AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 17, 1996
REGISTRATION NO. 33-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
BPC HOLDING CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 3089 35-1814673
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
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101 OAKLEY STREET
EVANSVILLE, INDIANA 47710
(812) 424-2904
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
-------------------
MARTIN R. IMBLER
PRESIDENT
BPC HOLDING 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)
-------------------
With a copy to:
LAWRENCE G. GRAEV, ESQ.
O'SULLIVAN GRAEV & KARABELL, LLP
30 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10112
(212) 408-2400
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
-------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE OFFERING PRICE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NOTE (1) FEE
<S> <C> <C> <C> <C>
12 1/2% Series B Senior Secured
Notes due 2006.................... $105,000,000 100% $105,000,000 $36,207
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
-------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
BPC HOLDING CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO REGULATION S-K, ITEM 501(B),
SHOWING LOCATION OF INFORMATION REQUIRED BY ITEMS OF FORM S-4
<TABLE>
<CAPTION>
FORM S-4 LOCATION OR
ITEM NUMBER AND CAPTION CAPTION IN PROSPECTUS
------------------------------------------ ------------------------------------------
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(1) Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.... Facing Page of Registration Statement;
Cross-Reference Sheet; Outside Front
Cover Page of Prospectus
(2) Inside Front and Outside Back Cover Pages
of Prospectus............................. Inside Front and Outside Back Cover Pages
of Prospectus; Available Information
(3) Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............. Summary of Prospectus; Risk Factors;
Selected Historical Financial Data
(4) Terms of the Transaction.................. Summary of Prospectus; The Exchange Offer;
Description of Notes; Certain Federal
Income Tax Considerations
(5) Pro Forma Financial Information........... Summary of Prospectus; Pro Forma Condensed
Consolidated Financial Statements
(6) Material Contacts with the Company Being
Acquired.................................. *
(7) Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters........................ Plan of Distribution
(8) Interests of Named Experts and Counsel.... *
(9) Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... *
(10) Information With Respect to S-3
Registrants *
(11) Incorporation of Certain Information by
Reference................................. *
(12) Information With Respect to S-2 or S-3
Registrants............................... *
(13) Incorporation of Certain Information by
Reference................................. *
(14) Information With Respect to Registrants
Other Than S-2 or S-3 Registrants......... Summary of Prospectus; Risk Factors; Pro
Forma Condensed Consolidated Financial
Statements; Selected Historical
Financial Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Business;
Description of Certain Indebtedness
(15) Information With Respect to S-3
Companies................................. *
(16) Information With Respect to S-2 or S-3
Companies................................. *
(17) Information With Respect to Companies
Other Than S-2 or S-3 Companies........... *
(18) Information if Proxies, Consents or
Authorization Are to be Solicited......... *
(19) Information if Proxies, Consents or
Authorizations Are Not to be Solicited,
or in an Exchange Offer................. Management; Certain Transactions;
Principal Stockholders
</TABLE>
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* Not applicable or answer is in the negative.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 17, 1996
PROSPECTUS
BPC HOLDING CORPORATION
OFFER TO EXCHANGE UP TO $105,000,000 OF ITS
12 1/2% SERIES B SENIOR SECURED NOTES DUE 2006
FOR ANY AND ALL OF ITS OUTSTANDING
12 1/2% SENIOR SECURED NOTES DUE 2006
------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1996, UNLESS EXTENDED.
------------------------
BPC Holding Corporation ("Holding" or the "Issuer") hereby offers, upon the
terms and subject to the conditions set forth in this Prospectus and the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange $1,000 principal amount of 12 1/2% Series B Senior Secured
Notes due 2006 (the "New Notes") of the Issuer for each $1,000 principal amount
of the issued and outstanding 12 1/2% Senior Secured Notes due 2006 (the "Old
Notes," and the Old Notes and the New Notes, collectively, the "Notes" or the
"Senior Notes") of the Issuer from the Holders (as defined) thereof. As of the
date of this Prospectus, there is $105,000,000 aggregate principal amount of the
Old Notes outstanding. The terms of the New Notes are identical in all material
respects to the Old Notes, except that the New Notes have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and therefore
will not bear legends restricting their transfer and will not contain certain
provisions providing for the payment of liquidated damages to the holders of the
Old Notes under certain circumstances relating to the Registration Rights
Agreement (as defined), which provisions will terminate as to all of the Notes
upon the consummation of the Exchange Offer.
Interest on the New Notes will accrue from June 18, 1996 and will be payable
in cash semi-annually in arrears on June 15 and December 15 of each year,
commencing December 15, 1996. No interest will be payable on the Old Notes
accepted for exchange.
The New Notes will be senior secured obligations of Holding and will rank
senior in right of payment to all existing and future subordinated indebtedness
of Holding, including Holding's subordinated guarantee of the Existing Senior
Subordinated Notes (as defined), and pari passu in right of payment with all
senior indebtedness of Holding. The New Notes will be secured by a first
priority pledge of all shares of outstanding capital stock of Berry Plastics
Corporation ("Berry" or the "Company"). Upon the consummation of the Exchange
Offer, the New Notes will be the only outstanding indebtedness of Holding other
than guarantees of certain of Berry's existing indebtedness. Holding has no
operations of its own and holds 100% of the outstanding shares of capital stock
of Berry. Consequently, Holding will be dependent on sales of, and dividends or
distributions on, the stock of Berry held by Holding in order to meet its
obligations under the New Notes, other than interest payments through June 15,
2001. The New Notes will be effectively subordinated to all existing and future
liabilities of Berry and its subsidiaries. As of June 1, 1996, Berry and its
subsidiaries had approximately $134.5 million of total liabilities, including
approximately $113.7 million of indebtedness. See "Description of Senior Notes."
The Old Notes were not registered under the Securities Act in reliance upon
an exemption from the registration requirements thereof. In general, the Old
Notes may not be offered or sold unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act. The New Notes are being offered hereby in order to satisfy
certain obligations of the Issuer contained in the Registration Rights
Agreement. Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties, the Issuer believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold or otherwise
transferred by any holder thereof (other than any such holder that is an
"affiliate" of the Issuer 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 New 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 New Notes and neither
such holder nor any such other person is engaging in or intends to engage in a
distribution of such New Notes. Notwithstanding the foregoing, each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, 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 New Notes received in
exchange for such Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (other than Old Notes acquired directly from the Issuer). The Issuer
has agreed that, for a period of one year after the date of this Prospectus, it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale.
The Old Notes are designated for trading in the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") market. There is no
established trading market for the New Notes. The Issuer does not currently
intend to list the New Notes on any securities exchange or to seek approval for
quotation through any automated quotation system. Accordingly, there can be no
assurance as to the development or liquidity of any market for the New Notes.
The Issuer will not receive any proceeds from the Exchange Offer. The Issuer
will pay all of the expenses incident to the Exchange Offer. Tenders of Old
Notes pursuant to the Exchange Offer may be withdrawn as provided herein at any
time prior to the Expiration Date (as defined). The Exchange Offer is subject to
certain customary conditions.
------------------------
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED
BY HOLDERS PRIOR TO TENDERING OLD 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 , 1996
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
AVAILABLE INFORMATION
The Issuer has filed with the Commission a Registration Statement on Form
S-4 (together with all amendments, exhibits, schedules and supplements thereto,
the "Registration Statement") under the Securities Act with respect to the New
Notes being offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations promulgated by the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document are not necessarily complete. With respect
to each such contract, agreement or other document filed or incorporated by
reference as an exhibit to the Registration Statement, reference is made to such
exhibit for a more complete description of the matter involved, and each such
statement is qualified in its entirety by such reference.
The Registration Statement may be inspected by anyone without charge at the
Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington D.C. 20549, and at the regional offices of the
Commission located at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material may also be obtained at the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of prescribed fees.
The Issuer and the Company are subject to the informational reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports and other information with the
Commission. Such material filed by the Issuer and the Company with the
Commission may be inspected, and copies thereof obtained, at the places, and in
the manner, set forth above.
In the event that the Issuer ceases to be subject to the informational
reporting requirements of the Exchange Act, the Issuer has agreed that, so long
as the Old Notes or the New Notes remain outstanding, it will file with the
Commission and distribute to holders of the Old Notes or the New Notes, as
applicable, copies of (i) 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 Issuer were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to annual information only, a report thereon by
the Issuer's independent public accountants and (ii) all reports that would be
required to be filed with the Commission on Form 8-K if the Issuer were required
to file such reports. The Issuer will also make such reports available to
prospective purchasers of the Old Notes or the New Notes, as applicable,
securities analysts and broker-dealers upon their request. In addition, the
Issuer has agreed that for so long as any of the Old Notes remain outstanding it
will make available to any prospective purchaser of the Old Notes or beneficial
owner of the Old Notes in connection with any sale thereof the information
required by Rule 144A(d)(4) under the Securities Act, until such time as the
Issuer has either exchanged the Old Notes for securities identical in all
material respects which have been registered under the Securities Act or until
such time as the holders thereof have disposed of such Old Notes pursuant to an
effective registration statement filed by the Issuer.
ii
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Issuer and the Company pursuant to Section 15(d)
of the Exchange Act after the date of this Prospectus and prior to the
termination of the Exchange Offer shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing
such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Issuer will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be submitted in writing to the Issuer at 101 Oakley Street, Evansville,
Indiana 47706, Attention: Secretary.
iii
<PAGE>
SUMMARY OF PROSPECTUS
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,
the terms the "Company" and "Berry" refer to Berry Plastics Corporation, its
subsidiaries and their respective operations, and the terms the "Issuer" and
"Holding" refer to BPC Holding Corporation. The fiscal year of Holding and the
Company is the 52 or 53 week period ending on the Saturday closest to December
31. All references in this Prospectus to "fiscal 1991," "fiscal 1992," "fiscal
1993," "fiscal 1994" and "fiscal 1995" refer to the fiscal years of the Company
ended on December 28, 1991, December 26, 1992, January 1, 1994, December 31,
1994 and December 30, 1995, respectively.
THE COMPANY
Berry, a wholly-owned subsidiary of the Issuer, is a leading domestic
manufacturer and marketer of plastic packaging products focused on three key
markets: aerosol overcaps, rigid open-top containers and drink cups. Within each
of these markets, the Company concentrates on manufacturing value-added products
sold to marketers of image-conscious industrial and consumer products that
utilize the Company's proprietary molds, superior color matching abilities and
sophisticated multi-color printing capabilities. The Company believes that it is
the largest supplier of aerosol overcaps in the United States, with an estimated
44% domestic market share in fiscal 1995 and sales of over 1.3 billion overcaps.
Berry also believes that it is the largest domestic supplier of thinwall,
child-resistant, pry-off and polypropylene open top containers. In connection
with a recent acquisition, Berry has utilized its national sales force and
existing molding and printing capacity at multiple-plant locations to become a
leader in the high growth plastic drink cup market, which includes the Company's
innovative 32 ounce and 44 ounce Drive-Thru ("DT") cups, which fit in standard
vehicle cup holders.
In fiscal 1995, the Company had net sales of $140.7 million, of which
aerosol overcaps and containers constituted 31% and 51%, respectively. Drink
cups, a product line acquired in March 1995, accounted for approximately 12% of
total net sales in fiscal 1995. On a pro forma basis after giving effect to the
Tri-Plas Acquisition (as defined), in fiscal 1995 the Issuer had net sales of
approximately $156.4 million. On a historical basis, from the fiscal year ended
September 30, 1990 through fiscal 1995, the Issuer's net sales increased
steadily at a compound annual growth rate of 19.3% per year.
The Company supplies aerosol overcaps for a wide variety of products,
including such well-known brand names as WD-40 lubricant, Rustoleum and
Sherwin-Williams paints, Pam cooking spray, Gillette Foamy and Noxema shaving
creams, Dow Brand's oven cleaner, Lysol disinfectant, Faultless starch and S.C.
Johnson Wax products. Similarly, the Company's containers are used for packaging
a broad spectrum of commercial and consumer products, including Red Devil and
Quikrete building products, McDonald's and Burger King promotional children's
meals, Elmer's glue, Milliken adhesives, Super Bubble chewing gum, Haagen-Dazs
ice cream and Hershey chocolate. The Company's plastic drink cups are sold
primarily to fast food and convenience store chains. Drink cup customers include
McDonald's, Coca-Cola, Burger King, Circle K, Wal-Mart, 7-Eleven and Boston
Market. Berry's customer base is comprised of over 2,000 customers with
operations in a widely diversified range of markets, which reduces the Company's
vulnerability to fluctuations in the overall U.S. economy and mitigates the
effects of cyclicality and seasonality. The Company's top ten customers
accounted for approximately 23% of the Company's fiscal 1995 net sales, and no
customer accounted for more than 4% of net sales. Additionally, the Company
believes it is the single-source or largest supplier of overcaps, containers and
drink cups to a majority of its customers.
Berry's primary business objective is to continue its strong growth trends
in both net sales and operating profitability. In order to accomplish this
objective, the Company is committed to: (i)
<PAGE>
expanding its leading market positions in three key product categories: aerosol
overcaps, open top containers and drink cups; (ii) securing its low cost
position through continued technology investments and productivity gains; and
(iii) seeking selective acquisitions and joint ventures which offer market and
product extension or productivity improvement opportunities.
The Company intends to seek strategic acquisition opportunities as the
highly fragmented plastic packaging industry continues its recent trend of
consolidation. Building its acquisition record demonstrated by the successful
integration of the Mammoth Acquisition, the Sterling Products Acquisition and
the Tri-Plas Acquisition (each as defined)(see "Business--Recent Acquisitions"),
Berry intends to identify and acquire targets which offer market and product
extension or productivity improvement opportunities.
The address for each of Holding and the Company is 101 Oakley Street,
Evansville, Indiana 47710, and the telephone number is (812) 424-2904.
THE TRANSACTION
On June 18, 1996, concurrently with the closing of the offering of the Old
Notes, Holding consummated the Transaction (as defined). BPC Mergerco, Inc.
("Mergerco") 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 (as defined), each of International, CVCA and certain other
equity investors subscribed for shares of common stock of Mergerco. Pursuant to
the terms of a Preferred Stock Purchase Agreement (as defined), CVCA and an
additional institutional investor purchased shares of preferred stock of
Mergerco and warrants to purchase shares of common stock of Mergerco.
Immediately after the purchase of the common stock, the preferred stock and the
warrants of Mergerco, Mergerco merged with and into Holding, with Holding being
the surviving corporation. Upon the consummation of the merger: (i) each share
of the Class A Common Stock and Class B Common Stock of Holding and certain
privately-held warrants exercisable for such common stock were converted into
the right to receive cash; (ii) all other shares 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; and (iii) the holders of
the warrants issued in connection with the issuance of Berry's 12 1/4% Senior
Subordinated Notes due 2004 (the "Existing Senior Subordinated 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. As used herein, the purchase and sale of the common stock, the
preferred stock and the warrants of Mergerco and the merger of Mergerco with and
into Holding are collectively referred to as the "Transaction." See "Description
of Common Stock" and "Description of Preferred Stock and Warrants."
The aggregate consideration paid to the holders of the Class A and Class B
Common Stock, the privately-held warrants to purchase such common stock of
Holding and the warrants issued in connection with the Existing Senior
Subordinated Notes was approximately $119.2 million in cash. In order to finance
the Transaction, including the payment of related fees and expenses: (i) Holding
issued the Old Notes for net proceeds 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 Senior Notes); (ii)
International, CVCA, members of management and certain other equity investors
made equity and rollover investments in the aggregate amount of $70.0 million
(which amount included rollover investments of approximately $7.1 million by
certain members of management and $3.0 million by an existing institutional
shareholder); and (iii) Holding received an aggregate of approximately $0.9
million in connection with the exercise of certain management stock options. See
"The Transaction."
2
<PAGE>
THE EXCHANGE OFFER
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REGISTRATION RIGHTS AGREEMENT........ The Old Notes were sold by the Issuer on June 18,
1996 to Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser"), who placed
the Old Notes with institutional investors. In
connection therewith, the Issuer and the Initial
Purchaser executed and delivered for the benefit
of the holders of the Old Notes a registration
rights agreement (the "Registration Rights
Agreement") providing, among other things, for the
Exchange Offer.
THE EXCHANGE OFFER................... New Notes are being offered in exchange for a like
principal amount of Old Notes. As of the date
hereof, $105,000,000 aggregate principal amount of
Old Notes are outstanding. The Issuer will issue
the New Notes to Holders promptly following the
Expiration Date (as defined). See "Risk
Factors--Consequences of Failure to Exchange."
EXPIRATION DATE...................... 5:00 p.m., New York City time, on , 1996,
unless the Exchange Offer is extended as provided
herein, in which case the term "Expiration Date"
means the latest date and time to which the
Exchange Offer is extended.
INTEREST............................. Each New Note will bear interest from June 18, 1996,
the date of original issuance of the Old Notes. No
interest will be paid on the Old Notes accepted
for exchange.
CONDITIONS TO THE EXCHANGE OFFER..... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Issuer. The
Issuer reserves 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 OLD NOTES... Each Holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together
with the Old 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, each Holder
will represent to the Issuer, among other things,
that (i) the New Notes acquired pursuant to the
Exchange Offer by the Holder and any beneficial
owners of Old Notes are being obtained in the
ordinary course of business of the person
receiving such New Notes, (ii) neither the Holder
nor such beneficial owner has an arrangement with
any person to participate in the distribution of
such New Notes, (iii) neither the Holder nor such
beneficial owner nor any such other person is
engaging in or intends to
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
engage in a distribution of such New Notes and
(iv) neither the Holder nor such beneficial owner
is an "affiliate," as defined under Rule 405
promulgated under the Securities Act, of the
Issuer. Each broker-dealer that receives New Notes
for its own account in exchange for Old Notes,
where such Old Notes were acquired by such
broker-dealer as a result of market-making
activities or other trading activities (other than
Old Notes acquired directly from the Issuer), 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 New 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............................. Any beneficial owner whose Old Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered Holder
promptly and instruct such registered Holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such
beneficial owner's own behalf, such beneficial
owner must, prior to completing and executing the
Letter of Transmittal and delivering his Old
Notes, either make appropriate arrangements to
register ownership of the Old Notes in such
beneficial owner's name or obtain a properly
completed bond power from the registered Holder.
The transfer of registered ownership may take
considerable time. See "The Exchange
Offer--Procedures for Tendering."
GUARANTEED DELIVERY PROCEDURES....... Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date must
tender their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS.................... Tenders may be withdrawn as provided herein at any
time prior to 5:00 p.m., New York City time, on the
Expiration Date. See "The Exchange
Offer--Withdrawal of Tenders."
ACCEPTANCE OF OLD NOTES AND DELIVERY
OF NEW NOTES....................... The Issuer will accept for exchange any and all Old
Notes which are properly tendered in the Exchange
Offer prior
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4
<PAGE>
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<S> <C>
to 5:00 p.m., New York City time, on the
Expiration Date. The New Notes issued pursuant to
the Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange
Offer--Terms of the Exchange Offer."
EXCHANGE AGENT....................... First Trust of New York, National Association, 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 the Issuer from
the exchange pursuant to the Exchange Offer.
FEDERAL INCOME TAX CONSEQUENCES...... The exchange of Old Notes for New Notes will not be
a taxable exchange for Federal income tax purposes.
See "Certain Federal Income Tax Considerations."
CONSEQUENCES OF FAILURE TO
EXCHANGE............................. Holders of Old Notes who do not exchange their Old
Notes for New Notes pursuant to the Exchange Offer
will continue to be subject to the restrictions on
transfer of such Old Notes as set forth in the
legend thereon as a consequence of the issuance of
the Old 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, Old Notes may
not be offered or sold unless registered under the
Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the
Securities Act and applicable state securities
laws.
</TABLE>
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<PAGE>
SUMMARY DESCRIPTION OF THE NEW NOTES
The Exchange Offer applies to $105,000,000 aggregate principal amount of Old
Notes. The terms of the New Notes are identical in all material respects to the
Old Notes, except that the New 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 the payment of liquidated damages
to the holders of the Old 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 New Notes will evidence
the same debt as the Old Notes and, except as set forth in the immediately
preceding sentence, will be entitled to the benefits of the Indenture, under
which both the Old Notes were, and the New Notes will be, issued. See
"Description of Senior Notes."
<TABLE>
<S> <C>
THE NEW NOTES........................ $105.0 million in aggregate principal amount at
maturity of 12 1/2% Series B Senior Secured Notes
due 2006.
MATURITY............................. December 15, 2006.
INTEREST............................. Except as provided below, interest on the New Notes
will be payable in cash semiannually in arrears on
June 15 and December 15 of each year, commencing
December 15, 1996. In addition, from December 15,
1999 until June 15, 2001, Holding may, at its
option, pay interest, at an increased interest
rate of .75% per annum, in additional New Notes
valued at 100% of the principal amount thereof.
SECURITY............................. The New Notes will be secured by a first priority
lien on all of the capital stock of Berry. In
addition, a portion of the net proceeds of the
offering of the Old Notes (the "Offering") were
used to purchase a portfolio of Marketable
Securities (as defined) that are pledged as
security for payment of interest on the Senior
Notes through June 15, 1999, and, under certain
circumstances, as security for repayment of
principal of the Senior Notes.
OPTIONAL REDEMPTION.................. The New Notes may be redeemed at the option of
Holding, in whole or in part, on or after June 15,
1999 at a premium above par as set forth herein,
and declining to par in 2004, plus accrued and
unpaid interest, if any, through the redemption
date.
In the event that Holding consummates a Strategic
Equity Sale (as defined) prior to June 15, 1999,
Holding may, at its option, redeem up to 33 1/3%
of the aggregate principal amount at maturity of
the Senior Notes with the net proceeds therefrom
at a price equal to 112.50% of the principal
amount thereof plus accrued and unpaid interest,
if any, to the date of redemption; provided,
however, that at least 66 2/3% of the aggregate
principal amount at maturity of the Senior Notes
remain outstanding following such redemption.
CHANGE OF CONTROL.................... In the event of a Change of Control (as defined),
the holders of the New Notes will have the right to
require Holding
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
to purchase all Notes at a price equal to 101% of
the aggregate principal amount thereof, plus
accrued and unpaid interest, if any, to the date
of repurchase.
RANKING.............................. The New Notes will be senior secured obligations of
Holding. The New Notes will rank pari passu in
right of payment with all existing and future
senior Indebtedness (as defined) of Holding and
senior in right of payment to all future
subordinated Indebtedness of Holding. The New
Notes are not guaranteed by any subsidiary of
Holding and as a result, will be structurally
subordinated to the indebtedness and other
obligations of Holding's subsidiaries. With
certain limited exceptions, the Indenture
prohibits the incurrence of additional
indebtedness by Holding.
COVENANTS............................ The indenture pursuant to which the Old Notes were,
and the New Notes will, be issued (the "Indenture")
contains certain covenants that, among other
things, limit the ability of Holding and its
subsidiaries to incur additional Indebtedness and
issue preferred stock, pay dividends or make other
distributions, repurchase Equity Interests (as
defined) or subordinated Indebtedness, create
certain liens, enter into certain transactions
with affiliates, sell assets of Holding or its
subsidiaries, issue or sell Equity Interests of
Holding's subsidiaries or enter into certain
mergers and consolidations. In addition, under
certain circumstances, Holding will be required to
offer to purchase Senior Notes at a price equal to
101% of the principal amount thereof outstanding,
plus accrued and unpaid interest, if any, to the
date of purchase, with the proceeds of certain
Asset Sales (as defined). See "Description of
Senior Notes--Certain Covenants."
</TABLE>
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<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following table sets forth (i) summary consolidated historical financial
data of Holding and its subsidiaries and (ii) pro forma summary financial data
of Holding and its subsidiaries which gives effect to (A) the Offering and (B)
the Offering and the Tri-Plas Acquisition, as of January 1, 1995 for operations
statement data and other data for fiscal 1995; as of April 2, 1995 for
operations statement data and other data for the last 12 months ended March 30,
1996; and March 30, 1996 for balance sheet data. The following financial data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Pro Forma Condensed
Consolidated Financial Statements," "Capitalization," and the consolidated
financial statements of Holding and its subsidiaries and the accompanying notes
thereto, which information is included elsewhere herein.
<TABLE>
<CAPTION>
PRO FORMA
TWELVE
PRO FORMA MONTHS
FISCAL YEAR ENDED ENDED
------------------------------- DECEMBER 30, MARCH 30,
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
OPERATIONS STATEMENT DATA:
Net sales.................................. $87,830 $106,141 $140,681 $156,366 $154,809
Cost of goods sold......................... 65,652 73,997 102,484 115,068 114,568
------- -------- -------- ------------ ---------
Gross profit............................... 22,178 32,144 38,197 41,298 40,241
Operating expenses(a)...................... 13,222 15,044 16,803 18,081 18,685
------- -------- -------- ------------ ---------
Operating income........................... 8,956 17,100 21,394 23,217 21,556
Other expenses(b).......................... 4,005 300 994 994 873
Interest expense, net(c)................... 6,582 10,972 13,389 25,339 25,330
------- -------- -------- ------------ ---------
Income (loss) before income taxes
and extraordinary charge................. (1,631) 5,828 7,011 (3,116) (4,647 )
Net income (loss).......................... $(1,703) $ 2,165(d) $ 6,333 $ (3,211) $ (3,882 )
------- -------- -------- ------------ ---------
------- -------- -------- ------------ ---------
OTHER DATA:
EBITDA(e).................................. $20,840 $ 25,683 $ 30,716 $ 33,235 $ 31,829
Depreciation and amortization(f)........... 11,198 8,176 9,536 10,233 10,493
Capital expenditures....................... 5,586 9,118 11,247 11,247 11,836
Net cash interest expense(g)............... 4,966 9,794 12,439 23,909 24,118
Ratio of earnings to fixed charges......... (h) 1.5x 1.4x (h) (h )
CASH FLOWS PROVIDED BY (USED FOR)(I):
Operating Activities....................... $14,110 $ 15,555 $ 12,970 n/a n/a
Investing Activities....................... (3,821) (9,495) (25,385) n/a n/a
Financing Activities....................... (9,859) 2,184 11,124 n/a n/a
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 30, 1996
-----------------------
HISTORICAL PRO FORMA
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................................. $ 5,047 $ 5,238
Marketable securities (available for payment of interest on Senior
Notes).................................................................. -- 35,600
Working capital........................................................ 13,408 14,599
Total assets........................................................... 104,661 145,152
Total long-term debt................................................... 111,646 216,646
Stockholders' equity (deficit)......................................... (31,657) (96,166)
</TABLE>
- ------------
<TABLE>
<S> <C>
(a) Operating expenses include selling, general and administrative expenses, amortization of
intangibles, research and development expenses and management fees. Operating expenses
also include non-cash charges (credits) for the effect of the market valuation
adjustments for management stock options and warrants as follows: 1993, $605; 1994,
$358; 1995, $(236).
</TABLE>
(Footnotes continued on following page)
8
<PAGE>
(Footnotes continued from preceding page)
<TABLE>
<S> <C>
(b) Other expenses include in fiscal 1993, $3,675 of non-recurring costs associated
principally with the shut-down and sale of a facility acquired in the Mammoth
Acquisition and $330 of costs related to an unsuccessful acquisition; in fiscal 1994, a
$184 loss on disposal of property and equipment and $116 in unsuccessful acquisition
costs; and in fiscal 1995 a $127 loss on disposal of property and equipment, $473 of
costs related to unsuccessful acquisition costs, $224 of costs related to the Tri-Plas
Acquisition and $170 of costs related to the Sterling Products Acquisition.
(c) Interest expense is stated net of interest income of $25, $580 and $642 earned in each
of fiscal 1993, 1994 and 1995, respectively, and of $2,634 and $2,463 on a pro forma
basis for the year ended December 30, 1995, and the twelve months ended March 30, 1996,
respectively.
(d) Includes extraordinary charge on extinguishment of debt of $3,652 in connection with the
issuance of the Existing Senior Subordinated Notes.
(e) EBITDA is defined as income (loss) before income taxes, net interest expense,
depreciation and amortization of intangibles adjusted to exclude (i) non-cash charges
relating to amortization of restricted stock awards and market value adjustments related
to stock options and (ii) other non-recurring or "one-time" expenses as described in
note (b) above. EBITDA is presented to facilitate an investor's understanding of the
covenants in the Indenture. EBITDA should not be considered by investors as an
alternative to net income (loss) as an indicator of operating performance or to cash
flows as a measure of liquidity.
(f) Depreciation and amortization excludes non-cash amortization of deferred financing fees
and debt discount amortization which are included in interest expense.
(g) Does not include amortization of deferred financing fees or debt discount.
(h) Earnings were inadequate to cover fixed charges by the amount of $1,794 for fiscal 1995,
and by $3,466 and $4,954 on a pro forma basis for the year ended December 30, 1995 and
the twelve months ended March 30, 1996, respectively. For purposes of this computation,
earnings consist of (i) income (loss) before income taxes, plus (ii) fixed charges
consisting of interest on indebtedness (including amortization of deferred financing
fees), plus (iii) that portion of lease rental expense representative of the interest
factor.
(i) Cash flows from operating, investing and financing activities will be significantly
affected by the Offering. See "Consolidated Statements of Cash Flows" of Holding and its
subsidiaries and the notes included elsewhere herein and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
</TABLE>
9
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following factors in
addition to the other information set forth in this Prospectus before making a
decision to tender their Old Notes in the Exchange Offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange the Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old 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 Old Notes may not be
offered or sold unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Issuer does not currently anticipate that
it will register the Old Notes under the Securities Act. Based on
interpretations by the staff of the Commission set forth in no-action letters
issued to third parties, the Issuer believes that the New Notes issued pursuant
to the Exchange Offer in exchange for Old Notes may be offered for resale,
resold or otherwise transferred by any holder thereof (other than any such
holder that is an "affiliate" of the Issuer 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 New
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
New Notes and neither such holder nor any such other person is engaging in or
intends to engage in a distribution of such New Notes. Notwithstanding the
foregoing, each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, 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 New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities (other than Old Notes acquired directly
from the Issuer). The Issuer has agreed that, for a period of one year from the
date of this Prospectus, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution." However, the ability of any Holder to resell the New Notes is
subject to applicable state securities laws as described in "--Blue Sky
Restrictions on Resale of New Notes."
NECESSITY TO COMPLY WITH EXCHANGE OFFER PROCEDURES
To participate in the Exchange Offer, and to avoid the restrictions on
transfer of the Old Notes, Holders of Old Notes must transmit a properly
completed Letter of Transmittal, including all other documents required by such
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 such Old Notes must be received
by the Exchange Agent along with the Letter of Transmittal or (ii) a timely
confirmation of a book-entry transfer of such Old 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 described herein, must be
received by the Exchange Agent prior to the Expiration Date or (iii) the Holder
must comply with the guaranteed delivery procedures described herein. See "The
Exchange Offer."
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<PAGE>
BLUE SKY RESTRICTIONS ON RESALE OF NEW NOTES
In order to comply with the securities laws of certain jurisdictions, the
New Notes may not be offered or resold by any Holder 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. The Issuer does not currently intend to register
or qualify the resale of the New 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.
HOLDING COMPANY STRUCTURE; SIGNIFICANT LIMITATIONS ON ACCESS TO SUBSIDIARIES'
CASH FLOW
The New Notes will be obligations exclusively of the Issuer. The Issuer is a
holding company with no material assets other than the capital stock of Berry
and the Escrow Account (as defined). Because the operations of the Issuer are
conducted through Berry and its subsidiaries, the cash flow of the Issuer and
the consequent ability to service its indebtedness, including the New Notes, are
dependent upon the earnings of Berry and such subsidiaries and the distribution
of those earnings to the Issuer, or upon loans or other payments of funds made
by Berry or such subsidiaries to the Issuer. In addition, debt agreements
applicable to Berry and its subsidiaries, including the Revolving Credit
Facility (as defined) and the Indenture (the "Senior Subordinated Notes
Indenture") relating to Berry's 12 1/4% Senior Subordinated Notes due 2004 (the
"Existing Senior Subordinated Notes"), impose significant restrictions that
affect, among other things, the ability of Berry and its subsidiaries to pay
dividends or make other distributions or loans to the Issuer. Particularly, the
Revolving Credit Facility does not permit Berry to pay any dividend or make any
distribution of funds to the Issuer to satisfy interest and other obligations on
the New Notes. In general, the Senior Subordinated Notes Indenture prohibits the
payment of any dividend by Berry to Holding unless Berry meets certain cash flow
interest coverage ratios and the amount of such dividend (together with any
other dividends previously paid, including the $50 million paid in April 1994)
is less than the sum of 50% of the aggregate net income of Berry since the
issuance of the Existing Senior Subordinated Notes plus the amount of cash
equity proceeds received by Berry. Based upon historical operating results,
without a substantial increase in the operating results of Berry, management
anticipates that it will be unable to generate sufficient cash flow to permit a
dividend to Holding in an amount sufficient to meet Holding's interest payment
obligations under the New Notes which begin after the depletion of the Escrow
Account and the expiration of Holding's option to pay interest by issuing
additional Notes. In that event, management anticipates that such obligations
will only be met by refinancing the Existing Senior Subordinated Notes or
raising capital through equity offerings. No assurance can be given that a
refinancing or equity offering can be consummated on terms acceptable to the
Issuer and Berry, if at all. See "Description of Certain Indebtedness" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
SUBORDINATION TO SUBSIDIARY LIABILITIES
Because the Issuer is a holding company, substantially all of the operating
assets are owned by Berry and its subsidiaries, effectively subordinating the
Notes to all existing and future liabilities of Berry and its subsidiaries,
including the Existing Senior Subordinated Notes, indebtedness outstanding under
the Revolving Credit Facility, trade payables, preferred stock, lease
obligations and guarantees. Therefore, the Issuer's rights and the rights of its
creditors, including the holders of the New Notes, to participate in the assets
of Berry or any of its subsidiaries upon the liquidation or recapitalization of
Berry or its subsidiaries will be subject to the prior claims of Berry's or its
subsidiaries' creditors, except to the extent that the Issuer may itself be a
creditor with recognized claims against Berry or its subsidiaries, as the case
may be, in which case the claims of the Issuer would still be effectively
subordinate to any security interests in or mortgages or other liens on the
assets of Berry or its
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<PAGE>
subsidiaries and would be subordinate to any indebtedness of Berry or its
subsidiaries senior to that held by the Issuer.
