the Guarantors make any payment of principal of, premium, if any, or
interest, if any, on any Note following the reinstatement of its obligations,
the Company and the Guarantors 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 Company, the Guarantors
and the Trustee may amend or supplement this Indenture or the Notes without the
consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide. (or uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's or any Guarantor's
obligations to Holders of the Notes in the case of a merger or consolidation
pursuant to Article Five or Article 10 hereof, as the case may be;
(d) to make any change that would provide any additional rights or benefits
to the Holders of the Notes (including providing for additional Note
Guarantees pursuant to Section 4.13 hereof) or that does not adversely affect
the legal rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
9.06 hereof, the Trustee shall join with the Company and the 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
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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 Company, the Guarantors
and the Trustee may amend or supplement this Indenture or the Notes with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for the 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 or the Notes may
be waived with the consent of the Holders of at least a majority in principal
amount of the then outstanding Notes (including consents obtained in connection
with a tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its Board of
Directors 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 9.06 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture 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 Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company 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 then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver 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;
(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 premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at
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least a majority in aggregate principal amount of the then outstanding
Notes and a waiver of the payment default that resulted from such
acceleration);
(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
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note;
(h) make any change to the subordination provisions of Article 10 or
Article 11 hereof that adversely affects Holders;
(i) except pursuant to Article 8 and Article 10 hereof, release any
Guarantor from its obligations under its Note Guarantee, or change any
Note Guarantee in any manner that would adversely affect Holders; or
(j) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in an amended or a 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 Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
(accompanied by a notation of the Note Guarantee duly endorsed by the
Guarantors) 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.
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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 Company
and the Guarantors may not sign an amendment or supplemental indenture until the
Board of Directors of the Company approves it. In executing any amended or
supplemental indenture, the Trustee shall be entitled to receive and (subject to
Section 7.01) shall be fully protected in relying upon, 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
NOTE GUARANTEES
SECTION 10.01. NOTE GUARANTEE.
The Guarantors and each Subsidiary of the Company which in accordance with
Section 4.13 hereof is required to guarantee the obligations of the Company
under the Notes upon execution of a counterpart of this Indenture, hereby
jointly and severally unconditionally guarantees (each such guarantee, a "NOTE
GUARANTEE") to each Holder of a Note authenticated and delivered by the Trustee
irrespective of the validity or enforceability of this Indenture, the Notes or
the obligations of the Company under this Indenture or the Notes, that: (i) the
principal of and interest on the Notes will be paid in full when due, whether at
the maturity or interest payment or mandatory redemption date, by acceleration,
call for redemption or otherwise, and interest on the overdue principal of and
interest, if any, on the Notes and all other obligations of the Company to the
Holders or the Trustee under this Indenture or the Notes will be promptly paid
in full or performed, all in accordance with the terms of this indenture and the
Notes; and (ii) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, they will be paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed for whatever reason, each Guarantor will be obligated to pay the
same whether or not such failure to pay has become an Event of Default which
could cause acceleration pursuant to Section 6.02 hereof. Each Guarantor agrees
that this is a guarantee of payment not a guarantee of collection.
Each Guarantor hereby agrees that its obligations with regard to this Note
Guarantee shall be joint and several, unconditional, irrespective of the
validity or enforceability of the Notes or the obligations of the Company under
this Indenture, the absence of any action to enforce the same, the recovery of
any judgment against the Company or any other obligor with respect to this
Indenture, the Notes or the obligations of the Company under this Indenture or
the Notes, any action to enforce the same or any other circumstances (other than
complete performance) which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor further, to the extent
permitted by law, waives and relinquishes all claims, rights and remedies
accorded by applicable law to guarantors and agrees not to assert or take
advantage of any such claims, rights or remedies, including but not limited to:
(a) any right to require the Trustee, the Holders or the Company (each, a
"BENEIFITTED PARTY") to proceed against the Company or any other Person or to
proceed against or exhaust any security held by a Benefitted Party at any time
or to pursue any other remedy in any Benefitted Party's power before proceeding
against such Guarantor; (b) the defense of the statute of limitations in any
action hereunder or in any action for the collection of any Indebtedness or the
performance of any obligation hereby guaranteed; (c) any defense that may arise
by reason of the incapacity, lack of authority, death or
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disability of any other Person or the failure of a Benefitted Party to file or
enforce a claim against the estate (in administration, bankruptcy or any other
proceeding) of any other Person; (d) demand, protest and notice of any kind
including but not limited to notice of the existence, creation or incurring of
any new or additional Indebtedness or obligation or of any action or non-action
on the part of such Guarantor, the Company, any Benefitted Party, any creditor
of such Guarantor, the Company or on the part of any other Person whomsoever in
connection with any Indebtedness or obligations hereby guaranteed; (e) any
defense based upon an election of remedies by a Benefitted Party, including but
not limited to an election to proceed against such Guarantor for reimbursement;
(f) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (g) any defense arising because of a
Benefitted Party's election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal
Bankruptcy Code; or (h) any defense based on any borrowing or grant of a
security interest under Section 364 of the Federal Bankruptcy Code. Each
Guarantor hereby covenants that its Note Guarantee will not be discharged except
by complete performance of the obligations contained in ITS Note Guarantee and
this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to either the Company or any Guarantor, or any Custodian, trustee, or
similar official acting in relation to either the Company or such Guarantor, any
amount paid by the Company or such Guarantor to the Trustee or such Holder, the
applicable Note Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor agrees that it will 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 Guarantor further agrees that, as between such Guarantor, on the one
hand, and the Holders and the Trustee, on the other hand, (i) the maturity of
the obligations guaranteed hereby may be accelerated as provided in Section 6.02
hereof for the purposes of this Note Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration as to the Company
or any other obligor on the Notes of the obligations guaranteed hereby, and (ii)
in the event of any declaration of acceleration of those obligations as provided
in Section 6.02 hereof, those obligations (whether or not due and payable) will
forthwith become due and payable by such Guarantor for the purpose of this Note
Guarantee
SECTION 10.02. SUBORDINATION.
Each Guarantor, the Trustee, and each Holder by accepting a Note agrees,
that the obligations of such Guarantor hereunder shall be subordinated in right
of payment to the prior payment in full of all Obligations of every type
whatsoever, contingent or otherwise due in respect of Senior Indebtedness of
such Guarantor and of the Company (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed). The subordination
provisions of this Article 10 are made for the benefit of the holders of all
Senior Indebtedness (whether outstanding on the date hereof or issued hereafter)
of each Guarantor, such holders of Senior Indebtedness of each Guarantor are
made Obligees under this Article 10 and such holders of Senior Indebtedness of
each Guarantor or any of them may enforce the provisions of this Article 10.
Holders of Senior Indebtedness of each Guarantor are third party beneficiaries
of this Article 10 and no amendment thereof shall be effected without the prior
written consent of the holders of a majority of the outstanding principal amount
of Senior Indebtedness of each Guarantor.
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SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of any Guarant6r in a liquidation or
dissolution of such Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Guarantor or its property,
in an assignment for the benefit of creditors or any marshaling of such
Guarantor's assets and liabilities:
(1) holders of Senior Indebtedness of such Guarantor shall be entitled to
receive payment in full of all Obligations due in respect of such Senior
Indebtedness of such Guarantor (including interest after the commencement of
any such proceeding at the rate specified in the applicable Senior
Indebtedness of such Guarantor, whether or not such interest was an allowed
claim) before the Trustee or any Holder shall be entitled to receive any
payment from the Guarantor under or pursuant to this Note Guarantee with
respect to the Notes; and
(2) until all Obligations with respect to Senior Indebtedness of such
Guarantor (as provided in subsection (1) above) are paid in full, any
distribution to which the Trustee or any Holder would be entitled but for this
Article shall be made to holders of Senior Indebtedness of such Guarantor
(except that Holders may receive securities that are subordinated in right and
priority of payment to at least the same extent as the Note Guarantee to (a)
Senior Indebtedness of such Guarantor and 0,) any securities issued in
exchange for Senior Indebtedness of such Guarantor).
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS OF THE GUARANTOR.
No Guarantor shall make any payment or distribution to the Trustee or any
Holder upon or in respect of its Note Guarantee or the Notes, or any Obligation
with respect thereto, and no Guarantor shall acquire from the Trustee or any
Holder any Notes for cash or property (other than securities that are
subordinated in right and priority of payment to at least the same extent as its
Note Guarantee to (a) Senior Indebtedness of such Guarantor and (1)) any
securities issued in exchange for Senior Indebtedness of such Guarantor) until
all principal and other Obligations with respect to the Senior Indebtedness of
such Guarantor have been paid in full if:
(i) a default in the payment when due, whether upon acceleration or
otherwise, of any principal, premium, if any, or interest on Senior
Indebtedness of such Guarantor occurs and is continuing beyond any applicable
grace period; or
(ii) any other default on Designated Senior Indebtedness of such Guarantor
occurs and is continuing and the Trustee receives a notice of the default from
such Guarantor, or the holders of any such Designated Senior Indebtedness of
such Guarantor, stating that such Guarantor or holders are invoking a payment
blockage under this Section 10.04(u) (a "GUARANTOR PAYMENT BLOCKAGE NOTICE").
If the Trustee receives any such notice, a subsequent notice received within
365 days thereafter shall not be effective for purposes of this Section.
Each Guarantor may and shall resume payments on and distributions in
respect of its Note Guarantee, the Notes and all Obligations with respect
thereto, and may acquire such Notes, Obligations for value when:
(1) in the case of a payment default as described in (i) above, upon the
date on which such default is cured or waived, and
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(2) in the case of a nonpayment default as described in (ii) above, on the
earlier of the date on which such nonpayment default is cured or waived or 179
days after the date on which a Guarantor Payment Blockage Notice is received
if the maturity of such Designated Senior Indebtedness of such Guarantor has
not been accelerated, and this Article otherwise permits the payment at the
time of such payment.
SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, each
Guarantor shall promptly notify each Representative of holders of Senior
Indebtedness of such Guarantor of the acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives from a Guarantor any
payment of any Obligations with respect to the Notes or any other Obligation
guaranteed hereby at a time when the Trustee or such Holder has actual knowledge
that such payment is prohibited by Section 10.03 or Section 10.04 hereof, 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 Indebtedness of such Guarantor as their interests may
appear, or their Representative under the indenture or other agreement (if any)
pursuant to which Senior Indebtedness of such Guarantor may have been issued, as
their respective interests may appear, for application to the payment of all
Obligations with respect to Senior Indebtedness of such Guarantor remaining
unpaid to the extent necessary to pay such Obligations in full in accordance
with their terms, after giving effect to any concurrent payment or distribution
to or for the holders of Senior Indebtedness of such Guarantor.
If a distribution is made to the Trustee or any Holder that because of this
Article 10 should not have been made to it at a time when the Trustee or such
Holder has actual knowledge that such distribution should not have been made to
it, the Trustee or such Holder who receives the distribution shall hold it in
trust for the benefit of, and, upon written request, pay it over to, the holders
of Senior Indebtedness of such Guarantor as their interests may appear, or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Indebtedness of such Guarantor may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Indebtedness of such Guarantor remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness of such Guarantor.
With respect to any Guarantor, with respect to the holders of Senior
Indebtedness of such Guarantor, 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 Indebtedness of such Guarantor shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness of such Guarantor, 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 Company or any other Person money or assets to which any
holders of Senior Indebtedness of such Guarantor 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.
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SECTION 1O.07. NOTICE BY A GUARANTOR.
Each Guarantor shall promptly notify the Trustee and the Paying Agent of
any facts known to such Guarantor that would cause a payment of any Obligations
with respect to the Notes or its Note Guarantee to violate this Article, but
failure to give such notice shall not affect the subordination of its Note
Guarantee or of the Notes to the Senior Indebtedness of such Guarantor as
provided in this Article.
SECTION 10.08. SUBROGATION.
With respect to any Guarantor, after all Senior Indebtedness of such
Guarantor is paid in full and until the Notes are paid in full, Holders shall,
without duplication, be subrogated to the rights of holders of Senior
Indebtedness of such Guarantor to receive distributions applicable to Senior
Indebtedness of such Guarantor to the extent that distributions otherwise
payable to the Holders have been applied to the payment of Senior Indebtedness
of such Guarantor. A distribution made under this Article to holders of Senior
Indebtedness of such Guarantor that otherwise would have been made to Holders is
not, as between such Guarantor and Holders, a payment by the Company on the
Senior Indebtedness of such Guarantor.
SECTION 10.09. RELATIVE RIGHTS.
This Article defines the relative rights of Holders and holders of Senior
Indebtedness of such Guarantor. Nothing in this Indenture shall:
(1) impair, as between such Guarantor and the Holders, the obligation of
such Guarantor, which is absolute and unconditional, to pay principal of and
interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of such Guarantor
other than their rights in relation to holders of Senior Indebtedness of such
Guarantor; or
(3) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of holders
of Senior Indebtedness of such Guarantor set forth herein to receive
distributions and payments otherwise payable to Holders.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPATIRD BY ANY GUARANTOR.
With respect to any Guarantor, no right of any holder of Senior
Indebtedness of such Guarantor to enforce the subordination of the Note
Guarantee shall be impaired by any act or failure to act by such Guarantor or
any Holder or by failure of such Guarantor or any Holder to comply with this
Indenture.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
With respect to any Guarantor, whenever a distribution is to be made or a
notice given to holders of Senior Indebtedness of such Guarantor, the
distribution may be made and the notice given to their Representative.
Upon any payment or distribution of assets referred to in this Article 10,
the Trustee and the Holders 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
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making any distribution for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness of such
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.12. 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 five 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 Note Guarantee to violate this Article. Only a Guarantor, the holder of any
Senior Indebtedness of such Guarantor, or the Representative of holders of
Senior Indebtedness of such Guarantor 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.
With respect to any Guarantor, the Trustee in its individual or any other
capacity may hold Senior Indebtedness of such Guarantor with the same rights it
would have if it were not Trustee.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the 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 the Holder's artorney4n-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 relative any Guarantor referred
to in Section 6.09 hereof at least 30 days before the expiration of the time to
file such claim, the holders (or their Representative) of Senior Indebtedness of
each Guarantor are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.
SECTION 10.14. LIMITATION OF GUARANTOR'S LIABILTY.
Each Guarantor and by its acceptance hereof, each beneficiary hereof,
hereby confirms that it is its intention that the Note Guarantee by such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of the
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
Note Guarantees. To effectuate the foregoing intention, each such person hereby
irrevocably agrees that the obligation of such Guarantor under its Note
Guarantee under this Article 10 shall be limited to the maximum amount as will,
after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Guarantor that are relevant under such laws, and
after giving effect to any collections from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
this Article 10, result in the obligations of such Guarantor in respect of such
maximum amount not constituting a fraudulent conveyance. Each beneficiary under
the Note Guarantees, by accepting the benefits hereof, confirms its intention
that, in the event of a bankruptcy, reorganization or other similar proceeding
of the Company or any Guarantor in which concurrent claims are made upon such
Guarantor hereunder, to the extent such claims will not be fully satisfied, each
such claimant with a valid claim against the Company shall be entitled to a
ratable share of all payments by such Guarantor in respect of such concurrent
claims.
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SECTION 10.15. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 10.01 hereof, each
Guarantor hereby agrees that this Indenture shall be executed on behalf of each
Guarantor by its President or one of its Vice Presidents and attested to by an
Officer and that the notation on each Note relating to the Note Guarantee shall
be executed on behalf of each Guarantor by an Officer.
SECTION 10.16. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) No Guarantor shall consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person), another Person
whether or not it is affiliated with such Guarantor unless (i) subject to
the provisions of the following paragraph and Section 10.17 hereof, the
Person formed by or surviving any such consolidation or merger (if other
than such Guarantor) assumes all the obligations of such Guarantor pursuant
to a supplemental indenture in a form reasonably satisfactory to the
Trustee, under its Note Guarantee and this Indenture, (ii) immediately
after giving effect to such transaction, no Default or Event of Default
exists, and (iii) in the case of any Guarantor other than Holding, such
Guarantor, or any Person formed by or surviving any such consolidation or
merger, (A) shall have Consolidated Net Worth (immediately after giving
effect to such transaction), equal to or greater than the Consolidated Net
Worth of such Guarantor immediately preceding the transaction and (B) will
be permitted by virtue of the Company's pro forma Fixed Charge Coverage
Ratio to incur, immediately after giving effect to such transaction, at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test Set forth in Section 4.09 hereof. 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 Note Guarantee
in this Indenture and the due and punctual performance and observance of
all of the covenants and conditions of this Indenture to be performed by
the Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor.
Notwithstanding the foregoing, (A) a Guarantor may consolidate with or
merge with or into the Company, PROVIDED, that the surviving corporation (if
other than the Company) shall expressly assume by supplemental indenture
complying with the requirements of this Indenture, the due and punctual payment
of the principal of, premium, if any, and interest on all of the Notes, and the
due and punctual performance and observance of all the covenants and conditions
of this Indenture to be performed by the Company and (B) a Guarantor may
consolidate with or merge with or into any other Guarantor.
SECTION 10.17. RELEASES FOLLOWING SALE OF ASSETS.
Upon a sale or other disposition of all or substantially all of the assets
of any Guarantor (other than Holding), by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the Capital Stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the Capital Stock of
such 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
Guarantor) shall be released and relieved of its obligations under its Note
Guarantee; PROVIDED that the Net Proceeds of such sale or other disposition are
applied in accordance with Section 4.10 hereof.
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ARTICLE 11
SUBORDINATION
SECTION 11.01. SUBORDINATION.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes shall be subordinated in right of
payment to the prior payment in full of all Obligations of every type
whatsoever, contingent or otherwise due in respect of Senior Indebtedness of the
Company (whether outstanding on the date hereof or hereafter created, incurred,
assumed or guaranteed). The subordination provisions of this Article 11 are made
for the benefit of the holders of all Senior Indebtedness (whether outstanding
on the date hereof or issued hereafter) of the Company, such holders of Senior
Indebtedness of the Company are made obligees under this Article 11 and such
holders of Senior Indebtedness of the Company or any of them may enforce the
provisions of this Article 11. Holders of Senior Indebtedness of the Company are
third party beneficiaries of this Article 11 and no amendment hereof shall be
effected without the prior written consent of the holders of a majority of the
outstanding principal amount of Senior Indebtedness of the Company.
SECTION 11.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) holders of Senior Indebtedness of the Company shall be entitled to
receive payment in full of all Obligations due in respect of such Senior
Indebtedness of the Company (including interest after the commencement of
any such proceeding at the rate specified in the applicable Senior
Indebtedness of the Company, whether or not such interest is an allowed
claim) before the Holders shall be entitled to receive any payment with
respect to the Notes; and
(2) until all Obligations with respect to Senior Indebtedness of the
Company (as provided in subsection (1) above) are paid in full, any
distribution to which Holders would be entitled but for this Article shall
be made to holders of Senior Indebtedness of the Company (except that
Holders may receive securities that are subordinated in right and priority
of payment to at least the same extent as the Notes to (a) Senior
Indebtedness of the Company and (b) any securities issued in exchange for
any such Senior Indebtedness of the Company).
SECTION 11.03. DEFAULT ON SENIOR INDEBTEDNESS.
The Company may not make any payment or distribution to the Trustee or
any Holder upon or in respect of the Notes, or any Obligation with respect
thereto, and may not acquire from the Trustee or any Holder any Notes for cash
or property (other than securities that are subordinated in right and priority
of payment to at least the same extent as the Notes to (a) Senior Indebtedness
of the Company and (b) any securities issued in exchange for Senior Indebtedness
of the Company) until all principal and other Obligations with respect to the
Senior Indebtedness of the Company have been paid in full if:
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(i) a default in the payment when due, whether upon acceleration or
otherwise, of the principal of, premium, if any, or interest on any Senior
Indebtedness of the Company occurs and is continuing beyond any applicable
grace period; or
(ii) any other default on Designated Senior Indebtedness of the Company
occurs and is continuing and the Trustee receives a notice of such default
from the Company, or from, or on behalf of, the holders of any such
Designated Senior Indebtedness of the Company, stating that it is or such
holders are invoking a payment blockage under this Section 11.03(ii) (a
"PAYMENT BLOCKAGE NOTICE"). If the Trustee receives any such notice, a
subsequent notice received within 365 days thereafter shall not be effective
for purposes of this Section.
The Company may and shall resume payments on and distributions in
respect of the Notes, and all Obligations with respect thereto, and may acquire
them when:
(1) in the case of a payment default as described in (i) above, upon
the date on which such default is cured or waived, and
(2) in the case of a nonpayment default as described in (ii) above, on
the earlier of the date on which such nonpayment default is cured or waived
or 179 days after the date on which the applicable Payment Blockage Notice
is received, unless the maturity of any such Designated Senior Indebtedness
of the Company has been accelerated, and this Article otherwise permits the
payment at the time of such payment.
SECTION 11.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify each Representative of holders of Senior
Indebtedness of the Company of the acceleration.
SECTION 11.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder
has acknowledge that such payment is prohibited by Section 11.02 or Section
11.03 hereof, 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 Indebtedness of the Company as their
interests may appear, or their Representatives under the indenture or other
agreement (if any) pursuant to which Senior Indebtedness of the Company may have
been issued, as their respective interests may appear, for application to the
payment of all Obligations with respect to Senior Indebtedness of the Company
remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness of the Company.
If a distribution is made to the Trustee or any Holder that because of
this Article 11 should not have been made to it at a time when the Trustee or
such Holder has actual knowledge that such distribution should not have been
made to it, the Trustee or such Holder who receives the distribution shall hold
it in trust for the benefit of, and, upon written request, pay it over to, the
holders of Senior Indebtedness of the Company as their interests may appear, or
their Representative under the indenture or other agreement (if any) pursuant to
which Senior Indebtedness of the Company may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to
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<PAGE>
Senior Indebtedness of the Company remaining unpaid to the extent necessary to
pay such Obligations in full in accordance with their terms, after giving effect
to any concurrent payment or distribution to or for the holders of Senior
Indebtedness of the Company.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 11 and no implied covenants or
obligations with respect to the holders of Senior Indebtedness of the Company
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the
Company 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 Company or any other Person
money or assets to which any holders of Senior Indebtedness of the Company shall
be entitled by virtue of this Article 11, except if such payment is made as a
result of negligent action, its own negligent failure to act or its own willful
conduct or gross negligence of the Trustee.
SECTION 11.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness of the Company as provided in this Article.
SECTION 11.07. SUBROGATION.
After all Senior Indebtedness of the Company is paid in full and until
the Notes are paid in full, Holders shall, without duplication, be subrogated to
the rights of holders of Senior Indebtedness of the Company to receive
distributions applicable to Senior Indebtedness of the Company to the extent
that distributions otherwise payable to the Holders have been applied to the
payment of Senior Indebtedness of the Company. A distribution made under this
Article to holders of Senior Indebtedness of the Company that otherwise would
have been made to Holders is not, as between the Company and Holders, a payment
by the Company on Senior Indebtedness of the Company.
SECTION 11.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders and holders of
Senior Indebtedness of the Company. Nothing in this Indenture shall:
(1) impair, as between the Company and the Holders, the obligation of
the Company, which is absolute and unconditional, to pay principal of and
interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the Company
other than their rights in relation to holders of Senior Indebtedness of the
Company; or
(3) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of
holders of Senior Indebtedness of the Company set forth herein to receive
distributions and payments otherwise payable to Holders.
If the Company fails because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
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SECTION 11.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness of the Company to enforce
the subordination of the Indebtedness with respect to the Notes shall be
impaired by any act or failure to act by the Company or any Holder or by failure
of the Company or any Holder to comply with this Indenture.
SECTION 11.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness of the Company, the distribution may be made and the notice
given to their Representative.
Upon any payment or distribution of assets referred to in this Article
11, the Trustee and the Holders 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 for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 11.
SECTION 11.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 11 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 three 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. Only the Company, the holder
of any Senior Indebtedness of the Company, or any Representative of holders of
Senior Indebtedness of the Company may give the notice. Nothing in this Article
11 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
Indebtedness of the Company with the same rights it would have if it were not
Trustee.
SECTION 11.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 11, and appoints the Trustee the 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 holders (or their Representative) of Senior Indebtedness of the Company are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Notes.
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ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
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 Company, the Guarantors 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),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
If to the Company or any Guarantor:
Berry Plastics Corporation
101 Oakley Street
Evansville, Indiana 47710
Telecopier No.: (812) 421-9604
Attention: Martin R. Imbler
With a copy to:
O'Sullivan Graev & Karabell
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 408-2420
Attention: Kenneth S. Siegel, Esq.
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Telecopier No.: (212) 852-1625
Attention: Corporate Trust Administration
The Company, the Guarantors 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 after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; 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.
59
<PAGE>
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 Company or any Guarantor mails 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 Company, the
Guarantors, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINON AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or the Guarantors to the
Trustee to take any action under this Indenture, the Company or the Guarantors
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 have been satisfied.
SECTION 12. 05. STATEMENTS REQUIRED IN CERTIFICATE OR OPIMON.
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. 3 14(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;
(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
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(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 DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or any Guarantor under the Notes, the Note
Guarantees, this 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
and the Note Guarantees waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes and the Note
Guarantees.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTE.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company 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 Company and the Guarantors in this Indenture and
the Notes and the Note Guarantees, as the case may be, shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture, or in the Notes or in the Note
Guarantees 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.
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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]
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<PAGE>
SIGNATURES
Dated as of April 21, 1994 BERRY PLASTICS CORPORATION
By:/s/ROBERTO BUARON
Name: Roberto Buaron
Title: Chairman
Attest:
/s/JAMES KRATOCHVIL (SEAL)
James Kratochvil
Secretary
Dated as of April 21, 1994 BPC HOLDING CORPORATION, as Guarantor
By:/s/ROBERTO BUARON
Name: Roberto Buaron
Title: Chairman
Attest:
/s/JAMES KRATOCHVIL (SEAL)
James Kratochvil
Secretary
Dated as of April 21, 1994 BERRY IOWA CORPORATION, as Guarantor
By:/s/ROBERTO BUARON
Name: Roberto Buaron
Title: Chairman
Attest:
/s/JAMES KRATOCHVIL (SEAL)
James Kratochvil
Secretary
Dated as of April 21, 1994 BERRY-CPI PLASTICS CORP., as Guarantor
By:/s/ROBERTO BUARON
Name: Roberto Buaron
Title: Chairman
Attest:
/s/JAMES KRATOCHVIL (SEAL)
James Kratochvil
Secretary
Dated as of April 21, 1994 UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
By:/s/JOHN GUILIANO
Name: John Guiliano
Title: Vice President
Attest:
(SEAL)
Dated as of April 21, 1994
<PAGE>
_______________________________________________________________________________
_______________________________________________________________________________
EXHIBIT A
(Face of Note)
12 1/4% Senior Subordinated Notes due 2004
No. $____________
BERRY PLASTICS CORPORATION
promises to pay to
or registered assigns,
the principal sum of
Dollars on April 15, 2004.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Dated:___________________ __, 1994
BERRY PLASTICS CORPORATION
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
(SEAL)
This is one of the Notes
referred to in the
within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By: __________________________
Authorized Signatory
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE>
(Back of Security)
12 1/4% SENIOR SUBORDINATED NOTE
DUE April 15, 2004
"UNTIL THE EARLIEST TO OCCUR OF (I) OCTOBER 15, 1994, (II) SUCH
EARLIER DATE AS MAY BE DETERMINED BY DONALDSON, LUFKIN &
JENRETTE SECURITIES CORPORATION ("DLJ") WITH THE CONSENT OF BPC
HOLDING CORPORATION ("HOLDING"), WHICH CONSENT MAY NOT BE
UNREASONABLY WITHHELD, (III) IN THE EVENT OF A CHANGE OF CONTROL
(AS DEFINED IN THE INDENTURE (THE "INDENTURE") GOVERNING THE
12 1/4% SENIOR SUBORDINATED NOTES DUE 2004 (THE "NOTES") OF BERRY
PLASTICS CORPORATION ("BERRY")), THE DATE BERRY MAILS NOTICE THEREOF TO
HOLDERS OF NOTES AND (iv) IN THE EVENT OF AN ASSET SALE OFFER (AS
DEFINED IN THE INDENTURE), THE DATE BERRY MAILS NOTICE THEREOF TO
HOLDERS OF NOTES, THE NOTES EVIDENCED HEREBY MAY NOT BE SOLD,
ASSIGNED OR OTHERWISE TRANSFERRED TO ANY PERSON UNLESS,
SIMULTANEOUSLY WITH SUCH TRANSFER, THE HOLDER HEREOF TRANSFERS TO
THE SAME TRANSFEREE FOR EACH ONE WARRANT (SUBJECT TO AN
ADJUSTMENT UNDER SECTION 14 OF THE WARRANTY AGREEMENT, DATED AS OF
APRIL 21, 1994, BETWEEN HOLDING AND UNITED STATES TRUST COMPANY
OF NEW YORK, AS WAAAANT AGENT) TO PURCHASE 1.13237 SHARES OF
CLASS A COMMON STOCK, PAR VALUE $.00005 PER SHARE, OF HOLDING
$1,000 PRINCIPAL AMOUNT OF NOTES SO TRANSFERRED."
By accepting a Note bearing the legend above, each Holder of a Note shall
be bound by all of the terms and provisions of the Warrant Agreement (a copy of
which is available on request to Holding or the Warrant Agent) AS fully and
effectively AS if such Holder had signed the same.
Capitalized terms used herein have the meanings assigned to them
in the Indenture (as defined below) unless otherwise indicated.
1. INTEREST. Berry Plastics Corporation, a Delaware corporation (the
oCompany~), promises to pay interest on the principal amount of this Note at the
rate and in the manner specified below.
The Company shall pay in cash interest on the principal amount of
this Note at the rate per annum of 12 1/4%. The Company will pay interest
semi-annually on October 15 and April 15 of each year, or if any such day is not
a Business Day (as defined in the Indenture), on the next succeeding Business
Day (each an "Interest Payment Date").
Interest will be computed on the basis of a 360-day year consisting
of twelve 30-day months. Interest shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Notes. To the extent lawful, the Company shall pay
interest on overdue principal at the rate of 1% per annum in excess of the then
applicable interest rate on the Notes; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at the
same rate to the extent lawful.
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2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are cancelled after such record date and on or before
such Interest Payment Date. The Holder hereof must surrender this Note to a
Paying Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company, however, may pay
principal, premium, if any, and interest by check payable in such money. It may
mail an interest check to a Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-registrar without notice to any Holder. The Company or any Guarantor (as
defined below) may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of April 21, 1994 (the "Indenture") among the Company, BPC Holding
Corporation, a Delaware corporation ("Holding"), Berry Iowa Corporation, a
Delaware corporation ("Berry Iowa"), Berry-CPI Plastics Corp., a Delaware
corporation ("Berry-CPI Plastics"; Berry-CPI Plastics, together with Holding and
Berry Iowa, the "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 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in
effect on the date of the Indenture. The Notes are subject to all such terms,
and Holders of the Notes are referred to the Indenture and such act for a
statement of such terms. The terms of the indenture shall govern any
inconsistencies between the Indenture and the Notes. The Notes are unsecured
general obligations of the Company limited to $100,000,000 in aggregate
principal amount.
5. OPTIONAL REDEMPTION. Except as set forth below, the Company shall
not have the option to redeem the Notes pursuant to Section 3.07 of the
Indenture prior to April 15, 1999. Thereafter, the Company shall have the option
to redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of the principal amount) set forth below, plus accrued and unpaid
interest thereon, to the applicable redemption date, if redeemed during the 12
month period beginning on April 15 of the years indicated below:
YEAR PERCENTAGE
1999 106.125%
2000 104.083%
2001 102.042%
2002 AND THEREAFTER 100.000%
Notwithstanding the foregoing, at any tune prior to April 15, 1997,
the Company may redeem up to 25 % of the initial principal amount of the Notes
originally issued from the net proceeds of one or more public offerings of the
Common Stock of Holding, to the extent such net proceeds are contributed or
otherwise transferred to the Company as a capital contribution or are used to
purchase common equity securities of the Company at a redemption price equal to
111.25% of the principal amount thereof plus accrued and unpaid interest, if
any, to the redemption date; PROVIDED that at least 75 % of the principal of
Notes originally issued remain outstanding immediately after the occurrence of
any such redemption and that such redemption occurs within 60 days following the
closing of any such public offering.
6. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
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<PAGE>
7 REDEMPTION OR REDEMPTION AT OPTION OF HOLDER. (a) If there is a
Change of Control, the Company shall be required to offer to purchase all Notes
at 101 % of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase. Holders of Notes that are subject to
an offer to purchase will receive an offer to purchase from the Company 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" appearing
below.
(b) When the aggregate amount of Excess Proceeds from Asset Sales
exceeds $5 million, the Company shall be required to offer to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at 101 % of the principal amount thereof plus accrued and unpaid
interest, if any, to the date fixed for the closing of such offer. If the
aggregate principal amount of Notes tendered by Holders thereof exceeds the
amount of Excess Proceeds, the Notes to be redeemed shall be selected pursuant
to the terms of Section 3.02 of the Indenture (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased). To the extent that the
aggregate amount of Notes tendered by Holders thereof is less than the Excess
Proceeds, the Company may use such deficiency for general corporate purposes.
Holders of Notes which are the subject of an offer to purchase will receive an
offer to purchase from the Company 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" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
least 30 days but than 60 days before the redemption date to each Holder of
Notes to be redeemed at its address. Notes may be redeemed in part but only in
whole multiples of $1,000, unless all of held by a Holder are to be redeemed. On
and after the redemption date, interest~ ceases to Notes or portions of them
called for redemption.
9. SUBORDINATION. The Notes are subordinated to Senior Indebtedness
of the Company (whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed) and all Obligations with respect
thereto. To the extent provided in the Indenture, Senior Indebtedness of the
Company must be paid before the Notes may be paid. The Company agrees, and each
Holder by accepting a Note agrees, to the subordination and authorizes the
Trustee to give it effect.
10. NOTE GUARANTEES. Payment of principal of, premium, if any, and
interest (including interest on overdue principal, premium, if any, and
interest, if lawful) on the Notes is unconditionally guaranteed by the
Guarantors, on a senior subordinated basis, pursuant to Article 10 of the
Indenture.
11. 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 to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Note or portion of a
Note selected for redemption. Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before ~ selection of Notes to be
redeemed, during the period between a record date and the corresponding Interest
Payment Date.
12. PERSONS DEEMED OWNERS. Prior to due presentment to the Trustee
for registration of the transfer of this Note, the Trustee, any Agent, the
Company and the Guarantors may deem and treat the Person in whose name this Note
is registered as its absolute owner for the purpose of receiving payment of
principal of and interest on this Note and for all other purposes whatsoever,
whether or not
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<PAGE>
this Note is overdue, and neither the Trustee, any Agent, the Company nor any
Guarantor shall be affected by notice to the contrary. The registered holder of
a Note shall be treated as its owner for all purposes.
13. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the
Indenture or the Notes may be amended with the consent of the Holders of at
least a majority in principal amount of the then outstanding Notes (including
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 or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes). Without
the consent of any Holder, the Indenture or the Notes may be amended to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for assumption of the
Company's or any Guarantor's obligations to Holders in the case of a merger or
consolidation or to make any change that would provide any additional rights or
benefits to the Holders (including providing for additional Note Guarantees
pursuant to Section 4.13 of the Indenture) or that does not adversely affect the
rights of any Holder under the Indenture or to comply with the requirements of
the SEC in order to effect or maintain the qualification of the Indenture under
the TIA.
14. DEFAULTS AND REMEDIES. Events of Default include: default by the
Company or the Guarantors in the payment when due of interest on the Notes
(whether or not prohibited by the subordination provisions of Article 10 or
Article 11 of the Indenture, as the case may be) and such default continues for
a period of 30 days; default by the Company or the Guarantors in the payment
when due of principal of or premium, if any, on the Notes (whether or not
prohibited by the subordination provisions of Article 10 or Article 11 of the
Indenture, as the case may be) when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to purchase or
otherwise); failure by the Company to comply with Sections 4.07, 4.09, 4.10 or
4.15 of the Indenture; failure by the Company or the Guarantors to observe or
perform any other covenant, representation, warranty or other agreement in the
Notes for 60 days after the notice to the Company by the Trustee or the Holders
of at least 25% in principal amount of the Notes then outstanding; 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
borrowed by the Company, Holding or any of their respective Subsidiaries (or the
payment of which is guaranteed by the Company, Holding or any of their
respective Subsidiaries) whether such Indebtedness or Guarantee now exists, or
is created after the Issuance Date, which default (a) is caused by a failure to
pay principal of or premium, if any, or interest on such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness (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 $2 million or1T?~re; a final judgment or final
judgments for the payment of money are entered by a court or courts of competent
jurisdiction against the Company, Holding or any of their respective
Subsidiaries and such judgment or judgments remain unpaid or undischarged for a
period (during which execution shall not be effectively stayed) of 60 days,
PROVIDED that the aggregate of all such undischarged judgments exceeds $2
million; except as permitted by the Indenture, any Note Guarantee 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 Guarantor (or its successors or
assigns), or any Person acting on behalf of such Guarantor (or its successors or
assigns), shall deny or disaffirm its obligations or shall fail to comply with
any obligations under its Note Guarantee; and certain events of bankruptcy or
insolvency with respect to the Company, any Guarantor or any of their respective
Subsidiaries. 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 immediately; except, that if any
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<PAGE>
Indebtedness is outstanding pursuant to the New Revolving Credit Facility, upon
a declaration of acceleration, the principal and interest on the Notes shall be
payable upon the earlier of (1) the day which is five business days after notice
of acceleration is given to the Company and the lender under the New Revolving
Credit Facility or (2) the date of acceleration of the Indebtedness under the
New Revolving Credit Facility and except that in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company or any of its Subsidiaries, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes 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 Company must furnish an annual compliance certificate
to the Trustee.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company, the Guarantors or their respective
Affiliates, and may otherwise deal with the Company the Guarantors or their
respective Affiliates, as if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any Guarantor,
as such, shall have any liability for any obligations of the Company or any
Guarantor under the Notes, the Note Guarantees, the 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 and the Note Guarantees waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes and the Note Guarantees.
17. AUTHENTICATION. Neither this Note nor any Note Guarantee shall
be valid until authenticated by the manual signature of the Trustee or an
authenticating agent.
18. 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).
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to 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.
20. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO ~NSTRUE THE INDENTURE, THE NOTES AND THE NOTE GUARANTEES.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Request may be made to:
A-6
<PAGE>
Berry Plastics Corporation
101 Oakley Street
P.O. Box 959
Evansville, Indiana 47706-0959
Attention:Chief Financial Officer
NOTE GUARANTEE
Each of the Guarantors and each Subsidiary of the Company which in
accordance with Section 4.13 of the Indenture is required to guarantee the
obligations of the Company under the Notes upon execution of a counterpart of
this Indenture, has jointly and severally unconditionally guaranteed (I) the due
and punctual payment of the principal of and interest on the Notes, whether at
the maturity or interest payment or mandatory redemption date, by acceleration,
call for redemption or otherwise, and of interest on the overdue principal of
and interest, if any, on the Notes and all other obligations of the Company to
the Holders or the Trustee under the Indenture or the Notes and (ii) 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 maturity,
by acceleration or otherwise.
The obligations of each Guarantor to the Holder and to the Trustee
pursuant to this Note Guarantee and the Indenture are as expressly set forth in
Article 10 of the Indenture, and reference is hereby made to such Indenture for
the precise terms of this Note Guarantee. The terms of Article 10 of the
Indenture are incorporated herein by reference.
This is a continuing guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its successors and assigns
until full and final payment of all of the Company's obligations under the Notes
and the Indenture and shall inure to the benefit of the successors and assigns
of the Trustee and the Holders and, in the event of any transfer or assignment
of rights by any Holder or the Trustee, the rights and privileges herein
conferred upon that party shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. This is
a guarantee of payment and not a guarantee of collection.
This Note Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Note
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
A-7
<PAGE>
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Guarantors:
BPC HOLDING CORPORATION
By:_____________________________________
Name:
Title:
Attest:
_____________________________________ (SEAL)
BERRY IOWA CORPORATION
By:_____________________________________
Name:
Title:
Attest:
_____________________________________ (SEAL)
BERRY-CPI PLASTICS CORP.
By:_____________________________________
Name:
Title:
Attest:
_____________________________________ (SEAL)
A-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 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 Company. 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.
A-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 (upon the occurrence of an Asset Sale) or 4.15 (upon the occurrence
of a Change of Control) of the Indenture, check the box below:
[]Section 4.10 []Section 4.15
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.15 of the Indenture, state the amount you elect to have
purchased: $__________
Date: _________________ Your Signature: ______________________________
(Sign exactly as your name appears on
on the Note)
Tax Identification No.:_____________
Signature Guarantee.
A-10
<PAGE>
EXHIBIT B
[FORM OF NOTATION ON SENIOR SUBORDINATED NOTE
RELATING TO THE NOTE GUARANTEES]
Each of the Guarantors and each Subsidiary of the Company which in
accordance with Section 4.13 of the Indenture is required to guarantee the
obligations of the Company under the Notes upon execution of a counterpart of
this Indenture, has jointly and severally unconditionally guaranteed (i) the due
and punctual payment of the principal of and interest on the Notes, whether at
the maturity or interest payment or mandatory redemption date, by acceleration,
call for redemption or otherwise, and of interest on the overdue principal of
and interest, if any, on the Notes and all other obligations of the Company to
the Holders or the Trustee under the Indenture or the Notes and (ii) 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 maturity,
by acceleration or otherwise.
The obligations of each Guarantor to the Holder and to the Trustee pursuant
to this Note Guarantee and the Indenture are as expressly set forth in Article
10 of the Indenture, and reference is hereby made to such Indenture for the
precise terms of this Note Guarantee. The terms of Article 10 of the Indenture
are incorporated herein by reference.
This is a continuing guarantee and shall remain in full force and effect
and shall be binding upon each Guarantor and its successors and assigns until
full and final payment of all of the Company's obligations under the Notes and
the Indenture and shall inure to the benefit of the successors and assigns of
the Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a guarantee
of payment and not a guarantee of collection.
This Note Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Note Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
B-1
EXHIBIT 10.27
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BERRY PLASTICS CORPORATION
BPC HOLDING CORPORATION
BERRY PLASTICS ACQUISITION CORPORATION
BERRY IOWA CORPORATION
BERRY TRI-PLAS CORPORATION
BERRY STERLING CORPORATION
AEROCON, INC.
PACKERWARE CORPORATION, a Kansas corporation
PACKERWARE CORPORATION, a Delaware corporation
BERRY PLASTICS DESIGN CORPORATION
VENTURE PACKAGING, INC.
VENTURE PACKAGING MIDWEST, INC., an Ohio corporation
VENTURE PACKAGING MIDWEST, INC., a Delaware corporation
VENTURE PACKAGING SOUTHEAST, INC., a South Carolina corporation
VENTURE PACKAGING SOUTHEAST, INC., a Delaware corporation
NIM HOLDINGS LIMITED
NORWICH INJECTION MOULDERS LIMITED
NORWICH ACQUISITION LIMITED
KNIGHT PLASTICS, INC.
CPI HOLDING CORPORATION
CARDINAL PACKAGING, INC.
11% SENIOR SUBORDINATED NOTES DUE 2007
- --------------------------------------------------------------------------------
INDENTURE
Dated as of July 6, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES TRUST COMPANY 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)(1).................................................. 7.06
(b)(2).................................................. 7.06; 7.07
(c)..................................................... 7.06; 12.02
(d)..................................................... 7.06
314(a)..................................................... 4.03; 12.02
(b)..................................................... N.A.
(c)(1).................................................. 12.04
(c)(2).................................................. 12.04
(c)(3).................................................. N.A.
(d)..................................................... 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).................................................. 6.07; 9.02
(b)..................................................... 6.07
(c)..................................................... 2.13
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 the Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE ................... 1
SECTION 1.01 DEFINITIONS .......................................... 1
SECTION 1.02 OTHER DEFINITIONS .................................... 15
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT .... 16
SECTION 1.04 RULES OF CONSTRUCTION ................................ 16
ARTICLE 2 THE NOTES .................................................... 16
SECTION 2.01 FORM AND DATING .................................... 16
SECTION 2.02 EXECUTION AND AUTHENTICATION ....................... 17
SECTION 2.03 REGISTRAR AND PAYING AGENT ......................... 18
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST ................ 19
SECTION 2.05 LISTS OF HOLDERS OF THE NOTES ...................... 19
SECTION 2.06 TRANSFER AND EXCHANGE .............................. 19
SECTION 2.07 REPLACEMENT NOTES .................................. 30
SECTION 2.08 OUTSTANDING NOTES .................................. 31
SECTION 2.09 TREASURY NOTES ..................................... 31
SECTION 2.10 TEMPORARY NOTES .................................... 31
SECTION 2.11 CANCELLATION ....................................... 32
SECTION 2.12 DEFAULTED INTEREST ................................. 32
SECTION 2.13 RECORD DATE ........................................ 33
SECTION 2.14 CUSIP NUMBER ....................................... 33
ARTICLE 3 REDEMPTION AND PREPAYMENT .................................... 33
SECTION 3.01 NOTICES TO TRUSTEE ................................. 33
SECTION 3.02 SELECTION OF NOTES TO BE PURCHASED OR REDEEMED ..... 33
SECTION 3.03 NOTICE OF PURCHASE OR REDEMPTION ................... 34
SECTION 3.04 EFFECT OF NOTICE OF PURCHASE OR REDEMPTION ......... 34
SECTION 3.05 DEPOSIT OF PURCHASE OR REDEMPTION PRICE ............ 35
SECTION 3.06 NOTES PURCHASED OR REDEEMED IN PART ................ 35
SECTION 3.07 OPTIONAL REDEMPTION ................................ 35
SECTION 3.08 MANDATORY REDEMPTION ............................... 36
SECTION 3.09 OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS 36
ARTICLE 4 COVENANTS .................................................... 37
SECTION 4.01 PAYMENT OF NOTES ................................... 37
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY .................... 38
SECTION 4.03 REPORTS ............................................ 38
SECTION 4.04 COMPLIANCE CERTIFICATE ............................. 39
SECTION 4.05 TAXES .............................................. 39
SECTION 4.06 STAY, EXTENSION AND USURY LAWS ..................... 40
SECTION 4.07 RESTRICTED PAYMENTS ................................ 40
SECTION 4.08 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES ....................................... 42
i
<PAGE>
SECTION 4.09 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED STOCK ................................. 42
SECTION 4.10 ASSET SALES ........................................ 45
SECTION 4.11 TRANSACTIONS WITH AFFILIATES ....................... 46
SECTION 4.12 LIENS .............................................. 46
SECTION 4.13 ADDITIONAL GUARANTEES .............................. 46
SECTION 4.14 CORPORATE EXISTENCE ................................ 47
SECTION 4.15 OFFER TO REPURCHASE UPON CHANGE OF CONTROL ......... 47
SECTION 4.16 NO SENIOR SUBORDINATED INDEBTEDNESS ................ 48
SECTION 4.17 DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES 48
ARTICLE 5 SUCCESSORS ................................................... 49
SECTION 5.01 MERGER, CONSOLIDATION OR SALE OF ASSETS ............ 49
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED .................. 49
ARTICLE 6 DEFAULTS AND REMEDIES ........................................ 49
SECTION 6.01 EVENTS OF DEFAULT .................................. 49
SECTION 6.02 ACCELERATION ....................................... 51
SECTION 6.03 OTHER REMEDIES ..................................... 52
SECTION 6.04 WAIVER OF PAST DEFAULTS ............................ 52
SECTION 6.05 CONTROL BY MAJORITY ................................ 53
SECTION 6.06 LIMITATION ON SUITS ................................ 53
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT ...... 53
SECTION 6.08 COLLECTION SUIT BY TRUSTEE ......................... 54
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM ................... 54
SECTION 6.10 PRIORITIES ......................................... 54
SECTION 6.11 UNDERTAKING FOR COSTS .............................. 55
ARTICLE 7 TRUSTEE ...................................................... 55
SECTION 7.01 DUTIES OF TRUSTEE .................................. 55
SECTION 7.02 RIGHTS OF TRUSTEE .................................. 56
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE ....................... 56
SECTION 7.04 TRUSTEE'S DISCLAIMER ............................... 57
SECTION 7.05 NOTICE OF DEFAULTS ................................. 57
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES ......... 57
SECTION 7.07 COMPENSATION AND INDEMNITY ......................... 57
SECTION 7.08 REPLACEMENT OF TRUSTEE ............................. 58
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC ................... 59
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION ...................... 59
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY .. 60
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE ..................... 60
SECTION 8.01 OPTION TO EFFECT LEGAL DEFEASANCE OR
COVENANT DEFEASANCE ................................ 60
SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE ..................... 60
SECTION 8.03 COVENANT DEFEASANCE ................................ 60
SECTION 8.04 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE ......... 61
SECTION 8.05 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS ........... 62
SECTION 8.06 REPAYMENT TO COMPANY ............................... 62
ii
<PAGE>
SECTION 8.07 REINSTATEMENT ...................................... 63
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER ............................. 63
SECTION 9.01 WITHOUT CONSENT OF HOLDERS OF NOTES ................ 63
SECTION 9.02 WITH CONSENT OF HOLDERS OF NOTES ................... 64
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT ................ 65
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS .................. 65
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES ................... 66
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC .................... 66
ARTICLE 10 NOTE GUARANTEES ............................................. 66
SECTION 10.01 NOTE GUARANTEE .................................... 66
SECTION 10.02 SUBORDINATION ..................................... 67
SECTION 10.03 LIQUIDATION; DISSOLUTION; BANKRUPTCY .............. 68
SECTION 10.04 DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS OF
THE GUARANTOR ..................................... 68
SECTION 10.05 ACCELERATION OF NOTES ............................. 69
SECTION 10.06 WHEN DISTRIBUTION MUST BE PAID OVER ............... 69
SECTION 10.07 NOTICE BY A GUARANTOR ............................. 70
SECTION 10.08 SUBROGATION ....................................... 70
SECTION 10.09 RELATIVE RIGHTS ................................... 70
SECTION 10.10 SUBBORDINATION MAY NOT BE IMPAIRED BY ANY GUARANTOR 70
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE .......... 70
SECTION 10.12 RIGHTS OF TRUSTEE AND PAYING AGENT ................ 71
SECTION 10.13 AUTHORIZATION TO EFFECT SUBORDINATION ............. 71
SECTION 10.14 LIMITATION OF GUARANTOR'S LIABILITY ............... 71
SECTION 10.15 EXECUTION AND DELIVERY OF NOTE GUARANTEE .......... 72
SECTION 10.16 GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS 72
SECTION 10.17 RELEASES FOLLOWING SALE OF ASSETS ................. 72
ARTICLE 11 SUBORDINATION ............................................... 73
SECTION 11.01 SUBORDINATION ..................................... 73
SECTION 11.02 LIQUIDATION; DISSOLUTION; BANKRUPTCY .............. 73
SECTION 11.03 DEFAULT ON SENIOR INDEBTEDNESS .................... 73
SECTION 11.04 ACCELERATION OF NOTES ............................. 74
SECTION 11.05 WHEN DISTRIBUTION MUST BE PAID OVER ............... 74
SECTION 11.06 NOTICE BY COMPANY ................................. 75
SECTION 11.07 SUBROGATION ....................................... 75
SECTION 11.08 RELATIVE RIGHTS ................................... 75
SECTION 11.09 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY ...... 76
SECTION 11.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE .......... 76
SECTION 11.11 RIGHTS OF TRUSTEE AND PAYING AGENT ................ 76
SECTION 11.12 AUTHORIZATION TO EFFECT SUBORDINATION ............. 76
ARTICLE 12 MISCELLANEOUS ............................................... 77
SECTION 12.01 TRUST INDENTURE ACT CONTROLS ...................... 77
SECTION 12.02 NOTICES ........................................... 77
SECTION 12.03 COMMUNICATION BY HOLDERS OF NOTES WITH OTHER
HOLDERS OF NOTES .................................. 78
SECTION 12.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT 78
iii
<PAGE>
SECTION 12.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION ..... 78
SECTION 12.06 RULES BY TRUSTEE AND AGENTS ....................... 79
SECTION 12.07 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS ........................ 79
SECTION 12.08 GOVERNING LAW ..................................... 79
SECTION 12.09 CONSENT TO JURISDICTION ........................... 79
SECTION 12.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS ..... 79
SECTION 12.11 SUCCESSORS ........................................ 79
SECTION 12.12 SEVERABILITY ...................................... 80
SECTION 12.13 COUNTERPART ORIGINALS ............................. 80
SECTION 12.14 TABLE OF CONTENTS, HEADINGS, ETC .................. 80
EXHIBITS
EXHIBIT A-1 FORM OF NOTE
EXHIBIT A-2 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 ON SENIOR SUBORDINATED NOTE RELATING TO THE NOTE
GUARANTEES
iv
<PAGE>
INDENTURE dated as of July 6, 1999 among Berry Plastics Corporation,
a Delaware corporation (the "Company"), BPC Holding Corporation, a Delaware
corporation ("Holding"), Berry Plastics Acquisition Corporation, a Delaware
corporation ("Berry Acquisition"), Berry Iowa Corporation, a Delaware
corporation ("Berry Iowa"), Berry Tri Plas Corporation, a Delaware corporation
("Berry Tri Plas"), Berry Sterling Corporation, a Delaware corporation ("Berry
Sterling"), AeroCon, Inc., a Delaware corporation ("AeroCon"), PackerWare
Corporation, a Kansas corporation ("PackerWare'), PackerWare Corporation, a
Delaware corporation ("PackerWare Delaware"), Berry Plastics Design Corporation,
a Delaware corporation ("Berry Design"), Venture Packaging, Inc., a Delaware
corporation ("Venture Holdings"), Venture Packaging Midwest, Inc., an Ohio
corporation ("Venture Midwest"), Venture Packaging Midwest Inc., a Delaware
corporation ("Venture Midwest Delaware"), Venture Packaging Southeast, Inc., a
South Carolina corporation ("Venture Southeast"), Venture Packaging Southeast,
Inc., a Delaware corporation ("Venture Southeast Delaware"), NIM Holdings
Limited, a company organized under the laws of England and Wales ("NIM
Holdings"), Norwich Injection Moulders Limited, a company organized under the
laws of England and Wales ("Norwich"), Norwich Acquisition Limited, a company
organized under the laws of England and Wales ("Norwich Acquisition"), Knight
Plastics, Inc., a Delaware corporation ("Knight"), CPI Holding Corporation, a
Delaware corporation ("CPI"), Cardinal Packaging, Inc., an Ohio corporation
("Cardinal"), and United States Trust Company of New York, as trustee (the
"Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 11% Series A Senior Subordinated Notes due 2007 (the "Series A Notes") and
the 11% Series B Senior Subordinated Notes due 2007 (the "Series B Notes" and,
together with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01 DEFINITIONS.