SIGNIFICANT LEVERAGE OF BERRY AND HOLDING
As of March 30, 1996, on a pro forma basis after giving effect to the
Transaction and the financing thereof, the Senior Notes would have represented
the Issuer's only outstanding indebtedness, other than the Issuer's guarantees
of the Revolving Credit Facility, the Existing Senior Subordinated Notes and
certain other obligations of Berry. The outstanding indebtedness of the Issuer
and Berry on a consolidated basis would have consisted primarily of $100.0
million aggregate principal amount of the Existing Senior Subordinated Notes,
$5.5 million of the Nevada Industrial Revenue Bonds (the "Nevada Bonds") and
$5.4 million of the Iowa Industrial Revenue Bonds (the "Iowa Bonds"), and Berry
would have been able to draw $15.7 million under the Revolving Credit Facility,
subject to a borrowing base and other requirements. Although the Revolving
Credit Facility and the Senior Subordinated Notes Indenture impose limitations
on the incurrence of additional indebtedness, Berry and its subsidiaries will
retain the ability to incur substantial additional indebtedness. See
"Description of Certain Indebtedness." As of December 30, 1995, on a
consolidated basis the Issuer and Berry had an aggregate of $111.7 million of
outstanding indebtedness and stockholders' deficit of $32.5 million.
Since the ability of the Issuer to service the New Notes is dependent on the
earnings of Berry and its subsidiaries, the high degree of leverage could have
important consequences to holders of the New Notes, including, but not limited
to, the following: (i) a substantial portion of Berry's cash flow from
operations must be dedicated to the payment of principal and interest on its
indebtedness, thereby reducing the funds available to Berry for other purposes;
(ii) Berry's ability to obtain additional debt financing in the future for
working capital, capital expenditures, acquisitions, general corporate purposes
or other purposes may be impaired; (iii) certain of Berry's borrowings will be
at variable rates of interest, which will expose Berry to the risk of higher
interest rates; (iv) the indebtedness outstanding under the Revolving Credit
Facility is secured by substantially all of the assets of Berry and matures
prior to the maturity of the New Notes; (v) the Existing Senior Subordinated
Notes mature prior to the New Notes; (vi) Berry is substantially more leveraged
than certain of its competitors, which may place Berry at a competitive
disadvantage, particularly in light of its acquisition strategy; and (vii)
Berry's degree of leverage may hinder its ability to adjust rapidly to changing
market conditions and could make it more vulnerable in the event of a downturn
in general economic conditions or its business.
The Issuer's ability to pay principal and interest on the New Notes will
depend on Berry's financial and operating performance, which in turn are subject
to prevailing economic conditions and to certain financial, business and other
factors beyond its control. However, if Berry cannot generate sufficient cash
flow from operations to meet its obligations, then it may be forced to take
actions such as reducing or delaying capital expenditures, selling assets,
restructuring or refinancing its indebtedness, or seeking additional equity
capital. There is no assurance that any of these remedies could be effected on
satisfactory terms, if at all. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
COMPANY GROWTH AND RISKS RELATED TO FUTURE ACQUISITIONS
Berry's ability to increase revenues and operating cash flow over time
depends, in part, on its success in consummating future acquisitions upon
satisfactory terms and successfully integrating the acquired companies or assets
into Berry's operations. There can be no assurance that acquisition
opportunities will continue to be available or that if available, such
acquisitions could be consummated on terms acceptable to Berry, or that Berry
would be able to obtain financing on terms that it deems acceptable to
consummate any potential acquisition. See "Business--Business Strategy." In
addition, future acquisitions would place increasing demands on Berry's
management and operational resources. Berry's future performance will depend in
part on its ability to manage expanding operations and to
12
<PAGE>
adapt its operational systems to such expansions. The failure of Berry to
effectively manage its growth, if any, could have a material adverse effect on
Berry's business, financial condition and results of operations.
POSSIBLE ADVERSE EFFECT OF INCREASE IN RESIN PRICES
The primary materials used by Berry in the manufacture of its products are
various plastic resins, which in fiscal 1995 constituted approximately $45.0
million, or 43.4%, of Berry's total cost of goods sold. Accordingly, Berry's
financial performance is materially dependent on its ability to pass through
resin price increases to its customers. Plastic resins are subject to cyclical
price fluctuations, including those arising from supply shortages and as a
result of changes in the prices of natural gas, crude oil and other
petrochemical intermediates from which resins are produced. Although Berry has
been generally able to pass on increases in resin prices to its customers in the
past, no assurance can be given that this trend will continue or that a
significant increase in resin prices would not have a material adverse effect on
the Issuer's 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."
RELIANCE ON CERTAIN SUPPLIER
Berry purchases approximately 54% of its total resin requirements (in U.S.
dollars) from Dow Chemical Company ("Dow") pursuant to purchase orders issued
from time to time by Berry. Berry has a long-standing relationship with Dow, and
has worked closely with Dow to develop resins which yield maximum performance
from Berry's equipment. There can be no assurances, however, that Dow will
continue to be a supplier to Berry in the future. In the event that this
relationship terminates, however, Berry believes that alternative sources are
available for its resin requirements and could be utilized without materially
impacting its costs, deliveries or production efficiency.
CONTROLLING STOCKHOLDERS; MANAGEMENT STOCKHOLDERS
International owns approximately 51% of Holding's outstanding voting capital
stock on a fully-diluted basis. As majority stockholder, International is able,
subject to certain contractual limitations, to determine the outcome of any
corporate transaction or other matter submitted to the stockholders of Holding
or Berry for approval, including mergers, consolidations and the sale of Berry
or the Issuer or all or substantially all of Berry's assets. Atlantic Equity
Associates International II, L.P., a Delaware limited partnership ("AEA II"), is
the sole general partner of International. Roberto Buaron, the Chairman and a
director of the Issuer and Berry, is the sole shareholder of Buaron Holdings
Ltd. ("BHL"). BHL is the managing general partner of AEA II. Woland Limited, a
Cayman Islands corporation ("Woland") and indirect wholly owned subsidiary of
Akros Finanziaria, S.p.A., an Italian merchant bank based in Milan, Italy
("Akros"), is also a general partner of AEA II and shares with BHL voting and/or
investment power over investments made by International. Through their
respective affiliations with BHL, Woland and AEA II, Mr. Buaron and Akros
control the sole general partner of International and therefore have the
authority to control International's actions with respect to the capital stock
of Holding that it owns. In addition, pursuant to the terms of the New
Stockholders Agreement (as defined), International and Mr. Buaron together have
the ability to elect a majority of Holding's board of directors. See "Principal
Stockholders" and "Certain Transactions--Stockholders Agreements."
In addition to the shares of capital stock owned by International, members
of Berry's management own approximately 8% of Holding's outstanding voting
capital stock. See "Management" and "Principal Stockholders."
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COMPETITION
Most of Berry's products are sold in highly competitive markets in the
United States. Berry competes with a significant number of companies of varying
sizes, 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. A number of Berry's competitors have financial and other
resources that are substantially greater than those of Berry. Competitive
pressures or other factors could cause Berry's products to lose market share or
could result in significant price erosion, either of which would have a material
adverse effect on the Issuer's results of operations. See "Business."
ENVIRONMENTAL MATTERS
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. The Issuer is 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 produced by Berry. If such prohibitions or restrictions were
widely adopted, such regulatory and environmental measures or a decline in
consumer preference for plastic products due to environmental considerations
could have a material adverse effect upon the Issuer. In addition, certain of
Berry's operations are subject to federal, state and local environmental laws
and regulations that impose limitations on the discharge of pollutants into the
air and water and establish standards for the treatment, storage and disposal of
solid and hazardous wastes. While Berry has not been required historically to
make significant capital expenditures in order to comply with applicable
environmental laws and regulations, Berry cannot predict with any certainty its
future capital expenditure requirements because of continually changing
compliance standards and environmental technology. Furthermore, although Berry
is not aware of additional environmental issues, unknown contamination of sites
currently or formerly owned or operated by Berry (including contamination caused
by prior owners and operators of such sites) and the off-site disposal of
hazardous substances at facilities utilized by Berry may give rise to additional
compliance costs. Berry does not have insurance coverage for environmental
liabilities and does not anticipate obtaining such coverage in the future. See
"Business--Environmental Matters and Government Regulation."
INABILITY TO PURCHASE SENIOR NOTES UPON A CHANGE OF CONTROL
Upon a Change of Control, the Issuer is required to offer to repurchase all
outstanding Notes at 101% of the aggregate principal amount thereof plus accrued
and unpaid interest, if any, to the date of repurchase. The source of funds for
any such repurchase will be a dividend or distribution from Berry to Holding,
which is prohibited by the Revolving Credit Facility and restricted by the
Senior Subordinated Notes Indenture, or a refinancing of the Notes. The source
of funds for any such dividend or distribution will be Berry's available cash or
cash generated from operating or other sources, including borrowing, sales of
assets, sales of equity or funds provided by a new controlling person. However,
there can be no assurance that sufficient funds will be available at the time of
any Change of Control to make any required repurchases of Notes tendered. See
"Description of Senior Notes--Offer to Purchase Upon Change of Control,"
"Description of Certain Indebtedness--Revolving Credit Facility" and
"Description of Certain Indebtedness--Existing Senior Subordinated Notes due
2004."
FRAUDULENT CONVEYANCE CONSIDERATIONS
Although Holding currently has no material creditors other than pursuant to
its guarantees of the Existing Senior Subordinated Notes, the Revolving Credit
Facility and certain other obligations of Berry, a portion of the proceeds of
the Offering were used to purchase equity of Holding. As such, under relevant
federal and state fraudulent conveyance statutes in a bankruptcy, reorganization
or rehabilitation case or similar proceeding, if a court were to find that, at
the time the Old Notes were issued,
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(i) Holding issued the Old Notes with the intent of hindering, delaying or
defrauding current or future creditors or (ii)(A) Holding received less than
reasonably equivalent value or fair consideration for issuing the Old Notes and
(B) Holding (1) was insolvent or was rendered insolvent by reason of the
Offering, (2) was engaged, or about to engage, in a business or transaction for
which its assets constituted unreasonably small capital, (3) intended to incur,
or believed that it would incur, debts beyond its ability to pay as such debts
matured (as all of the foregoing terms are defined in or interpreted under such
fraudulent conveyance statutes) or (4) was a defendant in an action for money
damages, or had a judgment for money damages docketed against it (if, in either
case, after final judgment, the judgment is unsatisfied), such court could void
or subordinate the Notes to presently existing and future indebtedness of
Holding and take other action detrimental to the holders of the Notes,
including, under certain circumstances, invalidating the Notes.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or local law that is being applied in any such
proceeding. Generally, however, Holding would be considered insolvent if, at the
time it incurs the indebtedness constituting the Notes, either (i) the fair
market value (or fair saleable value) of its assets is less than the amount
required to pay its total existing debts and liabilities (including the probable
liability on contingent liabilities) as they become absolute and matured or (ii)
it is incurring debts beyond its ability to pay as such debts mature.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Issuer on June 18, 1996 to the Initial
Purchaser, who placed the Old Notes with institutional investors. In connection
therewith, Holding and the Initial Purchaser entered into the Registration
Rights Agreement, which provides that (i) Holding will file a Registration
Statement with the Commission on or prior to 45 days after the Issuance Date,
(ii) Holding will use its best efforts to have the Registration Statement
declared effective by the Commission on or prior to 90 days after the Issuance
Date, (iii) unless the Exchange Offer would not be permitted by applicable law
or Commission policy, Holding will commence the Exchange Offer and use its best
efforts to issue on or prior to 60 business days after the date on which the
Registration Statement was declared effective by the Commission, New Notes in
exchange for all Old Notes tendered prior thereto in the Exchange Offer and (iv)
if obligated to file the Shelf Registration Statement (as described below),
Holding will use its best efforts to file the Shelf Registration Statement with
the Commission on or prior to 30 days after such filing obligation arises (and
in any event within 180 days after the Closing Date) and to cause the Shelf
Registration to become effective by the Commission as promptly as possible after
such obligation arises. Promptly after the effectiveness of the Registration
Statement, Holding will offer, pursuant to this Prospectus, to the Holders of
the Old Notes the opportunity to exchange their Old Notes for a like principal
amount of New 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 Old Notes are registered on the
books of the Issuer or any other person who has obtained a properly completed
bond power from the registered holder.
The Issuer has not requested, and does not intend to request, an
interpretation by the staff of the Commission with respect to whether the New
Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be
offered for sale, resold or otherwise transferred by any holder without
compliance with the registration and prospectus delivery provisions of the
Securities Act. Instead, based on interpretations by the staff of the Commission
set forth in no-action letters issued to third parties, the Issuer believes that
New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by any holder of such New
Notes (other than any such holder that is an "affiliate" of the Issuer 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 New 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 New Notes and neither such
Holder nor any other such person is engaging in or intends to engage in a
distribution of such New 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 the Issuer or who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the New 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 New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, 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 New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (other than Old Notes acquired directly from the Issuer). The Issuer
has agreed that, for a period of one year
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after the date of this Prospectus, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
If (i) Holding is not required to file the Registration Statement or
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 (as defined below) notifies Holding within the specified
time period 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 Registration Statement is not
appropriate or available for such resales or (C) that it is a broker-dealer and
owns Old Notes acquired directly from Holding or an affiliate of Holding,
Holding will file with the Commission a Shelf Registration Statement (the "Shelf
Registration Statement") to cover resales of the Old Notes by the holders
thereof who satisfy certain conditions relating to the provision of information
in connection with the Shelf Registration Statement. Holding will use its 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 Old Note until (i) the date on which
such Old Note has been exchanged by a person other than a broker-dealer for a
New Note in the Exchange Offer, (ii) following the exchange by a broker-dealer
in the Exchange Offer of an Old Note for a 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, (iii) the date on which such Old 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 Old Note is
distributed to the public pursuant to Rule 144 under the Act.
If (a) Holding fails 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 date specified for such effectiveness (the
"Effectiveness Target Date"), (c) Holding fails 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 Holding will pay liquidated damages to each holder of Old Notes
("Liquidated Damages"), 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 Old 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 Old Notes 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 Old Notes.
All accrued Liquidated Damages will be paid by Holding on each interest payment
date to the Global Note Holder (as defined) either (i) in the form of additional
Old Notes or (ii) in cash, at the option of Holding. Following the cure of all
Registration Defaults, the accrual of Liquidated Damages will cease.
Holders of Old Notes will be required to make certain representations to
Holding (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver 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 Old Notes included
in the Shelf Registration Statement and benefit from the provisions 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, all of the provisions of the
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Registration Rights Agreement, a copy of which has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
The Old Notes are designated for trading in the PORTAL market. To the extent
Old Notes are tendered and accepted in the Exchange Offer, the principal amount
of outstanding Old Notes will decrease with a resulting decrease in the
liquidity in the market therefor. Following the consummation of the Exchange
Offer, Holders of Old Notes who were eligible to participate in the Exchange
Offer but who did not tender their Old Notes will not be entitled to certain
rights under the Registration Rights Agreement and such Old Notes will continue
to be subject to certain restrictions on transfer. Accordingly, the liquidity of
the market for the Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Issuer will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Issuer will issue $1,000 principal amount of New Notes
in exchange for each $1,000 principal amount of outstanding Old Notes accepted
in the Exchange Offer. Holders may tender some or all of their Old Notes
pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes, except that the New 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
the payment of liquidated damages to holders of the Old Notes under certain
circumstances relating to the Registration Rights Agreement, which provisions
will terminate upon the consummation of the Exchange Offer. The New Notes will
evidence the same debt as the Old Notes and will be entitled to the benefits of
the Indenture under which the Old Notes were, and the New Notes will be, issued.
As of the date of this Prospectus, $105,000,000 aggregate principal amount
of the Old Notes are outstanding. The Issuer has fixed the close of business on
, 1996 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 Old Notes.
Holders of the Old Notes do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law or the Indenture in connection with
the Exchange Offer. The Issuer 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.
The Issuer shall be deemed to have accepted validly tendered Old Notes when,
as and if the Issuer 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 Old Notes.
If any tendered Old 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 Old Notes will be returned, without expense, to
the tendering Holder thereof as promptly as practicable after the Expiration
Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Issuer will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"--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
, 1996, unless the Issuer, 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, the Issuer 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.
The Issuer reserves the right, in its sole discretion, (i) to delay
accepting any Old 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 the Issuer to constitute a
material change, the Issuer will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered Holders, and
the Issuer will extend the Exchange Offer for a period of five to 10 business
days, depending upon the significance of the amendment and the manner of
disclosure to the registered Holders, if the Exchange Offer would otherwise
expire during such five- to 10-business-day period.
Without limiting the manner in which the Issuer may choose to make public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, the Issuer shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from June 18, 1996, the date of original
issuance of the Old Notes. No interest will be paid on the Old Notes accepted
for exchange.
PROCEDURES FOR TENDERING
The tender of Old Notes by a Holder thereof pursuant to one of the
procedures set forth below and the acceptance thereof by the Issuer will
constitute a binding agreement between such Holder and the Issuer 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 , 1996, to all Holders of Old Notes known
to the Issuer and the Exchange Agent.
Only a Holder of the Old Notes may tender such Old Notes in the Exchange
Offer. A Holder who wishes to tender any Old Notes for exchange pursuant to the
Exchange Offer must transmit a properly completed and duly executed Letter of
Transmittal, or a facsimile thereof, 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) certificates for such Old 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 Old
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 Old Notes, Letter of Transmittal and other required documents must be
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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.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. 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 LETTER OF TRANSMITTAL OR OLD
NOTES SHOULD BE SENT TO THE ISSUER.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered Holder promptly and instruct such registered
Holder to tender on such beneficial owner's behalf. If such beneficial owner
wishes to tender on such beneficial owner's own behalf, such beneficial owner
must, prior to completing and executing the Letter of Transmittal and delivering
such beneficial owner's Old Notes, either make appropriate arrangements to
register ownership of the Old Notes in such beneficial owner's name or obtain a
properly completed bond power from the registered Holder. The transfer of
registered ownership may take considerable time.
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) unless the
Old Notes tendered pursuant thereto are tendered (i) by a registered Holder who
has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. 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 Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered Holder
as such registered Holder's name appears on such Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Issuer,
evidence satisfactory to the Issuer 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 Old Notes will be determined by
the Issuer in its sole discretion, which determination will be final and
binding. The Issuer reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Issuer's acceptance of which would,
in the opinion of counsel for the Issuer, be unlawful. The Issuer also reserves
the right to waive any defects, irregularities or conditions of tender as to
particular Old Notes. The Issuer'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 Old Notes must be cured within such
time as the Issuer shall determine. Although the Issuer intends to notify
Holders of defects or irregularities with respect to tenders of Old Notes,
neither the Issuer, the Exchange Agent nor any other person shall incur any
liability for failure to give such notification. Tenders of Old Notes will not
be deemed to have been made until such defects or irregularities have been cured
or waived. Any Old Notes received by the Exchange Agent that the Issuer
determines are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be
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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 the Issuer, among other things,
that (i) the New Notes acquired by the Holder and any beneficial owners of Old
Notes pursuant to the Exchange Offer are being obtained in the ordinary course
of business of the person receiving such New Notes, (ii) neither the Holder nor
such beneficial owner has an arrangement with any person to participate in the
distribution of such New 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 New 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 the Issuer. Each broker-dealer that receives New Notes for
its own account in exchange for Old Notes, where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities (other than Old Notes acquired directly from the Issuer), 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 New
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 Old 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 Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old 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 Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof,
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 "--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 Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes, or a 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), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer, or a Book-
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Entry Confirmation, as the case may be, and all other documents required by
the Letter of Transmittal are received by the Exchange Agent within three
New York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the Holder
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature guarantees)
or be accompanied by documents of transfer sufficient to have the Trustee (as
defined) with respect to the Old Notes register the transfer of such Old Notes
into the name of the persons withdrawing the tender and (iv) specify the name in
which any such Old Notes are to be registered, if different from that of the
Depositor. If certificates for Old 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 Old 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 Old 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 the Issuer in
its sole discretion, which determination shall be final and binding on all
parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no New Notes will be issued with
respect thereto unless the Old Notes so withdrawn are validly retendered.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described above under "--Procedures for Tendering" at any time prior
to the Expiration Date.
Any Old 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 Old 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 Old Notes will be
credited to an account maintained with such Book-Entry Transfer Facility for the
Old Notes).
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Issuer shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate the Exchange Offer as provided herein before the acceptance of
such Old Notes, if:
(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 the
Issuer to proceed with the Exchange Offer or
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any material adverse development has occurred in any existing action or
proceeding with respect to the Issuer; or
(c) any governmental approval has not been obtained, which approval the
Issuer shall deem necessary for the consummation of the Exchange Offer.
If the Issuer determines in its sole discretion that any of the conditions
are not satisfied, the Issuer may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering Holders (or, in the case of Old 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 Old Notes will be credited to an account maintained with
such Book-Entry Transfer Facility), (ii) extend the Exchange Offer and retain
all Old Notes tendered prior to the expiration of the Exchange Offer, subject,
however, to the rights of Holders to withdraw such Old Notes (see "The Exchange
Offer-- Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Old Notes which
have not been withdrawn. If such waiver constitutes a material change to the
Exchange Offer, the Issuer will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the registered Holders, and
the Issuer 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
First Trust of New York, National Association, has been appointed as
Exchange Agent for the Exchange Offer. Questions and requests for assistance,
requests for additional copies of this Prospectus or of the Letter of
Transmittal and requests for Notices of Guaranteed Delivery should be directed
to the Exchange Agent addressed as follows:
<TABLE>
<S> <C> <C>
If by Mail (FULLY REG): If by Hand or Overnight Mail: If by Hand:
First Trust National First Trust National First Trust New York,
Association Association National Association
First Trust Center 180 East Fifth Street 100 Wall Street
P.O. Box 64111 4th Floor - Bond Drop Window Suite 2000 - Bond Drop Window
St. Paul, MN 55164-0111 St. Paul, MN 55101 New York, NY 10005
</TABLE>
By Telecopier: Confirm by Telephone:
(612) 244-1537 (612) 244-1197
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Issuer. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Issuer and its affiliates.
The Issuer has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Issuer, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Issuer. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
23
<PAGE>
The Issuer will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of the Old Notes tendered, or if
tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
Holder or any other persons) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is face value less accrued original issue discount, if any, as reflected
in the Issuer'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 Old
Notes will be amortized over the term of the New Notes.
24
<PAGE>
THE TRANSACTION
OVERVIEW
On June 18, 1996, concurrently with the closing of the offering of the Old
Notes, Holding consummated the Transaction. BPC Mergerco, Inc. ("Mergerco") was
organized by International, 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 Stock Purchase and Recapitalization
Agreement dated as of June 12, 1996 (the "Common Stock Purchase Agreement"),
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 and Warrant
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 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. See
"Description of Common Stock" and "Description of Preferred Stock and Warrants."
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 Units Offering (as defined) 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.
Following the consummation of the Transaction, International and CVCA hold
approximately 53% and 24%, respectively, of the voting common stock of Holding,
and approximately 23% and 37%, respectively, of all classes of common stock of
Holding on a fully-diluted basis.
The aggregate consideration paid to the sellers of the equity interests in
Holding, including the holders of the 1994 Warrants, was approximately $119.2
million in cash. In order to finance the Transaction, including the payment of
related fees and expenses: (i) Holding issued the Old Notes for net proceeds 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 Senior Notes); (ii) 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 (the "Equity Investments")
(which amount included rollover investments of approximately $7.1 million by
certain members of management and $3.0 million by an existing institutional
shareholder); and (iii) Holding received an aggregate of approximately $0.9
million in connection with the exercise of certain management stock options to
purchase common stock of Holding.
The Common Stock Purchase Agreement includes customary business and
financial representations and warranties regarding Holding and its subsidiaries.
Certain selling shareholders, and not Holding, have certain indemnification
obligations with respect to breaches of Holding's representations and
warranties. The Common Stock Purchase Agreement also contains customary
post-closing covenants obligating Holding, among other things, to use the
proceeds of the Transaction for specified purposes and to comply with all
agreements to which it is a party that are entered into in connection with the
Transaction. Holding agreed to pay all reasonable fees and out-of-pocket
expenses of the Common Stock Purchasers and certain selling shareholders
incurred in connection with the Transaction.
25
<PAGE>
In connection with the Transaction, Holding entered into the Preferred Stock
Purchase Agreement with the Preferred Stock Purchasers. Pursuant to the
Preferred Stock Purchase Agreement, the Preferred Stock Purchasers received
600,000 shares of Preferred Stock and the 1996 Warrants. See "Description of
Preferred Stock and Warrants." The Preferred Stock Purchase Agreement grants the
Preferred Stock Purchasers certain registration rights with respect to each of:
(i) the Preferred Stock; (ii) any securities issued by Holding in exchange for
the Preferred Stock; (iii) the 1996 Warrants; and (iv) the related Common Stock
issuable upon exercise of the 1996 Warrants. The Preferred Stock Purchase
Agreement also contains customary representations and warranties and
post-closing covenants obligating Holding, among other things, to use the
proceeds of the Transaction as specified therein and to comply with the terms of
all agreements entered into in connection with the Transaction. The Preferred
Stock Purchase Agreement further obligated Holding to pay all reasonable fees
and expenses of the Preferred Stock Purchaser incurred in connection with the
Transaction.
In connection with the Transaction, International, CVCA, certain other
institutional investors and certain members of management entered into a New
Stockholders Agreement pursuant to which certain stockholders, among other
things, (i) were granted certain registration rights and (ii) under certain
circumstances, have the right to force a sale of Holding. See "Certain
Transactions--Stockholders Agreements."
SOURCES AND USES OF FUNDS
Concurrently with the Offering, the Common Stock Purchasers, the Preferred
Stock Purchasers and certain members of management made the Equity Investments.
Proceeds from the Offering, the Equity Investments and the exercise of certain
stock options were used to fund the purchase price to be paid to the sellers of
equity interests of Holding, to fund the Escrow Account, to make deferred
payments to certain holders of stock options, to make net payments to holders of
the 1994 Warrants and to pay fees and expenses relating to the Offering and the
Transaction.
The sources and uses of funds in connection with the Transaction are set
forth below (in thousands):
<TABLE>
<CAPTION>
SOURCES:
<S> <C>
Issuance of Old Notes.......................................................... $105,000
Issuance of Common Stock....................................................... 55,000
Issuance of Preferred Stock.................................................... 11,489
Issuance of warrants attached to Preferred Stock............................... 3,511
Exercise of management stock options........................................... 929
--------
Total Sources.............................................................. $175,929
--------
--------
USES:
Rollover investments and purchase of equity interests.......................... $125,219
Purchase of Marketable Securities (available for payment of interest on Senior
Notes)........................................................................... 35,600
Net payments to public warrant holders......................................... 4,502
Payment to certain stock option holders........................................ 2,517
Payment of estimated fees and expenses......................................... 8,000
Increase in cash............................................................... 91
--------
Total Uses................................................................. $175,929
--------
--------
</TABLE>
26
<PAGE>
USE OF PROCEEDS
The Issuer will not receive any proceeds from the Exchange Offer.
The net proceeds to Holding from the Offering were approximately $100.2
million, after deducting discounts and estimated offering expenses payable by
Holding. Approximately $64.5 million of the net proceeds were used to finance a
portion of the purchase price paid in the Transaction. Approximately $35.6
million of the net proceeds, representing funds when invested in U.S. government
securities will be sufficient to pay three years' interest on the Senior Notes,
was placed into the Escrow Account and, pending disbursement, the Trustee will
have a first priority lien on the Escrow Account for the benefit of the holders
of the Senior Notes. Funds may be disbursed from the Escrow Account only to pay
interest on the Senior Notes and, upon certain repurchases or redemptions of the
Senior Notes, to pay principal of and premium, if any, thereon. It is currently
contemplated that approximately $0.1 million will be retained and will be
available for working capital and general corporate purposes. See "The
Transaction" and "Description of Senior Notes--Security."
27
<PAGE>
CAPITALIZATION
(DOLLARS IN THOUSANDS)
The following table sets forth the consolidated capitalization of Holding
and its subsidiaries at March 30, 1996, and the pro forma capitalization of
Holding and its subsidiaries as of such date after giving effect to (i) the sale
of the Old Notes and the application of the proceeds thereof as described under
"Use of Proceeds" and (ii) the completion of the other transactions described in
"The Transaction." The information in the table below is qualified in its
entirety by, and should be read in conjunction with, the historical consolidated
financial statements of Holding and the related notes included elsewhere herein.
<TABLE>
<CAPTION>
AT MARCH 30, 1996
-----------------------
HISTORICAL PRO FORMA
<S> <C> <C>
Marketable Securities (available to pay interest on Senior Notes).... $ -- $ 35,600
---------- ---------
---------- ---------
Current portion of long-term debt.................................... $ 722 $ 722
---------- ---------
---------- ---------
Long-term debt, excluding current portion:
Revolving credit facility(a)........................................ $ -- $ --
Nevada Bonds(b)..................................................... 5,500 5,500
Iowa Bonds(b)....................................................... 5,400 5,400
Capital lease obligations........................................... 728 728
12 1/4% Existing Senior Subordinated Notes.......................... 100,000 100,000
12 1/2% Senior Notes................................................ -- 105,000
Debt discount....................................................... (704) (704)
---------- ---------
Total long-term debt............................................ 110,924 215,924
---------- ---------
Stockholders' Equity:
Preferred Stock..................................................... -- 14,280(d)
Less discount....................................................... -- (3,511)(e)
Old Class A Voting Common Stock; 3,000,000 shares authorized;
1,331,432 issued.................................................. -- --
Old Class B Nonvoting Common Stock; 1,000,000 shares authorized;
355,940 issued.................................................... -- --
New Class A Common Stock, par value $0.01;
Voting; 500,000 shares authorized; 91,000 shares issued........... -- --
Nonvoting; 500,000 shares authorized; 259,000 shares issued....... -- --
New Class B Common Stock, par value $0.01;
Voting; 500,000 shares authorized; 145,058 shares issued.......... -- --
Nonvoting; 500,000 shares authorized; 54,942 shares issued........ -- --
New Class C Common Stock, par value $0.01;
Nonvoting; 500,000 shares authorized, 17,000 shares issued........ -- --
Treasury stock; 5,212 shares........................................ (58) --
Additional paid-in capital.......................................... -- 52,520(c)
Warrants............................................................ 13,433 3,511(e)
Retained earnings (deficit)......................................... (45,032) (162,966)(f)
---------- ---------
Total stockholders' equity (deficit)............................ (31,657) (96,166)
---------- ---------
Total capitalization............................................ $ 79,989 $ 120,480
---------- ---------
---------- ---------
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) Berry has a revolving credit facility which provides $28.0 million of credit subject to
a borrowing base calculated on specified percentages of eligible assets, reduced by
outstanding letters of credit. At March 30, 1996, approximately $15.7 million was
available under the facility.
(b) Excludes $12.3 million relating to letters of credit issued with respect to the Nevada
Bonds and the Iowa Bonds.
(c) Represents the excess of cash proceeds upon issuance of $55.0 million of common stock
in connection with the Transaction over the par value of the common stock issued, less
expenses attributed to the Offering of $2,480.
(d) Stated net of fees and expenses attributable to the Transaction of $720.
(e) Represents the estimated fair market value of warrants issued which enable the holders
to acquire 6% of the Common Stock of the Issuer upon exercise thereof.
(f) Includes (i) the Holding historical retained earnings deficit, plus (ii) the excess of
the cash paid former equity holders of $129,721 (including $10,500 of rollover
investments by existing shareholders) and the payment of the deferred bonus of $2,517
over the cash received from the exercise of management stock options of $929 less (iii)
the net effect of the basis of the warrants and treasury stock retired of $13,375.
</TABLE>
28
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The following unaudited pro forma consolidated statement of operations data
and condensed consolidated balance sheet (collectively, the "Pro Forma
Statements") give effect to the Offering and the application of the proceeds
therefrom after giving effect to the Tri-Plas Acquisition, based upon unaudited
financial statement data of Tri-Plas, Inc., as if the acquisition had occurred
as of January 1, 1995 for the statement of operations data. The Pro Forma
Statements do not purport to represent what 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 Holding's consolidated
financial position or results of operations for any future date or period. The
pro forma adjustments are based upon available information and upon assumptions
that Holding 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
Holding and related notes thereto which information is included elsewhere in
this Prospectus.
BPC HOLDING CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA FOR
PRO FORMA THE TRI-PLAS
TRI-PLAS FOR THE ACQUISITION
HOLDING ACQUISITION TRI-PLAS OFFERING AND THE
HISTORICAL ADJUSTMENTS ACQUISITION ADJUSTMENTS OFFERING
<S> <C> <C> <C> <C> <C>
Net sales................................ $ 140,681 $15,685 $ 156,366 $ -- $ 156,366
Cost of goods sold....................... 102,484 12,584 115,068 -- 115,068
---------- ----------- ----------- ----------- -------------
Gross profit............................. 38,197 3,101 41,298 -- 41,298
Operating expenses....................... 16,803 1,278 18,081 -- 18,081(a)
---------- ----------- ----------- ----------- -------------
Operating income......................... 21,394 1,823 23,217 -- 23,217
Other expenses........................... 994 -- 994 -- 994
Interest expense......................... 13,389 337 13,726 11,613 25,339
---------- ----------- ----------- ----------- -------------
Income (loss) before income taxes........ 7,011 1,486 8,497 (11,613) (3,116)
Provision for income taxes............... 678 559 1,237 (1,142) 95
---------- ----------- ----------- ----------- -------------
Net income (loss)........................ $ 6,333 $ 927 $ 7,260 $ (10,471) $ (3,211)
---------- ----------- ----------- ----------- -------------
---------- ----------- ----------- ----------- -------------
EBITDA................................... $ 30,716 $ 2,519 $ 33,235 $ -- $ 33,235
---------- ----------- ----------- ----------- -------------
---------- ----------- ----------- ----------- -------------
</TABLE>
- ------------
(a) Operating expenses of $18,081 exclude the effect of a charge of $2,517
relating to the one-time payment of a bonus to management employees who held
unvested stock options at the date the distribution was paid to stockholders
in 1994. This bonus, which was contingent upon a future offering of debt or
equity securities and was paid from the proceeds of the Offering, will be
charged to operating income in fiscal 1996. Operating expenses also exclude
the effect of a charge of $851 relating to the compensation element of
management stock options which will be charged to operating income in 1996.
29
<PAGE>
BPC HOLDING CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
13 WEEKS ENDED MARCH 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HOLDING OFFERING PRO FORMA FOR
HISTORICAL ADJUSTMENTS THE OFFERING
<S> <C> <C> <C>
Net sales................................................. $ 34,996 $-- $34,996
Cost of goods sold........................................ 25,119(a) -- 25,119(a)
---------- ----------- -------------
Gross profit.............................................. 9,877 -- 9,877
Operating expenses........................................ 5,165 -- 5,165
---------- ----------- -------------
Operating income.......................................... 4,712 -- 4,712
Other expenses............................................ 294 -- 294
Interest expense, net..................................... 3,380 2,903 6,283
---------- ----------- -------------
Income (loss) before income taxes......................... 1,038 (2,903) (1,865)
Provision for income taxes................................ 397 (1,252) (855)
---------- ----------- -------------
Net income (loss)......................................... $ 641 $(1,651) $(1,010)
---------- ----------- -------------
---------- ----------- -------------
EBITDA.................................................... $ 7,302 $-- $ 7,302
---------- ----------- -------------
---------- ----------- -------------
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) Includes $362 of additional costs incurred related to mold inefficiencies and other
expenses associated with the transfer of the Tri-Plas business.