"ACQUIRED DEBT" means, with respect to any specified Person (a)
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a 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 Subsidiary of such specified
Person; and (b) Indebtedness encumbering any asset acquired by such specified
Person.
"ADDITIONAL NOTES" means an unlimited number of additional Notes
(other than the Initial Notes) issued under this Indenture in accordance with
Sections 2.02 and 4.09 hereof.
"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; PROVIDED, HOWEVER, that beneficial ownership of 10% or
more of the voting securities of a Person shall be deemed to be control. For
purposes of this definition, the terms "controlling," "controlled by" and "under
common control with" shall have correlative meanings. Neither Chase Venture
Capital Associates, L.P. nor its respective Affiliates shall be deemed an
Affiliate of Holding, the Company or any of its Subsidiaries for purposes of
this definition by reason of its direct or indirect beneficial ownership of 30%
<PAGE>
or less of the voting Common Stock of Holding or by reason of any employee
thereof being appointed to the Board of Directors of Holding.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"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.
"ASSET SALE" means (a) the sale, lease, conveyance or other
disposition of any property or assets of the Company or any Restricted
Subsidiary, including by way of a sale-and-leaseback, other than sales of
inventory in the ordinary course of business; PROVIDED that the sale, conveyance
or other disposition of all or substantially all of the assets of the Company
and its Restricted Subsidiaries shall be governed by Section 4.15 hereof and/or
Section 5.01 hereof and not by the provisions of Section 4.10 hereof; or (b) the
issuance or sale of Equity Interests of any of the Company's Restricted
Subsidiaries, in the case of either clause (a) or (b) above, whether in a single
transaction or a series of related transactions.
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 equal to or less
than $1.0 million or for Net Proceeds equal to or less than $1.0 million; (ii) a
transfer of assets between or among the Company and its Wholly Owned Restricted
Subsidiaries, (iii) any Restricted Payment, dividend or purchase or retirement
of Equity Interests that is permitted by Section 4.07 hereof; (iv) the issuance
or sale of Equity Interests of any Restricted Subsidiary of the Company;
PROVIDED that such Equity Interests are issued or sold in consideration for the
acquisition of assets by such Restricted Subsidiary or in connection with a
merger or consolidation of another Person into such Restricted Subsidiary; (v)
the sale or lease of equipment, inventory, accounts receivable or other assets
in the ordinary course of business; and (vi) the sale or other disposition of
cash or Cash Equivalents.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.
"BOARD OF DIRECTORS" means (a) with respect to a corporation, the
board of directors of the corporation; (b) with respect to a partnership, the
board of directors of the general partner of the partnership; and (c) with
respect to any other Person, the board or committee of such Person serving a
similar function.
"BORROWING BASE" means, as of any date, an amount equal to (a) 85%
of the face amount of all accounts receivable owned by the Company and its
Subsidiaries as of such date that were not more than 90 days past due; PLUS (b)
65% of the book value (calculated on a first in first out basis) of all
inventory owned by the Company and its Subsidiaries as of such date, all
calculated on a consolidated basis and in accordance with GAAP. To the extent
that information is not available as to the amount of accounts receivable or
inventory as of a specific date, the Company may utilize the most recent
available information for purposes of calculating the Borrowing Base.
"BROKER-DEALER" has the meaning set forth in the Registration
Rights Agreement.
"BUSINESS DAY" means any day other than a Legal Holiday.
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"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 so required to be capitalized on a balance sheet
prepared in accordance with GAAP.
"CAPITAL STOCK" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, with respect to partnerships, partnership interests (whether
general or limited) and 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 such partnership.
"CASH EQUIVALENTS" means (a) United States dollars; (b) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition; (c) 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
from the date of acquisition and overnight bank deposits, in each case, with any
lender party to the Credit Facility or with any domestic commercial bank having
capital and surplus in excess of $500.0 million; (d) repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clauses (b) and (c) above entered into with any financial
institution meeting the qualifications specified in clause (c) above; and (e)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Rating Services and in each case maturing
within six months after the date of acquisition.
"CEDEL" means Cedel Bank, SA.
"CHANGE OF CONTROL" means the occurrence of (a) the sale, lease or
transfer, in one or a series of related transactions, of all or substantially
all of Holding's or the Company's assets to any "person" or "group" (as those
terms are used in Section 13(d)(3) of the Exchange Act) other than the Principal
and his Related Parties; (b) the adoption of a plan relating to the liquidation
or dissolution of Holding or the Company; (c) the acquisition by any "person" or
"group" (as defined above), other than by the Principal and his Related Parties,
of a direct or indirect interest in more than 35% of the voting power of the
voting stock of Holding by way of purchase, merger or consolidation or otherwise
if (i) such person or group (as defined above), other than the Principal and his
Related Parties, owns, directly or indirectly, more of the voting power of the
voting stock of Holding than the Principal and his Related Parties; and (ii)
such acquisition occurs prior to an Initial Public Offering; (d) the acquisition
by any person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) (other than by the Principal and his Related Parties) of a direct or
indirect interest in more than 50% of the voting power of the voting stock of
Holding by way of purchase, merger or consolidation or otherwise if such
acquisition occurs subsequent to an Initial Public Offering; or (e) the first
day on which a majority of the members of the Board of Directors of Holding are
not Continuing Directors.
"COMMON STOCK OF HOLDING" means the Class A Common Stock, $.00005
par value per share, and the Class B Common Stock, $.00005 par value per share,
of Holding.
"CONSOLIDATED CASH FLOW" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period PLUS
(a) 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 Consolidated Net Income;
PLUS (b) provision for taxes based on income or profits of such Person and its
Restricted
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Subsidiaries for such period, to the extent such provision for taxes
was included in computing Consolidated Net Income; PLUS (c) Consolidated
Interest Expense of such Person and its Restricted Subsidiaries for such period
to the extent such expense was deducted in computing Consolidated Net Income;
PLUS (d) Consolidated Depreciation and Amortization Expense of such Person and
its Restricted Subsidiaries for such period to the extent such expense was
deducted in computing Consolidated Net Income; PLUS (e) other non-cash charges
(including, without limitation, repricing of stock options, to the extent
deducted in computing Consolidated Net Income; but excluding any non-cash charge
that requires an accrual or reserve for cash expenditures in future periods or
which involved a cash expenditure in a prior period), in each case, on a
consolidated basis and determined in accordance with GAAP.
"CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means, with
respect to any Person for any period, the total amount of depreciation and
amortization expense (including amortization of goodwill and other intangibles
but excluding amortization of prepaid cash expenses that were paid in a prior
period) of such Person for such period on a consolidated basis as determined in
accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person
for any period, the sum of (a) consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued, to the
extent such expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount, non-cash interest payments, the
interest component of capital leases, and net payments (if any) pursuant to
Hedging Obligations); (b) commissions, discounts and other fees and charges paid
or accrued with respect to letters of credit and bankers' acceptance financing;
and (c) interest for such period whether or not paid by such Person or its
Restricted Subsidiaries under a Guarantee of Indebtedness of any other Person.
"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 (a) the Net Income 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 to the specified Person or a Guarantor; (b) the Net Income of
any Person that is a Restricted Subsidiary (other than a Wholly Owned Restricted
Subsidiary) shall be included only to the extent of the amount of dividends or
distributions paid to the specified Person or a Guarantor; (c) 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; (d) the cumulative effect of
a change in accounting principles shall be excluded; and (e) 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 Subsidiaries.
"CONSOLIDATED STEP-UP DEPRECIATION AND AMORTIZATION" means, with
respect to any Person for any period, the total amount of depreciation related
to the write up of assets and amortization of such Person for such period on a
consolidated basis as determined in accordance with GAAP to the extent such
depreciation was deducted in computing Consolidated Net Income.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of Holding who (a) was a member of such Board
of Directors on the date of this Indenture; or (b) was nominated for election or
elected to such Board of Directors with the affirmative vote of a majority of
the Continuing Directors who were members of such Board at the time of such
nomination or election.
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"CREDIT FACILITY" means the Second Amended and Restated Financing
and Security Agreement dated as of July 2, 1998, as amended through the date
hereof by and among the Company, NIM Holdings Limited, Norwich Injection
Moulders Limited, the financial institutions party thereto and NationsBank,
N.A., as collateral and administrative agent, providing for up to $142.9 million
of borrowings, including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced or refinanced from time to time.
"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 written notice to the Company.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"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 in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A 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.
"DESIGNATED SENIOR INDEBTEDNESS" means (a) the Senior Bank
Indebtedness; and (b) any other Senior Indebtedness permitted to be incurred
under this Indenture the principal amount of which is $15.0 million or more and
that has been designated in the instrument creating or evidencing such Senior
Indebtedness as "Designated Senior Indebtedness."
"DISQUALIFIED STOCK" means any Capital Stock 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, 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. 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.
"DISTRIBUTION" means, for purposes of Articles 10 and 11, a
distribution consisting of cash, securities or other property, by set-off or
otherwise.
"DOMESTIC RESTRICTED 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).
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"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.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Facility) in existence on
the date of this Indenture, until such amounts are repaid.
"FIRST ATLANTIC" means First Atlantic Capital, Ltd.
"FIXED CHARGES" means, with respect to any specified Person for any
period, the sum, without duplication, of (a) the Consolidated Interest Expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued, to the extent such expense was deducted in computing Consolidated Net
Income; PLUS (b) the product of (i) all cash dividend payments and noncash
dividend payments in the form of securities (other than Disqualified Stock) on
any series of preferred stock of such Person and its Restricted Subsidiaries,
times (ii) except to the extent such dividend payments are deemed tax
deductible, 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.
"FIXED CHARGE COVERAGE RATIO" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person 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
revolving credit 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 but 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.
For purposes of calculating the Fixed Charge Coverage Ratio,
acquisitions, dispositions and discontinued operations (as determined in
accordance with GAAP) that have been made by the specified Person or any of its
Restricted Subsidiaries, including all mergers and 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 (and the reduction of any associated
fixed charge obligations resulting therefrom) had occurred on the first day of
the four-quarter reference period.
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"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.
"GLOBAL NOTES" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A-1 hereto issued 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), 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 for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"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, through letters of
credit and reimbursement agreements in respect thereof, of all or any part of
any Indebtedness.
"GUARANTORS" means each of (a) each Domestic Restricted Subsidiary
of the Company; (b) NIM Holdings Limited, a company organized under the laws of
England and Wales, and Norwich Injection Moulders Limited, a company organized
under the laws of England and Wales; and (c) any other Restricted Subsidiary
that executes a Note Guarantee in accordance with the provisions of this
Indenture; and their respective successors and assigns.
"HEDGING OBLIGATIONS" means, with respect to any specified Person,
the obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements; and (b) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"HOLDER" means a Person in whose name a Note is registered.
"IAI GLOBAL NOTE" means a global Note substantially in the form of
Exhibit A 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 shall be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"INDEBTEDNESS" means, with respect to any specified Person, any
indebtedness of such person, whether or not: (a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof); (c) representing
Capital Lease Obligations; (d) in respect of the balance deferred and unpaid of
the purchase price of any property, except such balance that constitutes an
accrued expense or trade payable; or (e) 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 the Guarantee by the specified Person of any
indebtedness of any other Person.
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The amount of any Indebtedness outstanding as of any date will be:
(a) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount; and (b) the principal amount thereof, together with any
interest thereon that is more than 30 days past due, 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.
"INITIAL NOTES" means the first $75.0 million aggregate principal
amount of Notes issued under this Indenture on the date hereof.
"INITIAL PUBLIC OFFERING" means a public offering of the Common
Stock of Holding that first results in the Common Stock of Holding becoming
listed for trading on a Stock Exchange.
"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 is not also a QIB.
"INTEREST PAYMENT DATE" shall have the meaning given to it in the
Notes.
"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), advances or capital contributions
(excluding commission, travel and similar advances to officers, directors,
consultants and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities and all other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Restricted 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 Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of
Section 4.07 hereof. The acquisition by the Company or any Restricted 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 Restricted 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 Section 4.07 hereof.
"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 Business Day, and no interest shall accrue for the intervening
period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by the
Holders in connection with the Exchange Offer.
"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
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<PAGE>
filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction.
"LIQUIDATED DAMAGES" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"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 preferred stock dividends, excluding, however (a) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions); and (b)
any extraordinary gain (but not loss), together with any related provision for
taxes 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, net
of the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof, taxes 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 secured by a Lien on the asset or
assets that are the subject of such Asset Sale and any reserve for
indemnification adjustment in respect of the sale price of such asset or assets.
"1998 INDENTURE" means the Indenture dated August 24, 1998 among the
Company, the Guarantors named therein and the Trustee, governing the 1998 Notes.
"1994 INDENTURE" means the Indenture dated April 21, 1994 among the
Company, the Guarantors named therein and the Trustee, governing the 1994 Notes.
"1998 NOTES" means the $25.0 million in principal amount of the
Company's 12 1/4% Senior Subordinated Notes due 2004.
"1994 NOTES" means the $100.0 million in principal amount of the
Company's 12 1/4% Senior Subordinated Notes due 2004.
"NON-RECOURSE DEBT" means Indebtedness (a) as to which neither the
Company nor any of its Restricted Subsidiaries (i) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (ii) is directly or indirectly liable as a guarantor
or otherwise, or (iii) is the lender; (b) 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 (c) 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.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
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"NOTES" has the meaning assigned to it in the preamble to this
Indenture. The Initial Notes and the Additional Notes, if any, 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.
"OFFICER" means, with respect to any unnatural 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 or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"144A GLOBAL NOTE" means a global note substantially in the form of
Exhibit A 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 shall be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"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 Holding, any
Subsidiary of Holding 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 INVESTMENTS" means (a) any Investments in the Company or
in a Wholly Owned Restricted Subsidiary of the Company; (b) any Investment in
Cash Equivalents; (c) any Investment by the Company or any Subsidiary of the
Company in a Person, if as a result of such Investment (i) such Person becomes a
Wholly Owned Restricted Subsidiary of the Company; or (ii) 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
Wholly Owned Restricted Subsidiary of the Company; (c) 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; (d) any acquisition of
assets solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Company; and (e) Hedging Obligations.
"PERMITTED JUNIOR SECURITIES" means (a) Equity Interests in the
Company or any Guarantor; or (b) debt securities that are subordinated to all
Senior Indebtedness and any debt securities issued in exchange for Senior
Indebtedness to substantially the same extent as, or to a greater extent than,
the Notes and the Note Guarantees are subordinated to Senior Indebtedness under
this Indenture.
"PERMITTED LIENS" means (a) Liens of the Company and any Guarantor
securing Senior Indebtedness that was permitted by the terms of this Indenture
to be incurred; (b) Liens in favor of the Company or the Guarantors; (c) Liens
on property of a Person existing at the time such Person is merged
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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; (d) 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; (e) 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; (f) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (d) of the second
paragraph of Section 4.09 hereof covering only the assets acquired with such
Indebtedness; (g) Liens existing on the date of this Indenture; (h) 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; (i) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries; and (j) 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.
"PERMITTED REFINANCING" means Refinancing Indebtedness if (a) the
principal amount of Refinancing Indebtedness does not exceed the principal
amount of the Indebtedness so extended, refinanced, renewed, replaced, defeased
or refunded (plus the amount of premiums, accrued interest and reasonable
expenses incurred in connection therewith); (b) the Refinancing Indebtedness has
a final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (c) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, the Refinancing Indebtedness has a final maturity date 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 (d) 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, government or any agency or political subdivision
thereof or any other entity.
"PRINCIPAL" means Roberto Buaron.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"REFINANCING INDEBTEDNESS" means Indebtedness issued in exchange
for, or the proceeds of which are used to extend, refinance, renew, replace,
defease or refund Indebtedness referred to in the first paragraph of or in
clauses (b), (c), (d) and (l) of the second paragraph of Section 4.09 hereof.
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"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of July 6, 1999, by and among the Company and the other
parties named on the signature pages thereof, 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 Company 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 Company 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.
"REGULATION S GLOBAL NOTE" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary 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 or 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 A-1 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 A-2 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 with respect to the Principal (a) any spouse,
sibling or descendant of the Principal, whether or not such relationship arises
from birth, adoption or marriage or despite such relationship being dissolved by
divorce; or (b) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding a
controlling interest of which consist of the Principal and/or such other Persons
referred to in the immediately preceding clause (a).
"REPRESENTATIVE" means, for purposes of Articles 10 and 11, the
indenture trustee or other trustee, agent or representative for any Senior
Indebtedness or, with respect to any Guarantor, for any Senior Indebtedness of
such Guarantor.
"RESPONSIBLE OFFICER" when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) 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.
"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 an Investment other than a Permitted
Investment.
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"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.
"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 BANK INDEBTEDNESS" means the Indebtedness outstanding under
the Credit Facility as such agreement may be restated, further amended,
supplemented or otherwise modified or replaced from time to time hereafter,
together with any refunding or replacement of any such Indebtedness.
"SENIOR INDEBTEDNESS" means (a) the Senior Bank Indebtedness; (b)
any other Indebtedness permitted to be incurred by the Company or a Guarantor,
as the case may be, under the terms of this Indenture, unless the instrument
under which such Indebtedness is incurred expressly provides that it is PARI
PASSU with or subordinated in right of payment to the Notes or a Note Guarantee,
as the case may be; and (c) all Obligations with respect to the items listed in
the preceding clauses (a) and (b).
Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness shall not include (w) any liability for Federal, state, local or
other taxes owed or owing by the Company or a Guarantor, as the case may be; (x)
any Indebtedness of the Company or a Guarantor, as the case may be, to Holding
or to any of Holding's other Subsidiaries or other Affiliates; (y) any trade
payables; or (z) the portion of any Indebtedness that is incurred in violation
of this Indenture.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"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.
"STOCK EXCHANGE" means the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market.
"SUBSIDIARY" means, with respect to any specified Person (a) 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 (b) any
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partnership (i) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (ii) the only general
partners of which are such Person or one or more Subsidiaries of such Person or
any combination thereof.
"TAX SHARING AGREEMENT" means that certain Tax Sharing Agreement, as
in effect on the date of this Indenture, between the Company and Holding.
"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.
"TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"UNRESTRICTED DEFINITIVE NOTE" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"UNRESTRICTED GLOBAL NOTE" means a permanent global Note
substantially in the form of Exhibit A attached hereto that bears the Global
Note Legend and that has the "Schedule of 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 SUBSIDIARY" means any Subsidiary of the Company that
is designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a resolution of the Company's Board of Directors, but only to the extent that
such Subsidiary (a) has no Indebtedness other than Non-Recourse Debt; (b) 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; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (i) to subscribe for additional Equity
Interests or (ii) to maintain or preserve such Person's financial condition or
to cause such Person to achieve any specified levels of operating results; (d)
has not guaranteed or otherwise directly or indirectly provided credit support
for any Indebtedness of the Company or any of its Restricted Subsidiaries; and
(e) 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 Resolution of the Company's Board of Directors 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 the covenant described under
Section 4.09 hereof, the Company shall be in default of such Section. The Board
of Directors 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
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Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (a) 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 (b) 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.
"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 (i) 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 (ii) the
number of years (calculated to the nearest one-twelfth) that shall elapse
between such date and the due date 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.
Defined in
Term Section
"AFFILIATE TRANSACTION"................ 4.11
"ASSET SALE OFFER"..................... 3.09
"BENEFITED PARTY"...................... 10.01
"CHANGE OF CONTROL OFFER".............. 4.15
"CHANGE OF CONTROL PAYMENT"............ 4.15
"CHANGE OF CONTROL PAYMENT DATE"....... 4.15
"COVENANT DEFEASANCE".................. 8.03
"EVENT OF DEFAULT"..................... 6.01
"EXCESS PROCEEDS"...................... 4.10
"GUARANTOR PAYMENT BLOCKAGE NOTICE".... 10.04
"INCUR"................................ 4.09
"LEGAL DEFEASANCE"..................... 8.02
"NOTE GUARANTEE"....................... 10.01
"OFFER AMOUNT"......................... 3.09
"OFFER PERIOD"......................... 3.09
"PAYING AGENT"......................... 2.03
"PAYMENT BLOCKAGE NOTICE".............. 11.03
"PAYMENT DEFAULT"...................... 6.01
"PURCHASE DATE"........................ 3.09
"REGISTRAR"............................ 2.03
"RESTRICTED PAYMENTS".................. 4.07
"TERMINATION DATE"..................... 2.06
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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;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Notes means the Company, the Guarantors and any
successor obligor upon the Notes or any Note Guarantee, as the case may be.
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:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
and
(6) 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 in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The notation on each Note
relating to the Note Guarantee shall be substantially in the form set forth on
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Exhibit B, which is part of this Indenture. The Notes may have notations,
legends or endorsements approved as to form by the Company and required by law,
stock exchange rule, agreements to which the Company or any Guarantor is subject
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be issuable only in denominations of $1,000 and integral multiples
thereof.
(b) GLOBAL NOTES. Notes issued in global form shall be substantially in the
form of Exhibit A attached hereto (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 A
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 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 Company 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 another exemption from
registration under the Securities Act and who will take delivery of a beneficial
ownership interest in a 144A Global Note or an IAI Global Note bearing a Private
Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii)
an Officers' Certificate from the Company. 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 Global Notes that are held by
Participants through Euroclear or Cedel Bank.