</TABLE>
30
<PAGE>
BPC HOLDING CORPORATION
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 30,
1995
<S> <C> <C>
TRI-PLAS ACQUISITION ADJUSTMENTS:
(1) Net sales of Tri-Plas..................................................... $ 16,583
Deduct net sales to discontinued customer................................. (1,048)
Elimination of freight costs incurred by Tri-Plas to equalize production
at all facilities....................................................... 150
------------
Adjusted Tri-Plas net sales........................................... $ 15,685
------------
------------
(2) Cost of goods sold of Tri-Plas............................................ $ 15,483
Deduct costs related to products subcontracted for sale to discontinued
customer.................................................................. (1,643)
Deduct quantity purchase differential estimated to be saved on raw
materials used in production............................................ (534)
Deduct estimated savings for art and plate costs previously purchased from
outside contractors....................................................... (150)
Deduct costs related to closed operating facility, net of incremental
costs incurred.......................................................... (572)
------------
Adjusted Tri-Plas cost of goods sold.................................. $ 12,584
------------
------------
(3) Operating expenses of Tri-Plas............................................ $ 2,934
Deduct costs related to closed operating facility, net of incremental
costs incurred.......................................................... (1,716)
Add amortization of goodwill for the Tri-Plas Acquisition................. 60
------------
Adjusted operating expenses of Tri-Plas............................... $ 1,278
------------
------------
(4) Interest expense of Tri-Plas.............................................. $ 758
Deduct interest expense incurred by Tri-Plas in excess of interest earned
by Berry on funds used to acquire Tri-Plas.............................. (421)
------------
Adjusted interest expense of Tri-Plas................................. $ 337
------------
------------
(5) Provision for income taxes of Tri-Plas on income before taxes............. $ --
------------
Adjusted provision for income taxes of Tri-Plas....................... $ 559
------------
------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED 13 WEEKS ENDED
DECEMBER 30, MARCH 30,
1995 1996
<S> <C> <C> <C>
OFFERING ADJUSTMENTS:
(1) Adjustment of net interest expense:
Interest on Senior Notes.................................... $ 13,125 $ 3,281
Interest earned on Marketable Securities, available for
payment of interest on Senior Notes....................... (1,992) (498)
Amortization of deferred financing costs associated with the
Offering.................................................... 480 120
------------ -------
Change in net interest expense.......................... $ 11,613 $ 2,903
------------
------------ -------
-------
(2) Adjustment of income tax expense to reflect benefit of
change in net interest expense............................ $ (1,142) $ (1,252)
------------
------------ -------
-------
</TABLE>
31
<PAGE>
BPC HOLDING CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT MARCH 30, 1996
--------------------------------------
PRO FORMA
HOLDING OFFERING FOR THE
HISTORICAL ADJUSTMENTS OFFERING
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 5,047 $ 91 $ 5,138
Accounts receivable.................................... 18,334 -- 18,334
Inventories............................................ 13,952 -- 13,952
Other current assets................................... 1,347 -- 1,347
---------- ----------- ---------
Total current assets............................... 38,680 91 38,771
Property and equipment..................................... 53,120 -- 53,120
Intangible assets.......................................... 10,767 4,800 15,567
Other assets............................................... 2,094 35,600 37,694
---------- ----------- ---------
Total assets....................................... $ 104,661 $ 40,491 $ 145,152
---------- ----------- ---------
---------- ----------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt...................... $ 722 $ -- $ 722
Accounts payable....................................... 11,550 -- 11,550
Accrued liabilities.................................... 13,000 -- 13,000
---------- ----------- ---------
Total current liabilities.......................... 25,272 -- 25,272
Long-term debt:
Nevada Bonds and Iowa Bonds............................ 11,400 -- 11,400
Capital lease obligations.............................. 950 -- 950
12 1/4% Existing Senior Subordinated Notes............. 100,000 -- 100,000
12 1/2% Senior Notes................................... -- 105,000 105,000
Debt discount.......................................... (704) -- (704)
Less: Current portion.................................. (722) -- (722)
---------- ----------- ---------
Total long-term debt............................... 110,924 105,000 215,924
Other liabilities.......................................... 122 -- 122
---------- ----------- ---------
Total liabilities.................................. 136,318 105,000 241,318
---------- ----------- ---------
Stockholders' equity:
Preferred stock........................................ -- 14,280 14,280
Less discount on preferred stock....................... -- (3,511) (3,511)
Old Common Stock....................................... -- -- --
Treasury Stock......................................... (58) 58 --
New Common Stock....................................... -- -- --
Additional paid-in capital............................. -- 52,520 52,520
Warrants............................................... 13,433 (9,922) 3,511
Retained earnings (deficit)............................ (45,032) (117,934) (162,966)
---------- ----------- ---------
Total stockholders' equity (deficit)............... (31,657) (64,509) (96,166)
---------- ----------- ---------
Total liabilities and stockholders' equity
(deficit).................................................. $ 104,661 $ 40,491 $ 145,152
---------- ----------- ---------
---------- ----------- ---------
</TABLE>
32
<PAGE>
OFFERING ADJUSTMENTS
Reflects (i) the issuance of Old Notes in the aggregate principal amount of
$105.0 million,
(ii) the purchase of approximately $35.6 million in Marketable Securities
deposited into the Escrow Account and available to pay interest on the Senior
Notes, (iii) the payment of estimated fees and expenses of $8.0 million
associated with the Transaction, (iv) the issuance of new Common Stock of $55.0
million, (v) the issuance of Preferred Stock and warrants to purchase Common
Stock aggregating $15.0 million, (vi) the exercise of stock options, (vii) a
deferred payment to certain stock option holders, (viii) the redemption and
retirement of all previously issued shares of Common Stock at $58.55 per share
and (ix) the redemption and retirement of previously issued and outstanding
warrants at $58.55 per share less the exercise price for the underlying common
stock.
<TABLE>
<CAPTION>
<S> <C>
SOURCES:
Issuance of Old Notes....................................... $105,000
Issuance of Common Stock.................................... 55,000
Issuance of Preferred Stock................................. 11,489
Issuance of warrants attached to Preferred Stock............ 3,511
Exercise of management stock options........................ 929
--------
Total Sources........................................... $175,929
--------
--------
USES:
Rollover investments and purchase of equity interests....... $125,219
Purchase of Marketable Securities (available for payment of
interest on Senior Notes)....................................... 35,600
Net payments to public warrant holders...................... 4,502
Payment to certain stock option holders..................... 2,517
Payment of estimated fees and expenses...................... 8,000
Increase in cash............................................ 91
--------
Total Uses.............................................. $175,929
--------
--------
</TABLE>
33
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following selected financial data of Holding and its subsidiaries as of
and for the five fiscal years ended December 30, 1995 are derived from the
consolidated financial statements of Holding which have been audited by Ernst &
Young LLP, independent auditors. The following selected financial data for the
13 weeks ended April 1, 1995 and March 30, 1996 are derived from the unaudited
consolidated financial statements of Holding and, in the opinion of Holding,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of such data. Operating results for the 13
weeks ended March 30, 1996 are not necessarily indicative of the results that
may be achieved for the year ending December 28, 1996. The data should be read
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 herein.
<TABLE>
<CAPTION>
13 WEEKS ENDED
FISCAL --------------------
------------------------------------------------- APRIL 1, MARCH 30,
1991 1992 1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ $58,650 $81,355 $87,830 $106,141 $140,681 $ 32,694 $ 34,996
Cost of goods sold....................... 45,994 63,452 65,652 73,997 102,484 22,542 25,119(a)
------- ------- ------- -------- -------- -------- ---------
Gross profit............................. 12,656 17,903 22,178 32,144 38,197 10,152 9,877
Operating expenses(b).................... 8,553 11,471 13,222 15,044 16,803 4,100 5,165
------- ------- ------- -------- -------- -------- ---------
Operating income......................... 4,103 6,432 8,956 17,100 21,394 6,052 4,712
Other expenses(c)........................ 343 1,716 4,005 300 994 415 294
Interest expense, net(d)................. 8,706 6,671 6,582 10,972 13,389 3,306 3,380
------- ------- ------- -------- -------- -------- ---------
Income (loss) before income taxes and
extraordinary charge...................... (4,946) (1,955) (1,631) 5,828 7,011 2,331 1,038
Net income (loss).................... $(4,956) $(1,981) $(1,703) $ 2,165(e) $ 6,333 $ 2,326 $ 641
------- ------- ------- -------- -------- -------- ---------
------- ------- ------- -------- -------- -------- ---------
OTHER DATA:
EBITDA(f)................................ $12,501 $16,890 $20,840 $ 25,683 $ 30,716 $ 8,242 $ 7,302
Depreciation and amortization(g)......... 8,150 10,241 11,198 8,176 9,536 2,185 2,589
Capital expenditures..................... 2,195 7,143 5,586 9,118 11,247 1,893 2,482
Net cash interest expense(h)............. 4,917 5,114 4,966 9,794 12,439 3,083 3,148
Ratio of earnings to fixed charges....... (i) (i) (i) 1.5x 1.4x 1.7x 1.3x
BALANCE SHEET DATA:
Cash and cash equivalents................ $ 406 $ 652 $ 1,082 $ 9,327 $ 8,035 -- $ 5,047
Working capital (deficiency)............. (730) 1,978 384 13,393 13,012 -- 13,408
Total assets............................. 52,668 68,281 60,143 91,790 103,465 -- 104,661
Total long-term debt..................... 32,566 46,636 40,936 112,287 111,676 -- 111,646
Stockholders' equity (deficit)........... 11,276 9,415 5,972 (38,838)(j) (32,484) -- (31,657)
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) Costs of goods sold includes $362 of additional costs incurred related to mold inefficiencies and
other expenses associated with the transfer of the Tri-Plas business.
(b) Operating expenses include selling, general and administrative expenses, amortization of
intangibles, research and development expenses and management fees. Charges (credits) for the
effect of the market valuation adjustments for management stock options and warrants included in
operating expenses were as follows: 1991, $0; 1992, $75; 1993, $605; 1994, $358; 1995, $(236);
April 1, 1995, $0 and March 30, 1996, $0. Operating expenses for the 13-week period ended March
30, 1996 include $473 relating to patent and other litigation expenses.
(c) Other expenses include a $343 loss on disposal of property and equipment in fiscal 1991; costs of
$891 incurred in fiscal 1992 in connection with the Mammoth Acquisition and an $825 loss on
disposal of property and equipment; in fiscal 1993, $3,675 of non-recurring costs associated
principally with the shutdown and sale of a facility acquired in the Mammoth Acquisition and $330
of costs related to an unsuccessful acquisition; in fiscal 1994, a $184 loss on disposal of
property and equipment and $116 in unsuccessful acquisition costs; and in fiscal 1995, a $127
loss on disposal of property and equipment, $473 of costs related to unsuccessful acquisition
costs, $224 of costs related to the Tri-Plas Acquisition and $170 of costs related to the
Sterling Products Acquisition.
(d) Interest expense is stated net of interest income of $126, $26, $25, $580 and $642 earned in each
of fiscal 1991, 1992, 1993, 1994 and 1995, respectively, and of $239 and $68 for the 13 weeks
ended each of April 1, 1995 and March 30, 1996.
(e) Includes extraordinary charge on extinguishment of debt of $3,652 in connection with the issuance
of the Existing Senior Subordinated Notes.
</TABLE>
(Footnotes continued on following page)
34
<PAGE>
(Footnotes continued from preceding page)
<TABLE>
<C> <S>
(f) EBITDA is defined as income (loss) before income taxes, net interest expense, depreciation and
amortization of intangibles adjusted to exclude (i) non-cash charges relating to amortization of
restricted stock awards and market value adjustments related to stock options and (ii) other
non-recurring or "one-time" expenses as described in note (c) above. EBITDA is presented to
facilitate an investor's understanding of the covenants in the Indenture. EBITDA should not be
considered by investors as an alternative to net income (loss) as an indicator of operating
performance or to cash flows as a measure of liquidity.
(g) Depreciation and amortization excludes non-cash amortization of deferred financing fees and debt
discount amortization which are included in interest expense.
(h) Does not include amortization of deferred financing fees or debt discount.
(i) Earnings were inadequate to cover fixed charges for fiscal 1991, 1992 and 1993 by $4,971, $2,027
and $1,794, respectively. For purposes of this computation, earnings consist of (i) income (loss)
before income taxes, plus (ii) fixed charges consisting of interest on indebtedness (including
amortization of deferred financing fees), plus (iii) that portion of lease rental expense
representative of the interest factor.
(j) Stockholders' equity (deficit) includes the effect of a $50.0 million distribution paid to
holders of equity interests in 1994.
</TABLE>
35
<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 Financial Statements and the notes thereto
included elsewhere in this Prospectus. Unless the context requires otherwise,
the "Company" as used in this Management's Discussion and Analysis of Financial
Condition and Results of Operations shall include Holding and its subsidiaries
on a consolidated basis.
OVERVIEW
The Company's management is focusing on three principal areas: (i) expanding
its leading market positions in three key product categories: aerosol overcaps,
open top containers and drink cups; (ii) securing its low cost position through
continued technology investments and productivity gains; and (iii) seeking
selective acquisitions and joint ventures which offer market and product
extension or productivity improvement opportunities.
In order to accomplish its objectives, management implemented a capital
investment program in fiscal 1991 which emphasizes the following: maintenance,
replacement and expansion of machinery, molds and automation equipment;
development and construction of molds and equipment for new products; and
enhanced management information and production systems to help ensure that the
Company's assets are being fully and efficiently utilized. In connection with
the program in 1993, the Company closed the former Mammoth Containers plant in
Forest City, North Carolina. The business from the Forest City plant was
transferred to the Company's other locations, resulting in a reduction of both
overhead and general and administrative expenses, greater production efficiency
and improved asset utilization. The program is on-going, and also includes plant
and system expansion at the Company's Evansville facility. The Company believes
that all of its facilities are operating efficiently and are capable of meeting
increased volume requirements arising from planned sales expansion.
Since fiscal 1991, management has also emphasized sales of higher margin
products using Company-owned molds while reducing sales of lower margin custom
molded products which are produced with customer-owned molds. In order to
accomplish this goal, the Company has added 23 salespeople since 1990, and has
focused its sales force along product lines. Although the Company continues to
produce certain custom molded products in order to utilize existing capacity,
the increased production demands of the Mammoth Acquisition and the Tri-Plas
Acquisition enable the Company to eliminate much of this volume in favor of
higher margin business. The Sterling Products Acquisition also facilitated the
Company's entrance into the plastic drink cup market. Management believes this
market offers significant opportunities for growth.
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<PAGE>
The following table sets forth, for the periods indicated, certain statement
of operations and other data of the Company expressed as a percentage of net
sales:
<TABLE>
<CAPTION>
13 WEEKS ENDED
FISCAL ---------------------
----------------------- APRIL 1, MARCH 30,
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
OPERATIONS STATEMENT DATA:
Net sales........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold.................................. 74.7 69.8 72.8 69.0 71.8
----- ----- ----- -------- ---------
Gross profit........................................ 25.3 30.2 27.2 31.0 28.2
Operating expenses.................................. 15.1 14.2 11.9 12.5 14.8
----- ----- ----- -------- ---------
Operating earnings.................................. 10.2 16.0 15.3 18.5 13.4
Other expenses...................................... 4.6 0.3 0.7 1.3 0.8
Interest expense.................................... 7.5 10.3 9.5 10.1 9.7
----- ----- ----- -------- ---------
Income (loss) before income taxes................... (1.9) 5.4 5.1 7.1 2.9
Extraordinary charge................................ 0.0 3.4 0.0 0.0 0.0
Income taxes........................................ 0.0 0.0 0.6 0.0 1.1
----- ----- ----- -------- ---------
Net income (loss)................................... (1.9)% 2.0% 4.5% 7.1% 1.8%
----- ----- ----- -------- ---------
----- ----- ----- -------- ---------
</TABLE>
13 WEEKS ENDED MARCH 30, 1996 ("INTERIM 1996")
COMPARED TO 13 WEEKS ENDED APRIL 1, 1995 ("INTERIM 1995")
Net Sales. Net sales increased $2.3 million, or 7%, to $35.0 million for
Interim 1996 from $32.7 million for Interim 1995, notwithstanding an approximate
10% decrease in net selling price due mainly to the impact of cyclical
adjustments in the price of plastic resin. The increase in net sales was
attributed to a combination of higher drink cup sales of $1.3 million and higher
container sales of $1.4 million (including the introduction of polypropylene
containers from the Tri-Plas Acquisition). Sales of custom manufactured tools
decreased $0.4 million.
Gross Profit. Gross profit decreased by $0.3 million to $9.9 million for
Interim 1996 from $10.2 million for Interim 1995. This decrease of 2.8% included
the impact of negative inventory valuation (due principally to changing raw
material costs) and start-up expenses associated with the transfer of the
business previously conducted by Tri-Plas, Inc. in its Ontario, California
facility to the Henderson plant.
Operating Expenses. Selling expenses increased by $0.3 million to $1.7
million for Interim 1996 from $1.4 million for Interim 1995 principally as a
result of the addition of the drink cup business and the Tri-Plas Acquisition.
General and administrative expenses increased by $.8 million to $3.2 million for
Interim 1996 from $2.4 million for Interim 1995. The Tri-Plas Acquisition and
the Sterling Products Acquisition resulted in expenses of $0.3 million, and
patent and other litigation expenses were $0.5 million.
Interest Expense. Interest expense decreased $0.1 million to $3.4 million
for Interim 1996 compared to $3.5 million for Interim 1995.
Income Tax. For Interim 1996, the Company had income tax expense of $0.4
million which was computed based on Federal and state statutory income tax
rates. There was minimal income tax for Interim 1995 due to the availability of
loss carryforwards.
Net Income. Net income for Interim 1996 of $0.6 million decreased $1.7
million from net income of $2.3 million for Interim 1995 for the reasons
discussed above.
37
<PAGE>
YEAR ENDED DECEMBER 30, 1995
COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net Sales. Net sales increased 32.5% to $140.7 million in 1995, up $34.6
million from $106.1 million in 1994. Sales of aerosol overcaps increased $5.6
million (14%), including approximately 4% due to a strengthening of base
business and the addition of new products, and approximately 10% from the
pass-through to customers of increased raw material cost. Containers sales
increased $9.5 million in 1995 (15%), including approximately 10% from the
pass-through to customers of such cost increases, and approximately 5% due to
the continued market strength of base products and several new product
applications. The Sterling Products Acquisition (consummated in March 1995)
contributed $17.3 million of sales of drink cups in 1995 (compared to $6.1
million of net sales by the predecessor company in 1994, which are not included
in the Company's financials). Other product lines including custom molded
products and custom mold building reflected an increase of $2.1 million in 1995.
Other than $0.2 million of polypropylene containers subcontracted from Tri-Plas
in 1995, sales recorded from the Tri-Plas Acquisition were insignificant.
Gross Profit. Gross profit increased $6.1 million or 18.8% to $38.2 million
(27.2% of net sales) in 1995 from $32.1 million (30.3% of net sales) for 1994.
The increase in gross profit is primarily attributed to increased sales volume.
All of the Company's manufacturing plants produced at high operating levels
during 1995. Significant capacity was dedicated at all facilities to accommodate
the dynamic growth in the drink cup business.
Gross profit as a percent of sales decreased 3.1% from 30.3% in 1994 to
27.2% for 1995. Pass through of raw material cost increases contributed
approximately 2.4% of the decrease, as no additional profit was earned on such
incremental revenues. Additionally, most of the new high efficiency molds,
printing equipment, and injection molding machines required for the drink cup
business did not arrive until late in the summer season, forcing the Company to
produce on slower, less efficient drink cup tooling for the period of peak
demand. Outside subcontractors were used to print drink cups during peak
periods, resulting in lower gross profits. Although a fifty thousand square foot
warehouse facility was added in Evansville, the seasonality of the drink cup
business required leasing outside storage facilities at both the new Winchester,
Virginia plant and the Henderson, Nevada location.
Operating Expenses. Operating expenses during 1995 were $16.8 million,
compared with $15.0 million for 1994. As a percentage of sales, operating
expenses dropped from 14.2% of net sales in 1994 to 11.9% of net sales for 1995.
Sales related expenses, including the cost of expanded sales coverage, increased
$0.5 million. General and administrative expenses increased $1.0 million,
including $0.4 million associated with the Sterling Products Acquisition and a
$0.5 million increase in performance-based employee bonuses.
Other Expenses. Other expenses were $1.0 million in 1995 compared to $0.3
million in 1994, a increase of $0.7 million. This increase includes a charge of
$0.5 million associated with the discontinued pursuit of the acquisition of the
assets of CPI Plastics, Inc. and its affiliates and $0.2 million of costs
associated with the transfer of the Tri-Plas business.
Interest Expense and Income. Net interest expense, including amortization of
deferred financing costs for 1995, was $13.4 million (9.5% of net sales)
compared to $11.0 million (10.3% of net sales), an increase of $2.4 million.
This increase is primarily due to the full year effect in 1995 of expenses
relating to a recapitalization of the Company on April 21, 1994, when the
Company completed an offering of $100 million aggregate principal amount of
Existing Senior Subordinated Notes. The Existing Senior Subordinated Notes bear
interest at 12 1/4% and mature on April 15, 2004. Interest is payable semi-
annually on October 15 and April 15 of each year. Cash interest paid in 1995 was
$13.4 million as compared to $8.0 million for 1994. Interest income was $0.6
million in both 1995 and 1994.
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<PAGE>
Income Taxes. During the year ended December 30, 1995, the Company utilized
the last portion of certain net operating loss carryforwards and became a
taxpayer of federal income tax, incurring $0.7 million of federal income tax
liability compared to incurring no federal income tax for the year ended
December 31, 1995. Additionally, as of December 30, 1995, the Company recorded
$0.4 million of recoverable income taxes and $2.1 million of deferred income tax
credits resulting from payment of alternative minimum tax.
Extraordinary Charge. There were no extraordinary charges during 1995. The
Company incurred an extraordinary charge of $3.7 million ($3.2 million of which
related to non-cash charges) during 1994 as a result of the retirement of debt
concurrent with the issuance of the Existing Senior Subordinated Notes.
Net Income. Net income increased $4.2 million in 1995 to $6.3 million from
net income of $2.2 million in 1994 for the foregoing reasons.
YEAR ENDED DECEMBER 31, 1994
COMPARED TO YEAR ENDED JANUARY 1, 1994
Net Sales. Net sales increased 20.8% to $106.1 million in 1994, up $18.3
million from $87.8 million in 1993. Sales of aerosol overcaps increased $4.9
million due to both a strengthening of base business and the addition of new
products. Containers sales increased $11.8 million in 1994 due to a strong
demand for promotional containers, the continued market strength of base
products and several new product applications. Other product lines including
custom molded products, molds and artwork reflected an increase of $1.6 million
in 1994. Also contributing to the increase from 1993 was the pass-through to
customers of increased raw material cost, primarily plastic resin.
Gross Profit. Gross profit increased $9.9 million or 44.9% to $32.1 million
(30.3% of net sales) in 1994 from $22.2 million (25.3% of net sales) for 1993.
The increase in net sales contributed to this improvement, as well as additional
sales margin on increased volume and decreased cost due to higher operating
levels at all three then-existing manufacturing facilities. Additionally, the
Company completed construction and start-up of a state-of-the-art injection
molding facility at the existing Evansville, Indiana plant. The start-up of this
plant addition in mid-year coincided with peak capacity requirements for the
business, facilitating continued efficient production. The gross profit increase
was also partially due to a decrease of $3.0 million in the additional
depreciation originally incurred when the Company's assets were adjusted to fair
market value in December 1990 ($0.8 million in 1994 compared to $3.8 million in
1993). Increasing raw material prices did not materially affect gross profit
during 1994, as price increases to customers were implemented shortly after
price increases from resin suppliers.
Operating Expenses. Operating expenses during 1994 were $15.0 million (14.2%
of net sales), compared with $13.2 million (15.1% of net sales) for 1993. Sales
related expenses, including the cost of expanded sales coverage, increased $0.8
million. General and administrative expenses increased $1.0 million, due to $0.2
million of additional insurance costs and a $0.8 million increase in
performance-based employee bonuses.
Other Expenses. Other expenses were $0.3 million in 1994 compared to $4.0
million in 1993, a decrease of $3.7 million. This decrease is due to
non-recurring shutdown expenses and loss on fixed asset disposals incurred in
1993 associated with closing the Forest City, North Carolina plant.
Interest Expense and Income. Net interest expense, including amortization of
deferred financing costs for 1994, was $11.0 million (10.3% of net sales)
compared to $6.6 million (7.5% of net sales), an increase of $4.4 million. This
increase is primarily due to expenses relating to a recapitalization of the
Company on April 21, 1994, when the Company completed an offering of $100
million aggregate principal amount of Existing Senior Subordinated Notes. The
Existing Senior Subordinated Notes bear
39
<PAGE>
interest at 12 1/4% and mature on April 15, 2004. Interest is payable
semi-annually on October 15 and April 15 of each year. Cash interest paid in
1994 was $8.0 million as compared to $5.3 million for 1993. Interest income for
1994 was $0.6 million as compared to less than $0.1 million in 1993. This
increase is the result of the investment of cash and cash held for acquisitions.
Extraordinary Charge. The Company incurred an extraordinary charge of $3.7
million (including a non-cash portion of $3.2 million) during 1994 as a result
of the retirement of debt concurrent with the 1994 Units Offering.
Net Income (Loss). Net Income increased $3.9 million in 1994 to $2.2 million
from a net loss of $1.7 million in 1993 for the foregoing reasons.
INCOME TAX MATTERS
In February 1995, the Internal Revenue Service completed an audit of the
1990 through 1993 income tax returns of the Company. The results of these
audits, combined with the provision for 1994 income taxes, resulted in net
operating loss carryforwards as of December 31, 1994 of $5.1 million. As of
December 30, 1995, the Company had no remaining net operating loss carryforward.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a credit facility provided by Fleet Capital Corporation
which provides for a revolving line of credit for general working capital needs
(based on a borrowing base formula) and a letter of credit supporting the
Company's outstanding Industrial Revenue Bonds (approximately $12.0 million).
See "Description of Certain Indebtedness--Revolving Credit Facility."
In connection with the 1994 Units Offering, the Company entered into the
Senior Subordinated Notes Indenture which restricts the Company's ability to
incur additional debt and contains other provisions which could limit the
liquidity of the Company.
Capital expenditures in 1995 were $11.2 million, an increase of $2.1 million
from $9.1 million in 1994. Included in capital expenditures during 1995 was $2.2
million relating to the addition of a new warehouse in the Evansville plant
necessary to support the production facility added in 1994. The new warehouse
became operational in the second quarter of 1995. Capital expenditures also
included investment of $5.2 million for molds, $0.6 million for molding
machines, $0.7 million for printing equipment and $2.5 million for miscellaneous
accessory equipment and systems. For Interim 1996, capital expenditures of $2.5
million included $1.0 million for molds and molding machines, $0.5 million for
printing-related equipment and $1.0 million for building and accessory
equipment. Additionally, the Company purchased the drink cup product line of
Alpha Products (as defined) during such period. Net cash provided by operating
activities in 1995 was $13.0 million, a decrease of $2.6 million from $15.6
million in 1994. During Interim 1996, there was no cash provided from operating
activities. Increased sales volume, a reduction of overdue accounts payable
assumed in connection with the Tri-Plas Acquisition and the build-up of drink
cup inventory for the peak summer season all contributed to increasing working
capital (defined as accounts receivable, inventories, prepaid expenses, other
receivables, accounts payable and accrued expenses) by $4.0 million since the
end of fiscal 1995. Cash flow from operations, combined with cash on hand at
December 31, 1994, was sufficient to meet the Company's cash interest, working
capital and capital expenditure requirements, and to make the mandatory
principal payment on the Nevada Bonds and Iowa Bonds during 1995.
The capital expenditure budget for 1996 is expected to be $12.8 million,
including approximately $3.5 million for building and systems, $3.6 million for
molds, $1.2 million for molding machines, $1.8 million for printing equipment
and $2.7 million for miscellaneous accessory equipment. Increased working
capital needs occur whenever the Company experiences strong incremental demand
or a significant rise in the cost of raw material, particularly plastic resin.
However, the Company anticipates
40
<PAGE>
that its cash interest, working capital and capital expenditure requirements for
1996 will be satisfied through a combination of funds generated from operating
activities and cash on hand, together with funds available under the Revolving
Credit Facility. Management bases such belief on historical experience and the
substantial funds available under the Revolving Credit Facility. However, the
Company cannot predict its future results of operations.
The Senior Subordinated Notes Indenture restricts, and the Revolving Credit
Facility prohibits, Berry's ability to pay any dividend or make any distribution
of funds to Holding to satisfy interest and other obligations on the Senior
Notes. Based upon historical operating results, without a substantial increase
in the operating results of Berry, management anticipates that it will be unable
to generate sufficient cash flow to permit a dividend to Holding in an amount
sufficient to meet Holding's interest payment obligations under the Senior Notes
which begin after the depletion of the Escrow Account and the expiration of
Holding's option to pay interest by issuing additional Senior Notes. In that
event, management anticipates that such obligations will only be met by
refinancing the Existing Senior Subordinated Notes or raising capital through
equity offerings. See "Risk Factors--Holding Company Structure; Significant
Limitations on Access to Subsidiaries' Cash Flow" and "Description of Certain
Indebtedness."
At June 1, 1996, the Company's cash balance was approximately $1.8 million,
and the Company had unused borrowing capacity under the Revolving Credit
Facility's borrowing base of approximately $13.7 million.
GENERAL ECONOMIC CONDITIONS AND INFLATION
The Company faces various economic risks ranging from an economic downturn
adversely impacting the Company's primary markets to market fluctuations in
plastic resin prices. In the short-term, rapid increases in resin cost, such as
those experienced in the second half of 1994, may not be fully recovered through
price increases to customers. Also, shortages of raw materials may, from time to
time, occur. In the long-term, however, raw material availability and price
changes generally do not have a material adverse effect on gross profit. Cost
changes generally are passed through to customers. In addition, the Company
believes that its sensitivity to economic downturns in its primary markets is
less significant due to its diverse customer base and its ability to provide a
wide array of products to numerous end markets.
The Company believes that it is not affected by inflation except to the
extent that the economy in general is thereby affected. Should inflationary
pressures drive costs higher, the Company believes that general industry
competitive price increases would sustain operating results, although there can
be no assurance that this will be the case.
41
<PAGE>
BUSINESS
GENERAL
Berry, a wholly-owned subsidiary of the Issuer, is a leading domestic
manufacturer and marketer of plastic packaging products focused on three key
markets: aerosol overcaps, rigid open-top containers and drink cups. Within each
of these markets, the Company concentrates on manufacturing value-added products
sold to marketers of image-conscious industrial and consumer products that
utilize the Company's proprietary molds, superior color matching abilities and
sophisticated multi-color printing capabilities. The Company believes that it is
the largest supplier of aerosol overcaps in the United States, with an estimated
44% domestic market share in fiscal 1995 and sales of over 1.3 billion overcaps.
Berry also believes that it is the largest domestic supplier of thinwall,
child-resistant, pry-off and polypropylene open top containers. In connection
with a recent acquisition, Berry has utilized its national sales force and
existing molding and printing capacity at multiple-plant locations to become a
leader in the high growth plastic drink cup market, which includes the Company's
innovative 32 ounce and 44 ounce DT cups, which fit in standard vehicle cup
holders.
In fiscal 1995, the Company had net sales of $140.7 million, of which
aerosol overcaps and containers constituted 31% and 51%, respectively. Drink
cups, a product line acquired in March 1995, accounted for approximately 12% of
total net sales in fiscal 1995. On a pro forma basis after giving effect to the
Tri-Plas Acquisition, in fiscal 1995 the Issuer had net sales of approximately
$156.4 million. On a historical basis, from the fiscal year ended September 30,
1990 through fiscal 1995, the Issuer's net sales increased steadily at a
compound annual growth rate of 19.3% per year.
The Company supplies aerosol overcaps for a wide variety of products,
including such well-known brand names as WD-40 lubricant, Rustoleum and
Sherwin-Williams paints, Pam cooking spray, Gillette Foamy and Noxema shaving
creams, Dow Brand's oven cleaner, Lysol disinfectant, Faultless starch and S.C.
Johnson Wax products. Similarly, the Company's containers are used for packaging
a broad spectrum of commercial and consumer products, including Red Devil and
Quikrete building products, McDonald's and Burger King promotional children's
meals, Elmer's glue, Milliken adhesives, Super Bubble chewing gum, Haagen-Dazs
ice cream and Hershey chocolate. The Company's plastic drink cups are sold
primarily to fast food and convenience store chains. Drink cup customers include
McDonald's, Coca-Cola, Burger King, Circle K, Wal-Mart, 7-Eleven and Boston
Market. Berry's customer base is comprised of over 2,000 customers with
operations in a widely diversified range of markets, which reduces the Company's
vulnerability to fluctuations in the overall U.S. economy and mitigates the
effects of cyclicality and seasonality. The Company's top ten customers
accounted for approximately 23% of the Company's fiscal 1995 net sales, and no
customer accounted for more than 4% of net sales. Additionally, the Company
believes it is the single-source or largest supplier of overcaps, containers and
drink cups to a majority of its customers.
The Company believes that it derives a strong competitive position from its
state-of-the-art production capabilities, extensive array of proprietary molds
in a wide variety of sizes and styles (79 aerosol overcaps, 153 containers, 17
drink cups) and dedication to service and quality. In the aerosol overcap
market, the Company distinguishes itself with superior color matching
capabilities, which is of extreme importance to its base of image-conscious
consumer products customers, and proprietary packing equipment, which enables
the Company to deliver a higher quality product while lowering warehousing and
shipping costs. Likewise, in the container market, an in-house graphic arts
department and sophisticated printing and decorating capabilities permit the
Company to offer extensive value-added decorating options. The Company's drink
cup product line is strengthened by its multi-year agreement with Coca-Cola and
by its innovative design for large size DT cups. The Company is also
characterized as an industry innovator, particularly in the area of decoration.
These market-related strengths, combined with the Company's modern proprietary
mold technology, high speed molding capabilities and multiple-plant locations,
all contribute to the Company's strong market position.
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<PAGE>
In addition to these marketing and manufacturing strengths, the Company
believes that its close working relationships with customers are crucial to
maintaining market positions and developing future growth opportunities. The
Company employs a direct sales force which is focused on working with customers
and the Company's production and product design personnel to develop customized
packaging that enhances customer product differentiation and improves product
performance. The Company works to develop innovative new products and identify
and pursue non-traditional markets that can use existing Company products.
BUSINESS STRATEGY
Berry's primary business objective is to continue its strong growth trends
in both net sales and operating profitability. To achieve this objective, the
Company has developed and implemented the following specific strategies:
. Expand leading market positions in three key product categories: aerosol
overcaps, open top containers and drink cups.
Maintain the leading market position in aerosol overcaps. According to
industry sources, the Company is the largest domestic producer of aerosol
overcaps with an estimated 44% domestic market share. An additional
one-third of this market is comprised of companies that produce overcaps for
their own needs. Berry believes that these companies will continue to
increase their outsourcing of production to high quality, low cost producers
such as the Company. For example, in 1993 Gillette decided to outsource
additional overcap production to Berry, and has steadily increased the
amount outsourced to Berry since that time. In 1995, the Company
manufactured a majority of Gillette's overcap requirements. The Company also
intends to continue to work with existing customers to develop new products
which increase product differentiation and performance, such as the recently
introduced "spray-through" caps, child resistant caps and whipped cream
caps. Both of these strategies are intended to capitalize on Berry's
strengths in this market, which include long-standing relationships with its
customers, technological ability to produce in-house over 3,000 colors
accurately, proprietary packing technology, a broad product line of
proprietary molds and high-speed, low-cost molding and decorating
capabilities. Based upon its estimates, the Company believes that it has
gained market share from its principal competitors in the overcap market in
recent years.
Develop and expand high margin niche container markets. Berry intends to
continue to grow its container product lines in excess of the overall U.S.
market growth rate. To accomplish this goal, the Company will seek to
develop new products for high-margin niches and will work closely with
national marketers such as McDonald's and Burger King to continue to
increase sales of promotional products. In addition, the Company intends to
develop markets and applications not currently utilizing molded plastic
containers to create new customers or niches for the Company's existing
container products. Recent examples of the Company's success in this area
include the use of plastic containers that can be resealed by Pillsbury to
replace the tubes currently used for its cookie dough, the use of printed
plastic containers by Lipton for its iced tea mix in place of composite
(paper and metal) containers, the replacement of round containers by various
customers with square or rectangular plastic containers that maximize
shipping and storage space, and the use of thinwall popcorn containers to
replace traditional paper packaging, which are being sold in movie theaters
to promote new movies such as "Flipper," "The Hunchback of Notre Dame," the
remake of "One Hundred and One Dalmatians" and "Mighty Ducks III."
Rapidly expand drink cup business. Plastic drink cups are providing a
significant growth opportunity for the Company. By utilizing its national
sales force and existing molding machines at multiple plant locations, Berry
was able to achieve sales in fiscal 1995 of $17.3 million, compared to sales
in fiscal 1994 of $6.1 million by Sterling Products (as defined) prior to
its acquisition by the
43
<PAGE>
Company. The Company intends to continue to capitalize on its low cost
production of drink cups (including the innovative DT cup design in 32 and
44 ounce sizes, as well as its rapidly growing 64 ounce straight-sided drink
cup which has been successful with convenience stores) by focusing on its
sophisticated printing and graphics capabilities. Berry is currently
upgrading its printing and graphics capability to provide some of the most
sophisticated and technologically advanced equipment in the industry,
including the first 10-color printing capability. In addition, promotional
opportunities will be pursued by combining drink cups with containers, an
opportunity that affords Berry a unique strategic advantage.
. Secure low cost position through continued technology investments and
productivity gains.
The Company believes that it is currently the industry's low cost
producer for many of its products and that it will continue to improve
productivity through its on-going program of upgrading equipment and
facilities and investing in new technology. Over the last five years,
management has improved asset utilization, increased manufacturing
productivity and reduced overhead by consolidating underperforming
facilities, such as the Forest City plant, streamlining its workforce and
investing in modern molds, equipment and systems. For example, in Berry's
two original plants, Evansville and Henderson, sales per employee have
increased by 22% from approximately $128,000 in 1990 to approximately
$156,000 in 1995.
. Seek selective acquisition and joint venture opportunities.
The Company intends to seek strategic acquisition opportunities as the
highly fragmented plastic packaging industry continues its recent trend of
consolidation. Building on its acquisition record demonstrated by the
successful integration of the Mammoth Acquisition, the Sterling Products
Acquisition and the Tri-Plas Acquisition, the Company intends to identify
and acquire targets which offer market and product extension or productivity
improvement opportunities. For example, the purchase in January 1996 of
certain assets relating to Alpha Products' drink cup business gave Berry a
low cost way to add capacity and further expand its drink cup product line.
HISTORY
Imperial Plastics, the Company's predecessor, was established in 1967 in
Evansville, Indiana. Berry Plastics, Inc. ("Old Berry") was formed in 1983 to
purchase substantially all of the assets of Imperial Plastics. In 1988, Old
Berry acquired Gilbert Plastics of New Brunswick, New Jersey, a leading
manufacturer of aerosol overcaps, and subsequently relocated Gilbert Plastics'
production to Old Berry's Evansville, Indiana facility. In 1990, Holding and the
Company were formed to purchase the assets of Old Berry. The Company acquired
substantially all of the assets (the "Mammoth Acquisition") of the Mammoth
Containers division of Genpak Corporation in February 1992 for approximately
$18.3 million, adding plants in Forest City, North Carolina (which was
subsequently sold by the Company) and Iowa Falls, Iowa. In March 1995, the
Company acquired the assets of Sterling Products, Inc. (the "Sterling Products
Acquisition"), a producer of injection molded plastic drink cups and lids, and
added a plant in Winchester, Virginia. In December 1995, the Company acquired
the assets of Tri-Plas, Inc. (the "Tri-Plas Acquisition"), a manufacturer of
injection molded containers and lids, and added manufacturing plants in
Charlotte, North Carolina and York, Pennsylvania. In January 1996, the Company
acquired the assets relating to the plastic drink cup product line of Alpha
Products, Inc., a subsidiary of Aladdin Industries, Inc. ("Alpha Products").
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<PAGE>
RECENT ACQUISITIONS
The Sterling Products Acquisition
On March 10, 1995, Berry Sterling Corporation, a wholly-owned subsidiary of
the Company ("Berry Sterling"), acquired substantially all of the assets of
Sterling Products, Inc. ("Sterling Products") of Winchester, Virginia. Sterling
Products, a manufacturer and marketer of printed plastic drink cups, had fiscal
1994 net sales of $6.1 million. In 1994, Sterling Products introduced a new
drink cup design intended for use in vehicles which allows for larger-size cups
to fit standard vehicle drink cup holders. These drink cups also have unique
fitted lids to avoid spills. The acquired business also has a conventional line
of straight-sided plastic drink cups in sizes from 12 ounces to 64 ounces.
Management believes that the Sterling Products Acquisition gives the Company
immediate low cost penetration into the fast growing plastic drink cup market.
Since the integration of the plastic drink cup business entailed the addition of
a product line rather than the implementation of new technology, the Company was
able to achieve the dramatic increase in net sales by utilizing its national
sales force and its existing molding machines at multiple-plant locations. It
also provides the Company with a plant, located in Winchester, Virginia, that is
well-situated to service key Eastern markets. Customers for this product line
are primarily fast food and convenience store chains.
The Tri-Plas Acquisition
On December 21, 1995, Berry Tri-Plas Corporation, a wholly-owned subsidiary
of the Company ("Berry Tri-Plas"), acquired substantially all of the assets of
Tri-Plas, Inc. ("Tri-Plas") of Ontario, California. Tri-Plas, a manufacturer and
marketer of injection molded containers and lids, had fiscal 1995 net sales of
approximately $16.6 million. In connection with the transaction, Tri-Plas
transferred production from its Ontario, California facility (which was not
purchased by the Company) to the Company's Henderson, Nevada plant.
Additionally, Berry Tri-Plas continues to operate the former Tri-Plas plants in
York, Pennsylvania and Charlotte, North Carolina.
Management believes that the Tri-Plas Acquisition gives the Company an
immediate presence in the polypropylene container product line, which is mainly
used for food and "hot fill" applications. The Tri-Plas Acquisition also rounds
out the Company's open top container line and adds increased access to East
Coast markets with the addition of two manufacturing facilities.
The Alpha Products Drink Cup Product Line Acquisition
On January 23, 1996, the Company purchased the assets relating to the
plastic drink cup line and decorating equipment of Alpha Products. The addition
of these assets complements the drink cup product line acquired in the Sterling
Products Acquisition.
AEROSOL OVERCAP MARKET
The Company believes it is the leader in the U.S. market for aerosol
overcaps, which the Company estimates to be approximately $95 million per annum.
Overall, the market is mature with an annual growth rate of approximately 3%.
Approximately one-third of this market consists of national marketers who
produce overcaps in-house for their own needs. Management believes that a
portion of these in-house producers will increase the outsourcing of their
production to high technology, low cost manufacturers, such as the Company, as a
means of reducing manufacturing assets and focusing on their core marketing
objectives.
The Company's aerosol overcaps are used in a wide variety of end-use markets
including spray paints, household and personal care products, insecticides and a
myriad of other commercial and
45
<PAGE>
consumer products. The following chart illustrates the Company's fiscal 1995
overcap sales by market end-use:
[GRAPH]
Most U.S. manufacturers and contract fillers of aerosol products are
customers of the Company for some portion of their needs. In fiscal 1995, no
single overcap customer accounted for more than 4%, and the Company's top ten
overcap customers accounted for approximately 14%, of the Company's total net
sales.
Management believes that, over the years, the Company has developed several
significant competitive advantages, including a reputation for outstanding
quality, short lead-time requirements, long-standing relationships with major
customers, the ability to accurately reproduce over 3,000 colors, proprietary
packing technology that minimizes freight cost and warehouse space, high-speed,
low-cost molding and decorating capability and a broad product line of
proprietary molds. The Company continues to develop new products in the overcap
market, including the "spray-thru" line of aerosol overcaps.
The Company's major competitor in this product line is Knight Engineering.
In addition, a number of companies, including several of the Company's customers
(e.g., S.C. Johnson, Cheseborough-Ponds and Reckitt & Colman), currently produce
aerosol overcaps for their own use.
CONTAINER MARKET
The Company estimates the rigid plastic open-top container market in the
United States to be approximately $1.1 billion, of which approximately $600
million is large (primarily 5-gallon) industrial pails. The remaining $500
million encompasses a wide variety of containers which include all of the
Company's product lines other than industrial containers. Although growth rates
vary by product line, the overall market is growing faster than the economy due
in part to the conversion of paper, glass and metal packaging to plastic
packaging. Plastic is a preferred material for many applications due to its low
cost, functional performance, reusability and recyclability. In addition,
certain markets, such as dairy and food packaging, are shifting to injection
molded products from thermoformed containers made from polystyrene due to
environmental and performance advantages. Management believes the Company's
overall market share in the container market (excluding industrial containers)
is approximately 15%, and that the Company is the leading U.S. manufacturer in
the thinwall, pry-off, child-resistant and polypropylene product lines.
Management considers industrial containers to be a commodity market,
characterized by little product differentiation and an absence of higher margin
niches.
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<PAGE>
The Company classifies its containers into six product lines: "thinwall,"
"child-resistant," "pry-off," "dairy," "polypropylene" and "industrial." The
following table describes each of the Company's six product lines.
<TABLE>
<CAPTION>
PRODUCT LINE DESCRIPTION SIZES MAJOR END MARKETS
- ---------------- ------------------------------- ---------------- -------------------------------
<S> <C> <C> <C>
Thinwall Thinwalled, multi-purpose 6 oz. to Food, promotional products,
containers with or without 2 gallons toys and a wide variety of
handles and lids other uses
Child-resistant Containers that meet Consumer 2 lb. to Pool and other chemicals
Product Safety Commission 2 gallons
standards for child safety
Pry-off Containers having a tight 4 oz. to Building products, adhesives,
lid-fit and requiring an 2 gallons other industrial uses
opening device
Dairy Thinwall containers in 6 oz. to 5lbs., Cultured dairy products
traditional dairy market sizes Multi-pack including yogurt, cottage
and styles cheese, sour cream and dips
Polypropylene Usually clear containers in 6 oz. to 5lbs. Food, deli, sauces, salads
round, oblong or rectangular
shapes
Industrial Thick-walled, larger pails 2.5 to Building products, chemicals,
designed to accommodate heavy 5 gallons paints, other industrial uses
loads
</TABLE>
The largest end-uses for the Company's containers are food products,
building products, chemicals and dairy products. The Company has a diverse
customer base for its container lines, and no single container customer exceeded
4% of the Company's total net sales in fiscal 1995.
Management believes that no other container manufacturer in the U.S. has the
breadth of product line offered by the Company. The Company's 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, the Company has sophisticated
printing capabilities, an in-house graphic arts department, low cost
manufacturing capability with six plants strategically located throughout the
United States and a dedication to high quality products and customer service.
Ten product engineers, located in most of the Company's facilities, work with
customers to design and commercialize new containers.
The Company seeks to develop niche container products and new applications
by taking advantage of the Company's state-of-the-art decorating and graphic
arts capabilities and dedication to service and quality. Management believes
that these capabilities have given the Company a significant competitive
advantage in certain high-margin niche container applications for specialized
products. Examples include popcorn containers for new movie promotions and
professional and college sporting and entertainment events, where the ability to
produce sophisticated and colorful graphics is crucial to the product's success.
In order to identify new applications for existing products, the Company relies
extensively on its national sales force. Once these opportunities are
identified, the Company's sales force interfaces with product design engineers
to meet customers' needs. Finally, the quality and performance of the Company's
dairy product line have enabled the Company to establish a solid and growing
reputation in this market.
In non-industrial containers, the Company's strongest competitors include
Airlite, Sweetheart, Venture Packaging, Landis, Cardinal and Polytainers. The
Company also produces commodity industrial pails for a market which is dominated
by large volume competitors such as Letica, Plastican, Bennett and Ropak. The
Company does not participate heavily in this market due to generally lower
margins. The Company intends to selectively participate in the industrial
container market when higher margin opportunities, equipment utilization or
customer requirements make participation an attractive option.
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<PAGE>
DRINK CUP MARKET
The Company estimates the total U.S. market for drink cups exceeds $1.0
billion per year, with approximately $110 million in plastic. As beverage
producers, convenience stores and fast food restaurants increase their marketing
efforts for larger sized drinks, the Company believes that the plastic drink cup
market will expand because of plastic's desirability over paper for larger drink
cups. Injection-molded plastic cups range in size from eight to 64 ounces, and
often come with lids. Primary markets are fast food restaurants, convenience
stores, sporting events, sit-down restaurants and retail. Virtually all cups are
decorated, often as a promotional item, and Berry is known in the industry for
innovative, state-of-the-art graphics capability.
Berry's innovative DT cup design in 32 and 44 ounce sizes, introduced by
Berry Sterling's predecessor in 1994, allows these large size cups to fit in a
standard vehicle cup holder. The design has been successful for the Company, as
exemplified by McDonald's awarding the Company its fall 1995 National Football
League cup promotion. The Company's position in this market is also enhanced by
virtue of its multi-year contract to supply DT cups to Coca-Cola's fast food and
convenience store customers.
Berry also supplies a full line of traditional straight-sided drink cups
from 12 to 64 ounces with and without leak-proof lids primarily to fast food and
convenience store chains. The 64 ounce cup, which has been highly successful
with convenience stores, is one of the Company's fastest growing drink cups. In
addition to a full product line, Berry has the advantage of being the only
supplier that can provide sophisticated printing and/or labeling capacity on a
nation-wide basis; in 1995, four different plants molded and decorated drink
cups. Major drink cup competitors are Packaging Resources Incorporated and
PackerWare Corporation.
CUSTOM MOLDED PRODUCTS MARKET
The Company also produces custom molded products, which totaled
approximately 6% of fiscal 1995 net sales, by utilizing molds provided by its
customers. Typically, the low cost of entry in the custom molded products market
creates a commodity-like marketplace. However, the Company has focused its
marketing of custom molded products on those customers that are cognizant of the
Company's mold and product design expertise, superior color matching abilities
and sophisticated multi-color printing capabilities. The majority of the
Company's custom business in 1995 required specialized equipment and expertise,
supporting the Company's desire to pursue higher volume-added niche
opportunities in every market in which it participates.
MARKETING AND SALES
The Company reaches its large and diversified base of over 2,000 customers
primarily through its direct field sales force which has been expanded from 14
sales representatives in fiscal 1990 to 37 at the end of fiscal 1995. These
field sales representatives are focused on individual product lines, but are
encouraged to sell all Company products to serve the needs of the Company's
customers. The Company's commission structure for salespeople provides a strong
incentive to generate new business by paying separate commissions for new sales
in addition to commissions on total sales. The Company believes that a direct
field sales force is able to better focus on target markets and customers, with
the added benefit of permitting the Company to control pricing decisions
centrally. The Company utilizes the services of a small number of sales
representative organizations, the largest of which is Wolf Container in
Pittsburgh, Pennsylvania, to augment its direct sales force.
The Company believes that it has a reputation for a high level of customer
satisfaction. Highly skilled customer service representatives are located in
each of the Company's facilities to support the national field sales force. In
addition, two telemarketing representatives, three market managers and
48
<PAGE>
three sales/marketing executives oversee the 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 a Graphic Arts department
with computer-assisted graphic design capabilities and in-house production of
photopolymer printing plates. Berry also has a centralized Color Matching and
Materials Blending department that utilizes a computerized spectrophotometer to
insure that colors match those requested by customers.
MANUFACTURING
General
The Company manufactures its products using the plastic injection molding
process. The process begins when plastic resin, in the form of small pellets, is
fed into an injection molding machine. The injection molding machine then melts
the plastic resin and injects it into a multi-cavity steel mold, forcing the
plastic resin to take the final shape of the product. At the end of each molding
cycle (five to 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, approximately 30% of
overcaps, 75% of containers and virtually all drink cups are either decorated
(printing, silkscreening, labeling) or assembled (e.g., bail handles fitted to
containers). The Company believes that its molding and decorating capabilities
are among the best in the industry.
Each of the Company's plants is managed by a local plant manager and is
treated as a profit center. The Company's 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. The Company utilizes state-of-
the-art robotic packaging processes for large volume products, which enables the
Company to deliver a higher quality product (due to reduced breakage) while
lowering warehousing and shipping costs (due to more efficient use of space).
Each plant has complete tooling maintenance capability to support molding and
decorating operations. The Company has historically made, and intends to
continue to make, significant capital investments in plant and equipment because
of the Company's objectives to grow, to improve productivity and to maintain
competitive advantages, as well as the asset-intensive nature of the injection
molding business.
The Company operates 101 molding machines ranging from 150 to 750 ton clamp
capacity. The Company's largest overcap machines are capable of producing 10
thousand to 15 thousand aerosol overcaps per hour. Due to the wide variety of
container and drink cup styles and sizes produced by the Company, production
rates vary significantly. The Company owns over 350 active molds.
Product Development
The Company has 10 full-time product engineers who use three-dimensional
computer-aided-design (CAD) technology to design and modify new products and
prepare mold drawings. Engineers use an in-house model shop, which includes a
thermoforming machine, to produce prototypes and sample parts. The Company can
simulate the molding environment by running unit-cavity prototype molds in a
small injection molding machine dedicated to research and development of new
products. Production molds are then designed and outsourced for production by
various companies in the United States and Canada with whom the Company has
extensive experience and established relationships. The Company's engineers
oversee the mold-building process from start to finish.
49
<PAGE>
Quality Assurance
Each plant extensively utilizes Total Quality Management philosophies,
including the use of statistical process control and extensive involvement of
employees to increase productivity. This teamwork approach to problem-solving
increases employee participation and provides necessary training at all levels.
The Evansville plant and the Henderson plant were approved for ISO 9000 in 1994
and 1995, respectively, which certifies compliance by a company with a set of
shipping, trading and technology standards promulgated by the International
Standardization Organization. The Company is actively pursuing ISO certification
in all of the remaining facilities. Extensive testing of parts for size, color,
strength and material quality using statistical process control (SPC) techniques
and sophisticated technology is also an ongoing part of the Company's
traditional quality assurance activities.
Systems
Berry has an on-line, fully integrated computer software system at all of
its plants capable of producing complete financial and operational reports by
plant as well as by product line. This accounting and control system is easily
expandable to add new features and/or locations as the Company grows. In
addition, the Company has in place 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
The most important raw material purchased by the Company is plastic resin.
The Company purchased approximately $43.0 million of resin in fiscal 1995
(excluding specialty resins), of which 80% was high density polyethylene
("HDPE"), 10% linear low density polyethylene and 10% polypropylene. The
Company's purchasing strategy is to deal with only high quality, dependable
suppliers, such as Dow, Union Carbide, Chevron, and Phillips. The Company
purchases raw materials pursuant to purchase orders issued from time to time by
the Company.
The Company does not anticipate having any material difficulties obtaining
raw materials in the foreseeable future. All resin suppliers commit to the
Company to provide uninterrupted supply at competitive prices. See "Risk
Factors--Reliance on Certain Supplier." Management believes that the Company has
maintained outstanding relationships with these key suppliers over the past
several years and expects that such relationships will continue into the
foreseeable future.
EMPLOYEES
As of April 30, 1996, the Company had approximately 1,100 employees. No
employees of the Company are covered by collective bargaining agreements. There
have been no significant labor disputes in the past several years, and the
Company considers its employee relations to be excellent.
PATENTS AND TRADEMARKS
The Company has numerous patents and trademarks with respect to its
products. See "Legal Proceedings" below.
ENVIRONMENTAL MATTERS AND GOVERNMENT REGULATION
The past and present operations of the Company and the past and present
ownership and operations of real property by the Company 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. The
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<PAGE>
Company believes that it is in substantial compliance with applicable
environmental laws and regulations. However, the Company cannot predict with any
certainty that it will not in the future incur liability under environmental
statutes and regulations with respect to contamination of sites formerly or
currently owned or operated by the Company (including contamination caused by
prior owners and operators of such sites) and the off-site disposal of hazardous
substances.
The Food and Drug Administration (the "FDA") regulates the material content
of direct-contact food containers and packages, including certain thinwall
containers manufactured by the Company. The Company uses approved resins and
pigments in its direct contact food products and believes it is in material
compliance with all such applicable FDA regulations.
The plastics industry in general, and the Company in particular, also are
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 the Company's products, HDPE, is recyclable, and, accordingly, the
Company believes that the legislation promulgated to date and such initiatives
to date have not had a material adverse effect on the Company. There can be no
assurance that any such future legislative or regulatory efforts or future
initiatives would not have a material adverse effect on the Company. On January
1, 1995, legislation in Oregon, California and Wisconsin went into effect
requiring products packaged in rigid plastic containers to comply with standards
intended to encourage recycling and increased use of recycled materials.
Although the regulations vary by state, the principal requirement is the use of
post consumer regrind ("PCR") 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 such regulations if
statewide recycling reaches or exceeds 25% of rigid plastic containers. In 1995,
the Department of Environmental Quality calculated that Oregon had exceeded its
recycling goal of 25% which puts them in compliance for the 1995 and 1996
calendar years. In California, however, the rate committees hope to announce a
rate during the summer of 1996. Experts are skeptical as to whether California
can meet the 25% rate. If it does, there is no guarantee it will do so every
year. There are currently no permanent exceptions. The Company, in order to
facilitate individual customer compliance with these regulations, is providing
customers the option of purchasing containers which contain PCR or using
containers with reduced weight.
PROPERTIES
The following table sets forth the Company's principal facilities:
<TABLE>
<CAPTION>
LOCATION ACRES SQUARE FOOTAGE USE OWNER
- --------------------- ----- -------------- -------------------------------- ---------------
<S> <C> <C> <C> <C>
Evansville, IN....... 9.3 380,000 Headquarters and manufacturing The Company
Henderson, NV........ 12.0 106,000 Manufacturing The Company
Iowa Falls, IA....... 14.0 101,000 Manufacturing Berry Iowa
Winchester, VA....... 5.0 30,000 Manufacturing Berry Sterling
Charlotte, NC........ 32.0 48,000 Manufacturing Berry Tri-Plas
York, PA............. 10.0 40,000 Manufacturing Leased
</TABLE>
The Company believes that its property and equipment are well-maintained, in
good operating condition and adequate for its present needs.
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<PAGE>
LEGAL PROCEEDINGS
The Company is party to various legal proceedings involving routine claims
which are incidental to its business. Although the Company's legal and financial
liability with respect to such proceedings cannot be estimated with certainty,
the Company believes that any ultimate liability would not be material to its
financial condition.
In February 1995, the Internal Revenue Service completed an audit of the
1990 through 1993 income tax returns of the Company. The results of these
audits, combined with the provision for 1994 income taxes, resulted in net
operating loss carryforwards as of December 31, 1994 of $5.1 million. There were
no remaining unutilized loss carryforwards as of December 30, 1995.
The Company and/or Berry Sterling are currently litigating three lawsuits
that involve United States Patent No. Des. 362,368 (the " '368 Patent"). The
'368 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.
("Pescor Plastics") for infringement of the '368 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 ("Packaging Resources") in United
States District Court, Southern District of New York, for infringement of the
'368 Patent. Packaging Resources has filed counterclaims against Berry Sterling
alleging violation of the Lanham Act, tortious interference with Packaging
Resources's prospective business advantage, consumer fraud and requesting a
declaratory judgment that its "Drive-N-Go" cup does not infringe the '368
Patent. On October 12, 1995, PackerWare Corporation ("PackerWare") filed suit
against Berry Sterling in United States District Court, District of Kansas,
alleging unfair competition and seeking a declaratory judgment that a plastic
drink cup manufactured by PackerWare does not infringe the '368 Patent, and
attorney fees for the action. Berry Sterling has filed a counterclaim alleging
infringement by PackerWare of the '368 Patent. On April 25, 1996, the Virginia
Court granted Pescor Plastics' motion for summary judgment invalidating the '368
Patent on the grounds that the design was "functional." On May 14, 1996, the
court entered a judgment dismissing the action and dismissing Pescor Plastics'
counterclaim without prejudice. On May 22, 1996, Berry Sterling filed a Notice
of Appeal from this judgment to the Court of Appeals for the Federal Circuit.
The courts in the New York action and the Kansas action have not yet decided
whether those actions will be stayed or proceed pending the appeal in the
Virginia action.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information as of the date of this
Prospectus with respect to the executive officers, directors and certain key
personnel of Holding and its subsidiaries:
<TABLE>
<CAPTION>
NAME AGE TITLE ENTITY
- ------------------------------- --- ------------------------------- --------------------
<S> <C> <C> <C>
Roberto Buaron................. 50 Chairman and Director Company and Holding
Martin R. Imbler............... 48 President, Chief Executive Company
Officer and Director
President and Director Holding
Douglas E. Bell................ 44 Executive Vice President, Sales Company
and Marketing and Director
Ira G. Boots................... 42 Executive Vice President, Company
Operations and Director
James M. Kratochvil............ 39 Vice President, Chief Financial Company
Officer, Treasurer and
Secretary
Vice President, Chief Financial Holding
Officer and Secretary
R. Brent Beeler................ 43 Executive Vice President, Sales Company
and Marketing
Ruth Richmond.................. 33 Vice President, Planning and Company
Administration
David Weaver................... 33 Vice President and Plant Company
Manager--Iowa Falls
Robert J. Bielecki............. 36 Vice President and Plant Company
Manager--Henderson
Randall J. Becker.............. 40 Vice President and Plant Berry Sterling
Manager--Winchester
George A. Willbrandt........... 51 Vice President--Sales and Berry Sterling
Marketing
Lawrence G. Graev.............. 51 Director Company and Holding
James A. Long.................. 53 Vice President, Assistant Company
Secretary and Director
Vice President, Treasurer and Holding
Director
Donald J. Hofmann.............. 38 Director Company and Holding
Robert L. Egan................. 32 Director Company and Holding
David M. Clarke................ 45 Director Company and Holding
</TABLE>
ROBERTO BUARON has been Chairman and a Director of the Company since it was
organized in December 1990. He has also served as Chairman and a Director of
Holding since 1990. He is the Chairman and Chief Executive Officer of First
Atlantic Capital, Ltd. ("First Atlantic"), 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 affiliate. Prior to 1983, he was a Principal at McKinsey &
Company.
MARTIN R. IMBLER has been President, Chief Executive Officer and a Director
of the Company since January 1991. He has also served as a Director of Holding
since January 1991, and as President of
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<PAGE>
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.
DOUGLAS E. BELL has been Executive Vice President, Sales and Marketing, and
a Director of the Company since March 1991. From December 1990 to March 1991,
Mr. Bell was Chief Operating Officer of the Company. Mr. Bell was employed by
Old Berry, acting as interim Chief Operating Officer from July 1990 to December
1990, and prior to July 1990, as Vice President, Sales of Imperial Plastics.
IRA G. BOOTS has been Executive Vice President, Operations, and a Director
of the Company 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 Old Berry from 1984 to December
1990 as Vice President, Operations.
JAMES M. KRATOCHVIL has been Vice President, Chief Financial Officer and
Secretary of the Company since 1991, and as Treasurer of the Company since May
1996. He has also served as Vice President, Chief Financial Officer and
Secretary of Holding since 1991. Mr. Kratochvil was employed by Old Berry 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 the Company since December 1990. Mr. Beeler was employed by Old
Berry from October 1988 to December 1990 as Vice President, Sales and Marketing.
RUTH RICHMOND has been Vice President, Planning and Administration of the
Company 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 Old Berry in 1986.
DAVID WEAVER has been Vice President and Plant Manager-Iowa Falls of the
Company since January 1993. 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 Old Berry.
ROBERT J. BIELECKI has been Vice President and Plant Manager-Henderson of
the Company since January 1995. From January 1992 to December 1995, Mr. Bielecki
served as Customer Service and Materials Manager for the Company. Prior to that,
Mr. Bielecki served as Customer Service Manager for the Company from January
1990 to December 1991.
RANDALL J. BECKER has been Vice President and Plant Manager-Winchester of
Berry Sterling since March 1995. From 1991 to March 1995, he served as Product
Development/Marketing Manager of the Company.
GEORGE A. WILLBRANDT has been 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 the Company and 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.
JAMES A. LONG has been Vice President, Assistant Secretary and a Director of
the Company since 1991. He has also served as Vice President, Treasurer and a
Director of Holding since 1991. He has
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<PAGE>
been an Executive Vice President of First Atlantic since March 1991. From
January 1990 to February 1991, Mr. Long was an Executive Vice President at
Kleinwort Benson N.A., Inc., an equity leveraged buyout fund. Prior to 1989, he
was an Executive Vice President and a member of various executive and operating
committees of Primerica Corporation.
DONALD J. HOFMANN has been a director of Holding and the Company 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.
ROBERT L. EGAN has been a director of Holding and the Company since June
1996. Mr. Egan has been a Vice President of Chase Capital Partners since April
1996. From June 1994 to March 1996, he was with Chase Manhattan Capital
Corporation and, prior to that, he was a Vice President in the Merchant Banking
Group of The Chase Manhattan Bank, N.A.
DAVID M. CLARKE has been a director of Holding and the Company since June
1996. Mr. Clarke has been a Vice President in the Investment Group of Aetna Life
Insurance Company since 1988.
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid by the
Company to its Chief Executive Officer and the four other most highly
compensated executive officers of the Company (collectively, the "Named
Executive Officers") for services rendered in all capacities to the Company
during fiscal 1995, 1994 and 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
FISCAL -------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
- -------------------------------------------------- ------ -------- -------- ---------------
<S> <C> <C> <C> <C>
Martin R. Imbler.................................. 1995 $275,625 $157,500 $ 1,394
President and Chief Executive Officer 1994 262,500 117,000 1,394
1993 250,000 79,971 1,369
Douglas E. Bell................................... 1995 137,525 124,428 1,394
Executive Vice President, Sales and Marketing 1994 130,977 85,433 1,394
1993 124,740 69,187 1,369
Ira G. Boots...................................... 1995 137,525 124,428 1,394
Executive Vice President, Operations 1994 130,977 85,433 1,394
1993 124,740 85,888 1,369
James M. Kratochvil............................... 1995 106,270 96,150 1,394
Vice President, Chief Financial Officer and 1994 101,210 66,027 1,394
Secretary 1993 96,390 55,158 1,369
R. Brent Beeler................................... 1995 106,270 96,150 1,394
Executive Vice President, Sales and Marketing 1994 101,210 66,027 1,394
1993 96,390 63,888 1,369
</TABLE>
- ------------
(1) Amounts shown reflect contributions by the Company under the 401(k) plan.
55
<PAGE>
FISCAL YEAR-END OPTION HOLDINGS
The following table provides information on the number of exercisable and
unexercisable management stock options at December 30, 1995. No options were
granted to, and no options were exercised by, the Named Executive Officers in
fiscal 1995. In connection with the Transaction, (i) the vesting of options that
would vest on or prior to the end of fiscal 1996 was accelerated and (ii) all
such outstanding stock options were exercised prior to consummation of the
Offering and the Transaction.
FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END AT FISCAL YEAR-END
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME (#) (2) (2)
- ------------------------------------------------ ------------------------- -------------------------
<S> <C> <C>
Martin R. Imbler................................ 22,752/0 $56,334/0
Douglas E. Bell................................. 9,104/0 22,542/0
Ira G. Boots.................................... 9,104/0 22,542/0
James M. Kratochvil............................. 4,552/0 11,271/0
R. Brent Beeler................................. 4,552/0 11,271/0
</TABLE>
- ------------
(1) None of Holding's capital stock is currently publicly traded. Market value
reflects the sale price of warrants previously held by an investor of
Holding representing 2% of total ownership of Holding, sold in a third party
transaction late in 1995.
(2) Prior to consummation of the Transaction, all options granted to management
of the Company were exercisable for shares of Class A Common Stock, par
value $.00005 per share, of Holding.
COMPENSATION OF DIRECTORS
Members of the Board of Directors of Holding, the Company and its
subsidiaries receive no annual fees but are reimbursed for reasonable
out-of-pocket expenses incurred in their capacity as directors.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Imbler (the "Imbler
Employment Agreement") that expires on June 30, 2001. Base compensation under
the Imbler Employment Agreement for fiscal 1996 is $289,406. The Imbler
Employment Agreement also provides for an annual performance bonus of $50,000 to
$175,000 based upon the Company's attainment of certain financial targets. The
Company may terminate Mr. Imbler's employment for "cause" or upon a "disability"
(as such terms are defined in the Imbler Employment Agreement). If the Company
terminates Mr. Imbler "without cause" (as defined in the Imbler Employment
Agreement), Mr. Imbler is entitled to receive, among other things, the greater
of (i) one year's salary or (ii) 1/12 of one year's salary for each year (not to
exceed 24 years in the aggregate) of employment with the Company. The Imbler
Employment Agreement also contains customary noncompetition, nondisclosure and
nonsolicitation provisions.