SECTION 2.02 EXECUTION AND AUTHENTICATION.
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Two Officers of the Company shall sign the Notes for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Notes and may be in facsimile form. An Officer of each Guarantor shall sign the
Note Guarantee for such Guarantor by manual or facsimile signature.
If an Officer of the Company or a Guarantor whose signature is on a
Note or a Note Guarantee, as the case may be, no longer holds that office at the
time the Note is authenticated, the Note or the Note Guarantee, as the case may
be, shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Note has been authenticated under this Indenture. The form of
Trustee's authentication to be borne by the Notes shall be substantially as set
forth in Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed by two
Officers of the Company, authenticate Notes with the Note Guarantees endorsed
thereon for original issue up to an aggregate principal amount stated in
paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding at
any time shall not exceed the amount set forth herein except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or any Guarantor or an Affiliate of the Company
or any Guarantor.
Any authenticating agent may resign at any time by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of the authenticating agent by giving written notice
of termination to the authenticating agent and the Company. Upon receiving
notice of such resignation or upon such termination by the Trustee, the Trustee
may appoint a successor authenticating agent acceptable to the Company, in which
case it shall so notify the Holders. Upon its appointment hereunder, any
successor authenticating agent shall become vested with all the rights, powers
and duties of its predecessor hereunder.
The Company shall agree, by separate instrument, to pay each
authenticating agent from time to time reasonable compensation for its services.
SECTION 2.03 REGISTRAR AND PAYING AGENT.
The Company and the Guarantors shall maintain (1) an office or
agency where Notes may be presented for registration of transfer or for exchange
(including any co-registrar, the "REGISTRAR") and (2) an office or agency where
Notes may be presented for payment ("PAYING AGENT"). The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional paying agents. The
term "PAYING AGENT" includes any additional paying agent. The Company may change
any Paying Agent, Registrar or co-registrar without prior notice to any Holder
of a Note. The Company shall notify the Trustee and the Trustee shall notify the
Holders of the Notes of the name and address of any Agent not a party to this
Indenture. The Company or any Guarantor may act as Paying Agent, Registrar or
co-registrar. The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which shall
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incorporate the provisions of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the
Trustee shall act as such, and shall be entitled to appropriate compensation in
accordance with Section 7.07 hereof.
The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of notices and demands in connection with the Notes.
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent shall hold in trust for the benefit of
the Holders of the Notes or the Trustee all money held by the Paying Agent for
the payment of principal, premium or Liquidated Damages, if any, and interest on
the Notes, and shall notify the Trustee of any Default by the Company or any
Guarantor 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 Company 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 Guarantor) shall have no further liability for the money
delivered to the Trustee. If the Company or a Guarantor acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
of the Notes all money held by it as Paying Agent. Upon the occurrence of either
event specified in Section 6.01(h) or (i), the Trustee shall serve as Paying
Agent for the Notes.
SECTION 2.05 LISTS OF HOLDERS OF THE NOTES.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of the Notes and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the CompanY and/or any Guarantor shall furnish to
the Trustee at least seven Business Days before each interest payment date 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 Holders of the Notes, including the aggregate principal amount of
the Notes held by each thereof, and the Company and each Guarantor 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 Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its 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. 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
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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. 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. 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 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 Company 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
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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; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(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 Company;
(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;
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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 Company 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:
(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, 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, 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, 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;
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(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(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 Company 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.
(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 Company;
(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:
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(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 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 Company 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 Notes 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, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (1)
thereof;
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(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, 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, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(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 Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such 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, the IAI Global Note.
(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 Company;
(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
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such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or
(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 Company 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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(A) if the transfer will be made pursuant to Rule 144A, 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 Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a 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;
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 Company to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
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(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 Company shall issue and, upon
receipt of an Authentication Order in accordance with Section 2.02, the Trustee
shall authenticate (i) 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 Company, and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes 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
Company 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 INVESTOR"
(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 BERRY PLASTICS CORPORATION OR ANY OF ITS 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 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
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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 COMPANY 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 COMPANY OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH ANY 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.
(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 COMPANY."
(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 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
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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 Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's 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 Company 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 Company, 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 Company 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 day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (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 Company 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 Company 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.
(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.
SECTION 2.07 REPLACEMENT NOTES.
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If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate
and deliver a replacement Note (accompanied by a notation of the Note Guarantee
duly endorsed by the Guarantors) if the Trustee's requirements for replacements
of Notes are met. If required by the Trustee, the Company or the Guarantors, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee, the Company and the Guarantors to protect the Company, the
Guarantors, the Trustee, any Agent or any authenticating agent from any loss
which any of them may suffer if a Note is replaced. Each of the Company, the
Guarantors and the Trustee may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and the Guarantors and shall be entitled to all of the benefits of this
Indenture equally and proportionally 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 cancelled by it, those delivered to it for
cancellation and those described in this Section 2.08 as not outstanding.
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 ceases to be outstanding and interest on it ceases to accrue.
Subject to Section 2.09 hereof, a Note does not cease to be
outstanding because the Company, a Subsidiary of the Company or an Affiliate of
the Company holds the Note.
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, Notes owned by the
Company, any Guarantor, any of their respective Subsidiaries or any Affiliate of
the Company or any Guarantor shall be considered as though not outstanding,
except that for purposes of determining whether the Trustee shall be protected
in relying on any such direction, waiver or consent, only Notes which a
Responsible Officer knows to be so owned shall be so considered. Notwithstanding
the foregoing, Notes that are to be acquired by the Company, any Guarantor, any
Subsidiary of the Company or any Guarantor or an Affiliate of the Company or any
Guarantor pursuant to an exchange offer, tender offer or other agreement shall
not be deemed to be owned by the Company, a Guarantor, a Subsidiary of the
Company or a Guarantor or an Affiliate of the Company or a Guarantor until legal
title to such Notes passes to the Company, Guarantor, Subsidiary of the Company
or a Guarantor or Affiliate of the Company or a Guarantor, as the case may be.
SECTION 2.10 TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Notes
(accompanied by a notation of the Note Guarantee duly endorsed by the
Guarantors). Temporary Notes shall be substantially in the form of Definitive
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Notes but may have variations that the Company and the Trustee consider
appropriate for temporary Notes. Without unreasonable delay, the Company shall
prepare and the Trustee, upon receipt of the written order of the Company signed
by two Officers of the Company, shall authenticate Definitive Notes (accompanied
by a notation of the Note Guarantee duly endorsed by the Guarantors) in exchange
for temporary Notes. Until such exchange, temporary Notes shall be entitled to
the same rights, benefits and privileges as Definitive Notes.
SECTION 2.11 CANCELLATION.
The Company 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 shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall destroy cancelled Notes
(subject to the record retention requirement of the Exchange Act), unless the
Company directs cancelled Notes to be returned to it. The Company may not issue
new Notes to replace Notes that it has redeemed or paid or that have been
delivered to the Trustee for cancellation. All cancelled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
the Company, unless by a written order, signed by two Officers of the Company,
the Company shall direct that cancelled Notes be returned to it.
SECTION 2.12 DEFAULTED INTEREST.
If the Company or any Guarantor defaults in a payment of interest on
the Notes, the Company or such Guarantor (to the extent of their obligations
under the Note Guarantees) 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 of the Notes on a subsequent special record date, which
date shall be at the earliest practicable date but in all events at least five
Business Days prior to the payment date, in each case at the rate provided in
the Notes and in Section 4.01 hereof. The Company shall fix or cause to be fixed
each such special record date and payment date, and shall, promptly thereafter,
notify the Trustee of any such date. The Company 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, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such defaulted interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Holders entitled to such defaulted interest as in this Subsection provided. The
Company 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, and at
the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such defaulted
interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Holders entitled to such defaulted interest as
provided in this Section 2.12. At least 15 days before the special record date,
the Company (or the Trustee, in the name of and at the expense of the Company)
shall mail to Holders of the Notes a notice that states the special record date,
the related payment date and the amount of such interest to be paid.
SECTION 2.13 RECORD DATE.
The record date for purposes of determining the identity of Holders
of the Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA ss. 316(c).
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SECTION 2.14 CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP" number and, if it
does so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; PROVIDED that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company will
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01 NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (a) the clause of this Indenture pursuant to
which the redemption shall occur, (b) the redemption date, (c) the principal
amount of Notes to be redeemed and (d) the redemption price.
If the Company is required to make an offer to purchase Notes
pursuant to the provisions of Sections 4.10 or 4.15, it shall furnish to the
Trustee, at least 30 days before the scheduled purchase date, an Officers'
Certificate setting forth (a) the Section of this Indenture pursuant to which
the offer to purchase shall occur, (b) the offer's terms, (c) the purchase
price, (d) the principal amount of the Notes to be purchased, and (e) a
statement to the effect that (i) the Company or one of its Subsidiaries has made
an Asset Sale and there are Excess Proceeds aggregating more than $5.0 million
and the amount of such Excess Proceeds, or (ii) a Change of Control has
occurred, as applicable.
SECTION 3.02 SELECTION OF NOTES TO BE PURCHASED OR REDEEMED.
If less than all of the Notes are to be purchased in an Asset Sale
Offer or redeemed at any time, the Trustee shall select the Notes to be
purchased or redeemed 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 shall deem fair and
appropriate. In the event of partial purchase or redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the purchase or
redemption date by the Trustee from the outstanding Notes not previously called
for redemption. In the event that less than all of the Notes properly tendered
in an Asset Sale Offer are to be purchased, the particular Notes to be purchased
shall be selected promptly upon the expiration of such Asset Sale Offer.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
purchase or redemption, the principal amount thereof to be purchased or
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
purchased or redeemed, the entire outstanding amount of Notes held by such
Holder, even if not a multiple of $1,000, shall be purchased or redeemed. Except
as provided in the preceding sentence, provisions of this Indenture that apply
to Notes called for purchase or redemption also apply to portions of Notes
called for purchase or redemption.
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In the event the Company is required to make an Asset Sale Offer
pursuant to Sections 3.09 and 4.10 hereof and the amount of Excess Proceeds to
be applied to such purchase would result in the purchase of a principal amount
of Notes which is not evenly divisible by $1,000, the Trustee shall promptly
refund to the Company the portion of such Excess Proceeds that is not necessary
to purchase the immediately lesser principal amount of Notes that is so
divisible.
SECTION 3.03 NOTICE OF PURCHASE OR REDEMPTION.
At least 30 days but not more than 60 days before a purchase or
redemption date, the Company shall mail or cause to be mailed, by first class
mail, a notice of purchase or redemption to each Holder whose Notes are to be
purchased or redeemed at its registered address.
The notice shall identify the Notes to be purchased or redeemed and
shall state:
(a) the purchase or redemption date;
(b) the purchase or redemption price;
(c) if any Note is being purchased or redeemed in part, the portion of the
principal amount of such Note to be purchased or redeemed and that, after the
purchase or redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unpurchased or 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 purchase or redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such purchase or redemption
payment, interest on Notes called for purchase or redemption ceases to accrue on
and after the purchase or redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to
which the Notes called for redemption are being purchased or 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 Company's request, the Trustee shall give the notice of
purchase or redemption in the Company's name and at its expense; PROVIDED,
HOWEVER, that the Company shall have delivered to the Trustee, at least 45 days
prior to the purchase or 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 PURCHASE OR REDEMPTION.
Once notice of purchase or redemption is mailed in accordance with
Section 3.03 hereof, Notes called for purchase or redemption become irrevocably
due and payable on the purchase or redemption date at the purchase or redemption
price. A notice of purchase or redemption may not be conditional.
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SECTION 3.05 DEPOSIT OF PURCHASE OR REDEMPTION PRICE.
One Business Day prior to the purchase or redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the purchase or redemption price of and accrued interest on all Notes to
be purchased or redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the Company any money deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
purchase or redemption price of, and accrued interest on, all Notes to be
purchased or redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the purchase or redemption date, interest shall cease to
accrue on the Notes or the portions of Notes called for purchase or redemption.
If a Note is purchased or 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 purchase or redemption
shall not be so paid upon surrender for purchase or redemption because of the
failure of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the purchase or 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 PURCHASED OR REDEEMED IN PART.
Upon surrender of a Note that is purchased or redeemed in part, the
Company shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder and deliver at the expense of the Company a new Note
(accompanied by a notation of the Note Guarantee duly endorsed by the
Guarantors) equal in principal amount to the unpurchased or unredeemed portion
of the Note surrendered.
SECTION 3.07 OPTIONAL REDEMPTION.
(a) At any time prior to July 15, 2002, the Company may on any one or more
occasions redeem up to 35% of the aggregate principal amount of Notes issued
under this Indenture at a redemption price of 111% 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 a public offering of common stock
of the Company or a capital contribution to the Company's common equity made
with the net cash proceeds of an Initial Public Offering; PROVIDED that:
(1) at least 65% 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
(2) the redemption must occur within 45 days of the date of the closing of
such public offering or the making of such capital contribution.
Except as set forth in this clause (a), the Notes shall not be
redeemable at the Company's option prior to July 15, 2003.
(b) After July 15, 2003, the Company may redeem all or a part of the Notes
upon not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal
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amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any, thereon, to the applicable redemption date, if redeemed during the
twelve-month period beginning on July 15 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2003................................................. 105.500%
2004 103.667%
2005................................................. 101.833%
2006 and thereafter.................................. 100.000%
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08 MANDATORY REDEMPTION.
The Company 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 Company
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 Company 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, if
any, 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 Company shall
send, by first class mail, a notice to the Trustee and each of the Holders. 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;
(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;
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(d) that, unless the Company defaults 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 only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(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, to
the Company, a depositary, if appointed by the Company, or a Paying Agent at the
address specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by Holders
exceeds the Offer Amount, the Company shall select the Notes to be purchased
pursuant to the terms of Section 3.02 hereof (with such adjustments as may be
deemed appropriate by the Company 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
(or transferred by book entry) new Notes (accompanied by a notation of the Note
Guarantee duly endorsed by the Guarantors) equal in principal amount to the
unpurchased portion of the Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, pursuant to the terms of Section 3.02 hereof, 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 Company in accordance
with the terms of this Section 3.09. The Company, the depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
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 Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note (accompanied by a notation of the Note Guarantee duly
endorsed by the Guarantors) 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 Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
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 PAYMENT OF NOTES.
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The Company shall pay or cause to be paid the principal of, premium
and Liquidated Damages, 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 Guarantor, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it 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 Company 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 Company or the Guarantors in respect of the Notes and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company 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 Company 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
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company 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 Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03 REPORTS.
Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall (a) furnish to the Trustee
and to all Holders of Notes all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms l0-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 (b) file a
copy of all such information and any other information required by Section 13 or
15(d) of the Exchange Act with the SEC for public availability, in each case
within the time periods specified in the Commission's rules and regulations
(unless the SEC will not accept such a filing) and file such information with
the Trustee and make such information available to investors who request it in
writing. In addition, for so long as any Notes remain outstanding, the Company
and the Guarantors will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the
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information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act. Notwithstanding the foregoing, to the extent permitted under the
rules and regulations of the SEC, the Company may instead supply such
information with respect to Holding. The Company shall at all times comply with
TIA ss. 314(a).
If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraphs 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.
SECTION 4.04 COMPLIANCE CERTIFICATE.
(a) Each of the Company and the Guarantors 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 Company and its Subsidiaries and
the Guarantors during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company, its Subsidiaries or such Guarantors have kept, observed, performed and
fulfilled their respective 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 Company, its Subsidiaries or such Guarantors, as the
case may be, have kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company, its Subsidiaries or such Guarantor, as the case may be, is
taking or proposes 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 Company, its Subsidiaries or such Guarantor, as the case may be, is
taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) Each of the Company and the Guarantors shall, so long as any of the
Notes are outstanding, deliver to the Trustee, forthwith upon any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company or such
Guarantor, as the case may be, is taking or proposes to take with respect
thereto.
SECTION 4.05 TAXES.
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The Company shall pay, and shall cause each of its 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.
Each of the Company and the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
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 Company and the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, 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 (a) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (other than dividends or distributions payable in
Equity Interests of the Person making such dividend or distribution, other than
Disqualified Stock; or dividends or distributions payable to the Company or any
Wholly Owned Restricted Subsidiary of the Company that is a Guarantor); (b)
purchase, redeem or otherwise acquire or retire for value any Equity Interests
of the Company or any Restricted Subsidiary or other Affiliate of the Company
(other than any such Equity Interests owned by the Company or any Wholly Owned
Restricted Subsidiary of the Company that is a Guarantor); (c) purchase, redeem
or otherwise acquire or retire for value any Indebtedness that is subordinated
to the Notes or the Note Guarantees, except a payment of interest or principal
at the Stated Maturity (other than intercompany Indebtedness between or among
the Company and any of its Wholly Owned Restricted Subsidiaries that is a
Guarantor); (d) directly or indirectly make any loan or advance to, or make any
other payment to, Holding; or (e) make any Restricted Investment (all such
payments and other actions set forth in clauses (a) through (e) above being
collectively referred to as "Restricted Payments"), unless, at the time of 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 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 Section 4.09
hereof; and
(3) 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 (b), (c), (e), (f) and (g) of the next
succeeding paragraph), is less than the sum, without duplication, of
(A) 50% of the Consolidated Net Income and Consolidated Step-Up
Depreciation and Amortization of the Company for the period (taken as
one accounting period) from the beginning of
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the first fiscal quarter commencing after the date of this Indenture
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 plus
Consolidated Step-Up Depreciation and Amortization for such period is
a deficit, less 100% of such deficit); plus (B) 100% of the aggregate
net cash proceeds 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 (C) to the extent that any Restricted Investment that
was made after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (i) the cash
return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (ii) the initial amount of such
Restricted Investment.
The preceding provisions shall not prohibit (a) 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; (b) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or any Guarantor or
of any 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 other Equity Interests of the Company (other than
Disqualified Stock); 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; (c) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Guarantor in a Permitted
Refinancing; (d) a Restricted Payment to Holding pursuant to the Tax Sharing
Agreement as the same may be amended from time to time in a manner that is not
materially adverse to the Company; (e) a Restricted Payment to Holding to pay
its operating and administrative expenses including, without limitation,
directors fees, legal and audit expenses, SEC compliance expenses and corporate
franchise and other taxes, in an aggregate amount not to exceed $500,000 in any
fiscal year; (f) a Restricted Payment to Holding to pay management fees in an
aggregate amount not to exceed $750,000 in any fiscal year of the Company; (g)
the payment of any dividend by a Restricted Subsidiary of the Company to the
holders of its common Equity Interests on a pro rata basis; (h) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of Holding from any current or former employee of Holding, the Company or any
Subsidiary of the Company; PROVIDED, HOWEVER, that (1) the aggregate price paid
for all such repurchased, redeemed, acquired or retired Equity Interests shall
not exceed $1.0 million in any fiscal year, net of cash proceeds received from
the sale of Equity Interests to employees and (2) no Default or Event of Default
shall have occurred and be continuing immediately after such transaction; (i)
Investments by the Company in joint ventures or similar projects in a business
similar to that conducted by the Company and its Restricted Subsidiaries on the
date of this Indenture in an aggregate amount not to exceed $5.0 million; (j) a
Restricted Payment to Holding to pay cash interest payments on Holding's 12 1/2%
Senior Secured Notes dUE 2006 and on any Refinancing Indebtedness incurred to
refund, refinance or replace Holding's 12 1/2% Senior Secured Notes due 2006 in
a Permitted Refinancing; and (k) other RestrictED Payments in an aggregate
amount not to exceed $5.0 million since the date of this Indenture.
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
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by the Company or its 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 Section 4.07 shall be determined by the Board of
Directors whose resolution with respect thereto shall be delivered to the
Trustee if the fair market value exceeds $1.0 million. The Board of Directors'
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 Company 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, which calculations may be based upon the Company's latest available
financial statements.
SECTION 4.08 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or cause or suffer to exist or
become effective any 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 shall not apply to encumbrances
or restrictions existing under or by reasons of (a) Existing Indebtedness as in
effect on the date of this Indenture and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive with respect to such dividend and other
payment restrictions than those contained in such Existing Indebtedness, as in
effect on the date of this Indenture; (b) the 1994 Indenture, the 1994 Notes and
the guarantees thereof, the 1998 Indenture and the 1998 Notes and the guarantees
thereof; (c) this Indenture, the Notes and the Note Guarantees; (d) applicable
law; (e) any instrument governing Indebtedness or Capital Stock 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, provided that the Consolidated Cash Flow of such Person, to
the extent of such restriction, is not taken into account in determining whether
such acquisition was permitted by the terms of this Indenture; (f) customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices; (g) 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; and (h) Refinancing Indebtedness that is a Permitted Refinancing,
PROVIDED that the restrictions contained in the agreements governing such
Refinancing Indebtedness are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced.
SECTION 4.09 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED 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 with respect to (collectively, "incur" and
correlatively, an "incurrence" of) any Indebtedness (including
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Acquired Debt), and the Company shall not issue any, and shall not permit any of
its Subsidiaries to issue any, shares of Disqualified Stock; provided, however,
that the Company and its Subsidiaries may incur Indebtedness (including Acquired
Debt) or issue Disqualified 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 is issued would
have been at least 2.25 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom and including the pro forma
earnings of any business acquired by the Company or any of its Subsidiaries with
the proceeds therefrom), as if the additional Indebtedness had been incurred or
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The first paragraph of this Section 4.09 shall not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(a) the incurrence by the Company and its Restricted Subsidiaries of term
Indebtedness, revolving credit Indebtedness and letters of credit under the
Credit Facility in an aggregate principal amount at any one time
outstanding under this clause (a) not to exceed the greater of
(i) $150.0 million in principal amount (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability
of the Company thereunder), less the aggregate amount of all Net Proceeds
of Asset Sales that have been applied by the Company or any of its
Restricted Subsidiaries since the date of this Indenture to repay any term
Indebtedness under a Credit Facility pursuant to Section 4.10 hereof, and
(ii) the Borrowing Base;
(b) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(c) the incurrence by the Company and the Guarantors of Indebtedness
represented by the Notes and the related Note Guarantees to be issued on
the date of this Indenture and the New Notes and the related Note
Guarantees to be issued pursuant to the Registration Rights Agreement;
(d) the incurrence by the Company or any Restricted Subsidiary 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 aggregate principal amount, including all
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (d) in a Permitted
Refinancing, not to exceed $10.0 million at any time outstanding;
(e) the incurrence by the Company or any of its Restricted Subsidiaries of
Refinancing Indebtedness; provided, however, that such Refinancing
Indebtedness is a Permitted Refinancing;
(f) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Wholly Owned Restricted Subsidiaries that is a Guarantor; PROVIDED,
HOWEVER, that
(iii) if the Company or any Guarantor is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated to the prior
payment in full in cash of all
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Obligations with respect to the Notes, in the case of the Company, or the
Note Guarantee, in the case of a Guarantor; and
(iv) (A) 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 (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the
Company or a Wholly Owned Restricted Subsidiary that is a Guarantor
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 (f);
(g) the incurrence by the Company of Indebtedness between the Company and
Holding; PROVIDED that the advances evidenced by such Indebtedness are
permitted under the covenant described above under Section 4.07 hereof;
(h) the incurrence by the Company or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred 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;
(i) the guarantee by the Company or any of the 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;
(j) 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 (j);
(k) 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 shall 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; and
(l) the incurrence by the Company or its Restricted Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause of
this paragraph) in an aggregate principal amount, including all Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (l) in a Permitted Refinancing, not to
exceed the sum of $25.0 million at any time outstanding.
Notwithstanding anything to the contrary, the Company shall not
incur any Indebtedness (including Permitted Debt) that is contractually
subordinated in right of payment to any other Indebtedness of the Company unless
such Indebtedness is also contractually subordinated in right of payment to the
Notes on substantially identical terms; PROVIDED, HOWEVER, that no Indebtedness
of the Company shall be deemed to be contractually subordinated in right of
payment to any other Indebtedness of the Company solely by virtue of being
unsecured.
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
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described in clauses (a) through (l) above, or is entitled to be incurred
pursuant to the first paragraph of this covenant, 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 covenant.
SECTION 4.10 ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, conduct an Asset Sale unless (a) 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 sold or otherwise
disposed of; (b) such fair market value is determined by the Company's Board of
Directors and evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee no later than immediately
prior to the consummation of such proposed Asset Sale with respect to any Asset
Sale involving aggregate payments in excess of $2.0 million; and (c) at least
75% of the consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash. For purposes of this provision, each of the
following shall be deemed to be cash (i) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet or in the
notes thereto), of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Notes or any Note
Guarantee) that are assumed by the transferee of any such assets; and (ii) any
securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are immediately converted by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received).
Within 180 days after any Asset Sale, the Company may apply the Net
Proceeds from such Asset Sale to either (a) permanently reduce Senior
Indebtedness; or (b) make an investment in another business, make a capital
expenditure or acquire other long-term tangible assets, in each case, in the
same or a similar line of business as the Company or any Restricted Subsidiary
was engaged in on the date of this Indenture. Pending the final application of
any such Net Proceeds, the Company may temporarily reduce Senior Bank
Indebtedness or otherwise invest such Net Proceeds in Cash Equivalents.