The Company also has employment agreements with each of Messrs. Bell, Boots,
Kratochvil and Beeler (each, an "Employment Agreement" and, collectively, the
"Employment Agreements"), each of which expires on June 30, 2001. The Employment
Agreements provide for fiscal 1996 base compensation of $144,402, $144,402,
$111,584 and $111,584 respectively. Salaries are subject in each case to annual
adjustment at the discretion of the Board of Directors of the Company. The
Employment Agreements entitle each executive to participate in all other
incentive compensation plans established for executive officers of the Company.
The Company may terminate each Employment Agreement for "cause" or a
"disability" (as such terms are defined in the Employment Agreements). If the
Company terminates an executive's employment without "cause" (as defined in the
Employment Agreements),
56
<PAGE>
the Employment Agreements require the Company to pay certain amounts to the
terminated executive, including (i) 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 the Company, and (ii) certain benefits under
applicable incentive compensation plans. Each Employment Agreement also includes
customary noncompetition, nondisclosure and nonsolicitation provisions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has not historically used a compensation committee to determine
executive officer compensation. The annual salary and bonus paid to Messrs.
Imbler, Bell, Boots, Kratochvil and Beeler are determined by the Board of
Directors of the Company in accordance with their respective employment
agreements. All other compensation decisions with respect to officers of the
Company are made by Mr. Imbler pursuant to policies established in consultation
with the Company's Board of Directors.
The Company is party to an Amended and Restated Management Agreement (the
"FACL Management Agreement") with First Atlantic pursuant to which First
Atlantic provides the Company 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, the Company
paid First Atlantic fees and expenses of $816,900 for fiscal 1995 and $777,700
for fiscal 1994. First Atlantic also received a $100,000 advisory fee in both
March and December 1995 for originating, structuring and negotiating the
Sterling Products Acquisition and the Tri-Plas Acquisition, respectively, and a
fee of $1,500,000 in April 1994 for advisory services rendered in connection
with the 1994 Units Offering, including originating, structuring and negotiating
such offering. In connection with the Transaction, the FACL Management Agreement
was amended to provide for a fee for services rendered in connection with
certain transactions equal to the lesser of (i) 1% of the total transaction
value and (ii) $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 Transaction and the Offering, Holding
will pay a fee of $1,250,000 plus reimbursement for out-of-pocket expenses to
First Atlantic for advisory services, including originating, structuring and
negotiating the Transaction and the Offering. See "Certain Transactions."
Mr. Buaron, the Chairman and a director of Holding and the Company, is the
Chairman and Chief Executive Officer of First Atlantic. Mr. Graev is a director,
and Mr. Long is an officer, of First Atlantic. As a stockholder of First
Atlantic, Mr. Buaron is entitled to receive a portion of any dividends declared
by First Atlantic on its capital stock, including any dividends paid out of the
$1,250,000 fee to be paid by Holding to First Atlantic in connection with the
Transaction. First Atlantic is engaged by International to provide certain
financial and management consulting services for which it receives annual fees.
First Atlantic and International have completely distinct ownership and equity
structures. See "Certain Transactions."
Atlantic Equity Partners, L.P. (the "Fund"), a stockholder of Holding prior
to the consummation of the Transaction, will be receiving approximately $67.6
million from the sale of its common stock in Holding and warrants to purchase
common stock. First Atlantic is engaged by the Fund to provide certain financial
and management consulting services for which it receives annual fees. First
Atlantic and the Fund have completely distinct ownership and equity structures.
Atlantic Equity Associates, L.P., a Delaware limited partnership ("AEA"), is the
sole general partner of the Fund. Mr. Buaron is the sole shareholder of Buaron
Capital Corporation ("Buaron Capital"). Buaron Capital is the managing general
partner of AEA. RETNI Limited, a Cayman Islands corporation ("RETNI") and an
indirect wholly-owned subsidiary of Akros, is also a general partner of AEA. By
virtue of their direct and indirect ownership interests in the Fund, Buaron
Capital, RETNI and Mr. Long were entitled to receive a portion of the proceeds
from the sale of the equity interests in Holding. See "Certain Transactions."
57
<PAGE>
In connection with the Transaction, Mr. Imbler, a director of the Company
and Holding, and Messrs. Bell and Boots, directors of the Company, received
approximately $5.9 million, $2.5 million and $2.4 million, respectively, from
their sale of certain equity interests in Holding. In connection with the 1994
Units Offering, the Company paid a $50.0 million dividend on its common stock to
Holding, and Holding distributed that amount to its holders of equity interests.
In connection therewith, Holding agreed to pay cash bonuses, upon the occurrence
of certain events, to the members of management who held options under 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
Holding. As a result of the Transaction, such bonuses were paid to Messrs.
Imbler, Bell and Boots in the amounts of approximately $594,000, $238,000 and
$238,000, respectively. See "Certain Transactions."
In connection with the 1994 Units Offering and the distribution by Holding
of the $50.0 million dividend received from the Company, Messrs. Imbler, Bell
and Boots received net distributions from Holding of approximately $1.9 million,
$1.08 million and $1.01 million, respectively. See "Certain Transactions."
Chase Securities Inc. ("Chase Securities"), an affiliate of CVCA and Messrs.
Hofmann and Egan, who will become members of the Board of Directors of Holding
and the Company upon the consummation of the Transaction, received a fee of
$500,000 for arranging the sale of $15.0 million of the Holding Common Stock to
certain of the Common Stock Purchasers and the sale of $15.0 million of the
Holding Preferred Stock to CVCA. Chase Manhattan Investment Holdings, Inc.
("CMIHI"), an affiliate of Chase Securities and Messrs. Hofmann and Egan,
received approximately $13.6 million from the sale of equity interests of
Holding in the Transaction. In connection with the 1994 Units Offering, CMIHI
received a distribution of approximately $5.7 million on equity interests in
Holding and Chase Securities was paid a fee of $625,000 by the underwriter of
the 1994 Units Offering for financial advisory services rendered to the Company
and Holding. In addition, Chase Securities received a fee of $200,000 from the
Company in April 1994 for arranging the Revolving Credit Facility. See "Certain
Transactions."
Mr. Graev, a member of the Board of Directors of Holding and the Company, 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 the Company
and Holding in connection with certain matters, principally relating to
transactional, securities law, general corporate and litigation matters. See
"Certain Transactions."
EMPLOYEE STOCK OPTION PLAN
It is currently anticipated that the Board of Directors of Holding will
adopt a stock option plan in the near future. Holding currently contemplates
that employees, directors and certain independent contractors of Holding and its
subsidiaries will be entitled to participate in the stock option plan, which
will provide for the grant of both "incentive stock options" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and stock options that are non-qualified under the Code. Holding is currently
contemplating that the total number of shares of capital stock for which options
may be granted under the stock option plan will be a number equal to
approximately 7% of Holding's capital stock on a fully-diluted basis.
58
<PAGE>
PRINCIPAL STOCKHOLDERS
STOCK OWNERSHIP
All of the outstanding capital stock of the Company is owned by Holding. The
following table sets forth certain information regarding the ownership of the
capital stock of Holding as of the date of this Prospectus with respect to (i)
each person known by Holding to own beneficially more than 5% of the outstanding
shares of any class of its voting capital stock, (ii) each of Holding's
directors, (iii) the Named Executive Officers and (iv) 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 BPC Holding
Corporation, 101 Oakley Street, Evansville, Indiana 47710.
<TABLE>
<CAPTION>
PERCENTAGE
SHARES OF SHARES OF OF
VOTING PERCENTAGE NONVOTING ALL CLASSES
COMMON STOCK(1) OF COMMON STOCK(1) OF
NAME AND ADDRESS OF ------------------ VOTING -------------------------------- COMMON STOCK
BENEFICIAL OWNER CLASS A CLASS B COMMON STOCK CLASS A CLASS B CLASS C (FULLY-DILUTED)
- ----------------------- ------- ------- ------------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Atlantic Equity
Partners International
II, L.P.(2)............ -- 125,750 53.3% -- -- 10,688 22.5%
Chase Venture Capital
Associates, L.P.(3).... 52,000 5,623(4) 23.8 148,000 17,837(4) -- 36.9
BPC Equity, LLC(5)..... 31,200 -- 13.2 88,800 -- -- 19.8
Roberto Buaron(6)...... -- 125,750 53.3 -- -- 10,688 22.5
Martin R. Imbler....... -- 5,494 2.3 -- 15,636 1,795 3.8
James A. Long(7)....... -- 195 * -- 555 64 *
Lawrence G. Graev(8)... -- -- -- -- -- -- --
Donald J. Hofmann(9)... 52,000 5,623(4) 23.8 148,000 17,837(4) -- 36.9
Robert L. Egan(10)..... 52,000 5,623(4) 23.8 148,000 17,837(4) -- 36.9
David M. Clarke(11).... 31,200 -- 13.2 88,800 -- -- 19.8
Douglas E. Bell........ -- 2,392 1.0 -- 6,808 782 1.6
Ira G. Boots........... -- 2,280 1.0 -- 6,490 744 1.6
James M. Kratochvil.... -- 1,196 * -- 3,404 391 *
R. Brent Beeler........ -- 1,196 * -- 3,404 391 *
All officers and
directors as a group
(16 persons)........... 83,200 146,419 95.0 236,800 60,661 15,604 89.5
</TABLE>
- ------------
* Less than one percent.
(1) 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"), and 1,000,000 shares of Preferred Stock, $.01
par value (the "Holding Preferred Stock"). Of the 2,500,000 shares of
Holding 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 Voting Common Stock (the "Class B Voting 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"). Of the 1,000,000 shares of
Preferred Stock, 600,000 shares are designated Series A Senior Cumulative
Exchangeable Preferred Stock (the "Senior Preferred Stock").
(2) Address is P. O. Box 847, One Capital Place, Fourth Floor, Grand Cayman,
Cayman Islands, British West Indies. AEA II is the sole general partner of
International and as such exercises voting and/or investment power over
shares of capital stock owned by International, including the shares of
Holding Common Stock held by International (the "International Shares").
Mr. Buaron is the sole shareholder of BHL. BHL is the managing general
partner of AEA II. Woland, an indirect wholly owned subsidiary of Akros, is
also a general partner of AEA II. As general partners of AEA II, BHL and
Woland share voting and/or investment power over, and may be deemed to
beneficially own, the International Shares. BHL and Woland disclaim any
beneficial ownership of any shares of capital stock owned by International,
including the International Shares. Through their respective affiliations
with BHL, Woland and AEA II, Mr. Buaron and Akros control the sole general
partner of International and therefore have the authority to control voting
and/or investment
59
<PAGE>
power over, and may be deemed to beneficially own, the International
Shares. Mr. Buaron and Akros disclaim any beneficial ownership of any of
the International Shares.
(3) Address is 380 Madison Avenue, 12th Floor, New York, New York 10017.
(4) Represents warrants to purchase such shares of common stock to be held by
CVCA which are currently exercisable.
(5) Address is c/o Aetna Life Insurance Company, Private Equity Group, IG6U,
151 Farmington Avenue, Hartford, Connecticut 06156.
(6) Address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New
York, New York 10022. Represents shares of Holding Common Stock owned by
International. Mr. Buaron is the sole shareholder of BHL. BHL is the
managing general partner of AEA II. AEA II is the sole general partner of
International and as such, exercises voting and/or investment power over
shares of capital stock owned by International, including the International
Shares. Mr. Buaron, as the sole shareholder and Chief Executive Officer of
BHL, and Woland, as a general partner of AEA II, control the sole general
partner of International and therefore share voting and/or investment power
over, and may be deemed to beneficially own, the International Shares. Mr.
Buaron disclaims any beneficial ownership of the International Shares.
(7) Address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New
York, New York 10022.
(8) Address is c/o O'Sullivan Graev & Karabell, LLP, 30 Rockefeller Plaza, New
York, New York 10112.
(9) Address is c/o Chase Capital Partners, 380 Madison Avenue, 12th Floor, New
York, New York 10017. Represents shares to be owned by CVCA. 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
CVCA. Mr. Hofmann disclaims any beneficial ownership of the shares of
Holding Common Stock held by CVCA.
(10) Address is c/o Chase Capital Partners, 380 Madison Avenue, 12th Floor, New
York, New York 10017. Represents shares to owned by CVCA. Mr. Egan is a
Vice President of Chase Capital Partners, which is the private equity
investment arm of Chase Manhattan Corporation, which is an affiliate of
CVCA. Mr. Egan disclaims any beneficial ownership of the shares of Holding
Common Stock held by CVCA.
(11) Address is c/o Aetna Life Insurance Company, Private Equity Group, IG6U,
151 Farmington Avenue, Hartford, Connecticut 06156. Represents shares owned
by BPC Equity, LLC. Mr. Clarke is a Vice President in the Investment Group
of Aetna Life Insurance Company, which is a member of BPC Equity, LLC. Mr.
Clarke disclaims any beneficial ownership of the shares of Holding Common
Stock held by BPC Equity, LLC.
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<PAGE>
CERTAIN TRANSACTIONS
FIRST ATLANTIC
Pursuant to the FACL Management Agreement, First Atlantic provides the
Company 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, the Company paid First Atlantic
fees and expenses of $816,900 for fiscal 1995 and $777,700 for fiscal 1994.
First Atlantic also received a $100,000 advisory fee in both March and December
1995 for originating, structuring and negotiating the Sterling Products
Acquisition and the Tri-Plas Acquisition, respectively, and a fee of $1,500,000
in April 1994 for advisory services rendered in connection with the 1994 Units
Offering, including originating, structuring and negotiating such offering. In
connection with the Transaction, the FACL Management Agreement was amended to
provide for a fee for services rendered in connection with certain transactions
equal to the lesser of (i) 1% of the total transaction value and (ii) $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
Transaction and the Offering, Holding will pay a fee of $1,250,000 plus
reimbursement for out-of-pocket expenses to First Atlantic for advisory
services, including originating, structuring and negotiating the Transaction and
the Offering.
Mr. Buaron, the Chairman and a director of Holding and the Company, is the
Chairman and Chief Executive Officer of First Atlantic. As a stockholder of
First Atlantic, Mr. Buaron is entitled to receive a portion of any dividends
declared by First Atlantic on its capital stock, including any dividends paid
out of the $1,250,000 fee to be paid by Holding to First Atlantic in connection
with the Transaction. Mr. Long is also an officer of First Atlantic and Mr.
Graev is a director. First Atlantic is engaged by International to provide
certain financial and management consulting services for which it receives
annual fees. First Atlantic and International have completely distinct ownership
and equity structures.
Atlantic Equity Partners, L.P. (the "Fund"), a stockholder of Holding prior
to the consummation of the Transaction, received approximately $67.6 million
from the sale of its common stock in Holding and warrants to purchase common
stock. First Atlantic is engaged by the Fund to provide certain financial and
management consulting services for which it receives annual fees. First Atlantic
and the Fund have completely distinct ownership and equity structures. AEA is
the sole general partner of the Fund. Mr. Buaron is the sole shareholder of
Buaron Capital, and Buaron Capital is the managing general partner of AEA.
RETNI, an indirect wholly-owned subsidiary of Akros, is also a general partner
of the Fund. By virtue of their direct and indirect ownership interests in the
Fund, Mr. Long, Buaron Capital and RETNI are entitled to receive a portion of
the proceeds from the sale of the equity interests in Holding.
MANAGEMENT
In connection with the Transaction, Messrs. Imbler, Bell, Boots, Kratochvil
and Beeler received approximately $5.9 million, $2.5 million, $2.4 million, $1.3
million and $1.3 million, respectively, from their sale of certain equity
interests in Holding. In connection with the 1994 Units Offering, the Company
paid a $50.0 million dividend on its common stock to Holding, and Holding
distributed that amount to its holders of equity interests. In connection
therewith, Holding agreed to pay cash bonuses, upon the occurrence of certain
events, to the members of management who held options under 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 Holding. As a
result of the Transaction, such bonuses were paid to Messrs. Imbler, Bell,
Boots, Kratochvil and Beeler in the amounts of approximately $594,000, $238,000,
$238,000, $119,000 and $119,000, respectively.
In connection with the 1994 Units Offering and the distribution by Holding
of the $50.0 million dividend received from the Company, Messrs. Imbler, Bell,
Boots, Kratochvil and Beeler received net
61
<PAGE>
distributions from Holding of approximately $1.9 million, $1.08 million, $1.01
million, $0.54 million and $0.54 million, respectively.
STOCKHOLDERS AGREEMENTS
In connection with the Transaction, Holding entered into a Stockholders
Agreement dated as of June 18, 1996 (the "New Stockholders Agreement") with the
Common Stock Purchasers, certain Management Stockholders (as defined) and, for
limited purposes thereunder, the Preferred Stock Purchasers. The New
Stockholders Agreement grants the Common Stock Purchasers certain rights and
obligations, including the following: (i) until the occurrence of certain 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) International will have the right to designate three
directors; (C) CVCA will have the right to designate two directors; and (D) the
institutional holders (excluding International and CVCA) will have the right to
designate one director; (ii) in the case of certain Common Stock Purchasers, to
subscribe for a proportional share of future equity issuances by Holding; (iii)
under certain circumstances and in the case of International or CVCA, to cause
the initial public offering of equity securities of Holding or a sale of Holding
subsequent to the fifth anniversary of the closing of the Transaction and (iv)
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 Holding or a sale of Holding subsequent to the sixth anniversary of the
closing of the Transaction. Provisions under the New Stockholders Agreement also
(i) prohibit Holding from taking certain actions without the consent of holders
of a majority of voting stock held by CVCA and the institutional holders other
than International (or, following the occurrence of certain events,
International's consent), including certain transactions between Holding and any
subsidiary, on the one hand, and First Atlantic or any of its affiliates, on the
other hand; (ii) obligate Holding to provide certain Common Stock Purchasers
with financial and other information regarding Holding and to provide access and
inspection rights to all Common Stock Purchasers; and (iii) restrict transfers
of equity by the Common Stock Purchasers, subject to certain exceptions
(including for transfers of up to 10% of the equity (including warrants to
purchase equity) held by each Common Stock Purchaser on the date of the New
Stockholders Agreement). Pursuant to the New Stockholders Agreement, under
certain circumstances the Preferred Stock Purchasers (and their transferees)
have tag-along rights with respect to the 1996 Warrants and the Holding Common
Stock 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
International, CVCA and the Institutional Holders (as defined in the New
Stockholders Agreement) of more than 50% of the aggregate amount of securities
held by them immediately following the closing of the Transaction.
The New Stockholders Agreement grants registration rights, under certain
circumstances and subject to specified conditions, to the Common Stock
Purchasers. International and CVCA each have the right, on three occasions, to
demand registration, at Holding's expense, of their shares of Holding Common
Stock. Under certain circumstances, a majority in interest of the institutional
holders (excluding International and CVCA) have the right, on one occasion, to
demand registration, at Holding's expense, of their shares of Holding Common
Stock. The New Stockholders Agreement will provide that if Holding proposes to
register any of its securities, either for its own account or for the account of
other stockholders, Holding will be required to notify all Common Stock
Purchasers and to include in such registration the shares of Holding Common
Stock requested to be included by them. All shares of Holding Common Stock owned
by the Common Stock Purchasers requested to be included in a registration will
be subject to cutbacks under certain circumstances in connection with an
underwritten public offering.
The provisions of the New Stockholders Agreement regarding voting rights,
negative covenants, information/inspection rights, the right to force a sale of
Holding, preemptive rights and transfer
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restrictions generally will expire on the earlier to occur of (i) the later of
(A) the fifth anniversary of the closing of the Transaction if an underwritten
public offering of equity securities of Holding resulting in gross proceeds of
at least $20.0 million occurs prior to such fifth anniversary and (B) the
occurrence of such underwritten public offering that occurs subsequent to such
fifth anniversary of the closing of the Transaction; (ii) the twentieth
anniversary of the closing of the Transaction; and (iii) a sale of Holding. In
addition, the New 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 Holding and/or to
approve certain actions by Holding will terminate if certain circumstances
occur.
Holding is also party to a Stockholders Agreement dated January 22, 1991
(the "Management Stockholders Agreement"), with all management shareholders
including Messrs. Imbler, Bell, Boots, Kratochvil and Beeler (collectively, the
"Management Stockholders"). The Management Stockholders 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 Holding rights to repurchase capital
stock from the Management Stockholders upon the occurrence of certain events;
(v) granting the Management Stockholders certain rights to sell their shares to
Holding upon the occurrence of certain events; and (vi) requiring the Management
Stockholders to offer shares to International and Holding prior to any permitted
transfer. In connection with the Transaction, the Management Stockholders
Agreement is being amended in certain respects, including to add International
as a party.
CHASE SECURITIES, INC.
Chase Securities, an affiliate of CVCA and Messrs. Hofmann and Egan, who are
members of the Board of Directors of Holding and the Company, received a fee of
$500,000 for arranging the sale of $15.0 million of the Holding Common Stock to
certain of the Common Stock Purchasers and the sale of $15.0 million of the
Holding Preferred Stock to CVCA. CMIHI, an affiliate of Chase Securities and
Messrs. Hofmann and Egan, received approximately $13.6 million from the sale of
equity interests of Holding in the Transaction. In connection with the 1994
Units Offering, CMIHI received a distribution of approximately $5.7 million on
equity interests in Holding and Chase Securities was paid a fee of $625,000 by
the underwriter of the 1994 Units Offering for financial advisory services
rendered to the Company and Holding. In addition, Chase Securities received a
fee of $200,000 from the Company in April 1994 for arranging the Revolving
Credit Facility.
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 the Company and Holding in connection with certain matters,
principally relating to transactional, securities law, general corporate and
litigation matters.
TRANSACTIONS WITH AFFILIATES
The Indenture, the New Stockholders Agreement, the Senior Subordinated Notes
Indenture and the Revolving Credit Facility restrict the Company's and its
affiliates' ability to enter into transactions with their affiliates, including
their officers, directors and principal stockholders.
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DESCRIPTION OF COMMON STOCK
As of the date of this Prospectus, the issued and outstanding shares of
Holding Common Stock consist of Class A Voting and Nonvoting Common Stock, par
value $.01 per share, Class B Voting and Nonvoting Common Stock, par value $.01
per share, and Class C Nonvoting Common Stock, par value $.01 per share. The
Class A Voting Common Stock and Class B Voting Common Stock have one vote per
share on all matters on which Holding's stockholders are entitled to vote. The
Class A Nonvoting Common Stock, Class B Nonvoting Common Stock and Class C
Nonvoting Common Stock have no voting rights, except as required by law. All
distributions of any cash or property to the holders of Holding Common Stock
(except in connection with a recapitalization or exchange of Holding Common
Stock or any subdivision or combination of Holding Common Stock) shall be paid
in the following order of priority: (a) first, ratably, to the holders of Class
A Voting and Nonvoting Common Stock until such holders have received $100 per
share and (b) second, ratably, to the holders of Class B Voting and Nonvoting
Common Stock until such holders have received $100 per share. Thereafter, all
distributions shall be paid ratably to the holders of Class C Nonvoting Common
Stock until such time as the aggregate of all distributions paid to the holders
of Holding Common Stock is equal to $100 per share of Holding Common Stock held
by such holders. After such time, each distribution shall be paid ratably to the
holders of all Holding Common Stock (based upon the number of shares of Holding
Common Stock held by each such holder at the time of such distribution). Upon
the occurrence of certain events, all shares of Holding Common Stock will
automatically convert to voting stock, and the holders thereof will be entitled
to one vote per share on all matters on which Holding's stockholders are
entitled to vote. In addition, upon the occurrence of an underwritten public
offering at a price per share of Holding Common Stock that is equal to or
greater than $250 generating gross proceeds to Holding of at least $50.0
million, all classes of Holding Common Stock will automatically convert into a
single class of Holding Common Stock with identical voting and distribution
rights.
DESCRIPTION OF PREFERRED STOCK AND WARRANTS
In connection with the 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. The Preferred Stock does not have any voting
rights except as described above and except that upon the occurrence of certain
circumstances, a majority of
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the holders of Preferred Stock will have the right to elect two directors (in
which case International will have the right, under certain circumstances, to
elect up to two additional directors). Under certain circumstances, the
Preferred Stock may be redeemed by Holding, at its option, at specified
redemption prices.
Subject to the terms of the 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.
DESCRIPTION OF CERTAIN INDEBTEDNESS
EXISTING SENIOR SUBORDINATED NOTES DUE 2004
On April 21, 1994, Berry completed the offering of 100,000 Units consisting
of $100,000,000 aggregate principal amount of 12 1/4% Existing Senior
Subordinated Notes due 2004 and 100,000 warrants each to purchase 1.13237 shares
of Class A Common Stock, $.00005 par value, of Holding ("1994 Units Offering").
The Existing Senior Subordinated 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 Existing Senior Subordinated Notes are unconditionally
guaranteed on a senior subordinated basis by Holding, Berry Iowa (as defined),
Berry Sterling and Berry Tri-Plas.
Berry is not required to make mandatory redemption or sinking fund payments
with respect to the Existing Senior Subordinated Notes. However, at any time
prior to April 15, 1997, Berry may redeem up to 25% of the initial principal
amount of the Existing Senior Subordinated 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 Berry as a
capital contribution or are used to purchase common equity securities of Berry,
at a redemption price equal to 111.25% of the principal amount thereof plus
accrued interest, to the redemption date; provided that at least 75% of the
principal amount of Existing Senior Subordinated Notes originally issued remain
outstanding immediately after the occurrence of any redemption and that any such
redemption occurs within 60 days following the closing of any such public
offering. Subsequent to April 15, 1999, the Existing Senior Subordinated 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 of control, as defined in the Senior Subordinated Notes Indenture, each
holder of Existing Senior Subordinated Notes will have the right to require
Berry to repurchase all or any part of such holder's Existing Senior
Subordinated Notes at a repurchase price in cash equal to 101% of the aggregate
principal amount thereof plus accrued interest.
The Existing Senior Subordinated Notes rank pari passu with or senior in
right of payment to all existing and future subordinated indebtedness of Berry.
The Existing Senior Subordinated Notes rank junior in right of payment to all
existing and future senior indebtedness of Berry, including borrowings under the
Revolving Credit Facility, the Nevada Bonds and the Iowa Bonds.
The Senior Subordinated Notes Indenture contains certain covenants which,
among other things, limit Berry's and its subsidiaries' ability to (i) retain
proceeds from asset sales, (ii) incur additional
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indebtedness or issue disqualified stock, (iii) make restricted payments,
including, without limitation, payments to Holding, (iv) enter into transactions
with affiliates, (v) permit liens, (vi) place limitations on dividends and other
payments affecting subsidiaries, (vii) consummate a merger, consolidation or
sale of assets. With respect to the restriction on Berry's ability to make any
dividend or distribution to Holding, the Senior Subordinated Notes Indenture
generally prohibits the payment of any dividend by Berry to Holding unless Berry
meets certain cash flow interest coverage ratios and the amount of such dividend
(together with any other dividends previously paid, including the $50 million
paid in April 1994) is less than the sum of 50% of the aggregate net income of
Berry since the issuance of the Existing Senior Subordinated Notes plus the
amount of cash equity proceeds received by Berry. See "Risk Factors -- Holding
Company Structure; Significant Limitations on Access to Subsidiaries' Cash
Flow."
REVOLVING CREDIT FACILITY
General. Simultaneously with the 1994 Units Offering, the Company entered
into the Loan and Security Agreement dated April 21, 1994 (the "Revolving Credit
Facility") with Fleet Capital Corporation (by assignment from Shawmut Capital
Corporation, by assignment from Barclays Business Credit, Inc.) ("Fleet"). The
Revolving Credit Facility provides for loans to the Company and the issuance of
letters of credit on behalf of the Company in an aggregate amount not to exceed
$28.0 million. All indebtedness of the Company under the Revolving Credit
Facility is guaranteed by each subsidiary of the Company and by Holding. The
Revolving Credit Facility consists of (i) a $28.0 million revolving credit
facility (the "Revolver"), (ii) a $12.8 million reducing standby letter of
credit facility (the "IRB Letter of Credit Subfacility"), which is available to
issue letters of credit to secure the Nevada Bonds and the Iowa Bonds, (iii) a
$3.0 million letter of credit facility (the "Documentary Letter of Credit
Subfacility"), which is available for general corporate purposes, (iv) a $7.0
million machinery and equipment acquisition facility (the "Machinery
Subfacility") and (v) a term facility to refinance any drawing under the IRB
Letter of Credit Subfacility (the "IRB Term Facility").
Availability. Borrowings under the Revolver are subject to a borrowing base
equal to 85% of "eligible accounts" plus the lesser of (i) $8.5 million or (ii)
65% of "eligible inventory" (as such terms are defined in the Revolving Credit
Facility) less a fixed $3.0 million reserve plus additional reserves which may
be required by Fleet.
Security. The Revolving Credit Facility is secured by a lien on
substantially all of the assets of the Company and its subsidiaries.
Maturity. The Revolving Credit Facility matures on April 21, 1999, and will
be automatically renewed unless terminated by (i) the Company or (ii) Fleet upon
one year advance notice to the Company prior to the expiration of the original
term or upon six months' advance notice thereafter.
Interest Rates. The interest rate applicable to the Revolving Credit
Facility is (i) prime rate plus 1.0% or LIBOR plus 3.0%, at the Company's
option, in the case of borrowings on the Revolver, (ii) prime rate plus 1.5% or
LIBOR plus 3.5%, at the Company's option, in the case of borrowings under the
Machinery Subfacility, (iii) 2.5% per annum on the average outstanding face
amount of letters of credit under the IRB Letter of Credit Subfacility (reduced
to 2.25% for certain standby letters of credit), (iv) 1.75% per annum on the
average outstanding face amount of letters of credit under the Documentary
Letter of Credit Subfacility and (v) prime rate plus 1.5% or LIBOR plus 3.5%, at
the Company's option, in the case of borrowings under the IRB Term Facility.
Covenants. The Revolving Credit Facility contains covenants customary for
working capital financings, including, without limitation, minimum tangible net
worth, restrictions on mergers and acquisitions, limitation on the incurrence of
additional indebtedness, minimum current ratio, minimum cash flow ratio and
dividend and capital expenditure restrictions.
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Events of Default. The Revolving Credit Facility contains events of default
customary for working capital financings, including an event of default upon a
"change of control" of Holding or the Company.
NEVADA BONDS
The Company is party to a Financing Agreement (the "Financing Agreement")
with the City of Henderson, Nevada Public Improvement Trust (the "Nevada
Issuer") pursuant to which the Company has agreed to pay to the Nevada Issuer
amounts sufficient to pay principal, interest and any premium on the Nevada
Bonds. The Company's obligations under the Financing Agreement are secured by a
letter of credit provided by Barclay's Bank PLC, New York Branch.
The Nevada Bonds mature in April 2007. Since fiscal 1992, the Company has
been required to pay $500,000 each year to the Nevada Issuer in order to permit
mandatory sinking fund redemptions of the Nevada Bonds. The Nevada Bonds bear
interest at a floating rate depending on prevailing market conditions.
IOWA BONDS
Berry Iowa Corporation, a Delaware corporation and wholly-owned subsidiary
of Berry ("Berry Iowa"), is party to a Loan and Trust Agreement (the "Loan and
Trust Agreement") with The City of Iowa Falls, Iowa (the "Iowa Issuer"),
pursuant to which Berry Iowa has agreed to pay to the Iowa Issuer amounts
sufficient to pay principal, interest and any premium on the Iowa Bonds. Berry
Iowa's obligations under the Loan and Trust Agreement are secured by a letter of
credit provided by Fleet National Bank of Connecticut.
The Iowa Bonds mature in August 1998 and are not subject to any sinking fund
or similar payments. The Iowa Bonds bear interest at a floating rate depending
on prevailing market conditions.
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DESCRIPTION OF SENIOR NOTES
GENERAL
The Old Notes were, and the New Notes will be, issued pursuant to an
Indenture dated as of June 18, 1996 (the "Indenture") between Holding and First
Trust of New York, National Association, as trustee (the "Trustee"). The terms
of the New Notes are identical in all material respects to the Old Notes, except
that the New 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 the payment of Liquidated Damages under certain
circumstances relating to the Registration Rights Agreement, which provisions
will terminate upon the consummation of the Exchange Offer.
The terms of the Senior Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(the "Trust Indenture Act"). The Senior Notes are subject to all such terms, and
holders of Senior Notes are referred to the Indenture and the Trust Indenture
Act for a statement thereof. The following summary of certain provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain terms
used below. A copy of the Indenture is available as set forth under
"--Additional Information." The definitions of certain terms used in the
following summary are set forth below under "--Certain Definitions." As used in
this section, the term "Holding" refers only to BPC Holding Corporation and not
to its subsidiaries.
RANKING
The Senior Notes rank senior in right of payment to all subordinated
Indebtedness of Holding, including senior in right of payment to Holding's
subordinated guarantee of the Existing Senior Subordinated Notes of Berry
Plastics Corporation ("Berry"), a subsidiary of Holding. The Senior Notes rank
pari passu in right of payment with all senior borrowings of Holding. Currently,
there is no other senior indebtedness of Holding other than Holding's guarantee
of the Berry Revolving Credit Facility and certain other Guarantees of Berry's
Indebtedness and, subject to certain exceptions, the Indenture prohibits Holding
from incurring any Indebtedness other than the Senior Notes. However, the Senior
Notes are effectively senior to such unsecured Guarantees because the Senior
Notes are secured by a first priority pledge of the Capital Stock of Berry. See
"--Security."
The operations of Holding are conducted through Berry and its Subsidiaries
and, therefore, Holding is dependent upon the cash flow of its Subsidiaries to
meet its obligations, including its obligations under the Senior Notes. The
Berry Revolving Credit Facility prohibits the payment of dividends to Holding.