Any Net Proceeds from the Asset Sale that are not applied or
invested as provided in the preceding paragraph shall constitute "Excess
Proceeds." If the aggregate amount of Excess Proceeds exceeds $5.0 million, upon
completion of the Asset Sale Offers required under the 1994 Indenture and the
1998 Indenture, the Company 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 is in an integral multiple of $1,000, that may be purchased out of the
Excess Proceeds, if any, remaining upon completion of the Asset Sale Offers
required under the 1994 Indenture and the 1998 Indenture. The offer price in any
Asset Sale Offer shall be equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase, and shall be payable in cash. If the aggregate amount of Notes and
such other PARI PASSU Indebtedness tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Company may use such deficiency for general
corporate purposes. If the aggregate principal amount of Notes and such other
PARI PASSU Indebtedness surrendered by Holders 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 in the manner described in
Section 3.02 hereof. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds shall be reset to zero.
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The Company 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 Company 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.
SECTION 4.11 TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or Guarantee with, or for
the benefit of, any Affiliate (each, an "Affiliate Transaction"), unless (a)
such Affiliate Transaction is on terms that are no less favorable to the Company
or the relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with a
Person who was not an Affiliate; and (b) the Company delivers to the Trustee (i)
with respect to any Affiliate Transaction involving aggregate payments in excess
of $2.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
this Section 4.11 and that such Affiliate Transaction is approved by a majority
of the Board of Directors; and (ii) with respect to any Affiliate Transaction
involving aggregate payments in excess of $5.0 million, an opinion as to the
fairness to the Holders 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, shall not be subject to the provisions of the prior paragraph:
(a) any employment 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; (b) transactions
between or among Holding, the Company and/or its Restricted Subsidiaries; (c)
payment of reasonable directors fees to Persons who are not otherwise Affiliates
of the Company; (d) Restricted Payments that are permitted by Section 4.07
hereof; and (e) the payment of annual fees and expenses to First Atlantic
PROVIDED that such payment is permitted by Section 4.07 hereof.
SECTION 4.12 LIENS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly create, incur, assume or suffer to exist any Lien of
any kind securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, except Permitted Liens.
SECTION 4.13 ADDITIONAL NOTE GUARANTEES.
If the Company or any of its Subsidiaries transfers or causes to be
transferred, in one or a series of related transactions, other than a
transaction or series of related transactions constituting a Restricted Payment
permitted by Section 4.07 hereof; any assets, businesses, divisions, real
property or equipment having a book value in excess of $1.0 million to any
Subsidiary that is not a Guarantor or if the Company or any of its Subsidiaries
shall acquire another Domestic Restricted Subsidiary having (a) total assets
with a book value in excess of $1.0 million or (b) Consolidated Cash Flow in
excess of $1.0 million, then such transferee or acquired Subsidiary (if other
than a Subsidiary that has been properly designated as an Unrestricted
Subsidiary in accordance with the terms of this Indenture) shall execute a Note
Guarantee and deliver an Opinion of Counsel as to the enforceability of such
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Note Guarantee, in accordance with the terms of this Indenture.
SECTION 4.14 CORPORATE EXISTENCE.
Subject to Article 5 and Article 10 hereof, as the case may be, the
Company and each of the Guarantors shall do or cause to be done all things
necessary to preserve and keep in full force and effect (a) its corporate
existence, and the corporate, partnership 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 Company, any such Guarantor or any
such Subsidiary, as the case may be, and (b) the rights (charter and statutory),
licenses and franchises of the Company, the Guarantors and their respective
Subsidiaries; PROVIDED, HOWEVER, that the Company and the Guarantors shall not
be required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of their respective Subsidiaries, if the
Board of Directors of Holding shall determine that the preservation thereof is
no longer desirable in the conduct of the business of the Company, the
Guarantors 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, each Holder of Notes shall have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of that Holder's Notes pursuant to the offer
described below (the "CHANGE OF CONTROL OFFER") at an offer price in cash equal
to 101% of the aggregate principal amount of Notes repurchased plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the date of
purchase. Within 10 days following any Change of Control, the Company 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 shall be accepted
for payment; (ii) the purchase price and the purchase date, which shall be no
earlier than 30 days nor later than 60 days from the date the notice is mailed
(the "CHANGE OF CONTROL PAYMENT DATE"); (iii) that any Note not tendered shall
continue to accrue interest; (iv) that, unless the Company defaults 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 shall 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 shall 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 telegram, telex, 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 such Notes
purchased; and (vii) that Holders whose Notes are being purchased only in part
shall 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 Company 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 the 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 Company shall comply with
the applicable securities laws and
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regulations and shall not be deemed to have breached its obligations under the
Change of Control provisions of this Indenture by virtue of such conflict.
(b) On the Change of Control Payment Date, the Company shall, to the extent
lawful (i) accept for payment Notes or portions thereof tendered pursuant to the
Change of Control Offer; (ii) 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 (iii) 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 tendered to the Company.
The Paying Agent shall promptly mail to each Holder of Notes so
accepted the Change of Control Payment for such Notes, 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, if any; PROVIDED that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof.
Prior to making the Change of Control Payment, but in any event
within 90 days following a Change of Control, the Company shall either repay all
outstanding Designated Senior Indebtedness or obtain the requisite consents, if
any, under all agreements governing outstanding Designated Senior Indebtedness
to permit the repurchase of Notes required by this Section 4.15. The Company
shall publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
SECTION 4.16 NO SENIOR SUBORDINATED INDEBTEDNESS.
The Company 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 Indebtedness of the Company and senior in any
respect in right of payment to the Notes. No Guarantor shall incur, create,
issue, assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to its Senior Indebtedness and senior
in any respect in right of payment to its Note Guarantee.
SECTION 4.17 DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors 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 of Section 4.07
hereof or Permitted Investments, as applicable. That designation shall only be
permitted if such Restricted Payment would be permitted at that time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the redesignation would not cause a Default.
Upon the designation of a Restricted Subsidiary as an Unrestricted Subsidiary or
the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the
Company shall notify the Trustee.
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ARTICLE 5
SUCCESSORS
SECTION 5.01 MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not (a) consolidate or merge with or into another
Person (whether or not the Company is the surviving corporation); or (b) sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company and its Subsidiaries taken as a
whole, in one or more related transactions, to another Person; unless (i) the
Company is the surviving corporation; or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation 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 the
Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company
pursuant to agreements reasonably satisfactory to the Trustee, under the Notes,
this Indenture and the Registration Rights Agreement; (iii) immediately after
such transaction no Default or Event of Default exists; and (iv) the Company or
any Person formed by or surviving any such consolidation or merger, or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made shall, at the time of such transaction and after giving pro forma
effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, 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.
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 or the Company and its Subsidiaries on a consolidated basis 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" or the "GUARANTOR," as
the case may be, shall refer instead to the successor corporation and not to the
Company or the Guarantor, as the case may be), and may exercise every right and
power of the Company or the Guarantors, as the case may be, under this Indenture
with the same effect as if such successor Person had been named as the Company
or Guarantor, as the case may be, herein; PROVIDED, HOWEVER, that the
predecessor Company and the predecessor Subsidiaries that are Guarantors 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.
The Trustee shall, at the written request of the Company and the
Holders, authenticate and deliver new Notes representing such successor pursuant
to the terms of Section 2.02 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT.
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An "Event of Default" occurs if:
(a) the Company or the Guarantors default in the payment when due of
interest or Liquidated Damages, if any, on the Notes (whether or not prohibited
by the subordination provisions of Article 10 or Article 11 hereof, as the case
may be) and such default continues for a period of 30 days;
(b) the Company or the Guarantors default in the payment when due of
principal of or premium, if any, on the Notes (whether or not prohibited by the
subordination provisions of Article 10 or Article 11 hereof, as the case may be)
when the same becomes due and payable at maturity, upon redemption (including in
connection with an offer to purchase) or otherwise;
(c) the Company fails to comply with any of the provisions of Section 4.07,
4.09, 4.10 or 4.15 hereof;
(d) the Company or the Guarantors 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 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 borrowed by the Company, Holding or any of their
respective Subsidiaries (or the payment of which is guaranteed by the Company,
Holding or any of their respective Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the date of the Indenture, which
default (i) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness (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 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 $2.0
million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company,
Holding or any of their respective Subsidiaries and such judgment or judgments
remain unpaid or undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, PROVIDED that the aggregate of all such
undischarged judgments exceeds $2.0 million;
(g) except as permitted by this Indenture, any Note Guarantee 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 Guarantor (or its successors or
assigns), or any Person acting on behalf of such Guarantor (or its successors or
assigns), shall deny or disaffirm its obligations or shall fail to comply with
any obligations under its Note Guarantee.
(h) the Company, any Guarantor or any of their respective Subsidiaries
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,
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(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
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company, any Guarantor or any of their
respective Subsidiaries in an involuntary case;
(ii) appoints a Custodian of the Company, any Guarantor or any of
their respective Subsidiaries or for all or substantially all of the
property of the Company, any Guarantor or any of their respective
Subsidiaries; or
(iii) orders the liquidation of the Company, any Guarantor or any of
their respective Subsidiaries and the order or decree remains unstayed and
in effect for 60 consecutive days.
SECTION 6.02 ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof with respect to the Company, Holding or
any of their respective Subsidiaries) occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
(including Additional Notes, if any) may declare all the Notes to be due and
payable immediately; PROVIDED, HOWEVER, that if any Indebtedness is outstanding
pursuant to the Credit Facility, upon a declaration of acceleration, the
principal and interest on the Notes shall be payable, upon the earlier of (i)
the day which is five Business Days after notice of acceleration is given to the
Company and the lender under the Credit Facility or (ii) the date of
acceleration of the Indebtedness under the Credit Facility. Notwithstanding the
foregoing, if an Event of Default specified in clause (h) or (i) of Section 6.01
hereof occurs with respect to the Company, Holding or any of their respective
Subsidiaries, all outstanding Notes shall be due and payable immediately without
further action or notice. The Holders of not less than a majority in aggregate
principal amount of the then outstanding Notes (including Additional Notes, if
any) by written notice to the Trustee may on behalf of all of the Holders of the
Notes 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, premium or Liquidated Damages that has become due solely
because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after July 15, 2003 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to July 15, 2003
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on July 15 of the years
set forth below, as set forth below
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(expressed as a percentage of the principal amount of the Notes on the date of
payment that would otherwise be due but for the provisions of this Indenture):
YEAR PERCENTAGE
1999 . . . . . . . . . . . . . . . . . 112.932%
2000 . . . . . . . . . . . . . . . . . 111.099%
2001 . . . . . . . . . . . . . . . . . 109.166%
2002 . . . . . . . . . . . . . . . . . 107.333%
SECTION 6.03 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium and
Liquidated Damages, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture, including, but not
limited to, notifying the Guarantors pursuant to the terms hereof and the Note
Guarantees.
All rights of action and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders in respect of which such judgment has been recovered.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any Holder to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this Article
Six or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 6.04 WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the Notes then outstanding (including Additional Notes, if any) 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 hereunder, except a
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continuing Default or Event of Default in the payment of the principal of,
premium and Liquidated Damages, if any, or interest on, any Note held by a
non-consenting Holder (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 (including Additional Notes, if any) 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 not less than a majority in principal amount of the then
outstanding Notes (including Additional Notes, if any) 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 (including Additional Notes, if any) 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 reasonably anticipated by the Trustee in complying with
such request;
(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 (including Additional Notes, if any) 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 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, is absolute and unconditional and shall not be impaired or affected
without the consent of such Holder.
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SECTION 6.08 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium 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, expenses,
disbursements and advances 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, expenses,
disbursements and advances 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, including the Guarantors), its creditors
or its property and shall be entitled and empowered to collect, receive and
distribute any money or securities or other property payable or deliverable upon
the exchange of the Notes or upon any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 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 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 the holders of Senior Indebtedness of the Company or the
Guarantors, as the case may be, to the extent required by Article 10 or Article
11 hereof, as applicable;
THIRD: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium 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 and Liquidated Damages, if any, and
interest, respectively; and
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FOURTH: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders 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, 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 (including Additional Notes, if
any) .
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 his or her own
affairs.
(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,
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 (c) does not limit the effect of paragraph (b) of
this Section 7.01;
(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
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(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 7.01.
(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 Company. 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 shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note 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, upon reasonable notice and during normal business hours, to examine
the books, records and premises of the Company, personally or by agent or
attorney so long as such examination does not interfere with the Company's
business.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. 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 and the written 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 Company shall be sufficient if signed by
an Officer of the Company.
(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 in the
reasonable discretion of the Trustee, might be incurred by it in compliance with
such request or direction.
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE.
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The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, the
Guarantors or any Affiliate of the Company or the Guarantors with the same
rights 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 Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's 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 known to 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 and
Liquidated Damages, 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 May 15 beginning with the May 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 Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Company shall promptly notify the TrusteE when the Notes are listed on any stock
exchange.
SECTION 7.07 COMPENSATION AND INDEMNITY.
The Company and the Guarantors shall pay to the Trustee from time to
time reasonable compensation 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 Company and the Guarantors
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
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The Company and the Guarantors shall indemnify the Trustee against
any and all losses, liabilities or expenses 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 Company and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company, any Guarantor 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, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company and the Guarantors of their obligations hereunder. The
Company and the Guarantors shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
and the Guarantors shall pay the reasonable fees and expenses of such counsel.
The Company and the Guarantors need not pay for any settlement made without
their consent, which consent shall not be unreasonably withheld.
The obligations of the Company and the Guarantors under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantors' payment obligations in
this Section 7.07, the Trustee shall have, and the Company does hereby grant,
assign and convey to the Trustee, to the benefit of the Holders, a security
interest in and a Lien 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.
The Trustee's right to receive payment of any amounts due under this
Section 7.07 shall not be subordinate to any other liability or indebtedness of
the Company (even though the Notes may be subordinated) and the payments of
principal and interest on the Notes shall be subordinate to the Trustee's right
to receive such payment.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(h) or (i) 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 Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes (including Additional
Notes, if any) may remove the Trustee by so notifying the Trustee and the
Company in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
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(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;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes (including
Additional Notes, if any) may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, any
Guarantor, or the Holders of Notes of at least 10% in principal amount of the
then outstanding Notes (including Additional Notes, if any) may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note 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 Company. 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 of the Notes. 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 Company's and the Guarantors' 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 $100 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.ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
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SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
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 Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate delivered to the Trustee,
at any time, elect to have either Section 8.02 or 8.03 hereof be applied to the
outstanding Notes and the Note Guarantees upon compliance with the conditions
set forth below in this Article Eight.
SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from their obligations with respect to all
outstanding Notes and Note Guarantees on the date the conditions set forth below
are satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal
Defeasance means that the Company and the Guarantors shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding Notes
and the Note Guarantees, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, 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, premium and Liquidated Damages, if any, and interest on such
Notes when such payments are due, (b) the Company's and the Guarantors'
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 Company's and the Guarantors' obligations in connection therewith and
(d) this Article Eight. Subject to compliance with this Article Eight, the
Company 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 Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and the 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 and 4.16 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Notes and the Note
Guarantees shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose,
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Covenant Defeasance means that, with respect to the outstanding Notes, the
Company and the 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
shall be unaffected thereby. In addition, upon the Company's 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(e) through 6.01(f) 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:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, 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, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium and Liquidated Damages, if any, and interest on
the outstanding Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be, of such principal or installment
of principal of, premium, if any, interest or Liquidated Damages, if any, on the
outstanding Notes;
(b) in the case of an election under Section 8.02 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the Issuance Date, 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 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 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;
(d) no Default or Event of Default shall have occurred and be continuing
either: (i) 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 (ii) insofar as Sections 6.01(h) or
6.01(i) hereof is concerned, at any time in the period ending on the day on
which all applicable preference periods have run;
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(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
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that, assuming no intervening bankruptcy of the Company or any
Guarantor between the date of deposit and the day on which all applicable
preferences have run and assuming that no Holder is an "insider" of the Company
under applicable bankruptcy law, after the day on which all applicable
preferences have run, 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 Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company or
the Guarantors or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or the Guarantors; and
(h) the Company 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 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 and
Liquidated Damages, if any, and interest, but such money need not be segregated
from other funds except to the extent required by law.
The Company and the Guarantors 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.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company 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 COMPANY.
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Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium or
Liquidated Damages, if any, or interest, if any, on any Note and remaining
unclaimed for two years after such principal, premium or Liquidated Damages, if
any, or interest, if any, have become due and payable shall be paid to the
Company on its written request accompanied by an Officers' Certificate or (if
then held by the Company) shall be discharged from such trust; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
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 Company's and the Guarantors' 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 Company
and the Guarantors make any payment of principal of, premium or Liquidated
Damages, if any, or interest, if any, on any Note following the reinstatement of
its obligations, the Company and the Guarantors 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 Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(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 or any Guarantor's
obligations to Holders of the Notes in the case of a merger or consolidation
pursuant to Article Five or Article 10 hereof, as the case may be;
(d) to make any change that would provide any additional rights or benefits
to the Holders of the Notes (including providing for additional Note Guarantees
pursuant to SECTION 4.13 hereof) or that does not adversely affect the legal
rights hereunder of any Holder of the Notes;
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(e) to provide for the issuance of Additional Notes in accordance with the
provisions set forth herein; or
(f) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
9.06 hereof, the Trustee shall join with the Company and the 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 Company, the
Guarantors and the Trustee may amend or supplement this Indenture or 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
consents obtained in connection with a 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 or the Notes may be waived with the consent
of the Holders of at least a majority in principal amount of the then
outstanding Notes (including Additional Notes, if any) voting as a single class
(including consents obtained in connection with a tender offer or exchange offer
for the Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors 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 9.06 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture 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 Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company 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
Company with any provision of this Indenture or the Notes. However, without the
consent of each Holder affected, an amendment or waiver may not (with respect to
any Notes held by a non-consenting Holder of Notes):
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(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;
(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
premium, if any, interest 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);
(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 waivers
of past Defaults or the rights of Holders of Notes to receive payments of
principal of or premium or Liquidated Damages, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note;
(h) make any change to the subordination provisions of Article 10 or
Article 11 hereof that adversely affects Holders;
(i) except pursuant to Article 8 and Article 10 hereof, release any
Guarantor from its obligations under its Note Guarantee, or change any Note
Guarantee in any manner that would adversely affect Holders; or
(j) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall
be set forth in an amended or a 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.
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The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
(accompanied by a notation of the Note Guarantee duly endorsed by the
Guarantors) 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 Company and the Guarantors may not sign an amendment or supplemental
Indenture until the Board of Directors of the Company approves it. In executing
any amended or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.01) shall be fully protected in relying upon, 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
NOTE GUARANTEES
SECTION 10.01 NOTE GUARANTEE.
The Guarantors and each Restricted Subsidiary of the Company which
in accordance with Section 4.13 hereof is required to guarantee the obligations
of the Company under the Notes upon execution of a counterpart of this
Indenture, hereby jointly and severally unconditionally guarantees (each such
guarantee, a "NOTE GUARANTEE") to each Holder of a Note authenticated and
delivered by the Trustee irrespective of the validity or enforceability of this
Indenture, the Notes or the obligations of the Company under this Indenture or
the Notes, that: (a) the principal of, interest and Liquidated Damages, if any,
on the Notes will be paid in full when due, whether at the maturity or interest
payment or mandatory redemption date, by acceleration, call for redemption or
otherwise, and interest on the overdue principal of and interest, if any, on the
Notes and all other obligations of the Company to the Holders or the Trustee
under this Indenture or the Notes will be promptly paid in full or performed,
all in accordance with the terms of this Indenture and the Notes; and (b) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, they will be paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at maturity, by acceleration
or otherwise. Failing payment when due of any amount so guaranteed for whatever
reason, each Guarantor will be obligated to pay the same whether or not such
failure to pay has become an Event of Default which could cause acceleration
pursuant to Section 6.02 hereof. Each Guarantor agrees that this is a guarantee
of payment not a guarantee of collection.
Each Guarantor hereby agrees that its obligations with regard to
this Note Guarantee shall be joint and several, unconditional, irrespective of
the validity or enforceability of the Notes or the obligations of the Company
under this Indenture, the absence of any action to enforce the same, the
recovery of any judgment against the Company or any other obligor with respect
to this Indenture, the Notes or the obligations of the Company under this
Indenture or the Notes, any action to enforce the same or any other
circumstances (other than complete performance) which might otherwise constitute
a legal or equitable discharge or defense of a Guarantor. Each Guarantor
further, to the extent permitted by law, waives and relinquishes all claims,
rights and remedies accorded by applicable law to guarantors
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and agrees not to assert or take advantage of any such claims, rights or
remedies, including but not limited to: (a) any right to require the Trustee,
the Holders or the Company (each, a "BENEFITED PARTY") to proceed against the
Company or any other Person or to proceed against or exhaust any security held
by a Benefited Party at any time or to pursue any other remedy in any Benefited
Party's power before proceeding against such Guarantor; (b) the defense of the
statute of limitations in any action hereunder or in any action for the
collection of any Indebtedness or the performance of any obligation hereby
guaranteed; (c) any defense that may arise by reason of the incapacity, lack of
authority, death or disability of any other Person or the failure of a Benefited
Party to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of any other Person; (d) demand, protest and
notice of any kind including but not limited to notice of the existence,
creation or incurring of any new or additional Indebtedness or obligation or of
any action or non-action on the part of such Guarantor, the Company, any
Benefited Party, any creditor of such Guarantor, the Company or on the part of
any other Person whomsoever in connection with any Indebtedness or obligations
hereby guaranteed; (e) any defense based upon an election of remedies by a
Benefited Party, including but not limited to an election to proceed against
such Guarantor for reimbursement; (f) any defense based upon any statute or rule
of law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (g) any
defense arising because of a Benefited Party's election, in any proceeding
instituted under the Federal Bankruptcy Code, of the application of Section
111l(b)(2) of the Federal Bankruptcy Code; or (h) any defense based on any
borrowing or grant of a security interest under Section 364 of the Federal
Bankruptcy Code. Each Guarantor hereby covenants that its Note Guarantee will
not be discharged except by complete performance of the obligations contained in
its Note Guarantee and this Indenture.
If any Holder or the Trustee is required by any court or otherwise
to return to either the Company or any Guarantor, or any Custodian, trustee, or
similar official acting in relation to either the Company or such Guarantor, any
amount paid by the Company or such Guarantor to the Trustee or such Holder, the
applicable Note Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor agrees that it will 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 Guarantor further agrees that, as between such Guarantor, on
the one hand, and the Holders and the Trustee, on the other hand, (a) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Section 6.02 hereof for the purposes of this Note Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration as to the
Company or any other obligor on the Notes of the obligations guaranteed hereby,
and (b) in the event of any declaration of acceleration of those obligations as
provided in Section 6.02 hereof, those obligations (whether or not due and
payable) will forthwith become due and payable by such Guarantor for the purpose
of this Note Guarantee.
SECTION 10.02 SUBORDINATION.
Each Guarantor, the Trustee, and each Holder by accepting a Note
agrees, that the obligations of such Guarantor hereunder shall be subordinated
in right of payment to the prior payment in full of all Obligations of every
type whatsoever, contingent or otherwise due in respect of Senior Indebtedness
of such Guarantor and of the Company (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed). The subordination
provisions of this Article 10 are made for the benefit of the holders of all
Senior Indebtedness (whether outstanding on the date hereof or issued hereafter)
of each Guarantor, such holders of Senior Indebtedness of each Guarantor are
made obligees
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under this Article 10 and such holders of Senior Indebtedness of each Guarantor
or any of them may enforce the provisions of this Article 10. Holders of Senior
Indebtedness of each Guarantor are third party beneficiaries of this Article 10
and no amendment thereof shall be effected without the prior written consent of
the holders of a majority of the outstanding principal amount of Senior
Indebtedness of each Guarantor.
SECTION 10.03 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of any Guarantor in a liquidation
or dissolution of such Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Guarantor or its property,
in an assignment for the benefit of creditors or any marshaling of such
Guarantor's assets and liabilities:
(1) holders of Senior Indebtedness of such Guarantor shall be entitled
to receive payment in full of all Obligations due in respect of such Senior
Indebtedness of such Guarantor (including interest after the commencement
of any such proceeding at the rate specified in the applicable Senior
Indebtedness of such Guarantor, whether or not such interest was an allowed
claim) before the Trustee or any Holder shall be entitled to receive any
payment from the Guarantor under or pursuant to this Note Guarantee with
respect to the Notes (except that Holders of Notes may receive and retain
Permitted Junior Securities and payments from the trust described in
Article Eight hereof); and
(2) until all Obligations with respect to Senior Indebtedness of such
Guarantor (as provided in subsection (1) above) are paid in full, any
distribution to which the Trustee or any Holder would be entitled but for
this Article shall be made upon the proper written request of the holders
of Senior Indebtedness of such Guarantor, to holders of Senior Indebtedness
of such Guarantor or their proper Representative.
SECTION 10.04 DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS OF THE GUARANTOR.
No Guarantor shall make any payment or distribution to the Trustee
or any Holder upon or in respect of its Note Guarantee or the Notes, or any
Obligation with respect thereto, and no Guarantor shall acquire from the Trustee
or any Holder any Notes for cash or property (other than Permitted Junior
Securities and payments from the trust described in Article Eight hereof) until
all principal and other Obligations with respect to the Senior Indebtedness of
such Guarantor have been paid in full if:
(a) a default in the payment when due, whether upon acceleration or
otherwise, of the principal, premium, if any, or interest on any Senior
Indebtedness of such Guarantor occurs and is continuing; or
(b) any other default on any series or Designated Senior Indebtedness
of such Guarantor occurs and is continuing and the Trustee receives a notice of
the default from such Guarantor, or the holders of any such Designated Senior
Indebtedness of such Guarantor, stating that such Guarantor or holders are
invoking a payment blockage under this Section 10.04(b) (a "GUARANTOR PAYMENT
BLOCKAGE NOTICE"). If the Trustee receives any such notice, a subsequent notice
received within 365 days thereafter shall not be effective for purposes of this
Section.