The terms of the Existing Senior Subordinated Notes limit the ability of Berry
to pay dividends or otherwise make cash available to pay interest, principal or
premium on the Senior Notes. The Senior Notes are effectively subordinated to
all indebtedness (including the Existing Senior Subordinated Notes) and other
liabilities and commitments (including trade payables and lease obligations) of
Holding's Subsidiaries. Any right of Holding to receive assets of any of its
Subsidiaries upon such Subsidiary's liquidation or reorganization (and the
consequent right of the holders of the Senior Notes to participate in those
assets) is effectively subordinated to the claims of that Subsidiary's creditors
except to the extent that Holding is itself recognized as a creditor of such
Subsidiary, in which case the claims of Holding would still be subordinate to
any security in the assets of such Subsidiary and any indebtedness of such
Subsidiary senior to that held by Holding. As of June 1, 1996, Berry and its
subsidiaries had approximately $134.5 million of total liabilities, including
approximately $113.7 million of Indebtedness. See "Risk Factors--Holding Company
Structure; Significant Limitations on Access to Subsidiaries' Cash Flow."
PRINCIPAL, MATURITY AND INTEREST
The Senior Notes are general obligations of Holding, limited in aggregate
principal amount to $105.0 million plus such principal amount of additional
Senior Notes as may be issued in lieu of cash interest, and will mature on
December 15, 2006. Interest on the Senior Notes accrue at a rate of 12 1/2% per
annum and are payable in cash semi-annually in arrears on June 15 and December
15 of each year,
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commencing on December 15, 1996, to holders of record on the immediately
preceding June 1 and December 1. Interest on the Senior Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid on any Senior Note, from the date of original issuance of such Senior Note.
Beginning with the first interest payment date after the third anniversary date
of the issuance of the Senior Notes, and until and including the interest
payment date on June 15, 2001, Holding may, at its option and subject to a .75%
increase in the stated interest rate on the Senior Notes, elect to pay interest
on the Senior Notes in additional Senior Notes valued at 100% of the principal
amount thereof. After June 15, 2001, interest on the Senior Notes may be paid
only in cash. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months.
Principal, premium, if any, and interest on the Senior Notes will be payable
at the office or agency of Holding maintained for such purpose within the City
and State of New York or, at the option of Holding, payment of interest may be
made by check mailed to the holders of the Senior Notes at their respective
addresses set forth in the register of holders of Senior Notes; provided that
all payments with respect to Senior Notes the holders of which have given wire
transfer instructions to Holding will be required to be made by wire transfer of
same day funds to the accounts specified by the holders thereof. Until otherwise
designated by Holding, Holding's office or agency in New York will be the office
of the Trustee maintained for such purpose. The Senior Notes are issued in
denominations of $1,000 and integral multiples thereof, except to the extent
required to pay interest or liquidated damages on the Senior Notes in accordance
with the terms of the Indenture.
SECURITY
The Senior Notes are secured by a first priority pledge of the Capital Stock
of Berry.
Holding has entered into a pledge and security agreement (the "Holding
Pledge Agreement") providing for the pledge by Holding to the Trustee, as
collateral agent (in such capacity, the "Collateral Agent") for the holders of
the Senior Notes, of the Capital Stock of Berry. Holding's pledge secures the
payment and performance when due of all of the Obligations of Holding under the
Indenture and the Senior Notes as provided in the Holding Pledge Agreement.
So long as (i) no Default (as defined) or Event of Default (as defined)
shall have occurred and be continuing and (ii) the outstanding principal of the
Senior Notes is not then due and payable, and subject to certain terms and
conditions in the Indenture and the Holding Pledge Agreement, Holding will be
entitled to receive all cash dividends and other payments made upon or with
respect to the collateral pledged by it and to exercise any voting and other
consensual rights pertaining to the collateral pledged by it. Upon the
acceleration of the maturity of the Senior Notes or the failure to pay all
obligations under the Senior Notes on or before December 15, 2006, (a) all
rights of Holding to exercise such voting or other consensual rights shall
cease, and all such rights shall become vested in the Collateral Agent, which,
to the extent permitted by law, shall have the sole right to exercise such
voting and other consensual rights, (b) all rights of Holding to receive all
cash dividends and other payments made upon or with respect to the pledged
collateral will cease and such cash dividends and other payments will be paid to
the Collateral Agent and (c) the Collateral Agent may sell the pledged
collateral or any part thereof in accordance with the terms of the Holding
Pledge Agreement. All funds distributed under the Holding Pledge Agreement and
received by the Collateral Agent for the benefit of the holders of the Senior
Notes will be distributed by the Collateral Agent in accordance with the
provisions of the Indenture.
Under the terms of the Holding Pledge Agreement, the Collateral Agent will
determine the circumstances and manner in which the pledged collateral shall be
disposed of, including, but not limited to, the determination of whether to
release all or any portion of the pledged collateral from the Liens created by
the Holding Pledge Agreement and whether to foreclose on the pledged collateral
following an acceleration of the Senior Notes. Moreover, upon the full and final
payment and performance of all Obligations of Holding under the Indenture and
the Senior Notes, the Holding Pledge Agreement shall terminate and the pledged
collateral shall be released.
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In addition, certain of Holding's obligations under the Senior Notes are
secured pending disbursement pursuant to the Escrow and Disbursement Agreement
by a pledge of the Escrow Account. Approximately $35.6 million will remain in
the Escrow Account and be used to purchase a portfolio of Marketable Securities
that are pledged as security for payment of interest on the Senior Notes through
June 15, 1999.
The Escrow and Disbursement Agreement provides for the grant by Holding to
the Trustee of a security interest in the Collateral for the benefit of the
holders of the Senior Notes. All such security interests secure the payment and
performance when due of the Obligations of Holding under the Indenture with
respect to the Senior Notes and under such Senior Notes, as provided in the
Escrow and Disbursement Agreement. The Liens created by the Escrow and
Disbursement Agreement are first priority security interests in the Collateral.
The ability of holders to realize upon any such funds or securities may be
subject to certain bankruptcy law limitations in the event of a bankruptcy of
Holding.
The Escrow Account contains an amount sufficient to pay three years'
interest on the Senior Notes, approximately $35.6 million. Funds will be
disbursed from the Escrow Account only to pay interest on the Senior Notes and
upon certain repurchases or redemptions of the Senior Notes, to pay principal of
and premium, if any, thereon, or if so paid with other proceeds, such funds may
be released to Holding. Pending such disbursements, all funds contained in the
Escrow Account will be invested in Marketable Securities. Upon the acceleration
of the maturity of the Senior Notes or the failure to pay principal at maturity
or upon certain redemptions and repurchases of the Senior Notes, the Escrow and
Disbursement Agreement provides for the foreclosure by the Trustee upon the net
proceeds of the Escrow Account. Under the terms of the Indenture, the proceeds
of the Escrow Account shall be applied, first, to amounts owing to the Trustee
in respect of fees and expenses of the Trustee and second, to the Obligations
under the Senior Notes and the Indenture.
OPTIONAL REDEMPTION
The Senior Notes are not redeemable at Holding's option prior to June 15,
1999. Thereafter, the Senior Notes are subject to redemption at the option of
Holding, in whole or in part, 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 June 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- -------------------------------------------------------------- ----------
<S> <C>
1999.......................................................... 110.00%
2000.......................................................... 110.00%
2001.......................................................... 108.00%
2002.......................................................... 105.33%
2003.......................................................... 102.67%
2004 and thereafter........................................... 100.00%
</TABLE>
Notwithstanding the foregoing, prior to June 15, 1999, Holding may redeem up
to a maximum of 33 1/3% of the aggregate principal amount of the Senior Notes
then outstanding at a redemption price of 112.50% of the principal amount
thereof, plus accrued and unpaid interest to the date of redemption, if any,
with the net proceeds of a Strategic Equity Sale of the common stock of Holding;
provided that at least 66 2/3% in aggregate principal amount of the Senior Notes
remain outstanding immediately after the occurrence of such redemption; and
provided further that such redemption shall occur within 90 days of the date of
the closing of such Strategic Equity Sale.
MANDATORY REDEMPTION
Except as set forth below under the captions "--Offer to Purchase Upon
Change of Control" and "Certain Covenants--Asset Sales," Holding is not required
to make mandatory redemption or sinking fund payments with respect to the Senior
Notes.
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OFFER TO PURCHASE UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, Holding will be required to make
an offer (the "Change of Control Offer") to each holder of Senior Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such holder's Senior Notes at a purchase price equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of repurchase, in accordance with the procedures
set forth in the Indenture. Within 10 days following any Change of Control,
Holding will mail a notice to each holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Senior Notes pursuant to the procedures required by the Indenture and described
in such notice. Holding 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 Senior Notes as a result of a Change of Control.
Berry's indebtedness including the Existing Senior Subordinated Notes and
the Berry Revolving Credit Facility contain provisions that may limit or prevent
certain events that would constitute a Change of Control. In addition, the
exercise by the holders of Senior Notes of their right to require Holding to
repurchase the Senior Notes (or the effect of such repurchases on the financial
condition of Holding) could cause a default under such other indebtedness, even
if the Change of Control itself does not. Finally, Holding's ability to pay cash
to the holders of Senior Notes upon a repurchase in the event of a Change of
Control may be limited by Holding's then existing financial resources.
SELECTION AND NOTICE
If fewer than all of the Senior Notes are to be redeemed at any time,
selection of Senior Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Senior Notes are listed, or, if the Senior Notes are not so
listed, on a pro rata basis, by lot or by such method as the Trustee shall deem
fair and appropriate; provided that no Senior Notes of $1,000 in face principal
amount or less shall be redeemed in part. Notices of redemption shall be mailed
by first class mail at least 30 but not more than 60 days before the redemption
date to each holder of Senior Notes to be redeemed at its registered address. If
any Senior Note is to be redeemed in part only, the notice of redemption that
relates to such Senior Note shall state the portion of the principal amount
thereof to be redeemed. A new Senior Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Senior Note. On and after the redemption date,
interest ceases to accrue on Senior Notes or portions of them called for
redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that Holding will not, and will not permit any of its
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of Holding'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 Holding or any
Wholly Owned Subsidiary of Holding); (ii) purchase, redeem or otherwise acquire
or retire for value any Equity Interests of Holding or any Subsidiary (other
than any such Equity Interests owned by Holding or any Wholly Owned Subsidiary
of Holding); (iii) purchase, redeem or otherwise acquire or retire for value,
any Indebtedness of Holding which ranks subordinated in right to payment to the
Senior Notes other than Guarantees of the Existing Senior Subordinated Notes; or
(iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments") unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
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(b) Holding 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 entitled "Incurrence of
Indebtedness and Issuance of Disqualified Stock;" 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 Holding and its Subsidiaries after the
Issuance Date (including Restricted Payments permitted by the next
succeeding paragraph) or (B) in the case of any Restricted Payment defined
by clause (i) above, together with the aggregate of all other Restricted
Payments made by Holding and its Subsidiaries after the Issuance Date
(including Restricted Payments permitted by 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 Holding 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 Holding'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 Holding from the issue
or sale since the Issuance Date of Equity Interests of Holding or of debt
securities of Holding that have been converted into such Equity Interests
(other than (1) Equity Interests (or convertible debt securities) sold to a
Subsidiary of the Company, (2) Disqualified Stock or debt securities that
have been converted into Disqualified Stock and (3) Equity Interests issued
in connection with the Transaction).
The foregoing provisions will not prohibit the following Restricted
Payments: (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 the Indenture; (ii) the redemption, repurchase,
retirement or other acquisition of any Equity Interests of Holding in exchange
for, or out of the proceeds of, the substantially concurrent sale (other than to
a Subsidiary of Holding) of other Equity Interests of Holding (other than
Disqualified Stock); (iii) the defeasance, redemption or repurchase of pari
passu or subordinated Indebtedness in a Permitted Refinancing; (iv) the
repurchase, redemption or other acquisition or retirement for value of an Equity
Interest of Holding pursuant to any management equity subscription, shareholder
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 $1.0 million in any fiscal year and
(b) no Default or Event of Default shall have occurred and be continuing
immediately after such transaction; (v) Investments in joint venture or similar
projects in a business similar to that conducted by Holding and its Subsidiaries
on the Issuance Date in an amount not to exceed $1.0 million; (vi) any
Restricted Payment to pay cash dividends on the New Preferred Stock (as defined
in the Indenture) after the sixth anniversary of the Issuance Date excluding any
dividends due, not paid and cumulated prior to the sixth anniversary of the
Issuance Date, provided no Default or Event of Default has occurred and is
continuing; and (vii) any Restricted Payment in connection with the consummation
of the Transaction.
The amount of all Restricted Payments (including, without limitation, all
Restricted Payments permitted to be made under this covenant), other than cash,
shall be the fair market value (evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee) on the
date of such Restricted Payment of the asset(s) proposed to be transferred by
Holding or such Subsidiary, as the case may be, pursuant to such Restricted
Payment. Not later than the date of making any Restricted Payment (other than
any such Restricted Payment permitted by the immediately preceding paragraph),
Holding 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 "Restricted Payments" were computed, which
calculations may be based upon Holding's latest available financial statements.
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ASSET SALES
The Indenture provides that Holding will not, and will not permit any of its
Subsidiaries to, directly or indirectly, conduct an Asset Sale unless: (i)
Holding (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 of Holding set forth in an Officer's
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 $1.0 million) of the shares or assets
sold or otherwise disposed of; and (ii) at least 75% of such consideration
therefor received by Holding or such Subsidiary is in the form of cash,
provided, however, that the amount of (A) any liabilities (as shown on Holding's
or such Subsidiary's most recent balance sheet or in the notes thereto), of
Holding or any Subsidiary (other than liabilities that are by their terms
subordinated to the Senior Notes) that are assumed by the transferee of any such
assets and (B) any notes or other obligations received by Holding or any such
Subsidiary from such transferee that are immediately converted by Holding or
such Subsidiary into cash (to the extent of the cash received), shall be deemed
to be cash for purposes of this provision.
The Indenture also provides that within 180 days after any Asset Sale,
Holding may apply the Net Proceeds from such Asset Sale to either (a)
permanently reduce Senior Indebtedness of Holding or Indebtedness of Berry or of
any Subsidiary of Berry, 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 Holding or any Subsidiary thereof was
engaged in on the Issuance Date. Pending the final application of any such Net
Proceeds, Holding or any Subsidiary thereof 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 will be deemed to constitute "Excess Proceeds."
If the aggregate amount of Excess Proceeds exceeds $5.0 million, Holding shall
make an offer to all holders of Senior Notes (an "Asset Sale Offer") to purchase
the maximum principal amount of Senior 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 the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate purchase
price of Senior Notes tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, Holding may use such deficiency for general corporate purposes.
If the aggregate principal amount of Senior Notes surrendered by holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Senior Notes
to be purchased in the manner described under the caption "Selection and Notice"
above. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset to zero. The Indenture will also provide that Holding will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Senior Notes in
connection with an Asset Sale.
Notwithstanding the foregoing, Holding will not, and will not permit Berry
to, directly or indirectly, sell, transfer, lease, convey, dispose of or issue
any Equity Interests of Berry except to Holding.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Indenture provides that Holding will not be permitted to (i) incur any
Indebtedness other than (a) the Senior Notes, (b) subordinated Guarantees of the
Existing Senior Subordinated Notes or (c) unsecured Guarantees of the
Obligations under the Berry Revolving Credit Facility or any other Indebtedness
permitted to be incurred by any subsidiary of Holding under the Indenture or
(ii) issue shares of Disqualified Stock.
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The Indenture provides that Holding will 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, without
limitation, Acquired Debt) and that Holding will not permit any of its
Subsidiaries to issue any shares of Disqualified Stock; provided, however, that
Subsidiaries of Holding may incur Indebtedness or issue shares of Disqualified
Stock if after giving effect to such incurrence or issuance, the Fixed Charge
Coverage Ratio for Holding and its Subsidiaries, taken together on a
consolidated basis, for the most recently ended four full fiscal quarters for
which internal financial statements are available as of the date on which such
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 1.75 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom and including the earnings of any
business acquired with the proceeds therefrom), as if the additional
Indebtedness is incurred, or the Disqualified Stock had been issued, as the case
may be, at the beginning of such four-quarter period.
The provisions in the immediately preceding paragraph and, with respect to
(c), (g) and (h) below, the provisions in the two immediately preceding
paragraphs do not apply to: (a) revolving credit Indebtedness and letters of
credit pursuant to the Berry Revolving Credit Facility in an aggregate principal
amount not to exceed at any one time outstanding the greater of (i) $28.0
million in principal amount (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of Berry thereunder),
less the aggregate amount of all repayments after the Issuance Date that
permanently reduce the commitment under the Berry Revolving Credit Facility, and
(ii) the Borrowing Base; (b) the Existing Indebtedness; (c) the Senior Notes,
including any additional Senior Notes issued in respect of the payment of
interest on outstanding Senior Notes or for the payment of Liquidated Damages;
(d) the incurrence of Refinancing Indebtedness; provided, however, that such
Refinancing Indebtedness is a Permitted Refinancing; (e) 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; (f) incurrence of Indebtedness (including Acquired
Debt) or issuance of shares of Disqualified Stock of Berry or its Subsidiaries,
if after giving effect to such incurrence or issuance, the Fixed Charge Coverage
Ratio for Berry, taken together on a consolidated basis with all of the
Subsidiaries of Berry, for the most recently ended four full fiscal quarters for
which internal financial statements are available as of the date on which such
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 earnings of any
business acquired 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 that
such Indebtedness is incurred or shares of Disqualified Stock are issued, as the
case may be, for the purpose of financing Acquisitions or Capital Expenditures;
(g) the incurrence of Indebtedness (in addition to Indebtedness permitted by any
other clause of this paragraph) in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding not to exceed $1.0 million and (h)
Indebtedness between or among Holding and any of its Subsidiaries.
For purposes of the Indenture, the accretion or amortization of original
issue discount, or the issuance of additional Indebtedness in respect of the
payment of interest on Indebtedness or the payment of Liquidated Damages shall
not be deemed an "incurrence" of Indebtedness if a corresponding amount is taken
into account for purposes of determining Consolidated Interest Expense at such
time.
LIENS
The Indenture provides that Holding will not directly or indirectly create,
incur, assume or suffer to exist any Lien on the Capital Stock of Berry other
than liens arising pursuant to the Holding Pledge Agreement. In addition,
Holding will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens.
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DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that Holding will not, and will 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 (i)(a) pay dividends or make any other distributions to Holding or
any of its Subsidiaries (1) on its Capital Stock or (2) with respect to any
other interest or participation in, or measured by, its profits, or (b) pay any
indebtedness owed to Holding or any of its Subsidiaries, (ii) make loans or
advances to Holding or any of its Subsidiaries, or (iii) transfer any of its
properties or assets to Holding or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the Issuance Date including the Existing Senior
Subordinated Notes, (b) Indebtedness of Berry or of Berry's subsidiaries
permitted to be incurred under the Indenture, (c) the Indenture and the Senior
Notes, (d) applicable law, (e) any instrument governing Indebtedness or Capital
Stock of a Person acquired by Holding 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 the Indenture, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices or (g) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that Holding may not consolidate or merge with or
into (whether or not Holding 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
corporation, Person or entity unless (i) Holding is the surviving corporation or
the entity or the Person formed by or surviving any such consolidation or merger
(if other than Holding) 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 entity or Person formed by or surviving any such
consolidation or merger (if other than Holding) or the entity or Person to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of Holding under the Senior Notes and
the Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no Default
or Event of Default exists; and (iv) except in the case of a merger of Holding
with or into a Wholly Owned Subsidiary of Holding, Holding or the entity or
Person formed by or surviving any such consolidation or merger (if other than
Holding), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of Holding immediately preceding the transaction and (B) 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 covenant entitled
"--Incurrence of Indebtedness and Issuance of Disqualified Stock."
TRANSACTIONS WITH AFFILIATES
The Indenture provides that Holding will not, and will 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 Holding or the relevant Subsidiary than
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those that would have been obtained in a comparable transaction by Holding or
such Subsidiary with a Person who was not an Affiliate and (b) Holding 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 clause (a) above and 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 Holding or such Subsidiary from a financial point of view
issued by an investment banking firm of national standing; provided, however,
that the following will not be deemed Affiliate Transactions: (i) any employment
agreement entered into by Holding or any of its Subsidiaries in the ordinary
course of business and consistent with the past practice of Holding or such
Subsidiary, (ii) transactions between or among Holding and/or its Subsidiaries,
(iii) Restricted Payments permitted by the provisions of the Indenture described
above under the covenant "--Restricted Payments," (iv) management fees payable
to First Atlantic in an amount not to exceed $750,000 per annum plus out-of-
pocket expenses, (v) a fee payable to First Atlantic not to exceed $1,250,000 in
respect of the Transaction, (vi) any transaction fee payable to First Atlantic
pursuant to the terms of the New Stockholders Agreement not to exceed $1,250,000
for any transaction consummated and out-of-pocket expenses in respect of any
such transaction (whether or not consummated) and (vii) a fee payable to Chase
Securities Inc. not to exceed $500,000 in respect of the Transaction.
LIMITATION ON CREATION OF NEW PARENT COMPANY
The Indenture provides that Holding will not permit a New Parent Company to
consummate a Leveraged Recapitalization.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Senior Notes are outstanding,
Holding will furnish to the Trustee and to all the holders of Senior Notes (i)
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 Holding 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 Holding's certified independent
accountants and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if Holding were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, Holding will file a copy of all such information and reports with
the Commission for public availability (unless the Commission will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, Holding has agreed that, for so
long as any Senior Notes remain outstanding, it 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 until such time as Holding has either exchanged the Senior Notes
for the New Senior Notes or until such time as the holders thereof have disposed
of such Senior Notes pursuant to an effective registration statement filed by
Holding.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an event of
default (each an "Event of Default"): (i) default for 30 days in the payment
when due of interest on the Senior Notes; (ii) default in payment when due of
the principal of or premium, if any, on the Senior Notes; (iii) failure by
Holding to comply with the provisions described under the captions "--Offer to
Purchase Upon Change of Control," "--Asset Sales," "--Restricted Payments" or
"--Incurrence of Indebtedness and Issuance of Disqualified Stock;" (iv) failure
by Holding for 60 days after notice to comply with any of its other agreements
in the Indenture or the Senior Notes; (v) default under any mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any
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Indebtedness for money borrowed by Holding or any of its Subsidiaries (or the
payment of which is guaranteed by Holding or any of its 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 on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $2.0 million or more; (vi) failure by Holding or any
of its 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; (vii) breach or default by Holding in the performance of any covenant set
forth in the Holding Pledge Agreement which continues for 60 days after notice
to comply, or repudiation by Holding of its obligations under the Holding Pledge
Agreement or the unenforceability of the Holding Pledge Agreement against
Holding for any reason; and (viii) certain events of bankruptcy or insolvency
with respect to Holding or any of its 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 Senior Notes may
declare all the Senior Notes to be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to Holding or any of its Subsidiaries,
all outstanding Senior Notes will become due and payable without further action
or notice. Under certain circumstances, the holders of at least a majority in
principal amount of the outstanding Senior Notes may rescind any acceleration
with respect to the Senior Notes and its consequences. Holders of the Senior
Notes may not enforce the Indenture or the Senior Notes except as provided in
the Indenture. Subject to certain limitations, holders of a majority in
principal amount of the then outstanding Senior Notes may direct the Trustee in
its exercise of any trust or power including the enforcement of the Escrow and
Disbursement Agreement. The Trustee may withhold from holders of the Senior
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.
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 Holding with the
intention of avoiding payment of the premium that Holding would have had to pay
if Holding then had elected to redeem the Senior 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 Senior Notes. If an Event of Default occurs prior to June
15, 1999, by reason of any willful action (or inaction) taken (or not taken) by
or on behalf of Holding with the intention of avoiding the prohibition on
redemption of the Senior Notes prior to June 15, 1999, 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 Senior Notes.
Holding is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and Holding is required upon becoming aware of
any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No past, present or future director, officer, employee, incorporator or
stockholder of Holding, as such, shall have any liability for any obligations of
Holding under the Senior Notes, the Indenture, the Holding Pledge Agreement or
the Escrow and Disbursement Agreement or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each holder of Senior Notes
by accepting a Senior Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Senior Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Holding may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Senior Notes ("Legal
Defeasance") except for (i) the rights of holders of outstanding Senior Notes to
receive payments in respect of the principal of, premium, if any, and interest
on such Senior Notes when such payments are due from the trust referred to
below, (ii) Holding's obligations with respect to the Senior Notes concerning
issuing temporary Senior Notes, registration of Senior Notes, mutilated,
destroyed, lost or stolen Senior Notes and the maintenance of an office or
agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the Trustee, and Holding's
obligations in connection therewith and (iv) the Legal Defeasance provisions of
the Indenture. In addition, Holding may, at its option and at any time, elect to
have the obligations of Holding released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Senior Notes. In the event Covenant Defeasance
occurs, certain events (not including non-payment, 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
Senior Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
Holding must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the Senior 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, premium, if any, and interest and Liquidated Damages on
the outstanding Senior Notes on the stated maturity or on the applicable
redemption date, as the case may be, and Holding must specify whether the Senior
Notes are being defeased to maturity or to a particular redemption date; (ii) in
the case of Legal Defeasance, Holding shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (A) Holding 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 Senior 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; (iii) in the case of Covenant Defeasance, Holding 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 Senior 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; (iv) 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 borrowing of funds to be
applied to such deposit) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
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 Holding or
any of its Subsidiaries is a party or by which Holding or any of its
Subsidiaries is bound; (vi) Holding must have delivered to the 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; (vii) Holding must deliver to the Trustee
an Officers' Certificate stating that the deposit was not made by Holding with
the intent of preferring the holders of Senior Notes over the other creditors of
Holding with the intent of defeating, hindering, delaying or defrauding
creditors of Holding or others; and (viii) Holding must deliver to the Trustee
an Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
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TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar for the Notes and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and Holding
may require a holder to pay any taxes and fees required by law or permitted by
the Indenture. Holding is not required to transfer or exchange any Senior Note
selected for redemption. Also, Holding is not required to transfer or exchange
any Senior Note for a period of 15 days before a selection of Senior Notes to be
redeemed.
The registered holder of a Senior Note will be treated as the owner of it
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Senior Notes may be amended or supplemented with the consent of the holders
of at least a majority in aggregate outstanding principal amount of the Senior
Notes (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Senior Notes), and any
existing default or compliance with any provision of the Indenture or the Senior
Notes may be waived with the consent of the holders of a majority in principal
amount of the then outstanding Senior Notes (including consents obtained in
connection with a tender offer or exchange offer for Senior Notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Senior Notes held by a non-consenting holder): (i) reduce
the principal amount of Senior Notes whose holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Senior Note or alter the provisions with respect to the redemption of the
Senior Notes (other than provisions relating to the covenants described above
under the caption "--Offer to Repurchase Upon Change of Control" or "Certain
Covenants--Asset Sales"), (iii) reduce the rate of or change the time for
payment of interest on any Note, (iv) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest on the Senior Notes
(except a rescission of acceleration of the Senior Notes by the holders of at
least a majority in aggregate principal amount of the Senior Notes and a waiver
of the payment default that resulted from such acceleration), (v) make any
Senior Note payable in money other than that stated in the Senior Notes, (vi)
make any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of holders of Senior Notes to receive payments of
principal of or premium, if any, or interest on the Senior Notes, (vii) waive a
redemption payment with respect to any Senior Note (other than a payment
required by the covenants described above under the captions "--Offer to
Purchase Upon Change of Control" or "--Certain Covenants--Asset Sales"), or
(viii) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of Senior
Notes, Holding and the Trustee may amend or supplement the Indenture or the
Senior Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Senior Notes in addition to or in place of certificated Senior
Notes, to provide for the assumption of Holding's obligations to holders of
Senior Notes in the case of a merger or consolidation, to make any change that
would provide any additional rights or benefits to the holders of Senior Notes
or that does not adversely affect the legal rights under the Indenture of any
such holder, or to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of Holding, 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
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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 Senior
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 (which shall not be cured), 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 Senior 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
without charge by writing to BPC Holding Corporation; 101 Oakley Street; P.O.
Box 959; Evansville, Indiana 47706-0959; Attention: Chief Financial Officer.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Senior Notes will initially
be issued in the form of one Global Note (the "Global Note"). The Global Note
will be deposited with, or on behalf of, The Depository Trust Company (the
"Depositary") and registered in the name of Cede & Co., as nominee of the
Depositary (such nominee being referred to herein as the "Global Note Holder").
Notes that are issued as described below under "--Certificated Securities"
will be issued in the form of registered definitive certificates (the
"Certificated Securities"). Upon the transfer of Certificated Securities, such
Certificated Securities may, unless the Global Note has previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Senior Notes being transferred.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchaser), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Depositary's Indirect Participants") that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly. Persons who are
not Participants may beneficially own securities held by or on behalf of the
Depositary only thorough the Depositary's Participants or the Depositary's
Indirect Participants.
Holding expects that pursuant to procedures established by the Depositary
(i) upon deposit of the Global Note, the Depositary will credit the accounts of
Participants designated by the Initial Purchaser with portions of the principal
amount of the Global Note and (ii) ownership of the Senior Notes evidenced by
the Global Note will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by the Depositary (with respect to the
interests of the Depositary's Participants), the Depositary's Participants and
the Depositary's Indirect Participants. Prospective purchasers are advised that
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 Senior Notes evidenced by the Global Note will be limited to such
extent.
So long as the Global Note Holder is the registered owner of any Senior
Notes, the Global Note Holder will be considered the sole holder under the
Indenture of any Senior Notes evidenced by the
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Global Note. Beneficial owners of Senior Notes evidenced by the Global Note will
not be considered the owners or holders thereof under the Indenture for any
purpose, including with respect to the giving of any directions, instructions or
approvals to the Trustee thereunder. Neither Holding nor the Trustee will have
any responsibility or liability for any aspect of the records of the Depositary
or for maintaining, supervising or reviewing any records of the Depositary
relating to the Senior Notes.
Payments in respect of the principal of, premium, if any, and interest on
any Senior Notes registered in the name of the Global Note Holder on the
applicable record date will be payable by the Trustee to or at the direction of
the Global Note Holder in its capacity as the registered holder under the
Indenture. Under the terms of the Indenture, Holding and the Trustee may treat
the persons in whose names Senior Notes, including the Global Note, are
registered as the owners thereof for the purpose of receiving such payments.
Consequently, neither Holding nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Senior Notes. Holding believes, however, that it is currently the policy of
the Depositary to immediately credit the accounts of the relevant Participants
with such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depositary. Payments by the Depositary's Participants and the Depositary's
Indirect Participants to the beneficial owners of Senior Notes will be governed
by standing instructions and customary practice and will be the responsibility
of the Depositary's Participants or the Depositary's Indirect Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Senior Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). All such certificated Senior Notes would be subject
to the legend requirements described herein under "Notice to Investors." In
addition, if (i) Holding notifies the Trustee in writing that the Depositary is
no longer willing or able to act as a depositary and Holding is unable to locate
a qualified successor within 90 days or (ii) Holding, at its option, notifies
the Trustee in writing that it elects to cause the issuance of Senior Notes in
the form of Certificated Securities under the Indenture, then, upon surrender by
the Global Note Holder of its Global Note, Senior Notes in such form will be
issued to each person that the Global Note Holder and the Depositary identify as
being the beneficial owner of the related Senior Notes.
Neither Holding nor the Trustee will be liable for any delay by the Global
Note Holder or the Depositary in identifying the beneficial owners of Senior
Notes and Holding and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
SAME-DAY PAYMENT
The Indenture requires that payments in respect of the Senior Notes
represented by the Global Note (including principal, premium, if any, and
interest) be made by wire transfer of same day funds to the accounts specified
by the Global Note Holder. With respect to Certificated Securities, Holding will
make all payments of principal, premium, if any, and interest by wire transfer
of same day funds to the accounts specified by the holders thereof or, if no
such account is specified, by mailing a check to each such holder's registered
address.
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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, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Acquisition" means any acquisition of a controlling interest in any
business or enterprise or any assets constituting any business or line of
business and all fees and expenses related thereto.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control. Neither CVCA nor its Affiliates will be deemed an
Affiliate of Holding or any of its Subsidiaries for purposes of this definition
solely by reason of such entities' direct or indirect beneficial ownership of
30% or less of the voting Common Stock of Holding or by reason of any employee
of such entities being appointed to the Board of Directors of Holding.
"Asset Sale" means (i) the sale, lease, conveyance, transfer or other
disposition of any property or assets of Holding 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 Holding shall be
governed by the provisions of the Indenture described above under the caption
"--Offer to Purchase Upon Change of Control" and the provisions described below
under the caption "--Certain Covenants--Merger, Consolidation or Sale of
Assets"), 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 (b) for net proceeds in excess of
$250,000. For purposes of this definition, the term "Asset Sale" shall not
include (i) the transfer of assets by Holding to a Wholly Owned Subsidiary of
Holding or by a Wholly Owned Subsidiary of Holding to Holding or to another
Wholly Owned Subsidiary of Holding, (ii) any Restricted Payment, dividend or
purchase or retirement of Equity Interests permitted under the covenant entitled
"Restricted Payments" or (iii) the issuance or sale of Equity Interests of any
Subsidiary of Holding, 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.
"Berry Revolving Credit Facility" means the Berry Revolving Credit Facility,
dated as of April 21, 1994, by and among Berry and Fleet Capital Corporation
providing for up to $28.0 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 which includes the addition,
substitution or replacement of any or all lenders thereunder under the same or
any replacement agreement.
"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 Holding and its
Subsidiaries as of such date that are not more than 90 days past due, and (b)
65% of the book value (calculated on a FIFO basis) of all inventory
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owned by Holding 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, Holding may utilize the most recent available information for
purposes of calculating the Borrowing Base.
"Capital Expenditure" means any expenditure to acquire or lease property,
plant or equipment useful, ancillary or related to the business of Berry or any
Subsidiary thereof and expenditures to pay related fees and expenses.
"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 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 Berry 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 the assets of Holding and its Subsidiaries (or of Berry and
its Subsidiaries) to any person or group (as such term is used in Section
13(d)(3) of the Exchange Act) (other than the Principals and their Related
Parties (as defined below)), (ii) the adoption of a plan relating to the
liquidation or dissolution of Holding or Berry, (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 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 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, (v) such time as Holding ceases to be
the direct owner of all of the outstanding Equity Interests, including options,
warrants or similar rights, of Berry, and (vi) the first day on which a majority
of the members of the Board of Directors of Holding are not Continuing
Directors.
"Collateral Agent" means First Trust of New York, National Association, as
Collateral Agent under the Holding Pledge Agreement or any successor thereto
appointed pursuant to such Agreement.
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"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 (b) 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 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 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 finance,
and (c) interest actually paid by such Person or its Subsidiaries under a
Guarantee of Indebtedness of any other Person.
"Consolidated Net Income" 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 actually paid in cash to the
referent Person or a Wholly Owned Subsidiary thereof, (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, (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 12 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.
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"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.
"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.
"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.
"Disqualified Stock" means any Capital Stock which, by its terms (or by the
terms of any Capital Stock to 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 December
31, 2006; provided, however, that any Capital Stock that would otherwise be
Disqualified Stock will not be Disqualified Stock solely as a result of a
maturity or redemption event that is conditioned upon and subject to compliance
with the covenant entitled "--Restricted Payments."
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500.0 million or its equivalent
in foreign currency, whose debt (or the debt of whose holding company) rates "A"
(or higher) according to S&P or "A2" (or higher) by Moody's at the time of which
any investment or rollover therein is made.
"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).
"Escrow Account" means the Escrow Account for the initial deposit of
approximately $35.5 million dollars of the net proceeds from the sale of the
Senior Notes under the Escrow and Disbursement Agreement.
"Escrow Agent" means First Trust of New York, National Association, as
Escrow Agent under the Escrow and Disbursement Agreement, or any successor
thereto appointed pursuant to such Agreement.
"Escrow and Disbursement Agreement" means the Pledge, Escrow and
Disbursement Agreement, dated as of the date of the Indenture, by and among the
Escrow Agent, the Trustee and Holding, governing the disbursement of funds from
the Escrow Account, as amended.
"Existing Indebtedness" means Indebtedness of Holding and its Subsidiaries
(including the Existing Senior Subordinated Notes) 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 (b) 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
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period. In the event that Holding or any of its Subsidiaries incurs, assumes,
guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues Disqualified 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 Holding 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.
"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 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.
"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.
"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 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.
"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.
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"Issuance Date" means the closing date for the sale and original issuance of
the Senior Notes.
"Leveraged Recapitalization" means any dividend or distribution to any or
all of the equity holders of a New Parent Company or any redemption or
repurchase of the Equity Interests of such equity holders that is funded
directly or indirectly by the incurrence of $10.0 million or more of
Indebtedness.
"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).
"Marketable Securities" means (a) Government Securities having a maturity
date on or before the date on which the payments of interest on the Senior Notes
to which such Government Securities are pledged to secure occur; (b) any
certificate of deposit maturing not more than 270 days after the date of
acquisition issued by, or time deposit of, an Eligible Institution, (c)
commercial paper maturing not more than 270 days after the date of acquisition
of an issuer (other than an Affiliate of Holding) with a rating, at the time as
of which any investment therein is made, of "A-1" (or higher) according to S&P
or "P-1" (or higher) according to Moody's or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments, (d) any bankers acceptances or money
market deposit accounts issued by an Eligible Institution and (e) any fund
investing exclusively in investment of the type described in clauses (a) through
(d) above.
"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 (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
excluding 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 Holding or any
of its Subsidiaries in respect of any Asset Sale (including, without limitation,
any cash received upon the sale or other disposition of any non-cash
consideration received in 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 indemnification or adjustment in respect of the sale price
of such asset or assets established in accordance with GAAP.
"New Notes" means the 12 1/2% Series B Senior Secured Notes due 2006 of
Holding, issued pursuant to the Registration Rights Agreement.
"New Parent Company" means any corporation, partnership, limited liability
company or similar entity, all or substantially all of whose assets consist of a
direct or indirect interest in at least a majority of the outstanding Capital
Stock of Holding; provided, however, that this definition shall not include any
corporation, partnership, limited liability company or similar entity, all or
substantially all of whose assets consist of a direct or indirect interest in at
least a majority of the outstanding Capital Stock of Holding immediately
subsequent to the consummation of the Transaction.
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"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Investments" means (a) any Investments in Holding or in a Wholly
Owned Subsidiary of Holding and that is engaged in the same or a similar line of
business as Holding and its Subsidiaries were engaged in on the Issuance Date
and (b) any Investments in Cash Equivalents.
"Permitted Liens" means (i) Liens on the assets of any Subsidiary of Holding
to secure Indebtedness of any Subsidiary of Holding that may be incurred
pursuant to the Indenture; (ii) Liens in favor of Holding; (iii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with Holding or any Subsidiary of Holding; 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 Holding; (iv) Liens on property existing at the time of
acquisition thereof by Holding or any Subsidiary of Holding, provided that such
Liens were in existence prior to the contemplation of such acquisition; (v)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens existing on the date of the Indenture;
(vii) 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; (viii) Liens incurred in the ordinary course
of business of Holding or any Subsidiary of Holding that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by Holding or such
Subsidiary; and (ix) Liens securing Obligations under the Senior Notes and the
Indenture.
"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); (b) 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; and (c) the Refinancing Indebtedness is pari passu or
subordinated in right of payment to the Senior Notes on terms at least as
favorable to the holders of Senior 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 the second paragraph or in clauses (b), (c)
or (f) of the third paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Disqualified Stock."
"Related Party" means with respect to a 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,
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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).
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Senior Bank Indebtedness" means the Indebtedness outstanding under the
Berry 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 the Senior Bank Indebtedness. 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
Holding, (x) any Indebtedness of Holding, (y) any trade payables or (z) any
Indebtedness that is incurred in violation of the Indenture.
"Stock Exchange" means the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market.
"Strategic Equity Sale" means any sale of Equity Interests of Holding that
are not Disqualified Stock in a sale to one or more investors provided that the
net proceeds to Holding from such sale exceed $10 million.
"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.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) 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.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain Federal income tax
considerations relevant to the exchange of Old Notes for New Notes pursuant to
the Exchange Offer, and of the ownership of the New Notes. The discussion is
based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations, Internal Revenue Service ("IRS") rulings and pronouncements and
judicial decisions now in effect, all of which are subject to change at any time
by legislative, judicial or administrative action. Any such changes may be
applied retroactively in a manner that could adversely affect a Holder of the
New Notes. The succeeding discussion assumes that Holders will acquire the New
Notes as capital assets.
Holding has not sought and will not seek any rulings from the IRS with
respect to the positions of Holding discussed below. There can be no assurance
that the IRS will not take a different position concerning the tax consequences
of the purchase, ownership or disposition of the New Notes or that any such
position would not be sustained.
The tax treatment of a Holder of New Notes may vary depending on his or its
particular situation or status. This summary does not address the tax
consequences to taxpayers who are subject to special rules such as insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
persons holding New Notes as part of a hedging or conversion transaction, and
foreign entities and individuals, or aspects of Federal income taxation that may
be relevant to a prospective investor based upon such investor's particular tax
situation. In addition, the description does not consider the effect of any
applicable foreign, state, local or other tax laws.
EACH HOLDER SHOULD CONSULT HIS OR ITS OWN TAX ADVISOR AS TO THE PARTICULAR
TAX CONSEQUENCES TO HIM OR IT OF THE EXCHANGE OF OLD NOTES FOR NEW NOTES
PURSUANT TO THE EXCHANGE OFFER AND OF THE OWNERSHIP OF NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
Although the matter is note entirely free from doubt, the exchange of an Old
Note for a New Note pursuant to the Exchange Offer should not be treated as an
exchange or otherwise as a taxable event for Federal income tax purposes.
Accordingly, the New Notes should have the same issue price as the Old Notes and
each Holder should have the same adjusted basis and holding period in the New
Notes as it had in the Old Notes immediately before the consummation of the
Exchange Offer. It is assumed, for purposes of the following discussion, that
the consummation of the Exchange Offer will not be treated as a taxable event to
Holders.
NEW NOTES
Original Issue Discount. Because the Old Notes were issued with "original
issue discount" ("OID"), the New Notes will also bear OID that Holders will be
required to include in income on a yield-to-maturity basis over the term of the
New Notes. As a result, a Holder will generally realize taxable income with
respect to the New Notes as the OID accrues, regardless of the Holder's method
of accounting.
The amount of original issue discount with respect to each New Note will be
the excess of the "stated redemption price at maturity" of such New Note over
its "issue price." The "issue price" of a New Note will be equal to the issue
price of the Old Note it was exchanged for, which is equal to the first price at
which a substantial amount of Old Notes was sold to the public. For this
purpose, the public does not include bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers.
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The "stated redemption price at maturity" of each New Note will be the sum
of all cash payments, including principal and interest (other than "qualified
stated interest"), required to be made thereunder until maturity. Qualified
stated interest is stated interest that is unconditionally payable in cash at
least annually at a single fixed rate that appropriately takes into account the
length of the interval between payments. Because interest on the New Notes may
be paid in the form of Additional New Notes, interest on the New Notes will not
be considered "qualified stated interest." Accordingly, all interest on the New
Notes will be included in the stated redemption price at maturity along with
principal on the New Notes.
Holding has the option, starting from the third anniversary of the issuance
date of the Old Notes until June 15, 2001, to issue additional New Notes
("Additional New Notes"), as interest in lieu of cash at an interest rate that
exceeds the cash interest rate. The Treasury Regulations dealing with OID (the
"OID Regulations") provide that an issuer of a debt instrument that has the
option of paying interest in the form of additional debt instruments will, for
purposes of calculating OID, be assumed not to elect to pay such interest in
additional debt instruments unless so doing would reduce the yield to maturity
of such debt instrument. If an issuer is assumed not to elect to pay such
interest in additional debt instruments under this rule but in fact does issue
the debt instruments as interest, then the OID Regulations provide that, solely
for purposes of the accrual of OID, the yield and maturity of the debt
instrument are redetermined by treating the debt instrument as reissued on the
date of the issuance of the additional debt instruments for an amount equal to
its adjusted issue price on that date.
In the case of the New Notes, Holding may elect to pay interest in the form
of Additional New Notes, but only at an increased interest rate. As such, it is
assumed, for OID calculation purposes, that Holding will not issue Additional
New Notes, because so doing would increase the yield to maturity of the New
Notes. Accordingly, the stated redemption price will initially include an amount
of interest assuming cash interest is paid. If, however, Holding does in fact
issue Additional New Notes in lieu of cash interest, then on each such date on
which Additional Notes are issued, the New Notes will be deemed reissued at
their adjusted issue price, and the yield, maturity and OID on the New Notes
will be appropriately redetermined. In addition, although it is not entirely
clear, the deemed reissuance of the New Notes would require the re-testing of
the New Notes for HYDO purposes, as described below in "Deductibility of
Original Issue Discount and Certain Federal Income Tax Consequences to Corporate
Holders."
The issuance of an Additional New Note will not be treated as a payment of
interest on the New Notes. The Additional New Notes will instead be treated as
aggregated with the New Notes, and any payments made with respect to the
Additional New Notes will be treated as payments on the New Notes. Holders will
allocate their adjusted basis and adjusted issue price in their New Notes
between the New Notes and Additional New Notes received by them based on the
respective principal amounts of such New Notes and Additional New Notes, and
accrue the redetermined OID on such New Notes and Additional New Notes and
calculate any gain or loss on such securities based on such allocation. For
purposes of the following discussion, "New Notes" will refer to New Notes
originally issued pursuant to the Exchange Offer and any Additional New Notes
issued with respect thereto.
Taxation of Original Issue Discount. Each Holder of a New Note will be
required to include in gross income an amount equal to the sum of the "daily
portions" of the original issue discount of the New Note for all days during the
taxable year in which such Holder holds the New Note ("accrued original issue
discount") without regard to when the cash attributable to such income is
received. The daily portion of original issue discount is determined by
allocating to each day in any "accrual period" a pro rata portion of the
original issue discount allocable to that accrual period. The "accrual period"
for a New Note may be of any length and may vary in length over the term of the
New Note, provided that each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs on the first day or the final
day of an accrual period. The amount of original issue discount allocable to any
accrual period is an amount equal to the product of the New Note's adjusted
issue price
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at the beginning of such accrual period and its yield to maturity (determined on
the basis of compounding at the close of each accrual period and properly
adjusted for the length of the accrual period). Original issue discount
allocable to a final accrual period is the difference between the amount payable
at maturity and the adjusted issue price at the beginning of the final accrual
period. Special rules apply for calculating original issue discount for an
initial short accrual period. The "adjusted issue price" of a New Note at the
beginning of any accrual period is equal to its issue price increased by the
accrued original issue discount for each prior accrual period (determined
without regard to the amortization of any acquisition premium, as described
below) and reduced by any cash payments made on such New Note on or before the
first day of the accrual period. Under these rules, a Holder of a New Note will
have to include in income increasingly greater amounts of original issue
discount in successive accrual periods.
Holding is required to furnish certain information to the IRS, and will
furnish annually to record Holders of the New Notes, information with respect to
original issue discount accruing during the calendar year, as well as interest
paid during that year. This information will be based upon the adjusted issue
price of the debt instrument as if the Holder were the original holder of the
debt instrument. In addition, each New Note will bear a legend setting forth the
issue date, issue price, total amount of original issue discount, the yield to
maturity and certain other information, or such legend will indicate how a
Holder can receive such information.
If Holding fails to register the Exchange Offer, or the Exchange Offer is
not consummated within a required period of time, and in certain other
circumstances, Holding will pay Liquidated Damages described in "Description of
Senior Notes-Registration Rights." Although it is not entirely clear, Holding
intends to take the position that such payment will be taxable to the holder as
ordinary income in accordance with the Holder's method of accounting. However,
the IRS may take a different position with respect to such payment that could
affect the timing of the holder's income.
Effect of Original Issue Discount on Optional Redemption and Offer to
Redeem. In the event of a Change of Control, Holding may be required to redeem
all of the New Notes. The OID Regulations provide that a required redemption
upon the occurrence of a contingent event such as a change of control will not
affect the yield or maturity date of the New Notes unless, based on all of the
facts and circumstances as of the issue date, it is more likely than not that
the contingent event will occur. Holding has no present intention of treating
the redemption provisions of the New Notes as affecting the computation of the
yield to maturity of any New Note.
Holding may redeem the New Notes at any time on or after June 15, 1999. The
OID Regulations set forth special rules for determining the yield to maturity
and maturity date of a debt instrument that may be redeemed prior to its stated
maturity date at the option of the issuer. The application of these rules
depends in part on the prices at which the New Notes may be redeemed. It is
currently anticipated that these rules should not affect the determination of
the yield to maturity of the New Notes.
Acquisition Premium of a Subsequent Purchaser. An acquisition premium will
exist if a subsequent purchaser purchases a New Note at a cost that is in excess
of its "adjusted issue price (ad defined above), but less than or equal to the
sum of all amounts payable on the New Note after the purchase date. A subsequent
holder of a New Note who purchases the New Note at an acquisition premium may
reduce the OID otherwise includible in gross income. This reduction of OID for a
taxable period is equal to the product of (i) the OID includible in gross income
for such taxable period (as otherwise determined) and (ii) a fraction, the
numerator of which is the excess of the cost of the New Note over its adjusted
issue price and the denominator of which is the excess of the sum of all amounts
payable on the New Note after the Purchase date, other than qualified stated
interest, over the New Note's adjusted issue price. The Holder of a New Note
purchased at an acquisition premium is permitted to elect to compute OID
accruals by treating the purchase as a purchase at original issue and applying a
constant yield method.
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Market Discount of a Subsequent Holder. If a subsequent Holder of a New Note
that was purchased at a "market discount" thereafter realizes gain upon its
disposition or retirement, such gain will be taxed as ordinary income to the
extent of the market discount that has accrued on a straight-line basis (or on a
constant interest rate basis, if such basis of accrual has been elected by the
Holder under Section 1276(b) of the Code) while the debt instrument was held by
such Holder. "Market discount" with respect to a New Note is the amount by which
the "revised issue price" of a New Note (i.e., the issue price increased by the
portion of OID previously included in the gross income of prior holders,
determined without regard to any reduction of OID attributable to any
acquisition premium) exceeds the Holder's basis in the New Note immediately
after acquisition (unless such excess is less than 0.25% of the stated
redemption price at maturity of the New Note multiplied by the number of
complete years from acquisition by such Holder to maturity, in which case there
is no "market discount"). If a subsequent Holder makes a gift of a New Note,
accrued market discount, if any, will be recognized as if such Holder had sold
such New Note for a price equal to its fair market value. The market discount
rules also provide that a Holder who acquires a New Note at a market discount
may be required to defer a portion of any interest expense that otherwise may be
deductible on any indebtedness incurred or maintained to purchase or carry such
New Note until the Holder disposes of the New Note in a taxable transaction.
The New Notes provide for optional redemption, in whole or in part, and, in
the case of Change of Control, a mandatory offer to redeem, prior to maturity.
If the New Notes were redeemed, a Holder generally would be required to include
in gross income as ordinary income, for Federal income tax purposes, the portion
of the payment that is attributable to accrued market discount on the New Notes,
if any.
A Holder of New Notes acquired at a market discount may elect to include
market discount in gross income, for Federal income tax purposes, as the
discount accrues either on a straight-line basis or on a constant interest rate
basis. This current inclusion election, once made, applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies, and may not be revoked without the consent
of the IRS. If a Holder of New Notes makes such an election the foregoing rules
with respect to the recognition of ordinary income on sales and other
dispositions of such debt instruments, and with respect to the deferral of
interest deductions on indebtedness incurred or maintained to purchase or carry
such debt instruments, would not apply.
Sale, Exchange, Redemption, Retirement or other Disposition of New Notes. In
general, subject to the market discount provisions discussed above, the Holder
of a New Note will recognize gain or loss upon the sale, exchange, redemption,
retirement or other disposition of such debt instrument measured by the
difference between (i) the amount of cash and fair market value of property
received in exchange therefor and (ii) the Holder's adjusted tax basis in such
debt instrument.
A Holder's initial tax basis in a New Note received in exchange for an Old
Note will be equal to the basis such Holder had in the Old Note. With respect to
Holders who purchase New Notes other than at their original issuance, their tax
basis in the New Notes will generally be equal to their purchase price. The
Holder's initial tax basis in a New Note will be increased from time to time by
the portion of original issue discount previously included in gross income to
the date of disposition and decreased from time to time to reflect the receipt
of any payments on such New Note.
Any gain or loss on the sale, exchange, redemption, retirement or other
disposition of a New Note should be capital gain or loss, provided the New Note
was a capital asset in the hands of the Holder. Any capital gain or loss will be
long-term capital gain or loss if the debt instrument had been held for more
than one year and otherwise will be short-term capital gain or loss.
Deductibility of Original Issue Discount and Certain Federal Income Tax
Consequences to Corporate Holders. The New Notes will constitute "applicable
high yield discount obligations" ("AHYDOs") if their yield to maturity is equal
to or greater than the sum of the applicable Federal
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rate (the "AFR") for debt instruments issued in June, 1996 (namely 6.92%), plus
five percentage points, and the New Notes are issued with significant original
issue discount. If the New Notes are AHYDOs, Holding will not be entitled to
deduct original issue discount that accrues with respect to such New Notes until
amounts attributable to such original issue discount are paid in cash. In
addition, if the yield to maturity of the New Notes exceeds the sum of the
relevant AFR plus six percentage points (the "Excess Yield"), the "disqualified
portion" of the original issue discount accruing on the New Notes will not be
deductible by Holding. In general, the "disqualified portion" of the original
issue discount for any accrual period will be equal to the product of (i) a
percentage determined by dividing the Excess Yield by the yield to maturity and
(ii) the original issue discount for the accrual period.
Subject to otherwise applicable limitations, Holders that are U.S.
corporations will be entitled to a dividends received deduction with respect to
the disqualified portion of the accrued original issue discount to the extent of
Holding 's current and accumulated earnings and profits, and the excess will
continue to be taxed as ordinary original issue discount income in accordance
with the rules described above in "Taxation of Original Issue Discount."
BACKUP WITHHOLDING
The backup withholding rules require a payor to deduct and withhold a tax if
(i) the payee fails to furnish a taxpayer identification number ("TIN") to the
payor, (ii) the IRS notifies the payor that the TIN furnished by the payee is
incorrect, (iii) the payee has failed to report properly the receipt of
"reportable payments" on several occasions and the IRS has notified the payor
that withholding is required or (iv) there has been a failure of the payee to
certify under the penalty of perjury that the payee is not subject to
withholding under Section 3406 of the Code. If any one of the events discussed
above occurs, Holding, its paying agent or other withholding agent will be
required to withhold a tax equal to 31% of any "reportable payment" made in
connection with the New Notes. A "reportable payment" includes, among other
things, interest actually paid and original issue discount in respect of a New
Note and amounts paid through brokers in sale or retirement of a New Note. Any
amounts withheld from a payment to a Holder under the backup withholding rules
will be allowed as a refund or credit against such holder's Federal income tax,
provided that the required information is furnished to the IRS. Certain Holders
(including, among others, corporations and certain tax exempt organizations) are
not subject to the backup withholding and information reporting requirements.
Each Holder should consult his or its tax advisor as to his or its qualification
for exemption from backup withholding and the procedure for obtaining such an
exemption.
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PLAN OF DISTRIBUTION
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Issuer believes that the New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by any holder thereof
(other than any such holder that is an "affiliate" of the Issuer 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 New 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 New Notes and neither such holder nor any such other
person is engaging in or intends to engage in a distribution of such New Notes.
Accordingly, any holder who is an affiliate of the Issuer or any holder using
the Exchange Offer to participate in a distribution of the New Notes will not be
able to 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. Notwithstanding the
foregoing, each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. 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 New Notes received in exchange
for Old Notes where such Old Notes were acquired as a result of market-making
activities or other trading activities (other than Old Notes acquired directly
from the Issuer). The Issuer has agreed that, for a period of one year from the
date of this Prospectus, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until , 1996 (90 days from the date of this
Prospectus), all dealers effecting transactions in the New Notes may be required
to deliver a prospectus.
The Issuer will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New 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 New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New 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, the Issuer 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. The Issuer will pay all the
expenses incident to the Exchange Offer (which shall not include the expenses of
any holder in connection with resales of the New Notes). The Issuer has agreed
to indemnify the Initial Purchaser and any broker-dealers participating in the
Exchange Offer against certain liabilities, including liabilities under the
Securities Act.
95
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the validity of the New Notes will be
passed upon for the Issuer by O'Sullivan Graev & Karabell, LLP, New York, New
York.
EXPERTS
The consolidated financial statements, including schedules of BPC Holding
Corporation at December 31, 1994 and December 30, 1995, and for each of the
three years in the period ended December 30, 1995, appearing in this Prospectus
and the Registration Statement to which this Prospectus forms a part, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein, and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
96
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED FINANCIAL STATEMENTS
Report of Independent Auditors....................................................... F-2
Consolidated Balance Sheets at December 31, 1994 and December 30, 1995............... F-3
Consolidated Statements of Operations for the years ended January 1, 1994, December
31, 1994 and December 30, 1995..................................................... F-5
Consolidated Statements of Changes in Stockholders' Equity for the years ended
January 1, 1994, December 31, 1994 and December 30, 1995........................... F-6
Consolidated Statements of Cash Flows for the years ended January 1, 1994, December
31, 1994 and December 30, 1995..................................................... F-7
Notes to Consolidated Financial Statements........................................... F-8
UNAUDITED INTERIM FINANCIAL STATEMENTS
Consolidated Balance Sheet at March 30, 1996......................................... F-20
Consolidated Statements of Operations for the Thirteen Weeks ended March 30, 1996 and
April 1, 1995........................................................................ F-22
Consolidated Statement of Changes in Stockholders' Equity (Deficit) for the Thirteen
Weeks ended March 30, 1996........................................................... F-23
Consolidated Statements of Cash Flows for the Thirteen Weeks ended March 30, 1996 and
April 1, 1995........................................................................ F-24
Notes to Consolidated Financial Statements........................................... F-25
</TABLE>
F-1
<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 December 31, 1994 and December 30, 1995, and
the related consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the three years in the period ended December
30, 1995. 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 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 December 31, 1994 and December 30,
1995, and the consolidated results of operations and cash flows for each of the
three years in the period ended December 30, 1995, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Indianapolis, Indiana
February 16, 1996
F-2
<PAGE>
BPC HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets (Note 5):
Cash and cash equivalents (Note 11).......................... $ 9,326,671 $ 8,034,986
Accounts receivable (less allowance for doubtful accounts of
$503,000 at December 31, 1994 and $737,000 at December 30,
1995).......................................................... 11,555,787 15,943,736
Inventories:
Finished goods............................................. 4,761,079 7,742,798
Raw materials and supplies................................. 5,401,095 3,897,323
Custom molds............................................... 455,463 256,880
------------ ------------
10,617,637 11,897,001
Prepaid expenses and other receivables....................... 573,686 1,592,653
Income taxes recoverable..................................... -- 411,220
------------ ------------
Total current assets........................................... 32,073,781 37,879,596
Cash held for acquisitions (Notes 3 and 5)..................... 12,000,000 --
Property and equipment (Notes 5 and 6):
Land......................................................... 2,492,097 3,882,095
Buildings and improvements................................... 12,136,106 15,711,743
Machinery, equipment and tooling............................. 52,425,975 68,801,103
Automobiles and trucks....................................... 391,571 496,190
Construction in progress..................................... 3,048,909 4,094,436
------------ ------------
70,494,658 92,985,567
Less accumulated depreciation................................ 32,391,786 40,544,072
------------ ------------
38,102,872 52,441,495
Intangible assets (Note 4):
Deferred financing and origination fees...................... 6,647,628 5,962,290
Covenants not to compete..................................... 686,535 72,917
Excess of cost over net assets acquired...................... 679,190 4,782,325
Patents...................................................... -- 138,634
Deferred acquisition costs................................... 389,937 --
------------ ------------
8,403,290 10,956,166
Deferred income taxes (Note 7)................................. 1,092,319 2,055,819
Other.......................................................... 118,012 132,326
------------ ------------
Total assets................................................... $ 91,790,274 $103,465,402
------------ ------------
------------ ------------
</TABLE>
F-3
<PAGE>
BPC HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable............................................. $ 8,886,416 $ 14,073,750
Accrued expenses and other liabilities....................... 2,184,760 2,806,841
Accrued interest............................................. 2,652,316 2,652,218
Employee compensation and payroll taxes...................... 4,112,284 4,618,340
Income taxes (Note 7)........................................ 147,319 --
Current portion of long-term debt (Notes 5 and 11)........... 697,805 716,918
------------ ------------
Total current liabilities...................................... 18,680,900 24,868,067
Long-term debt, less current portion (Notes 5 and 11).......... 111,589,026 110,959,186
Deferred compensation (Note 9)................................. 358,210 121,788
------------ ------------
130,628,136 135,949,041
Stockholders' equity (deficit) (Note 9):
Preferred Stock; $.001 par value; authorized -- 100,000
shares; none issued........................................ -- --
Class A Common Stock; $.00005 par value:
Authorized: 3,000,000 shares...............................
Issued: 1,308,680 shares................................... 65 65
Class B Common Stock; $.00005 par value:
Authorized: 1,000,000 shares...............................
Issued: 355,940 shares..................................... 18 18
Class A treasury stock: 5,212 shares......................... (57,766) (57,766)
Additional paid-in capital................................... 870,750 959,727
Warrants..................................................... 4,123,906 4,034,050
Deferred cost-restricted stock plan.......................... (21,632) --
Retained earnings (deficit).................................. (43,753,203) (37,419,733)
------------ ------------
Total stockholders' equity (deficit)........................... (38,837,862) (32,483,639)
------------ ------------
Total liabilities and stockholders' equity (deficit)......... $ 91,790,274 $103,465,402
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
BPC HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED
-------------------------------------------
JANUARY 1, DECEMBER 31, DECEMBER 30,
1994 1994 1995
----------- ------------ ------------
<S> <C> <C> <C>
Net sales......................................... $87,829,719 $106,140,906 $140,681,087
Cost of goods sold................................ 65,652,320 73,996,922 102,484,494
----------- ------------ ------------
Gross margin...................................... 22,177,399 32,143,984 38,196,593
Operating expenses:
Selling......................................... 4,256,672 5,083,177 5,617,205
General and administrative...................... 7,544,436 8,523,324 9,499,440
Research and development........................ 617,129 694,875 717,686
Amortization of intangibles (Note 4)............ 802,643 742,450 968,424
----------- ------------ ------------
Operating income.................................. 8,956,519 17,100,158 21,393,838
Other expenses:
Loss on disposal of property and equipment...... 2,780,051 183,870 127,073
Loss on plant closing........................... 895,290 -- --
Other........................................... 329,917 115,695 866,284
----------- ------------ ------------
Income before interest, taxes and extraordinary
charge............................................ 4,951,261 16,800,593 20,400,481
Interest (Notes 4 and 5):
Expense......................................... (6,607,564) (11,552,075) (14,031,273)
Income.......................................... 25,310 579,757 642,179
----------- ------------ ------------
Income (loss) before income taxes and
extraordinary charge............................ (1,630,993) 5,828,275 7,011,387
Income taxes (Note 7)............................. 72,150 11,211 677,917
----------- ------------ ------------
Income (loss) before extraordinary charge......... (1,703,143) 5,817,064 6,333,470
Extraordinary charge on extinguishment of debt
(Note 5).......................................... -- 3,652,197 --
----------- ------------ ------------
Net income (loss)................................. $(1,703,143) $ 2,164,867 $ 6,333,470
----------- ------------ ------------
----------- ------------ ------------
Earnings per share:
Earnings per common and common equivalent share:
Income (loss) before extraordinary charge..... $ (0.85) $ 2.79 $ 3.05
Extraordinary charge.......................... -- 1.75 --
----------- ------------ ------------
Net income (loss)............................. $ (0.85) $ 1.04 $ 3.05
----------- ------------ ------------
----------- ------------ ------------
Earnings per common share--assuming full
dilution:
Income (loss) before extraordinary charge..... $ (0.83) $ 2.77 $ 3.05
Extraordinary charge.......................... -- 1.74 --
----------- ------------ ------------
Net income (loss)............................. $ (0.83) $ 1.03 $ 3.05
----------- ------------ ------------
----------- ------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
BPC HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON STOCK DEFERRED
ISSUED ADDITIONAL COST- RETAINED
----------------- TREASURY PAID-IN RESTRICTED EARNINGS
CLASS A CLASS B STOCK CAPITAL WARRANTS STOCK (DEFICIT)
------- ------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 26, 1992..... $57 $18 $ -- $ 10,486,982 $6,015,375 $ (151,424) $ (6,936,418)
Net loss......................... -- -- -- -- -- -- (1,703,143)
Amortization of deferred
cost-restricted stock............ -- -- -- -- -- 81,120 --
Repurchase stock warrants........ -- -- -- -- (1,780,644) -- --
Market value
adjustment--warrants............. -- -- -- (6,646,587) 6,646,587 -- --
Purchase vested options from
management....................... -- -- -- (7,187) -- -- --
Purchase of treasury stock from
management....................... -- -- (59,175) -- -- -- --
Sale of treasury stock to
management....................... -- -- 26,776 -- -- -- --
-- --
-------- ------------ ---------- ---------- ------------
Balance at January 1, 1994....... 57 18 (32,399) 3,833,208 10,881,318 (70,304) (8,639,561)
Net income....................... -- -- -- -- -- -- 2,164,867
Amortization of deferred
cost-restricted stock............ -- -- -- -- -- 48,672 --
Warrants issued.................. -- -- -- 870,750 -- -- --
Market value
adjustment--warrants............. -- -- -- 6,757,412 (6,757,412) -- --
Distributions on common stock and
other equity interests.......... -- -- -- (12,721,491) -- -- (37,278,509)
Exercise of stock options........ 8 -- -- 2,130,871 -- -- --
Purchase treasury stock from
management....................... -- -- (25,367) -- -- -- --
-- --
-------- ------------ ---------- ---------- ------------
Balance at December 31, 1994..... 65 18 (57,766) 870,750 4,123,906 (21,632) (43,753,203)
Net income....................... -- -- -- -- -- -- 6,333,470
Amortization of deferred
cost-restricted stock............ -- -- -- 40 -- 21,632 --
Market value
adjustment--warrants............. -- -- -- 89,856 (89,856) -- --
Purchase vested options from
management....................... -- -- -- (919) -- -- --
-- --
-------- ------------ ---------- ---------- ------------
Balance at December 30, 1995..... $65 $18 $(57,766) $ 959,727 $4,034,050 $ -- $(37,419,733)
-- --
-- --
-------- ------------ ---------- ---------- ------------
-------- ------------ ---------- ---------- ------------
<CAPTION>
TOTAL
------------
<S> <C>
Balance at December 26, 1992..... $ 9,414,590
Net loss......................... (1,703,143)
Amortization of deferred
cost-restricted stock............ 81,120
Repurchase stock warrants........ (1,780,644)
Market value
adjustment--warrants............. --
Purchase vested options from
management....................... (7,187)
Purchase of treasury stock from
management....................... (59,175)
Sale of treasury stock to
management....................... 26,776
------------
Balance at January 1, 1994....... 5,972,337
Net income....................... 2,164,867
Amortization of deferred
cost-restricted stock............ 48,672
Warrants issued.................. 870,750
Market value
adjustment--warrants............. --
Distributions on common stock and
other equity interests.......... (50,000,000)
Exercise of stock options........ 2,130,879
Purchase treasury stock from
management....................... (25,367)
------------
Balance at December 31, 1994..... (38,837,862)
Net income....................... 6,333,470
Amortization of deferred
cost-restricted stock............ 21,672
Market value
adjustment--warrants............. --
Purchase vested options from
management....................... (919)
------------
Balance at December 30, 1995..... $(32,483,639)
------------
------------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
BPC HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
-------------------------------------------
JANUARY 1, DECEMBER 31, DECEMBER 30,
1994 1994 1995
----------- ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................. $(1,703,143) $ 2,164,867 $ 6,333,470
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization................... 11,198,426 8,175,580 9,536,046
Non-cash interest expense....................... 1,616,977 1,177,648 949,994
Extraordinary charge on extinguishment of
debt.............................................. -- 3,652,197 --
Non-cash compensation........................... 686,410 406,882 (214,750)
Write-off of deferred acquisition costs......... -- -- 389,937
Loss on sale of property and equipment.......... 2,780,051 183,870 127,073
Deferred income taxes........................... -- (1,092,319) (963,500)
Income taxes payable............................ 15,000 132,319 (147,319)
Changes in operating assets and liabilities:
Accounts receivable, net...................... (310,347) (2,776,372) (1,988,987)
Inventories................................... (293,103) (2,624,464) 926,155
Prepaid expenses and other receivables........ (150,250) 295,388 (963,603)
Accounts payable and accrued expenses......... 383,589 5,858,872 (1,000,600)
Other assets.................................. (113,178) 452 (14,314)
----------- ------------ ------------
Net cash provided by operating activities......... 14,110,432 15,554,920 12,969,602
INVESTING ACTIVITIES
Additions to property and equipment............... (5,586,084) (9,118,290) (11,247,029)
Proceeds from disposal of property and
equipment......................................... 1,764,908 13,555 20,345
Acquisition costs................................. -- (389,937) (394,488)
Purchase of Sterling Products..................... -- -- (7,245,816)
Purchase of Tri-Plas.............................. -- -- (6,517,997)
----------- ------------ ------------
Net cash used for investing activities............ (3,821,176) (9,494,672) (25,384,985)
FINANCING ACTIVITIES
Proceeds from long-term borrowings................ 750,000 99,129,250 --
Payments on long-term borrowings.................. (8,612,627) (29,684,044) (500,000)
Distributions on common stock and equity
interests......................................... -- (50,000,000) --
Exercise of management stock options.............. -- 1,450,963 --
Proceeds from issuance of warrants................ -- 870,750 --
Payments on capital leases........................ (176,396) (180,371) (197,802)
Debt issuance costs............................... -- (7,376,901) (177,581)
Purchase of outstanding warrants.................. (1,780,644) -- --
Reclassification of cash held for acquisition..... -- (12,000,000) 12,000,000
Other............................................. (39,586) (25,366) (919)
----------- ------------ ------------
Net cash provided by (used for) financing
activities........................................ (9,859,253) 2,184,281 11,123,698
Net increase (decrease) in cash and cash
equivalents....................................... 430,003 8,244,529 (1,291,685)
Cash and cash equivalents at beginning of year.... 652,139 1,082,142 9,326,671
----------- ------------ ------------
Cash and cash equivalents at end of year.......... $ 1,082,142 $ 9,326,671 $ 8,034,986
----------- ------------ ------------
----------- ------------ ------------
SUPPLEMENTAL DISCLOSURE
Financing and investing activities not affecting
cash and cash equivalents:
Acquisition of property and equipment by capital
lease............................................. $ 1,556,000 $ -- $ --
----------- ------------ ------------
----------- ------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
BPC Holding Corporation ("Holding"), through its subsidiaries Berry Plastics
Corporation ("Berry"), Berry Iowa Corporation, Berry Sterling Corporation and
Berry Tri-Plas Corporation, manufactures and markets plastic packaging products
through its facilities located in Evansville, Indiana; Henderson, Nevada; Iowa
Falls, Iowa; Winchester, Virginia; Charlotte, North Carolina; and York,
Pennsylvania. Atlantic Equity Partners, L.P. ("AEP"), an investment partnership
advised by First Atlantic Capital, Ltd. ("First Atlantic"), is a majority
stockholder of Holding.