Each Guarantor may and shall resume payments on and distributions in
respect of its Note Guarantee, the Notes and all Obligations with respect
thereto, and may acquire such Notes, Obligations for value when:
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(a) in the case of a payment default as described in (i) above, upon the
date on which such default is cured or waived, and
(b) in the case of a nonpayment default as described in (ii) above, on the
earlier of the date on which such nonpayment default is cured or waived or 179
days after the date on which a Guarantor Payment Blockage Notice is received if
the maturity of such Designated Senior Indebtedness of such Guarantor has not
been accelerated, and this Article otherwise permits the payment at the time of
such payment.
SECTION 10.05 ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, each Guarantor shall promptly notify each Representative of holders of
Senior Indebtedness of such Guarantor of the acceleration.
SECTION 10.06 WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives from a
Guarantor any payment of any Obligations with respect to the Notes or any other
Obligation guaranteed hereby at a time when the Trustee or such Holder has
actual knowledge that such payment is prohibited by Section 10.03 or Section
10.04 hereof, 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 Indebtedness of such Guarantor as their
interests may appear, or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Indebtedness of such Guarantor may
have been issued, as their respective interests may appear, for application to
the payment of all Obligations with respect to Senior Indebtedness of such
Guarantor remaining unpaid to the extent necessary to pay such Obligations in
full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness of such
Guarantor.
If a distribution is made to the Trustee or any Holder that because
of this Article 10 should not have been made to it at a time when the Trustee or
such Holder has actual knowledge that such distribution should not have been
made to it, the Trustee or such Holder who receives the distribution shall hold
it in trust for the benefit of, and, upon written request, pay it over to, the
holders of Senior Indebtedness of such Guarantor as their interests may appear,
or their Representative under the indenture or other agreement (if any) pursuant
to which Senior Indebtedness of such Guarantor may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Indebtedness of such Guarantor remaining
unpaid to the extent necessary to pay such Obligations in full in accordance
with their terms, after giving effect to any concurrent payment or distribution
to or for the holders of Senior Indebtedness of such Guarantor.
With respect to any Guarantor, with respect to the holders of Senior
Indebtedness of such Guarantor, 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 Indebtedness of such Guarantor shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness of such Guarantor, 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 Company or any other Person money or assets to which any
holders of Senior Indebtedness of such Guarantor 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.
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SECTION 10.07 NOTICE BY A GUARANTOR.
Each Guarantor shall promptly notify the Trustee and the Paying
Agent of any facts known to such Guarantor that would cause a payment of any
Obligations with respect to the Notes or its Note Guarantee to violate this
Article, but failure to give such notice shall not affect the subordination of
its Note Guarantee or of the Notes to the Senior Indebtedness of such Guarantor
as provided in this Article.
SECTION 10.08 SUBROGATION.
With respect to any Guarantor, after all Senior Indebtedness of such
Guarantor is paid in full and until the Notes are paid in full, Holders shall,
without duplication, be subrogated to the rights of holders of Senior
Indebtedness of such Guarantor to receive distributions applicable to Senior
Indebtedness of such Guarantor to the extent that distributions otherwise
payable to the Holders have been applied to the payment of Senior Indebtedness
of such Guarantor. A distribution made under this Article to holders of Senior
Indebtedness of such Guarantor that otherwise would have been made to Holders is
not, as between such Guarantor and Holders, a payment by the Company on the
Senior Indebtedness of such Guarantor.
SECTION 10.09 RELATIVE RIGHTS.
This Article defines the relative rights of Holders and holders of
Senior Indebtedness of such Guarantor. Nothing in this Indenture shall:
(1) impair, as between such Guarantor and the Holders, the
obligation of such Guarantor, which is absolute and
unconditional, to pay principal of and interest on the Notes in
accordance with their terms;
(2) affect the relative rights of Holders and creditors of
such Guarantor other than their rights in relation to holders of
Senior Indebtedness of such Guarantor; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to
the rights of holders of Senior Indebtedness of such Guarantor
set forth herein to receive distributions and payments otherwise
payable to Holders.
SECTION 10.10 SUBORDINATION MAY NOT BE IMPAIRED BY ANY GUARANTOR.
With respect to any Guarantor, no right of any holder of Senior
Indebtedness of such Guarantor to enforce the subordination of the Note
Guarantee shall be impaired by any act or failure to act by such Guarantor or
any Holder or by failure of such Guarantor or any Holder to comply with this
Indenture.
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
With respect to any Guarantor, whenever a distribution is to be made
or a notice given to holders of Senior Indebtedness of such Guarantor, the
distribution may be made and the notice given to their Representative.
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Upon any payment or distribution of assets referred to in this
Article 10, the Trustee and the Holders 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 for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness of such
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.12 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 five 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 Note Guarantee to violate this Article. Only a Guarantor,
the holder of any Senior Indebtedness of such Guarantor, or the Representative
of holders of Senior Indebtedness of such Guarantor 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.
With respect to any Guarantor, the Trustee in its individual or any
other capacity may hold Senior Indebtedness of such Guarantor with the same
rights it would have if it were not Trustee.
SECTION 10.13 AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the 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 the 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 relative to any Guarantor
referred to in Section 6.09 hereof at least 30 days before the expiration of the
time to file such claim, the holders (or their Representative) of Senior
Indebtedness of each Guarantor are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
SECTION 10.14 LIMITATION OF GUARANTOR'S LIABILITY.
Each Guarantor and by its acceptance hereof, each beneficiary
hereof, hereby confirms that it is its intention that the Note Guarantee by such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of the
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
Note Guarantee. To effectuate the foregoing intention, each such Person hereby
irrevocably agrees that the obligation of such Guarantor under its Note
Guarantee under this Article 10 shall be limited to the maximum amount as will,
after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Guarantor that are relevant under such laws, and
after giving effect to any collections from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
this Article 10, result in the obligations of such Guarantor in respect of such
maximum amount not constituting a fraudulent conveyance. Each beneficiary under
the Note Guarantees, by accepting the benefits hereof, confirms its intention
that, in the event of a bankruptcy, reorganization or other similar proceeding
of the Company or any Guarantor in which concurrent claims
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are made upon such Guarantor hereunder, to the extent such claims will not be
fully satisfied, each such claimant with a valid claim against the Company shall
be entitled to a ratable share of all payments by such Guarantor in respect of
such concurrent claims.
SECTION 10.15 EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 10.01 hereof,
each Guarantor hereby agrees that this Indenture shall be executed on behalf of
each Guarantor by its President or one of its Vice Presidents and that the
notation on each Note relating to the Note Guarantee shall be executed on behalf
of each Guarantor by an Officer.
SECTION 10.16 GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) No Guarantor shall 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 Guarantor is the surviving Person), another Person, other than the Company
or another Guarantor unless (i) subject to the provisions of the following
paragraph and Section 10.17 hereof, the Person formed by or surviving any such
consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee, under its Note Guarantee and this
Indenture, (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists, and (iii) in the case of any Guarantor other than
Holding, the person acquiring the property in such sale or disposition or the
Person formed by or surviving any such consolidation or merger will, at the time
of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 4.09 hereof. 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 Note Guarantee in
this Indenture and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by the Guarantor,
such successor corporation shall succeed to and be substituted for the Guarantor
with the same effect as if it had been named herein as a Guarantor.
Notwithstanding the foregoing, (a) a Guarantor may consolidate with
or merge with or into the Company, PROVIDED, that the surviving corporation (if
other than the Company) shall expressly assume by supplemental indenture
complying with the requirements of this Indenture, the due and punctual payment
of the principal of, premium, if any, and interest on all of the Notes, and the
due and punctual performance and observance of all the covenants and conditions
of this Indenture to be performed by the Company and (b) a Guarantor may
consolidate with or merge with or into any other Guarantor.
SECTION 10.17 RELEASES OF NOTE GUARANTEE.
The Note Guarantee of a Guarantor shall be released: (a) in
connection with any sale or other disposition of all or substantially all of the
assets of that Guarantor (other than Holding), by way of merger, consolidation
or otherwise, to a Person that is not (either before or after giving effect to
such transaction) a Subsidiary of the Company, if the Company applies the Net
Proceeds of that sale or other disposition in accordance with Section 3.09 and
4.10 hereof; (b) in connection with the sale or other disposition of all of the
Capital Stock of any Guarantor to a Person that is not (either before or after
giving effect to such transaction) a Subsidiary of the Company, if the Company
applies the Net Proceeds
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of that sale or other disposition in accordance with Section 3.09 and 4.10
hereof; or (c) if the Company properly designates any Restricted Subsidiary that
is a Guarantor as an Unrestricted Subsidiary in accordance with Section 4.17
hereof.
ARTICLE 11
SUBORDINATION
SECTION 11.01 SUBORDINATION.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes shall be subordinated in right of
payment to the prior payment in full of all Obligations of every type
whatsoever, contingent or otherwise due in respect of Senior Indebtedness of the
Company (whether outstanding on the date hereof or hereafter created, incurred,
assumed or guaranteed). The subordination provisions of this Article 11 are made
for the benefit of the holders of all Senior Indebtedness (whether outstanding
on the date hereof or issued hereafter) of the Company, such holders of Senior
Indebtedness of the Company are made obligees under this Article 11 and such
holders of Senior Indebtedness of the Company or any of them may enforce the
provisions of this Article 11. Holders of Senior Indebtedness of the Company are
third party beneficiaries of this Article 11 and no amendment hereof shall be
effected without the prior written consent of the holders of a majority of the
outstanding principal amount of Senior Indebtedness of the Company.
SECTION 11.02 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation
or dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full of all Obligations due in
respect of such Senior Indebtedness of the Company (including
interest after the commencement of any such proceeding at the
rate specified in the applicable Senior Indebtedness of the
Company, whether or not such interest was an allowed claim)
before the Holders shall be entitled to receive any payment with
respect to the Notes (except that Holders of Notes may receive
and retain Permitted Junior Securities and payments made from the
trust described in Article Eight hereof); and
(2) until all Obligations with respect to Senior
Indebtedness of the Company (as provided in subsection (1) above)
are paid in full, any distribution to which Holders would be
entitled but for this Article shall be made; upon the proper
written request of the holders of Senior Indebtedness of the
Company, to holders of Senior Indebtedness of the Company or
their proper Representative (except that Holders of Notes may
receive and retain Permitted Junior Securities and payments made
from the trust described in Article Eight hereof).
SECTION 11.03 DEFAULT ON SENIOR INDEBTEDNESS.
The Company may not make any payment or distribution to the Trustee
or any Holder upon or in respect of the Notes, or any Obligation with respect
thereto, and may not acquire from the
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Trustee or any Holder any Notes for cash or property (other than Permitted
Junior Securities and payments from the trust described in Article Eight hereof)
until all principal and other Obligations with respect to the Senior
Indebtedness of the Company have been paid in full if:
(a) a default in the payment when due, whether upon acceleration or
otherwise, of the principal, premium, if any, or interest on any Senior
Indebtedness of the Company occurs and is continuing; or
(b) any other default on any series of Designated Senior Indebtedness of
the Company occurs and is continuing and the Trustee receives a notice of such
default from the Company, or from, or on behalf of, the holders of any such
Designated Senior Indebtedness of the Company, stating that it is or such
holders are invoking a payment blockage under this Section 11.03(b) (a "PAYMENT
BLOCKAGE NOTICE"). If the Trustee receives any such notice, a subsequent notice
received within 365 days thereafter shall not be effective for purposes of this
Section.
The Company may and shall resume payments on and distributions in
respect of the Notes, and all Obligations with respect thereto, and may acquire
them when:
(a) in the case of a payment default as described in (i) above, upon the
date on which such default is cured or waived, and
(b) in the case of a nonpayment default as described in (ii) above, on the
earlier of the date on which such nonpayment default is cured or waived or 179
days after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any such Designated Senior Indebtedness of the Company
has been accelerated, and this Article otherwise permits the payment at the time
of such payment.
SECTION 11.04 ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify each Representative of holders of
Senior Indebtedness of the Company of the acceleration.
SECTION 11.05 WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Notes at a time when the Trustee or such
Holder has actual knowledge that such payment is prohibited by Section 11.02 or
Section 11.03 hereof, 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 Indebtedness of the Company as
their interests may appear, or their Representatives under the indenture or
other agreement (if any) pursuant to which Senior Indebtedness of the Company
may have been issued, as their respective interests may appear, for application
to the payment of all Obligations with respect to Senior Indebtedness of the
Company remaining unpaid to the extent necessary to pay such Obligations in full
in accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness of the Company.
If a distribution is made to the Trustee or any Holder that because
of this Article 11 should not have been made to it at a time when the Trustee or
such Holder has actual knowledge that such distribution should not have been
made to it, the Trustee or such Holder who receives the distribution shall hold
it in trust for the benefit of, and, upon written request, pay it over to, the
holders of
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Senior Indebtedness of the Company as their interests may appear, or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Indebtedness of the Company may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Indebtedness of the Company remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness of the Company.
With respect to the holders of Senior Indebtedness of the Company,
the Trustee undertakes to perform only such obligations on the part of the
Trustee as are specifically set forth in this Article 11 and no implied
covenants or obligations with respect to the holders of Senior Indebtedness of
the Company shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of the Company 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 Company
or any other Person money or assets to which any holders of Senior Indebtedness
of the Company shall be entitled by virtue of this Article 11, except if such
payment is made as a result of negligent action, its own negligent failure to
act or its own willful conduct or gross negligence of the Trustee.
SECTION 11.06 NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent
of any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness of the Company as provided in this Article.
SECTION 11.07 SUBROGATION.
After all Senior Indebtedness of the Company is paid in full and
until the Notes are paid in full, Holders shall, without duplication, be
subrogated to the rights of holders of Senior Indebtedness of the Company to
receive distributions applicable to Senior Indebtedness of the Company to the
extent that distributions otherwise payable to the Holders have been applied to
the payment of Senior Indebtedness of the Company. A distribution made under
this Article to holders of Senior Indebtedness of the Company that otherwise
would have been made to Holders is not, as between the Company and Holders, a
payment by the Company on Senior Indebtedness of the Company.
SECTION 11.08 RELATIVE RIGHTS.
This Article defines the relative rights of Holders and holders of
Senior Indebtedness of the Company. Nothing in this Indenture shall:
(1) impair, as between the Company and the Holders, the
obligation of the Company, which is absolute and
unconditional, to pay principal of and interest on the Notes
in accordance with their terms;
(2) affect the relative rights of Holders and creditors
of the Company other than their rights in relation to
holders of Senior Indebtedness of the Company; or
(3) prevent the Trustee or any Holder from exercising
its available remedies upon a Default or Event of Default,
subject to the rights of holders of
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Senior Indebtedness of the Company set forth herein to
receive distributions and payments otherwise payable to
Holders.
If the Company fails because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 11.09 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness of the Company to
enforce the subordination of the Indebtedness with respect to the Notes shall be
impaired by any act or failure to act by the Company or any Holder or by failure
of the Company or any Holder to comply with this Indenture.
SECTION 11.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders
of Senior Indebtedness of the Company, the distribution may be made and the
notice given to their Representative.
Upon any payment or distribution of assets referred to in this
Article 11, the Trustee and the Holders 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 for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 11.
SECTION 11.11 RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 11 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 three 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. Only the Company, the holder
of any Senior Indebtedness of the Company, or any Representative of holders of
Senior Indebtedness of the Company may give the notice. Nothing in this Article
11 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
Indebtedness of the Company with the same rights it would have if it were not
Trustee.
SECTION 11.12 AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 11, and appoints the Trustee the 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 holders (or their Representative) of Senior Indebtedness of the
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Company are hereby authorized to file an appropriate claim for and on behalf of
the Holders of the Notes.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01 TRUST INDENTURE ACT CONTROLS.
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 Company, the Guarantors 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),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
If to the Company or any Guarantor:
Berry Plastics Corporation
101 Oakley Street
Evansville, Indiana 47710
Telecopier No.: (812) 421-9604
Attention: Martin R. Imbler
With a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 408-2420
Attention: Michael Joseph O'Brien, Esq.
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Telecopier No.: (212) 852-1625
Attention: Corporate Trust Administration
The Company, the Guarantors 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 after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
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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 Company or any Guarantor mails 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
Company, the Guarantors, 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 Company or the Guarantors to
the Trustee to take any action under this Indenture, the Company or the
Guarantors 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 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;
(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;
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(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 DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or any Guarantor under the Notes,
the Note Guarantees, this 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 and the Note Guarantees waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes and the Note
Guarantees.
SECTION 12.08 GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.
SECTION 12.09 CONSENT TO JURISDICTION.
To the fullest extent permitted by applicable law, each of the
parties hereto hereby irrevocably submits to the jurisdiction of any New York
State court or Federal court sitting in the borough of Manhattan in New York
City in respect of any suit, action or proceeding arising out of or relating to
the provisions of this Indenture and irrevocably agrees that all claims in
respect of any such suit, action or proceeding may be heard and determined in
any such court. Each of the parties hereto waive, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter have to
the laying of venue of any such suit, action or proceeding brought in any such
court, and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 12.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
SECTION 12.11 SUCCESSORS.
All agreements of the Company and the Guarantors in this Indenture
and the Notes and the Note Guarantees, as the case may be, shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.
79
<PAGE>
SECTION 12.12 SEVERABILITY.
In case any provision in this Indenture, or in the Notes or in the
Note Guarantees 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 12.13 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 12.14 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]
80
<PAGE>
SIGNATURES
Dated as of July 6, 1999
BERRY PLASTICS CORPORATION
By: _____________________________________
Name:
Title:
BPC HOLDING CORPORATION
By: _____________________________________
Name:
Title:
BERRY PLASTICS ACQUISITION CORPORATION
By: _____________________________________
Name:
Title:
BERRY IOWA CORPORATION
By: _____________________________________
Name:
Title:
BERRY STERLING CORPORATION
By: _____________________________________
Name:
Title:
BERRY TRI-PLAS CORPORATION
By: _____________________________________
Name:
Title:
<PAGE>
AEROCON, INC.
By: _____________________________________
Name:
Title:
PACKERWARE CORPORATION, a Kansas
corporation
By: _____________________________________
Name:
Title:
PACKERWARE CORPORATION, a Delaware
corporation
By: _____________________________________
Name:
Title:
BERRY PLASTICS DESIGN CORPORATION
By: _____________________________________
Name:
Title:
VENTURE PACKAGING, INC.
By: _____________________________________
Name:
Title:
VENTURE PACKAGING MIDWEST, INC., an Ohio
corporation
By: _____________________________________
Name:
Title:
2
<PAGE>
VENTURE PACKAGING MIDWEST, INC., a
Delaware corporation
By: _____________________________________
Name:
Title:
VENTURE PACKAGING SOUTHEAST, INC., a
South Carolina corporation
By: _____________________________________
Name:
Title:
VENTURE PACKAGING SOUTHEAST, INC., a
Delaware corporation
By: _____________________________________
Name:
Title:
NIM HOLDINGS LIMITED
By: _____________________________________
Name:
Title:
3
<PAGE>
NORWICH INJECTION MOULDERS LIMITED
By: _____________________________________
Name:
Title:
NORWICH ACQUISITION LIMITED
By: _____________________________________
Name:
Title:
KNIGHT PLASTICS, INC.
By: _____________________________________
Name:
Title:
CPI HOLDING CORPORATION
By: _____________________________________
Name:
Title:
CARDINAL PACKAGING, INC.
By: _____________________________________
Name:
Title:
4
<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
By: ______________________________________
Name:
Title:
Dated as of July 6, 1999
5
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT A-1
(Face of Note)
CUSIP
11% Series A Senior Subordinated Notes due 2007
No.1 $75,000,000
BERRY PLASTICS CORPORATION
promises to pay to CEDE & CO. or registered assigns,
the principal sum of Seventy Five Million Dollars ($75,000,000)
on July 15, 2007.
Interest Payment Dates: January 15 and July 15.
Record Dates: January 1 and July 1.
A-1-1
<PAGE>
Dated: July 6, 1999
BERRY PLASTICS CORPORATION
By: _________________________________
Name:
Title:
By: _________________________________
Name:
Title:
(SEAL)
A-1-2
<PAGE>
This is one of the Notes
referred to in the
within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:____________________________
Authorized Signatory
A-1-3
<PAGE>
(Back of Security)
11% SERIES A SENIOR SUBORDINATED NOTE DUE 2007
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 INVESTOR" (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 BERRY PLASTICS CORPORATION OR ANY OF ITS 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 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
COMPANY 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 COMPANY OR
(G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY 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.
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 COMPANY.
Capitalized terms used herein have the meanings assigned to them in
the Indenture (as defined below) unless otherwise indicated.
A-1-4
<PAGE>
1. INTEREST. Berry Plastics Corporation, a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at the rate and in the manner specified below.
The Company shall pay in cash interest on the principal amount of
this Note at the rate per annum of 11% from January 15, 2000 until maturity and
shall pay the Liquidated Damages payable pursuant to Section 5 of the
Registration Rights Agreements referred to below. The Company will pay interest
and Liquidated Damages semi-annually on January 15 and July 15 of each year, or
if any such day is not a Business Day (as defined in the Indenture), on the next
succeeding Business Day (each an "Interest Payment Date"). The first Interest
Payment Date shall be January 15, 2000.
Interest will be computed on the basis of a 360-day year consisting
of twelve 30-day months. Interest shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Notes. To the extent lawful, the Company shall pay
interest on overdue principal at the rate of 1% per annum in excess of the then
applicable interest rate on the Notes; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at the
same rate to the extent lawful.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the record date next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date. The Company will pay
principal, interest and Liquidated Damages in money of the United States that at
the time of payment is legal tender for payment of public and private debts. The
Company, however, may pay principal, premium, if any, interest and Liquidated
Damages by check payable in such money. It may mail an interest check to a
Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-registrar without notice to any Holder. The Company or any Guarantor (as
defined below) may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of July 6, 1999 (the "Indenture") among the Company, the guarantors named
therein (the "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 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on
the date of the Indenture. The Notes are subject to ALL such terms, and Holders
of the Notes are referred to the Indenture and such Act for a statement of such
terms. The terms of the Indenture shall govern any inconsistencies between the
Indenture and the Notes. The Notes are unsecured general obligations of the
Company unlimited in aggregate principal amount.
5. OPTIONAL REDEMPTION. On or after July 15, 2003, the Company shall
have the option to redeem the Notes, in whole or in part, at the redemption
prices (expressed as percentages of the principal amount) set forth below, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon, to the
applicable redemption date, if redeemed during the twelve month period beginning
on July 15 of the years indicated below:
YEAR PERCENTAGE
2003 105.500%
2004 103.667%
2005 101.833%
2006 and thereafter 100.000%
A-1-5
<PAGE>
6. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. REDEMPTION OR REPURCHASE AT OPTION OF HOLDER. (a) If there is a
Change of Control, the Company shall be required to offer to purchase all Notes
at 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase. Holders of
Notes that are subject to an offer to purchase will receive an offer to purchase
from the Company 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" appearing below.
(b) When the aggregate amount of Excess Proceeds from Asset Sales
exceeds $5 million, upon completion of the Asset Sale Offers required under the
1994 Indenture and the 1998 Indenture, the Company shall be required to make 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 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 if any, remaining upon completion of the Asset Sale
Offers required under the 1994 Indenture and the 1998 Indenture at 100% of the
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase. If the aggregate principal amount of
Notes and such other PARI PASSU Indebtedness surrendered by Holders into such
Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes to be redeemed
shall be selected pursuant to the terms of Section 3.02 of the Indenture (with
such adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of $1,000, or integral multiples thereof, shall be purchased).
To the extent that the aggregate amount of Notes (including any Additional
Notes) and such other PARI PASSU Indebtedness tendered by Holders thereof is
less than the Excess Proceeds, the Company may use such deficiency for general
corporate purposes. Holders of Notes which are the subject of an offer to
purchase will receive an offer to purchase from the Company 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" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed by
first class mail at least 30 days but not more than 60 days before the purchase
or redemption date to each Holder of Notes to be purchased or redeemed at its
registered address. Notes may be purchased or redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
purchased or redeemed. On and after the purchase or redemption date, interest
ceases to accrue on Notes or portions of them called for purchase or redemption.
9. SUBORDINATION. The Notes are subordinated to Senior Indebtedness
of the Company (whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed) and all Obligations with respect
thereto. To the extent provided in the Indenture, Senior Indebtedness of the
Company must be paid before the Notes may be paid. The Company agrees, and each
Holder by accepting a Note agrees, to the subordination and authorizes the
Trustee to give it effect.
10. NOTE GUARANTEES. Payment of principal of, premium, if any, and
interest (including interest on overdue principal, premium, if any, and
interest, if lawful) on the Notes is unconditionally guaranteed by the
Guarantors, on a senior subordinated basis, pursuant to Article 10 of the
Indenture.
11. 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
A-1-6
<PAGE>
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Note or portion of a Note selected for purchase or redemption. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be purchased or redeemed, during the period between a
record date and the corresponding Interest Payment Date.
12. PERSONS DEEMED OWNERS. Prior to due presentment to the Trustee
for registration of the transfer of this Note, the Trustee, any Agent, the
Company and the Guarantors may deem and treat the Person in whose name this Note
is registered as its absolute owner for the purpose of receiving payment of
principal of and interest on this Note and for all other purposes whatsoever,
whether or not this Note is overdue, and neither the Trustee, any Agent, the
Company nor any Guarantor shall be affected by notice to the contrary. The
registered holder of a Note shall be treated as its owner for all purposes.
13. AMENDMENTS, SUPPLEMENTS AND WAIVERS. Subject to certain
exceptions, 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 then
outstanding Notes (including Additional Notes, if any) (including 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 or the Notes
may be waived with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes (including Additional Notes, if
any) (including consents obtained in connection with a tender offer or exchange
offer for Notes). Without the consent of any Holder, the Indenture or the Notes
may be amended to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for assumption of the Company's or any Guarantor's obligations to
Holders in the case of a merger or consolidation or sale of all or substantially
all of the Company's assets, to make any change that would provide any
additional rights or benefits to the Holders (including providing for additional
Note Guarantees pursuant to Section 4.13 of the Indenture) or that does not
adversely affect the legal rights under the Indenture of any Holder, to provide
for the issuance of Additional Notes in accordance with the provisions of the
Indenture or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA.
14. DEFAULTS AND REMEDIES. Events of Default include: default by the
Company or the Guarantors in the payment when due of interest or Liquidated
Damages, if any, on the Notes (whether or not prohibited by the subordination
provisions of Article 10 or Article 11 of the Indenture, as the case may be) and
such default continues for a period of 30 days; default by the Company or the
Guarantors in the payment when due of principal of or premium, if any, on the
Notes (whether or not prohibited by the subordination provisions of Article 10
or Article 11 of the Indenture, as the case may be) when the same becomes due
and payable at maturity, upon redemption (including in connection with an offer
to purchase) or otherwise; failure by the Company to comply with Sections 4.07,
4.09, 4.10 or 4.15 of the Indenture; failure by the Company or the Guarantors to
observe or perform any other covenant, representation, warranty or other
agreement in the Notes 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; 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 borrowed by the Company, Holding
or any of their respective Subsidiaries (or the payment of which is guaranteed
by the Company, Holding or any of their respective Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness (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
A-1-7
<PAGE>
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 $2.0 million or more; a final judgment
or final judgments for the payment of money are entered by a court or courts of
competent jurisdiction against the Company, Holding or any of their respective
Subsidiaries and such judgment or judgments remain unpaid or undischarged for a
period (during which execution shall not be effectively stayed) of 60 days,
PROVIDED that the aggregate of all such undischarged judgments exceeds $2.0
million; except as permitted by the Indenture, any Note Guarantee 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 Guarantor (or its successors or
assigns), or any Person acting on behalf of such Guarantor (or its successors or
assigns), shall deny or disaffirm its obligations or shall fail to comply with
any obligations under its Note Guarantee; and certain events of bankruptcy or
insolvency with respect to the Company, any Guarantor or any of their respective
Subsidiaries. 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
(including Additional Notes, if any) may declare all the Notes to be due and
payable immediately; PROVIDED, HOWEVER, that if any Indebtedness is outstanding
pursuant to the Credit Facility, upon a declaration of acceleration, the
principal and interest on the Notes shall be payable upon the earlier of (1) the
day which is five Business Days after notice of acceleration is given to the
Company and the lender under the Credit Facility or (2) the date of acceleration
of the Indebtedness under the Credit Facility and except that in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, with
respect to the Company, Holding or any of their respective Subsidiaries, all
outstanding Notes will become due and payable without further action or notice.
Holders of the Notes 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 (including Additional Notes,
if any) 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 Company must furnish an annual compliance certificate to the
Trustee.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company, the Guarantors or their respective
Affiliates, and may otherwise deal with the Company the Guarantors or their
respective Affiliates, as if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any Guarantor,
as such, shall have any liability for any obligations of the Company or any
Guarantor under the Notes, the Note Guarantees, the 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 and the Note Guarantees waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes and the Note Guarantees.
17. AUTHENTICATION. Neither this Note nor any Note Guarantee shall
be valid until authenticated by the manual signature of the Trustee or an
authenticating agent.
18. 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).
A-1-8
<PAGE>
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to 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.
20. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE NOTE GUARANTEES.
A-1-9
<PAGE>
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Request may be made to:
Berry Plastics Corporation
101 Oakley Street
P.O. Box 959
Evansville, Indiana 47710-0959
Attention: Chief Financial Officer
A-1-10
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax ID. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. 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.
A-1-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 (upon the occurrence of an Asset Sale) or 4.15 (upon
the occurrence of a Change of Control) of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to 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 Note)
Tax Identification No.: _________________________
Signature Guarantee.
A-1-12
<PAGE>
SCHEDULE OF EXCHANGES OF GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note, or of other Restricted Global Notes for an
interest in this Global Note, have been made:
Amount of Amount of
decrease in increase in Principal Amount Signature of
Principal Principal of this authorized
Amount Amount Global Note officer of
of of following such Trustee or
DATE OF THIS GLOBAL THIS GLOBAL decrease Note
EXCHANGE NOTE NOTE (OR INCREASE) CUSTODIAN
A-1-13
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
CUSIP
11% Series A Senior Subordinated Notes due 2007
No.1 $
BERRY PLASTICS CORPORATION
promises to pay to CEDE & CO. or registered assigns,
the principal sum of _______________ ($___________)
on July 15, 2007.
Interest Payment Dates: January 15 and July 15.
Record Dates: January 1 and July 1.
A-2-1
<PAGE>
Dated: July 6, 1999
BERRY PLASTICS CORPORATION
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
(SEAL)
B-4
<PAGE>
This is one of the Notes
referred to in the
within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:____________________________
Authorized Signatory
B-4
<PAGE>
(Back of Regulation S Temporary Global Note)
11% SERIES A SENIOR SUBORDINATED NOTE DUE 2007
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 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 INVESTOR" (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 BERRY PLASTICS CORPORATION OR ANY OF ITS 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 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
COMPANY 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 COMPANY OR
(G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY 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.
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
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(IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY.
Capitalized terms used herein have the meanings assigned to them in
the Indenture (as defined below) unless otherwise indicated.
21. INTEREST. Berry Plastics Corporation, a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at the rate and in the manner specified below.
The Company shall pay in cash interest on the principal amount of
this Note at the rate per annum of 11% from January 15, 2000 until maturity and
shall pay the Liquidated Damages payable pursuant to Section 5 of the
Registration Rights Agreements referred to below. The Company will pay interest
and Liquidated Damages semi-annually on January 15 and July 15 of each year, or
if any such day is not a Business Day (as defined in the Indenture), on the next
succeeding Business Day (each an "Interest Payment Date"). The first Interest
Payment Date shall be January 15, 2000.
Interest will be computed on the basis of a 360-day year consisting
of twelve 30-day months. Interest shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Notes. To the extent lawful, the Company shall pay
interest on overdue principal at the rate of 1% per annum in excess of the then
applicable interest rate on the Notes; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at the
same rate to the extent lawful.
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.
22. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the record date next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date. The Company will pay
principal, interest and Liquidated Damages in money of the United States that at
the time of payment is legal tender for payment of public and private debts. The
Company, however, may pay principal, premium, if any, interest and Liquidated
Damages by check payable in such money. It may mail an interest check to a
Holder's registered address.
23. PAYING AGENT AND REGISTRAR. Initially, the Trustee will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-registrar without notice to any Holder. The Company or any Guarantor (as
defined below) may act in any such capacity.
24. INDENTURE. The Company issued the Notes under an Indenture dated
as of July 6, 1999 (the "Indenture") among the Company, the guarantors named
therein (the "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 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on
the date of the Indenture. The Notes are subject to ALL such terms, and Holders
of the Notes are referred to the Indenture and such Act for a statement of such
terms. The terms of the Indenture shall govern any inconsistencies between the
Indenture and the Notes. The Notes are unsecured general obligations of the
Company unlimited in aggregate principal amount.
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25. OPTIONAL REDEMPTION. On or after July 15, 2003, the Company
shall have the option to redeem the Notes, in whole or in part, at the
redemption prices (expressed as percentages of the principal amount) set forth
below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon,
to the applicable redemption date, if redeemed during the twelve month period
beginning on July 15 of the years indicated below:
YEAR PERCENTAGE
2003 105.500%
2004 103.667%
2005 101.833%
2006 and thereafter 100.000%
26. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
27. REDEMPTION OR REPURCHASE AT OPTION OF HOLDER. (a) If there is a
Change of Control, the Company shall be required to offer to purchase all Notes
at 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase. Holders of
Notes that are subject to an offer to purchase will receive an offer to purchase
from the Company 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" appearing below.
(b) When the aggregate amount of Excess Proceeds from Asset Sales
exceeds $5 million, upon completion of the Asset Sale Offers required under the
1994 Indenture and the 1998 Indenture, the Company shall be required to make 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 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 if any, remaining upon completion of the Asset Sale
Offers required under the 1994 Indenture and the 1998 Indenture at 100% of the
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase. If the aggregate principal amount of
Notes and such other PARI PASSU Indebtedness surrendered by Holders into such
Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes to be redeemed
shall be selected pursuant to the terms of Section 3.02 of the Indenture (with
such adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of $1,000, or integral multiples thereof, shall be purchased).
To the extent that the aggregate amount of Notes (including any Additional
Notes) and such other PARI PASSU Indebtedness tendered by Holders thereof is
less than the Excess Proceeds, the Company may use such deficiency for general
corporate purposes. Holders of Notes which are the subject of an offer to
purchase will receive an offer to purchase from the Company 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" appearing below.
28. NOTICE OF REDEMPTION. Notice of redemption shall be mailed by
first class mail at least 30 days but not more than 60 days before the purchase
or redemption date to each Holder of Notes to be purchased or redeemed at its
registered address. Notes may be purchased or redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
purchased or redeemed. On and after the purchase or redemption date, interest
ceases to accrue on Notes or portions of them called for purchase or redemption.
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29. SUBORDINATION. The Notes are subordinated to Senior Indebtedness
of the Company (whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed) and all Obligations with respect
thereto. To the extent provided in the Indenture, Senior Indebtedness of the
Company must be paid before the Notes may be paid. The Company agrees, and each
Holder by accepting a Note agrees, to the subordination and authorizes the
Trustee to give it effect.
30. NOTE GUARANTEES. Payment of principal of, premium, if any, and
interest (including interest on overdue principal, premium, if any, and
interest, if lawful) on the Notes is unconditionally guaranteed by the
Guarantors, on a senior subordinated basis, pursuant to Article 10 of the
Indenture.
31. 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 to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Note or portion of a
Note selected for purchase or redemption. Also, it need not exchange or register
the transfer of any Notes for a period of 15 days before a selection of Notes to
be purchased or redeemed, 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.
32. PERSONS DEEMED OWNERS. Prior to due presentment to the Trustee
for registration of the transfer of this Note, the Trustee, any Agent, the
Company and the Guarantors may deem and treat the Person in whose name this Note
is registered as its absolute owner for the purpose of receiving payment of
principal of and interest on this Note and for all other purposes whatsoever,
whether or not this Note is overdue, and neither the Trustee, any Agent, the
Company nor any Guarantor shall be affected by notice to the contrary. The
registered holder of a Note shall be treated as its owner for all purposes.
33. AMENDMENTS, SUPPLEMENTS AND WAIVERS. Subject to certain
exceptions, 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 then
outstanding Notes (including Additional Notes, if any) (including 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 or the Notes
may be waived with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes (including Additional Notes, if
any) (including consents obtained in connection with a tender offer or exchange
offer for Notes). Without the consent of any Holder, the Indenture or the Notes
may be amended to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for assumption of the Company's or any Guarantor's obligations to
Holders in the case of a merger or consolidation or sale of all or substantially
all of the Company's assets, to make any change that would provide any
additional rights or benefits to the Holders (including providing for additional
Note Guarantees pursuant to Section 4.13 of the Indenture) or that does not
adversely affect the legal rights under the Indenture of any Holder, to provide
for the issuance of
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Additional Notes in accordance with the provisions of the Indenture or to comply
with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA.
34. DEFAULTS AND REMEDIES. Events of Default include: default by the
Company or the Guarantors in the payment when due of interest or Liquidated
Damages, if any, on the Notes (whether or not prohibited by the subordination
provisions of Article 10 or Article 11 of the Indenture, as the case may be) and
such default continues for a period of 30 days; default by the Company or the
Guarantors in the payment when due of principal of or premium, if any, on the
Notes (whether or not prohibited by the subordination provisions of Article 10
or Article 11 of the Indenture, as the case may be) when the same becomes due
and payable at maturity, upon redemption (including in connection with an offer
to purchase) or otherwise; failure by the Company to comply with Sections 4.07,
4.09, 4.10 or 4.15 of the Indenture; failure by the Company or the Guarantors to
observe or perform any other covenant, representation, warranty or other
agreement in the Notes 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; 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 borrowed by the Company, Holding
or any of their respective Subsidiaries (or the payment of which is guaranteed
by the Company, Holding or any of their respective Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness (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
$2.0 million or more; a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction against the
Company, Holding or any of their respective Subsidiaries and such judgment or
judgments remain unpaid or undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, PROVIDED that the aggregate of all
such undischarged judgments exceeds $2.0 million; except as permitted by the
Indenture, any Note Guarantee 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 Guarantor (or its successors or assigns), or any Person acting on
behalf of such Guarantor (or its successors or assigns), shall deny or disaffirm
its obligations or shall fail to comply with any obligations under its Note
Guarantee; and certain events of bankruptcy or insolvency with respect to the
Company, any Guarantor or any of their respective Subsidiaries. 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 (including Additional Notes, if
any) may declare all the Notes to be due and payable immediately; PROVIDED,
HOWEVER, that if any Indebtedness is outstanding pursuant to the Credit
Facility, upon a declaration of acceleration, the principal and interest on the
Notes shall be payable upon the earlier of (1) the day which is five Business
Days after notice of acceleration is given to the Company and the lender under
the Credit Facility or (2) the date of acceleration of the Indebtedness under
the Credit Facility and except that in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, with respect to the Company,
Holding or any of their respective Subsidiaries, all outstanding Notes will
become due and payable without further action or notice. Holders of the Notes
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 (including Additional Notes, if any) 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
Company must furnish an annual compliance certificate to the Trustee.
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35. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company, the Guarantors or their respective
Affiliates, and may otherwise deal with the Company the Guarantors or their
respective Affiliates, as if it were not Trustee.
36. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any Guarantor,
as such, shall have any liability for any obligations of the Company or any
Guarantor under the Notes, the Note Guarantees, the 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 and the Note Guarantees waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes and the Note Guarantees.
37. AUTHENTICATION. Neither this Note nor any Note Guarantee shall
be valid until authenticated by the manual signature of the Trustee or an
authenticating agent.
38. 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).
39. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to 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.
40. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE NOTE GUARANTEES.
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The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Request may be made to:
Berry Plastics Corporation
101 Oakley Street
P.O. Box 959
Evansville, Indiana 47710-0959
Attention: Chief Financial Officer
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Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax ID. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. 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.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 (upon the occurrence of an Asset Sale) or 4.15 (upon
the occurrence of a Change of Control) of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to 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 Note)
Tax Identification No.: _________________________
Signature Guarantee.
________________________________________________________________________________
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SCHEDULE OF EXCHANGES OF 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:
Amount of Amount of
decrease in increase in Principal Amount Signature of
Principal Principal of this authorized
Amount Amount Global Note officer of
of of following such Trustee or
DATE OF THIS GLOBAL THIS GLOBAL decrease Note
EXCHANGE NOTE NOTE (OR INCREASE) CUSTODIAN
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FORM OF CERTIFICATE OF TRANSFER
Berry Plastics Corporation
101 Oakley Street
Evansville, Indiana 47710
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Re: % Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of July 6, 1999
(the "INDENTURE"), among Berry Plastics Corporation, as issuer (the "COMPANY"),
the Guarantors named therein and UNITED STATES TRUST COMPANY 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 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 Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a person in
the United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of
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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 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 Company 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 in the form of Exhibit D to the Indenture and (2) if such
Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $250,000, an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached
to this certification), to the effect that such Transfer is in compliance
with the Securities Act. Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial
interest or 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.
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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 Company.
_________________________________________
[Insert Name of Transferor]
By: ______________________________________
Name:
__________________________ Title:
Dated:
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global 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-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Berry Plastics Corporation
101 Oakley Street
Evansville, Indiana 47710
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Re: 11% Senior Subordinated Notes due 2007
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of July 6, 1999
(the "INDENTURE"), among Berry Plastics Corporation, as issuer (the "COMPANY"),
the Guarantors named therein and [UNITED STATES TRUST COMPANY 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 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-1
<PAGE>
(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 Company.
_____________________________________
[Insert Name of Transferor]
By: _____________________________________
Name:
Title:
Dated: _____________________________
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Berry Plastics Corporation
101 Oakley Street
Evansville, Indiana 47710
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Re: 11% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of July 6, 1999
(the "INDENTURE"), among Berry Plastics Corporation, as issuer (the "COMPANY"),
the Guarantors named therein and United States Trust Company 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 Company 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 Company 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 Company 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 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.
D-1
<PAGE>
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
Company such certifications, legal opinions and other information as you and the
Company 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.
You and the Company 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
NOTE GUARANTEE
Each of the Guarantors and each Restricted Subsidiary of the Company
which in accordance with Section 4.13 of the Indenture is required to guarantee
the obligations of the Company under the Notes upon execution of a counterpart
of this Indenture, has jointly and severally unconditionally guaranteed (i) the
due and punctual payment of the principal of, interest and Liquidated Damages,
if any, on the Notes, whether at the maturity or interest payment or mandatory
redemption date, by acceleration, call for redemption or otherwise, and of
interest on the overdue principal of and interest, if any, on the Notes and all
other obligations of the Company to the Holders or the Trustee under the
Indenture or the Notes and (ii) 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 maturity, by acceleration or otherwise.
The obligations of each Guarantor to the Holder and to the Trustee
pursuant to this Note Guarantee and the Indenture are as expressly set forth in
Article 10 of the Indenture, and reference is hereby made to such Indenture for
the precise terms of this Note Guarantee. The terms of Article 10 of the
Indenture are incorporated herein by reference.
This is a continuing guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its successors and assigns
until full and final payment of all of the Company's obligations under the Notes
and the Indenture and shall inure to the benefit of the successors and assigns
of the Trustee and the Holders and, in the event of any transfer or assignment
of rights by any Holder or the Trustee, the rights and privileges herein
conferred upon that party shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. This is
a guarantee of payment and not a guarantee of collection.
This Note Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Note Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
<PAGE>
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
BPC HOLDING CORPORATION
By: _____________________________________
Name:
Title:
BERRY PLASTICS ACQUISITION CORPORATION
By: _____________________________________
Name:
Title:
BERRY IOWA CORPORATION
By: _____________________________________
Name:
Title:
BERRY STERLING CORPORATION
By: _____________________________________
Name:
Title:
BERRY TRI-PLAS CORPORATION
By: _____________________________________
Name:
Title:
E-2
<PAGE>
AEROCON, INC.
By: _____________________________________
Name:
Title:
PACKERWARE CORPORATION, a Kansas
corporation
By: _____________________________________
Name:
Title:
PACKERWARE CORPORATION, a Delaware
corporation
By: _____________________________________
Name:
Title:
BERRY PLASTICS DESIGN CORPORATION
By: _____________________________________
Name:
Title:
VENTURE PACKAGING, INC.
By: _____________________________________
Name:
Title:
VENTURE PACKAGING MIDWEST, INC., an
Ohio corporation
By: _____________________________________
Name:
Title:
E-3
<PAGE>
VENTURE PACKAGING MIDWEST, INC., a
Delaware corporation
By: _____________________________________
Name:
Title:
VENTURE PACKAGING SOUTHEAST, INC., a
South Carolina corporation
By: _____________________________________
Name:
Title:
VENTURE PACKAGING SOUTHEAST, INC., a
Delaware corporation
By: _____________________________________
Name:
Title:
NIM HOLDINGS LIMITED
By: _____________________________________
Name:
Title:
NORWICH INJECTION MOULDERS LIMITED
By: _____________________________________
Name:
Title:
NORWICH ACQUISITION LIMITED
By: _____________________________________
Name:
Title:
E-4
<PAGE>
KNIGHT PLASTICS, INC.
By: _____________________________________
Name:
Title:
CPI HOLDING CORPORATION
By: _____________________________________
Name:
Title:
CARDINAL PACKAGING, INC.
By: _____________________________________
Name:
Title:
E-5
EXHIBIT 10.28
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
Dated as of July 6, 1999
by and among
BERRY PLASTICS CORPORATION
BPC HOLDING CORPORATION
BERRY PLASTICS ACQUISITION CORPORATION
BERRY IOWA CORPORATION
BERRY STERLING CORPORATION
BERRY TRI-PLAS CORPORATION
AEROCON, INC.
PACKERWARE CORPORATION, a Kansas corporation
PACKERWARE CORPORATION, a Delaware corporation
BERRY PLASTICS DESIGN CORPORATION
VENTURE PACKAGING, INC.,
VENTURE PACKAGING MIDWEST, INC., an Ohio corporation
VENTURE PACKAGING MIDWEST, INC., a Delaware corporation
VENTURE PACKAGING SOUTHEAST, INC., a South Carolina corporation
VENTURE PACKAGING SOUTHEAST, INC., a Delaware corporation
NIM HOLDINGS LIMITED
NORWICH INJECTION MOULDERS LIMITED
NORWICH ACQUISITION LIMITED
KNIGHT PLASTICS, INC.
CPI HOLDING CORPORATION
CARDINAL PACKAGING CORPORATION
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
CHASE SECURITIES INC.
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of July 6, 1999, by and among, Berry Plastics Corporation, a Delaware
corporation (the "COMPANY"), BPC Holding Corporation, a Delaware corporation,
Berry Plastics Acquisition Corporation, a Delaware corporation, Berry Iowa
Corporation, a Delaware corporation, Berry Sterling Corporation, a Delaware
corporation, Berry Tri-Plas Corporation, a Delaware corporation, AeroCon, Inc.,
a Delaware corporation, PackerWare Corporation, a Kansas corporation, PackerWare
Corporation, a Delaware corporation, Berry Plastics Design Corporation, a
Delaware corporation, Venture Packaging, Inc., a Delaware corporation, Venture
Packaging Midwest, Inc., an Ohio corporation, Venture Packaging Midwest, Inc., a
Delaware corporation, Venture Packaging Southeast, Inc., a South Carolina
corporation, Venture Packaging Southeast, Inc., a Delaware corporation, NIM
Holdings Limited, a company organized under the laws of England and Wales,
Norwich Injection Moulders Limited, a company organized under the laws of
England and Wales, Norwich Acquisition Limited, a company organized under the
laws of England and Wales, Knight Plastics, Inc., a Delaware corporation, CPI
Holding Corporation, a Delaware corporation and Cardinal Packaging Corporation,
an Ohio corporation (collectively, the "GUARANTORS"), and Donaldson, Lufkin &
Jenrette Securities Corporation and Chase Securities Inc. (each an "INITIAL
PURCHASER" and collectively, the "INITIAL PURCHASERS"), who have agreed to
purchase the Company's 11% Series A Senior Subordinated Notes due 2007 (the
"SERIES A NOTES") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated as of
June 29, 1999, (the "PURCHASE AGREEMENT"), by and among the Company, the
Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers
to purchase the Series A Notes, the Company and the Guarantors 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.
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.
BUSINESS DAY: Any day except a Saturday. Sunday or other day in the City
of New York, or in the city of the corporate trust office of the Trustee, on
which banks are authorized to close.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
BROKER-DEALER TRANSFER RESTRICTED SECURITIES: Series B Notes that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Series A Notes
that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its affiliates).
CERTIFICATED SECURITIES: As defined in the Indenture.
CLOSING DATE: The date hereof.
1
<PAGE>
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 Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the minimum period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Series A Notes, each Interest
Payment Date.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The registration by the Company under the Act of the
Series B Notes pursuant to the Exchange Offer Registration Statement pursuant to
which the Company shall offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
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 Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and persons permitted to purchase the
Series A Notes in offshore transactions in reliance upon Regulation S under the
Act.
HOLDERS: As defined in Section 2 hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated the Closing Date, among the Company, the
Guarantors and the Trustee, pursuant to which the Notes are to be issued, as
such Indenture is amended or supplemented from time to time in accordance with
the terms thereof.
INTEREST PAYMENT DATE: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
NOTES: The Series A Notes and the Series B Notes.
PERSON: An individual, partnership, corporation, trust, unincorporated
organization, or a governmental agency or political subdivision thereof.
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
2
<PAGE>
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
RECORD HOLDER: With respect to any Damages Payment Date, each Person who
is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and the
Guarantors relating to (a) an offering of Series B 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) which 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.
RESTRICTED BROKER-DEALER: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
SERIES B NOTES: The Company's 11% Series B Senior Subordinated Notes due
2007 to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii)
upon the request of any Holder of Series A Notes covered by a Shelf Registration
Statement, in exchange for such Series A Notes.
SHELF REGISTRATION STATEMENT: As defined in Section 4 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 Note, until (i) the date on which
such Series A Note has been exchanged by a Person other than a broker-dealer for
a Series B Note in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of a Series A Note for a Series B Note, the
date on which such Series A 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, (iii) the date on which
such Series A Note has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iv) the date
on which such Series A Note is distributed to the public pursuant to Rule 144
under the Act.
TRUSTEE: United States Trust Company of New York and any of its
successors.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
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.
3
<PAGE>
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 45 days after the Closing Date, the Exchange Offer Registration Statement,
(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
210 days after the Closing Date, (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 such Exchange Offer Registration Statement
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 Series B 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 registration of the Series B Notes to be offered in
exchange for the Series A Notes that are Transfer Restricted Securities and to
permit sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective best efforts
to cause the Exchange Offer Registration Statement to be effective continuously,
and shall keep the Exchange Offer referred to in the second paragraph of Section
3(c) open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
PROVIDED, HOWEVER, that in no event shall such period be less than 20 Business
Days. The Company and the Guarantors shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the Series B Notes shall be included in the Exchange Offer Registration
Statement. The Company and the 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 60 Business Days thereafter.
(c) The Company and the Guarantors shall include a "Plan of Distribution"
section in the Prospectus contained in the Exchange Offer Registration Statement
and indicate therein that any Restricted Broker-Dealer who holds Series A Notes
that are Transfer Restricted Securities and that were acquired for the account
of such Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Series A Notes (other than Transfer Restricted
Securities acquired directly from the Company or any affiliate of the Company)
pursuant to the Exchange Offer; however, 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 each Series B Note received by such Broker-Dealer in the Exchange Offer,
which prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers that the Commission may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer, except to the extent required by the Commission.
4
<PAGE>
The Company and the Guarantors shall use their respective best efforts to
keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) below to
the extent necessary to ensure that it is available for sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers, and to ensure that
such Registration Statement conforms 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 one year from the date on which the Exchange
Offer is Consummated (or such longer period if extended pursuant to Section 6(d)
hereof).
The Company and the Guarantors shall promptly provide sufficient copies of
the latest version of such Prospectus to such Restricted Broker-Dealers promptly
upon request, and in no event later than one day after such request, at any time
during such one-year period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Company and the Guarantors are not
required to file an Exchange Offer Registration Statement with respect to the
Series B Notes because the Exchange Offer is not permitted by applicable law or
Commission policy (after the procedures set forth in Section 6(a)(i) below have
been complied with) or (ii) any Holder of Transfer Restricted Securities shall
notify the Company within 20 Business Days following the Consummation of the
Exchange Offer 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
Series B 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 Series A Notes acquired
directly from the Company or one of its affiliates, then the Company and the
Guarantors shall (x) cause to be filed, on or prior to 45 days after the date on
which the Company determines that it is not required to file the Exchange Offer
Registration Statement pursuant to clause (i) above or 45 days after the date on
which the Company receives the notice specified in clause (ii) above, a shelf
registration statement pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement (in either event, the
"SHELF REGISTRATION Statement")), relating to all Transfer Restricted Securities
the Holders of which shall have provided the information required pursuant to
Section 4(b) hereof, and shall (y) use their respective best efforts to cause
such Shelf Registration Statement to be declared effective by the Commission as
promptly as possible after the date on which the Company and the Guarantors
become obligated to file such Shelf Registration Statement. If, after the
Company and the Guarantors have filed an Exchange Offer Registration Statement
which satisfies the requirements of Section 3(a) above, the Company and the
Guarantors are required to file and make effective a Shelf Registration
Statement solely because the Exchange Offer shall not be permitted under
applicable federal law, then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above. Such
an event shall have no effect on the requirements of clause (y) above. The
Company and the Guarantors shall use their respective best efforts to keep the
Shelf Registration Statement discussed in this Section 4(a) continuously
effective, supplemented and amended as required by and subject to the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a), and to ensure that it conforms
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 three years (as extended pursuant to Section 6(d)) following the date on
which such Shelf Registration Statement first becomes effective under the Act,or
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such shorter period ending when all Transfer Restricted Securities covered by
the Shelf Registration Statement cease to be Transfer Restricted Securities.
(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 Company in writing, within 20 days after receipt of a request therefor, such
information specified in item 507 of Regulation S-K under 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 used its best efforts to provide all such information.
Each Holder as to which any Shelf Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
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 date specified for such filing in this
Agreement, (ii) any such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement, (iii) the Exchange Offer has not been Consummated within 60
Business Days after the Exchange Offer Registration Statement is first declared
effective by the Commission 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 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 Company and the Guarantors hereby jointly and severally agree to pay
liquidated damages to each Holder of Transfer Restricted Securities with respect
to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. 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 principal
amount of Transfer Restricted Securities. 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 by the Company and the
Guarantors on each Interest Payment Date to the Global Note Holder in the manner
provided for thr payment of interest in the Indenture, on each Interest Payment
Date, as more fully set forth in the Indenture and the Notes. All
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obligations of the Company and the Guarantors set forth in the preceding
paragraph that are outstanding with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to such security
shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the Exchange
Offer, the Company and the Guarantors shall comply with all applicable
provisions of Section 6(c) below, shall use their respective best efforts to
effect such exchange and to permit the sale of Broker-Dealer Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, such that in the reasonable opinion of counsel to the Company and
the Guarantors there is a substantial question as to whether the Exchange
Offer is permitted by applicable federal law, the Company and the
Guarantors hereby agree to seek a no-action letter or other favorable
decision from the Commission allowing the Company and the Guarantors to
Consummate an Exchange Offer for such Series A Notes. The Company and the
Guarantors hereby agree to pursue the issuance of such a decision to the
Commission staff level. In connection with the foregoing, the Company and
the Guarantors hereby agree to take all such other actions as are
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 Company and the
Guarantors 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 of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation of the Exchange Offer, a written representation
to the Company and the 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 Company, (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
Series B Notes to be issued in the Exchange Offer and (C) it is acquiring
the Series B Notes in its ordinary course of business. Each Holder hereby
acknowledges and agrees that any Broker-Dealer and any such Holder using
the Exchange Offer to participate in a distribution of the securities to
be acquired in the Exchange Offer (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
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holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Series B Notes obtained by such
Holder in exchange for Series A Notes acquired by such Holder directly
from the Company or an affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the 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) and, if
applicable, any no-action letter obtained pursuant to clause (i) above,
(B) including a representation that the Company and the Guarantors have
not entered into any arrangement or understanding with any Person to
distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's and the Guarantors' information and
belief, each Holder participating in the Exchange Offer is acquiring the
Series B Notes in its ordinary course of business and has no arrangement
or understanding with any Person to participate in the distribution of the
Series B 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.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall 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 Company
and the Guarantors pursuant to Section 4(b) hereof), and pursuant thereto the
Company and the Guarantors will prepare and file with the Commission a
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.
(c) GENERAL PROVISIONS. In connection with any Registration Statement and
any related Prospectus required by this Agreement to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus, to the extent that the
same are required to be available to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers), the Company and the
Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective 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 that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain
a material misstatement or omission or (B) not to be effective and usable
for resale of Transfer Restricted Securities during the period required by
this Agreement, the Company and the Guarantors shall file promptly an
appropriate amendment to such Registration Statement, (1) in the case of
clause (A), correcting any such misstatement or omission, and (2) in the
case of clauses (A) and (B), use their respective best efforts to cause
such amendment to be declared effective and such Registration Statement
and the related Prospectus to become usable for its intended purpose(s) as
soon as practicable thereafter;
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(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; 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 the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, 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
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 Company and the Guarantors shall use their respective best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) furnish to the Initial Purchasers, each selling Holder named in
any Registration Statement or Prospectus and each of the underwriter(s) in
connection with such 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 and comment of such Holders and underwriter(s) in
connection with such sale, if any, for a period of at least five Business
Days, and the Company and the Guarantors 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 selling Holders of the Transfer
Restricted Securities covered by such Registration Statement or the
underwriter(s) in connection with such sale, if any, shall reasonably
object within five Business Days after the receipt thereof. A selling
Holder or underwriter, if any, shall be deemed to have
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reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission or fails to comply
with the applicable requirements of the Act;
(v) 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, upon request, to the selling Holders and
to the underwriter(s) in connection with such sale, if any, make the
Company's and the Guarantors' representatives available for discussion of
such document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such selling
Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any managing underwriter participating in any disposition
pursuant to such Registration Statement and any attorney or accountant
retained by such selling Holders or any of such underwriter(s), all
financial and other records, pertinent corporate documents and properties
of the Company and the Guarantors and cause the Company's and the
Guarantors' officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter, 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;
(vii) if requested by any selling Holders or the underwriter(s) in
connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being
sold to such underwriter(s), the purchase price being paid therefor and
any other terms of the offering of the Transfer Restricted Securities to
be sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(viii) furnish to each selling Holder and each of the underwriter(s)
in connection with such sale, if any, 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);
(ix) deliver to each selling Holder and each of the underwriter(s),
if any, 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 Company and the Guarantors hereby
consent to the use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each of
the underwriter(s), if any, in connection with the offering and the sale
of the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(x) enter into such agreements (including an underwriting agreement)
and make such representations and warranties that are reasonably
acceptable to the Company and the
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Guarantors and take all such other reasonable actions in connection
therewith in order to expedite or facilitate the disposition of the
Transfer Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement as may be reasonably requested by any
Holder of Transfer Restricted Securities or underwriter in connection with
any sale or resale pursuant to any Registration Statement contemplated by
this Agreement, and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
Underwritten Registration, the Company and the Guarantors shall:
(A) furnish (or in the case of paragraphs (2) and (3), use
their respective best efforts to furnish) to each selling Holder and
each underwriter, if any, upon the effectiveness of the Shelf
Registration Statement and to each Restricted Broker-Dealer upon
Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf
of the Company and such Guarantor by (x) the President or any
Vice President and (y) a principal financial or accounting
officer of the Company and each Guarantor, confirming, as of
the date thereof, the type of matters set forth in paragraphs
(a) through (d) of Section 8 of the Purchase Agreement with
respect to the relevant Registration Statement and the
securities registered thereunder, and such other similar
matters as the Holders, underwriter(s) and/or Restricted
Broker Dealers may reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company and the Guarantors covering matters similar to those
set forth in paragraph (f) of Section 8 of the Purchase
Agreement and such other matter as the Holders, underwriters
and/or Restricted Broker Dealers may reasonably request, and
in any event including a statement to the effect that such
counsel has participated in conferences with officers and
other representatives of the Company and the Guarantors,
representatives of the independent public accountants for the
Company and the Guarantors and have considered the matters
required to be stated therein and the statements contained
therein, and although such counsel has not independently
verified the accuracy, completeness or fairness of such
statements, such counsel advises that, on the basis of the
foregoing, no facts came to such counsel's attention that
caused such counsel to believe that the applicable
Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became
effective and, in the case of the Exchange Offer Registration
Statement, as of the date of Consummation of the Exchange
Offer, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
that the Prospectus contained in such Registration Statement
as of its date and, in the case of the opinion dated the date
of Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading (it being
understood that such counsel need express no opinion nor
express any statement
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or belief with respect to the financial statements and
schedules and other financial or statistical data included in,
or omitted from, any Registration Statement contemplated by
this Agreement or the related Prospectus); and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement or the date
of Consummation of the Exchange Offer, as the case may be,
from the Company's and the Guarantors' independent
accountants, in the customary form and covering matters of the
type customarily covered in comfort letters to underwriters in
connection with primary underwritten offerings, and affirming
the matters set forth in the comfort letters delivered
pursuant to Section 8 of the Purchase Agreement, without
exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or
resale pursuant to any Shelf Registration Statement the
indemnification provisions and procedures of Section 8 hereof with
respect to all parties to be indemnified pursuant to said Section;
and
(C) deliver such other documents and certificates as may be
reasonably requested by the selling Holders, the underwriter(s), if
any, and Restricted Broker Dealers, if any, to evidence compliance
with clause (A) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the
Company and the Guarantors pursuant to this clause (x).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any
time the representations and warranties of the Company and the Guarantors
contemplated in (A)(1) above cease to be true and correct, the Company
shall so advise the underwriter(s), if any, the selling Holders and each
Restricted Broker-Dealer promptly and if requested by such Persons, shall
confirm such advice in writing;
(xi) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective 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 or underwriter(s), if
any, may 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 the Company and the Guarantors shall not 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;
(xii) issue, upon the request of any Holder of Series A Notes
covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to
the aggregate principal amount of Series A Notes surrendered to the
Company by such Holder in exchange therefor or being sold by such Holder;
such Series B Notes to be registered in the name of such Holder or in the
name of the purchaser(s) of such
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Notes, as the case may be; in return, the Series A Notes held by such
Holder shall be surrendered to the Company for cancellation;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriter(s), if
any, 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 Holders or the underwriter(s),
if any, may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
(xiv) 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 or
the underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xi)
above;
(xv) 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;
(xvi) 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;
(xvii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of
the NASD, and use their respective best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies
or authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xviii) 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);
(xix) 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 of Notes to effect such changes to the Indenture as
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may be required for such Indenture to be so qualified in accordance with
the terms of the TIA; and execute and use their respective 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
(xx) 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)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(C) or (D) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the applicable Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 6(c)(xv)
hereof, or until it is advised in writing by the Company 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 (the
"Advice"). If so directed by the Company, each Holder will deliver to the
Company (at the Company's 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 either such
notice. In the event the Company shall give any such 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 the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date when
each selling Holder covered by such Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xv) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by the Initial Purchasers or any Holder with the NASD (and, if applicable,
the fees and expenses of any "qualified independent underwriter") and its
counsel that may be required by the rules and regulations of the NASD); (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 Series B 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 Company and the Guarantors and the Holders of
Transfer Restricted Securities (subject to the provisions of Section 7(b)
below); (v) all application and filing fees in connection with listing the Notes
on a national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting
14
<PAGE>
duties), the expenses of any annual audit and the fees and expenses of any
Person, including special experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors agree, jointly and severally, to
indemnify and hold harmless (i) each Holder and (ii) each Person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the Persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any Person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "INDEMNIFIED HOLDER"), to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including without limitation and
as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to any Indemnified Holder) directly or
indirectly caused by, related to, based upon, arising out of or in connection
with 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), or 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 expenses are caused by an untrue statement or omission
or alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to any of the Holders furnished in writing
to the Company and the Guarantors by any of the Holders expressly for use
therein; PROVIDED, HOWEVER, that the Company and the Guarantors shall not be
required to indemnify any such Person if such untrue statement or omission or
alleged untrue statement or omission was contained or made in any preliminary
prospectus and corrected in the Prospectus or any amendment or supplement
thereto and the Prospectus does not contain any other untrue statement or
omission or alleged untrue statement or omission of a material fact that was the
subject matter of the related proceeding and any such loss, liability, claim,
damage or expense suffered or incurred by the Indemnified Holder resulted from
any action, claim or suit by any Person who purchased Transfer Restricted
Securities or Series B Notes which are the subject thereof from such Indemnified
Holder and it is established in the related proceeding that such Indemnified
Holder failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Transfer Restricted Securities or Series B Notes sold to such Person if
required by applicable law, unless such failure to deliver or provide a copy of
the Prospectus (as amended or supplemented) was a result of noncompliance by the
Company or any Guarantor with Section 6 of this Agreement.
15
<PAGE>
In case any action or proceeding (including any governmental or regulatory
investigation or proceeding) shall be brought or asserted against any of the
Indemnified Holders with respect to which indemnity may be sought against the
Company or any Guarantor, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company in
writing (PROVIDED, that the failure to give such notice shall not relieve the
Company and such Guarantor of their obligations pursuant to this Agreement,
unless and only to the extent that such failure directly results in the loss or
compromise of any material rights or defenses by the Company and such Guarantor
and the Company and such Guarantor were not otherwise aware of such action or
claim). In such event, the Company and such Guarantor shall retain counsel
reasonably satisfactory to the Indemnified Holders to represent the Indemnified
Holders and any others the Company and such Guarantor may reasonably designate
in such proceeding and shall pay the reasonable fees and expenses actually
incurred by such counsel related to such proceeding. The Company and such
Guarantor shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for such Indemnified
Holders, which firm shall be designated by the Holders. The Company and the
Guarantors shall be liable for any settlement of any such action or proceeding
effected with the Company's prior written consent, which consent shall not be
withheld unreasonably, and the Company and the Guarantors, jointly and
severally, agree to indemnify and hold harmless each Indemnified Holder from and
against any loss, claim, damage, liability or expense by reason of any
settlement of any action effected with the written consent of the Company. The
Company and the Guarantors shall not, without the prior written consent of each
Indemnified Holder, which shall not be unreasonably withheld, settle or
compromise or consent to the entry of judgment in or otherwise seek to terminate
any pending or threatened action, claim, litigation or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
any Indemnified Holder is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Holder from all liability arising out of such action, claim, litigation or
proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and each Guarantor, and
their respective directors, officers, and any Person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company
or the Guarantors, and the respective officers, directors, partners, employees,
representatives and agents of each such Person, to the same extent as the
foregoing indemnity from the Company and the Guarantors to each of the
Indemnified Holders, but only with respect to claims and actions based on
information relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement, preliminary prospectus or
Prospectus (or any amendment or supplement thereto). In case any action or
proceeding shall be brought against the Company or any Guarantor or its
directors or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Transfer Restricted Securities, such
Holder shall have the rights and duties given the Company or such Guarantor, and
the Company or such Guarantor, such directors or officers or such controlling
person shall have the rights and duties given to each Holder by the preceding
paragraph. The liability of any Holder under this paragraph shall in no event
exceed the proceeds received by such Holder from sales of Transfer Restricted
Securities or Series B Notes giving rise to such obligations.
(c) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party under Section 8(a) or Section 8(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
16
<PAGE>
applicable 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 expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and the Holders, on the other hand,
from their sale of Transfer Restricted Securities or if such allocation is not
permitted by applicable law, the relative fault of the Company and the
Guarantors, on the one hand, and of the Indemnified Holder, on the other hand,
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors on the one hand and the Indemnified Holders on the other shall be
deemed to be in the same proportion as the total proceeds from the offering (net
of discounts and commissions but before deducting expenses) of the Notes
received by the Company bears to the total proceeds received by such Indemnified
Holder from the sale to Transfer Restricted Securities or Series B Notes, as the
case may be. The relative fault of the Company and the Guarantors, on the one
hand, and of the Indemnified 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 the Company or such Guarantor or by the
Indemnified Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission and
any other equitable consideration appropriate in the circumstances. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses 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 Company and the Guarantors, and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 8(c) 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 expenses 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 such action or claim. Notwithstanding the
provisions of this Section 8, no Holder or its related Indemnified Holders 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 its
Transfer Restricted Securities pursuant to a Registration Statement exceeds 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 Series A Notes held by each of
the Holders hereunder and not joint.
SECTION 9. RULE 144A
The Company and each Guarantor hereby agrees with each Holder, for so long
as any Transfer Restricted Securities remain outstanding and during any period
in which the Company or such Guarantor is not subject to Section 13 or 15(d) of
the Securities Exchange Act, to make available, upon request of any Holder of
Transfer Restricted
17
<PAGE>
Securities, to any 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.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment bankers
and manager or managers for any Underwritten Offering that will administer such
offering will be selected by the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities included in such offering and
reasonably acceptable to the Company. Such investment bankers and managers are
referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) REMEDIES. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture, the Purchase Agreement or granted by
law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company and the
Guarantors agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by them of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Neither the Company nor any 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 conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not in any way conflict with and are
not inconsistent with the rights granted to the holders of the Company's or any
Guarantor's securities under any agreement in effect on the date hereof.
(c) ADJUSTMENTS AFFECTING THE NOTES. The Company and the Guarantors will
not take any action, or voluntarily permit any change to occur, with respect to
the Notes that would materially and adversely affect the ability of the Holders
to Consummate any Exchange Offer.
(d) 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) the consent of the Company is
obtained, which shall not be unreasonably withheld, (ii) in the case of Section
5 hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (iii) in the
case of all other
18
<PAGE>
provisions hereof, the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
securities are being tendered pursuant to the Exchange Offer and that does not
affect directly or indirectly the rights of other Holders whose 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.
(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 Company or any Guarantor:
Berry Plastics Corporation
101 Oakley Street
P.O. Box 959
Evansville, Indiana 47710-0959
Telecopier No.: (812) 421-9604
Attention: Martin R. Imbler
With a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 408-2420
Attention: Michael Joseph O'Brien, Esq.
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 of Transfer Restricted Securities; PROVIDED, HOWEVER, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities directly from such Holder.
19
<PAGE>
(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, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(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 and the other agreements referenced
herein are 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.
(l) UNDERWRITING AGREEMENT. Notwithstanding the provisions of Section 6
hereof, in the event of a Shelf Registration pursuant to Section 4 hereof, to
the extent that the Holders of Transfer Restricted Securities shall enter into
an underwriting or similar agreement, which agreement contains provisions
covering one or more issues addressed in such Section with substantially similar
effect, the provisions contained in such Sections addressing such issue or
issues shall be of no force or effect with respect to the registration of
securities being effected in connection with such underwriting or similar
agreement.
(m) TERMINATION. This Agreement shall terminate and be of no further force
or effect when there shall not be any Transfer Restricted Securities, except
that the provisions of Section 5, 7, 8 and 12 shall survive any such
termination.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
BERRY PLASTICS CORPORATION
By:_________________________________
Name:
Title:
BPC HOLDING CORPORATION
By:_________________________________
Name:
Title:
BERRY PLASTICS ACQUISITION CORPORATION
By:_________________________________
Name:
Title:
BERRY IOWA CORPORATION
By:_________________________________
Name:
Title:
BERRY STERLING CORPORATION
By:_________________________________
Name:
Title:
<PAGE>
BERRY TRI-PLAS CORPORATION
By:_________________________________
Name:
Title:
AEROCON, INC.
By:_________________________________
Name:
Title:
PACKERWARE CORPORATION, a Kansas
corporation
By:_________________________________
Name:
Title:
PACKERWARE CORPORATION, a Delaware
corporation
By:_________________________________
Name:
Title:
BERRY PLASTICS DESIGN CORPORATION
By:_________________________________
Name:
Title:
<PAGE>
VENTURE PACKAGING, INC.
By:_________________________________
Name:
Title:
VENTURE PACKAGING MIDWEST, INC., an Ohio
corporation
By:_________________________________
Name:
Title:
VENTURE PACKAGING MIDWEST, INC., a
Delaware corporation
By:_________________________________
Name:
Title:
VENTURE PACKAGING SOUTHEAST, INC., a
South Carolina corporation
By:_________________________________
Name:
Title:
VENTURE PACKAGING SOUTHEAST, INC., a
Delaware corporation
By:_________________________________
Name:
Title:
<PAGE>
NIM HOLDINGS LIMITED
By:_________________________________
Name:
Title:
NORWICH INJECTION MOULDERS LIMITED
By:_________________________________
Name:
Title:
NORWICH ACQUISITION LIMITED
By:_________________________________
Name:
Title:
KNIGHT PLASTICS, INC.
By:_________________________________
Name:
Title:
CPI HOLDING CORPORATION
By:_________________________________
Name:
Title:
<PAGE>
CARDINAL PACKAGING CORPORATION
By:_________________________________
Name:
Title:
<PAGE>
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES INC.
By: Donaldson, Lufkin & Jenrette Securities Corporation
By:_________________________________
Name:
Title:
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected Historical
Financial Data" and "Experts" and to the use of our report dated February 19,
1999 with respect to BPC Holding Corporation and the use of our report dated May
19, 1999 with respect to the Knight Engineering and Plastics Division of
Courtaulds Packaging Inc. in the Registration Statement (Form S-4) and related
Prospectus of Berry Plastics Corporation for the registration of $75,000,000 of
11% Series B Senior Subordinated Notes due 2007.
/s/ Ernst & Young LLP
Indianapolis, Indiana
August 20, 1999
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement, relating to $75,000,000 of
11% Series B Senior Subordinated Notes due 2007, of Berry Plastics Corporation
on Form S-4 of our report dated June 11, 1999 relating to the consolidated
financial statements of CPI Holding, Inc. as of November 30, 1998 and 1997 and
for the years ended November 30, 1998 and 1997 and for the period January 26,
1996 to November 30, 1996 appearing in the Prospectus, which is part of such
Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche LLP
Cleveland, Ohio
August 20, 1999
EXHIBIT 23.4
NORWICH INJECTION MOULDERS LIMITED
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated 22 December 1997 relating to the financial statements of
Norwich Injection Moulders Limited for the years ended October 31, 1997, 1996
and 1995 in the Registration Statement (Form S-4) and related Prospectus of
Berry Plastics Corporation for the registration of $75,000,000 of 11% Series B
Senior Subordinated Notes due 2007.
/s/ Lovewell Blake
Norwich, England
20 August 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JUL-03-1999
<CASH> 2,993
<SECURITIES> 0
<RECEIVABLES> 40,842
<ALLOWANCES> 1,507
<INVENTORY> 32,314
<CURRENT-ASSETS> 78,807
<PP&E> 210,781
<DEPRECIATION> 90,510
<TOTAL-ASSETS> 258,409
<CURRENT-LIABILITIES> 67,036
<BONDS> 300,187
0
16,947
<COMMON> 6
<OTHER-SE> (137,620)
<TOTAL-LIABILITY-AND-EQUITY> 258,409
<SALES> 159,852
<TOTAL-REVENUES> 0
<CGS> 112,782
<TOTAL-COSTS> 138,610
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<INCOME-PRETAX> 2,604
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