Holding's fiscal year is a 52/53 week period ending generally on the
Saturday closest to December 31. All references herein to "1993," "1994" and
"1995" relate to the fiscal years ended January 1, 1994, December 31, 1994 and
December 30, 1995, 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 one industry segment. Holding is a
domestic manufacturer and marketer of plastic packaging, with sales concentrated
in three product groups within this market: aerosol overcaps, rigid open-top
containers and plastic drink cups. Holding's customers are located principally
throughout the United States, without significant concentration in any one
region or any one customer. Holding performs periodic credit evaluations of its
customers' financial condition and generally does not require collateral.
Purchase of various densities of plastic resin used in the manufacture of
Holding's products aggregated approximately $43 million in 1995 (excluding
specialty resins). Dow Chemical Corporation is the principal supplier (over 50%)
of Holding's total resin material requirements. Holding also uses other
suppliers such as Union Carbide, Chevron and Phillips to meet its resin
requirements. Holding 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,
both the price and availability of the principal raw material used in the
manufacture of Holding's products could result in financial disruption to
Holding.
Holding is subject to existing and potential federal, state, local and
foreign legislation designed to reduce solid wastes in landfills. While the
principal resin used by Holding is recyclable and, therefore, reduces Holding'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 Holding. Legislation, if promulgated, requiring plastics to be
degradable in landfills or to have minimum levels of recycled content would have
a significant impact on Holding's business as would legislation providing 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.
F-8
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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
The origination fee relating to the 12.25% Existing Senior Subordinated
Notes due 2004 issued by Berry and deferred financing fees are being amortized
using the straight-line method over the lives of the respective debt agreements.
The costs in excess of net assets acquired represents the excess purchase
price over the fair value of the net assets acquired in the original acquisition
of the assets of Berry Plastics, Inc. and the subsequent acquisitions of the
assets of Sterling Products, Inc. and Tri-Plas, Inc. and are being amortized by
the straight-line method over 20 and 15 years, respectively.
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.
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 amounts could differ from those estimates.
Earnings Per Share
Earnings per share are presented on a per common and common equivalent share
and fully diluted basis. Both primary and fully diluted shares are based on the
modified treasury stock method, which includes the number of common shares
outstanding at year end plus the share equivalent effect of dilutive and
antidilutive stock options and warrants.
New Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. Statement 121 also addresses
assets that are expected to be disposed of. Holding will adopt Statement 121 in
the first quarter of 1996 and, based on current circumstances, does not believe
the effect of adoption will be material.
In October 1995, the FASB issued Statement 123, Accounting for Stock-Based
Compensation, which 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
expects
F-9
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
to continue using the existing accounting requirements for its stock-based
awards and to provide the pro forma disclosures in its 1996 financial statements
of net income and earnings per share using the fair value method prescribed by
the Statement.
NOTE 3. ACQUISITIONS
On March 10, 1995, Holding acquired substantially all of the assets and
assumed certain liabilities of Sterling Products, Inc. through its newly-formed,
indirectly wholly-owned subsidiary, Berry Sterling Corporation, for a purchase
price of $7,300,000. The operations of Berry Sterling Corporation are included
in Holding's operations since the acquisition date using the purchase method of
accounting.
On December 21, 1995, Holding acquired substantially all of the assets and
assumed certain liabilities of Tri-Plas, Inc. through its indirectly
wholly-owned subsidiary Berry Tri-Plas Corporation (formerly Berry-CPI Plastics
Corp.) for a purchase price of $6,600,000. The operations of Berry Tri-Plas
Corporation are included in Holding's operations since the acquisition date
using the purchase method of accounting.
The pro-forma results listed below are unaudited and reflect purchase price
accounting adjustments assuming the acquisitions occurred at the beginning of
each year presented.
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
<S> <C> <C>
Net sales...................................................... $130,041,723 $158,217,544
Income before income taxes and extraordinary charge............ 5,494,825 4,805,464
Net income..................................................... 1,831,417 4,618,794
Earnings per common share:
Primary...................................................... 0.88 2.22
Fully diluted................................................ 0.87 2.22
</TABLE>
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 effect.
F-10
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
<S> <C> <C>
Senior subordinated notes origination fee (less accumulated
amortization of $427,308 at December 31, 1994 and $1,039,699 at
December 30, 1995)................................................ $5,689,062 $ 5,084,211
Deferred financing fees (less accumulated amortization of $97,533
at December 31, 1994 and $294,907 at December 30, 1995)......... 600,498 573,165
Nevada bond fees (less accumulated amortization of $72,096 at
December 31, 1994 and $91,756 at December 30, 1995)............... 235,921 216,261
Iowa bond fees (less accumulated amortization of $95,563 at
December 31, 1994 and $129,057 at December 30, 1995).............. 122,147 88,653
------------ ------------
6,647,628 5,962,290
Covenant not to compete (less accumulated amortization of
$3,527,083 at December 30, 1995 and $2,813,465 at December 31,
1994)............................................................. 686,535 72,917
Costs in excess of net assets acquired (less accumulated
amortization of $169,798 at December 31, 1994 and $424,603 at
December 30, 1995).............................................. 679,190 4,782,325
Patents........................................................... -- 138,634
Deferred acquisition costs........................................ 389,937 --
------------ ------------
$8,403,290 $ 10,956,166
------------ ------------
------------ ------------
</TABLE>
NOTE 5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
<S> <C> <C>
12.25% Existing Senior Subordinated Notes...................... $100,000,000 $100,000,000
Nevada Industrial Revenue Bonds................................ 6,500,000 6,000,000
Iowa Industrial Revenue Bonds.................................. 5,400,000 5,400,000
Capital lease obligation payable through December 1999......... 1,199,531 1,001,729
Debt discount.................................................. (812,700) (725,625)
------------ ------------
112,286,831 111,676,104
Less current portion of long-term debt......................... 697,805 716,918
------------ ------------
$111,589,026 $110,959,186
------------ ------------
------------ ------------
</TABLE>
Berry 12.25% Existing Senior Subordinated Notes
On April 21, 1994, Berry completed an offering (the "1994 Units Offering")
of 100,000 Units consisting of $100,000,000 aggregate principal amount of 12.25%
Existing Senior Subordinated Notes due 2004 (the "Existing Senior Subordinated
Notes") and 100,000 warrants each to purchase 1.13237 shares of Class A Common
Stock, $.00005 par value, of Holding. The Existing Senior Subordinated Notes
mature on April 15, 2004 and interest is payable semi-annually on October 15 and
April 15 of
F-11
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. LONG-TERM DEBT--(CONTINUED)
each year and commenced on October 15, 1994. The Existing Senior Subordinated
Notes are unconditionally guaranteed on a senior subordinated basis by Holding,
Berry Iowa, Berry Sterling and Berry Tri-Plas. The net proceeds to Berry from
the sale of the Existing Senior Subordinated Notes, after underwriting
discounts, commissions and other offering expenses, were approximately
$93,000,000. Berry applied the net proceeds as follows: (i) to repay in full all
amounts outstanding under Berry's then-existing credit facility, which together
with all accrued interest and prepayment fees was $31,000,000 and included all
of Berry's outstanding long-term debt, except for the Nevada and Iowa Industrial
Revenue Bonds and its capital lease obligation, (ii) to pay a $50,000,000
dividend on Berry's Common Stock and (iii) to invest approximately $12,000,000
to finance and provide machinery and equipment for acquisitions.
In connection with the repayment of all amounts outstanding under Berry's
then-existing credit facility, Berry incurred a net loss in the amount of
$3,652,200, which includes the write-off of a portion of unamortized financing
fees and prepayment penalties. This loss is reflected in the 1994 statement of
operations as an extraordinary charge on extinguishment of debt.
Berry is not required to make mandatory redemption or sinking fund payments
with respect to the Existing Senior Subordinated Notes. However, at any time
prior to April 15, 1997, Berry may redeem up to 25% of the initial principal
amount of the Existing Senior Subordinated 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 Berry as a
capital contribution or are used to purchase common equity securities of Berry,
at a redemption price equal to 111.25% of the principal amount thereof plus
accrued interest, to the redemption date; provided that at least 75% of the
principal amount of Existing Senior Subordinated Notes originally issued remain
outstanding immediately after the occurrence of any redemption and that any such
redemption occurs within 60 days following the closing of any such public
offering. Subsequent to April 15, 1999, the Existing Senior Subordinated 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 of control, as defined in the Indenture (the "Senior Subordinated Notes
Indenture") covering the Existing Senior Subordinated Notes, each holder of
Existing Senior Subordinated Notes will have the right to require Berry to
repurchase all or any part of such holder's Existing Senior Subordinated Notes
at a repurchase price in cash equal to 101% of the aggregate principal amount
thereof plus accrued interest.
The Existing Senior Subordinated Notes rank pari passu with or senior in
right of payment to all existing and future subordinated indebtedness of Berry.
The Existing Senior Subordinated Notes rank junior in right of payment to all
existing and future senior indebtedness of Berry, including borrowings under the
Revolving Credit Facility and the Nevada and Iowa Industrial Revenue Bonds.
The Senior Subordinated Notes Indenture contains certain covenants which,
among other things, limit Berry's 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
Simultaneous with the 1994 Units Offering, Berry entered into a revolving
credit facility (the "Revolving Credit Facility") with Fleet Capital Corporation
(by assignment from Shawmut Capital Corporation, by assignment from Barclays
Business Credit, Inc.) dated April 21, 1994. The Revolving Credit Facility
provides for a total of $28,000,000 in revolving credit, subject to specified
percentages of
F-12
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. LONG-TERM DEBT--(CONTINUED)
eligible assets reduced by outstanding letters of credit ($12,300,000 at
December 30, 1995) and a $7,000,000 machinery and equipment acquisition facility
(no amount outstanding at December 30, 1995).
The Revolving Credit Facility is guaranteed by Holding and is collateralized
by a lien on substantially all of the assets of Berry, Berry Iowa Corporation,
Berry Sterling Corporation and Berry Tri-Plas Corporation and will expire on
April 20, 1999. The Revolving Credit Facility will be automatically renewed for
one year periods unless terminated by Berry or Fleet.
The Revolving Credit Facility loans bear interest at floating rates ranging
from bank prime plus 1.0% to 1.5% or a Eurodollar rate (LIBOR) plus 3.0% or
3.5%. Commitment fees during the Credit Facility period are 0.25% of the average
monthly unused portion of the available credit. Letter of credit fees range from
1.75% to 2.5% per annum on the outstanding amount.
The Revolving 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 indebtedness, (iii) limitations on dividends, (iv) limitations on
transactions with affiliates and (v) limitations on capital expenditures.
Nevada Industrial Revenue Bonds
The Nevada Industrial Bonds bear interest at a variable rate (5.7% and 5.6%
at December 31, 1994 and December 30, 1995, respectively), require annual
principal payments of $500,000 on April 1, are collateralized by irrevocable
letters of credit issued by Fleet under the Revolving Credit Facility and mature
in April 2007.
Iowa Industrial Revenue Bonds
The Iowa Industrial Bonds bear interest at a variable rate (4.2% and 4.0% at
December 31, 1994 and December 30, 1995, respectively), require no periodic
principal payments, are collateralized by irrevocable letters of credit issued
by Fleet under the Revolving Credit Facility and mature in August 1998.
Other
Future maturities of long-term debt are as follows: 1996, $716,900; 1997,
$737,900; 1998, $6,160,900; 1999, $786,000; 2000, $500,000 and $103,500,000
thereafter.
Interest paid was $5,313,000, $7,999,100 and $13,431,500 for 1993, 1994 and
1995, respectively. Interest capitalized was $163,300, $228,900 and $350,200 for
1993, 1994 and 1995, 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 $1,661,100 and related accumulated amortization of $332,200 and $498,300
at December 31, 1994 and December 30, 1995, respectively. Lease amortization is
included in depreciation expense. Total rental expense for operating leases was
approximately $705,000, $979,100 and $1,514,508 for 1993, 1994 and 1995,
respectively.
F-13
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. LEASE AND OTHER COMMITMENTS--(CONTINUED)
At December 30, 1995, future minimum lease payments for capital leases and
noncancellable operating leases with initial terms in excess of one year were as
follows:
<TABLE>
<CAPTION>
OPERATING
LEASE
ENTERED INTO
SUBSEQUENT TO
OPERATING DECEMBER 30,
CAPITAL LEASES LEASES 1995
-------------- ---------- -------------
<S> <C> <C> <C>
1996.................................................. $ 300,612 $2,185,161 $ 120,262
1997.................................................. 300,612 1,700,674 131,194
1998.................................................. 300,612 1,338,465 131,194
1999.................................................. 300,612 1,096,869 131,194
Thereafter............................................ -- 3,044,104 535,910
-------------- ---------- -------------
1,202,448 $9,365,273 $ 1,049,556
-------------- ---------- -------------
-------------- ---------- -------------
Less: amount representing interest.................... 200,719
--------------
Present value of net minimum lease payments........... $1,001,729
--------------
--------------
</TABLE>
In addition to lease commitments, at December 30, 1995, Holding had
committed $2,000,000 to outside vendors for certain capital projects.
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 December 31, 1994 and December 30, 1995
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation....................................... $1,312,457 $1,177,234
Other............................................................ 8,342 48,650
------------ ------------
Total deferred tax liabilities................................. 1,320,799 1,225,884
Deferred tax assets:
Inventory........................................................ 338,526 271,939
Allowance for doubtful accounts.................................. 193,459 311,010
Compensation and benefit accruals................................ 568,117 556,075
Insurance reserves............................................... 149,697 134,788
Net operating loss carryforwards................................. 1,939,956 --
Alternative minimum tax (AMT) credit carryforwards............... 1,092,319 2,007,891
------------ ------------
Total deferred tax assets...................................... 4,282,074 3,281,703
------------ ------------
Net deferred tax assets............................................ 2,961,275 2,055,819
Valuation allowance for net deferred tax assets.................... (1,868,956) --
------------ ------------
Net deferred tax................................................... $1,092,319 $2,055,819
------------ ------------
------------ ------------
</TABLE>
F-14
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7. INCOME TAXES--(CONTINUED)
Income tax expense (credit) consisted of the following:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, DECEMBER 30,
1994 1994 1995
---------- ------------ ------------
<S> <C> <C> <C>
Current
Federal............................................... $ 346,665 $628,040 $1,404,695
State................................................. -- 9,851 236,722
Deferred
Federal............................................... (274,515) (626,680) (900,470)
State................................................. -- -- (63,030)
---------- ------------ ------------
$ 72,150 $ 11,211 $ 677,917
---------- ------------ ------------
---------- ------------ ------------
</TABLE>
During 1994, Holding reached a settlement agreement with the Internal
Revenue Service ("IRS") relating to Holding's 1990 through 1993 income tax
returns. The settlement resulted in additional alternative minimum tax of
approximately $217,000 and adjustment of the tax basis of certain depreciable
assets and the net operating loss carryforwards.
Net operating loss carryforwards of approximately $5,100,000 at December 31,
1994 were fully utilized in 1995. AMT credit carryforwards are available to
Holding indefinitely to reduce future years' federal income taxes.
Income taxes paid during 1993, 1994 and 1995 approximated $57,000, $992,000
and $2,001,000, respectively.
A reconciliation of income tax expense, computed at the federal statutory
rate, to income tax expense is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
JANUARY 1, DECEMBER 31, DECEMBER 30,
1994 1994 1995
---------- ------------ ------------
<S> <C> <C> <C>
Federal income tax expense (benefit) at statutory
rate.................................................... $ (554,538) $1,981,614 $2,383,872
Extraordinary charge on extinguishment of debt.......... -- (1,241,747) --
State income tax expense (benefit), net of federal
benefit................................................. (78,786) 199,508 114,636
Amortization of costs in excess of net assets
acquired................................................ 28,727 14,433 13,151
Expenses not deductible for income tax purposes......... 26,642 127,168 19,306
Change in valuation allowance for deferred tax assets... 915,207 (708,133) (1,868,956)
Increase in AMT credit carryforwards.................... (274,514) (749,277) --
Internal Revenue Service agent's examination adjustment
to deferred tax asset................................. -- 380,246 --
Other................................................... 9,412 7,399 15,908
---------- ------------ ------------
$ 72,150 $ 11,211 $ 677,917
---------- ------------ ------------
---------- ------------ ------------
</TABLE>
F-15
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
$307,600, $344,000 and $384,000 for 1993, 1994 and 1995, respectively.
NOTE 9. STOCKHOLDERS' EQUITY
Common Stock
As of January 1, 1994, Holding's authorized Class A and Class B Common Stock
consisted of 250,000 shares of $.001 par value stock for each class. In
connection with the 1994 Units Offering (see Note 5) and following stockholder
approval, Holding effected a 20-for-1 stock split for all of the Common Stock
and simultaneously increased its authorized shares of Class A and Class B Common
Stock to 20,000,000 and 20,000,000, which were subsequently reduced to 3,000,000
and 1,000,000, respectively. All references in the consolidated financial
statements to share data have been adjusted to give effect to the 20-for-1 stock
split. Also, in connection with the 1994 Units Offering, Berry paid a
$50,000,000 dividend on its outstanding Common Stock. The entire $50,000,000
dividend was paid to Holding as Holding is the sole shareholder of Common Stock
of Berry. Holding in turn utilized the $50,000,000 dividend to pay a
distribution on its Common Stock and certain other equity interests.
Class A Common Stock has one vote per share. Class B Common Stock is
non-voting except with respect to certain matters affecting the rights and
preferences of that class. Each share of Class B Common Stock is convertible at
the option of the holder into one share of Class A Common Stock upon the
occurrence of a merger, consolidation, liquidation or similar transaction.
Warrants
Warrants (the "Old Warrants") to purchase 534,700 shares of Holding's Common
Stock were issued to its lenders in connection with the original acquisition of
the assets of Berry Plastics, Inc. On December 31, 1992, Holding purchased
155,560 Old Warrants from the primary lender at $11.25 per warrant with
financing provided by the lender. The remaining 379,140 Old Warrants expire on
December 31, 2000 and are exercisable at nominal amounts upon the sale of
Holding or a public offering and under various instances in the event of a
refinancing of Holding's indebtedness. In addition, the remaining Old Warrants
contained certain put rights enabling the holders to mandate the repurchase of
such Old Warrants at a fair market value determined by agreement of Holding and
the Old Warrant holders. However, on March 29, 1994, Holding and the Old Warrant
holders finalized an agreement whereby the holders of the put rights
relinquished their right to mandate the repurchase of their shares of Common
Stock of Holding. The put rights were relinquished in exchange for agreement by
Holding to undertake a public offering of equity securities or to sell the stock
or consolidated assets of Holding on or prior to April 21, 1999. As of the date
the put rights were relinquished, the market value was estimated to be $11.00
per share. During November 1995, a third party private sale of a portion of
outstanding private warrants resulted in a current valuation of $10.64 per share
as of December 30, 1995.
In connection with the 1994 Units Offering (see Note 5), Holding issued
100,000 warrants (the "New Warrants") each to purchase 1.13237 shares of Class A
Common Stock, $.00005 par value, of Holding. The New Warrants, which became
detachable on October 15, 1994, represent the right to
F-16
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. STOCKHOLDERS' EQUITY--(CONTINUED)
purchase an aggregate of approximately 5% of the fully diluted common stock of
Holding (based on the common stock, warrants and options outstanding as of
December 30, 1995). The New Warrants are exercisable at $18.797 per share,
subject to adjustment upon the occurrence of certain events and become
exercisable as of the date of the earliest of: (i) a change of control, (ii) an
initial public offering or (iii) October 15, 2003. The New Warrants expire on
April 15, 2004.
Stock Option Plan
Pursuant to the provisions of the BPC Holding Corporation 1991 Stock Option
Plan which reserved 290,000 shares for future issuance, Holding has granted
options to certain officers and key employees to acquire shares of Class A
Common Stock. These options are subject to various option agreements, which
among other things, set forth the class of stock, option price and performance
thresholds to determine exercisability and vesting requirements. The Plan
expires in January 1998. As of December 30, 1995, the vested portion of stock
options was valued at $10.64 per share based on a third party sale of common
stock equivalents.
Plan option activity is summarized below:
<TABLE>
<CAPTION>
SHARES OF
OPTION CLASS A
PRICE COMMON STOCK
--------------- ------------
<S> <C> <C>
1993
Outstanding at December 26, 1992........................... $8.1566--$11.25 287,800
Lapsed..................................................... 8.1566--11.25 (22,760)
------------
Outstanding at January 1, 1994............................. 8.1566--11.25 265,040
1994
Granted.................................................... 11.25--25.00 19,860
Exercised.................................................. 8.1566--11.25 (174,260)
Lapsed..................................................... 11.25 (4,788)
------------
Outstanding at December 31, 1994........................... 8.1566--25.00 105,852
1995
Granted.................................................... 26.41 11,130
Purchase of vested options from management................. 25.00 (2,460)
------------
Outstanding at December 30, 1995........................... 8.1566--26.41 114,522
------------
------------
Exercisable at December 30, 1995........................... $8.1566--26.41 90,858
------------
------------
</TABLE>
In addition, using a restricted stock plan, 68,200 shares of Class A Common
Stock were issued to certain key management employees. Shares issued vest
ratably over the period from December 24, 1990 to December 23, 1995. Amounts
related to the compensation element for these plans for 1995 was income of
$214,800 and expense for 1993 and 1994 of $686,400 and $406,900, respectively.
The market value of stock used for valuing the compensation element of these
plans is determined by either a third party transaction of Holding's equity or
equity equivalents (private warrants were sold in November, 1995 at $10.64 per
share), or an estimate of value as determined by Holding's Board of Directors.
F-17
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. STOCKHOLDERS' EQUITY--(CONTINUED)
Stockholders Agreement
Holding has an agreement with its management stockholders whereby it may (i)
require the management stockholders to sell shares as designated by Holding or
Atlantic Equity Partners, L.P. (the "Fund") upon consummation of certain
transactions, (ii) grant the management stockholders certain rights of co-sale
in connection with the sales by the Fund, (iii) grant Holding rights to
repurchase stock of the management stockholders upon the occurrence of certain
events, (iv) grant the management stockholders rights to sell their shares to
Holding upon the occurrence of certain events and (v) require the management
stockholders to offer shares to the Fund or Holding prior to any permitted
transfer of shares.
NOTE 10. RELATED PARTY TRANSACTIONS
In connection with the 1994 Units Offering and simultaneously with the
negotiation of the Revolving Credit Facility, First Atlantic and Chase
Securities, Inc., an affiliate of Chase Manhattan Investment Holdings, Inc.
("CMIHI"), received advisory fees of $1,500,000 and $200,000, respectively.
Also, Whirlpool Financial Corporation, a lender and warrant holder in the
original acquisition of the assets of Berry Plastics, Inc., received
approximately $478,000 in prepayment penalties upon repayment of the outstanding
amounts under the existing credit facility (see Note 5).
The CIT Group/Equity Investments, Inc. ("CITEI") received fees of $150,000
and $37,500 in 1993 and 1994, respectively, for financial advisory services.
First Atlantic received fees of $625,000, $730,000 and $750,000 in 1993, 1994
and 1995, respectively, for financial and management consulting services and
fees of $200,000 in 1995 for financial services provided in connection with the
acquisition of Sterling Products, Inc. and Tri-Plas, Inc.
NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS INFORMATION
Holding's financial instruments generally consist of cash and cash
equivalents and Holding's long-term debt. The carrying amounts of Holding's
financial instruments approximate fair value at December 30, 1995, except for
Berry's Existing Senior Subordinated Notes for which the fair value exceeds the
carrying value by approximately $7,000,000.
F-18
<PAGE>
BPC HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. SUMMARY FINANCIAL INFORMATION (IN THOUSANDS)
The following summarizes financial information of Holding's wholly-owned
subsidiary, Berry Plastics Corporation and subsidiaries:
<TABLE>
<CAPTION>
AS OF
----------------------------
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEETS
Current assets..................................................... $ 32,074 $ 37,880
Property and equipment--net of accumulated depreciation............ 38,103 52,441
Other noncurrent assets............................................ 21,614 13,144
Current liabilities................................................ 21,551 27,672
Noncurrent liabilities............................................. 111,589 110,959
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------
JANUARY 1, DECEMBER 31, DECEMBER 30,
1994 1994 1995
---------- ------------ ------------
<S> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales................................................... $ 87,830 $106,141 $140,681
Cost of goods sold.......................................... 65,652 73,997 102,484
Income (loss) before income taxes and extraordinary
charge...................................................... (1,014) 6,342 6,861
Extraordinary charge........................................ -- 3,652 --
Net income (loss)........................................... (942) 2,678 6,183
</TABLE>
F-19
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
MARCH 30, DECEMBER 30,
1996 1995
--------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 5,047 $ 8,035
Accounts receivable (less allowance for doubtful accounts of $749
and $737)........................................................ 18,334 15,944
Inventories:
Finished goods................................................... 10,234 7,743
Raw materials and supplies....................................... 3,228 3,897
Custom molds..................................................... 490 257
--------- ------------
13,952 11,897
Prepaid expenses and other receivables............................. 1,200 1,593
Income taxes recoverable........................................... 147 411
--------- ------------
Total current assets................................................. 38,680 37,880
Property and equipment:
Land............................................................... 4,285 3,882
Buildings and improvements......................................... 15,748 15,712
Machinery, equipment and tooling................................... 72,477 68,801
Automobiles and trucks............................................. 515 496
Construction in progress........................................... 3,081 4,094
--------- ------------
96,106 92,985
Less accumulated depreciation...................................... 42,986 40,544
--------- ------------
53,120 52,441
Intangible assets:
Deferred financing and origination fees (net of accumulated
amortization of $1,765 and $1,555)................................... 5,752 5,962
Patents (net of accumulated amortization of $2 and $0)............. 137 139
Excess of cost over net assets acquired (net of accumulated
amortization of $513 and $425)....................................... 4,813 4,782
Covenants not to compete (net of accumulated amortization of $35
and $27)......................................................... 65 73
--------- ------------
10,767 10,956
Deferred income taxes................................................ 1,928 2,056
Other................................................................ 166 132
--------- ------------
Total assets......................................................... $ 104,661 $103,465
--------- ------------
--------- ------------
</TABLE>
F-20
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
MARCH 30, DECEMBER 30,
1996 1995
--------- ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable................................................... $ 11,550 $ 14,074
Accrued expenses and other liabilities............................. 2,790 2,807
Accrued interest................................................... 5,705 2,652
Employee compensation and payroll taxes............................ 4,505 4,618
Current portion of long-term debt.................................. 722 717
--------- ------------
Total current liabilities............................................ 25,272 24,868
Long-term debt, less current portion................................. 110,924 110,959
Deferred compensation................................................ 122 122
--------- ------------
Total liabilities.................................................... 136,318 135,949
Stockholders' equity (deficit):
Preferred stock; $.001 par value; authorized--100,000 shares; none
issued............................................................... -- --
Class A Common Stock; $.00005 par value:
Authorized: 3,000,000 shares
Issued: 1,331,432 shares......................................... -- --
Class B Common Stock; $.00005 par value:
Authorized: 1,000,000 shares
Issued: 355,940 shares........................................... -- --
Class A treasury stock: 5,212 shares............................... (58) (58)
Additional paid-in capital......................................... -- 959
Warrants........................................................... 13,433 4,034
Retained earnings (deficit)........................................ (45,032) (37,419)
--------- ------------
Total stockholders' equity (deficit)................................. (31,657) (32,484)
--------- ------------
Total liabilities and stockholders' equity (deficit)................. $ 104,661 $103,465
--------- ------------
--------- ------------
</TABLE>
See notes to consolidated financial statements.
F-21
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
---------------------
MARCH 30, APRIL 1,
1996 1995
--------- --------
(UNAUDITED)
<S> <C> <C>
Net sales............................................................... $34,996 $ 32,694
Cost of goods sold...................................................... 25,119 22,542
--------- --------
Gross margin............................................................ 9,877 10,152
Operating expenses:
Selling............................................................... 1,672 1,370
General and administrative............................................ 3,187 2,356
Research and development.............................................. 207 176
Amortization of intangibles........................................... 99 198
--------- --------
Operating income........................................................ 4,712 6,052
Other expenses:
Gain on disposal of property and equipment............................ (42) (7)
Other................................................................. 336 422
--------- --------
Income before interest and income taxes................................. 4,418 5,637
Interest:
Expense............................................................... (3,448) (3,545)
Income................................................................ 68 239
--------- --------
Income before income taxes.............................................. 1,038 2,331
Income taxes............................................................ 397 5
--------- --------
Net income.............................................................. $ 641 $ 2,326
--------- --------
--------- --------
Earnings per share:
Earnings per common and common equivalent share:
Net income.......................................................... $ .31 $ 1.11
--------- --------
--------- --------
Earnings per common share -- assuming full dilution:
Net income.......................................................... $ .30 $ 1.11
--------- --------
--------- --------
</TABLE>
See notes to consolidated financial statements.
F-22
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
COMMON STOCK
ISSUED ADDITIONAL RETAINED
---------------- TREASURY PAID-IN EARNINGS
CLASS A CLASS B STOCK CAPITAL WARRANTS (DEFICIT) TOTAL
------- ------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 30, 1995......... $-- $-- $(58) $ 960 $ 4,034 $(37,420) $(32,484)
Net income........................... -- -- -- -- -- 641 641
Market value adjustment--warrants.... -- -- -- (1,146) 9,399 (8,253) --
Exercise of stock options............ -- -- -- 186 -- -- 186
------- ------- -------- ---------- -------- -------- --------
Balance at March 30, 1996............ $-- $-- $(58) $ -- $ 13,433 $(45,032) $(31,657)
------- ------- -------- ---------- -------- -------- --------
------- ------- -------- ---------- -------- -------- --------
</TABLE>
See notes to consolidated financial statements.
F-23
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
---------------------
MARCH 30, APRIL 1,
1996 1995
--------- --------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net income.............................................................. $ 641 $ 2,326
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization......................................... 2,589 2,185
Non-cash interest expense............................................. 232 223
Write-off of deferred acquisition costs............................... -- 390
Non-cash compensation................................................. -- 5
Gain on sale of property and equipment................................ (42) (7)
Deferred income taxes................................................. 128 (229)
Changes in operating assets and liabilities:
Accounts receivable, net............................................ (2,408) (4,256)
Inventories......................................................... (2,055) (888)
Prepaid expenses and other receivables.............................. 657 (327)
Accounts payable and accrued expenses............................... 273 2,969
Other assets........................................................ (5) (10)
--------- --------
Net cash provided by operating activities............................... 10 2,381
INVESTING ACTIVITIES
Additions to property and equipment..................................... (2,482) (1,893)
Proceeds from disposal of property and equipment........................ 42 11
Purchase of assets of Sterling Products, Inc., net of cash acquired..... -- (7,246)
Purchase of drink cup product line...................................... (625) --
Acquisition costs....................................................... (66) (328)
Net cash used for investing activities.................................. (3,131) (9,456)
FINANCING ACTIVITIES
Exercise of management stock options.................................... 185 --
Reclassification of cash held for acquisition........................... -- 12,000
Payments of capital lease............................................... (52) (46)
--------- --------
Net cash provided by financing activities............................... 133 11,954
--------- --------
Net increase (decrease) in cash and cash equivalents.................... (2,988) 4,879
Cash and cash equivalents at beginning of period........................ 8,035 9,327
--------- --------
Cash and cash equivalents at end of period.............................. $ 5,047 $ 14,206
--------- --------
--------- --------
</TABLE>
See notes to consolidated financial statements.
F-24
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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 the Company's
wholly-owned subsidiary, Berry Plastics Corporation ("Berry"), and its
wholly-owned subsidiaries: Berry Iowa Corporation; Berry Tri-Plas Corporation;
and Berry Sterling Corporation. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Form 10-K filed with the Securities and Exchange Commission for the
year ended December 30, 1995.
(2) ACQUISITIONS
On March 10, 1995, the Company acquired (the "Sterling Acquisition") through
its newly-formed subsidiary, Berry Sterling Corporation, substantially all of
the assets and assumed certain liabilities of Sterling Products, Inc. for a
purchase price of $7,300,000. The operations of Berry Sterling Corporation are
included in the Company's operations since the acquisition date using the
purchase method of accounting.
On December 21, 1995, the Company acquired (the "Tri-Plas Acquisition")
substantially all of the assets and assumed certain liabilities of Tri-Plas,
Inc. through its subsidiary Berry Tri-Plas Corporation (formerly Berry-CPI
Plastics Corp.) for $6,600,000. The operations of Berry Tri-Plas Corporation are
included in the Company's operations since the acquisition date using the
purchase method of accounting.
On January 23, 1996, the Company purchased the assets relating to the
plastic drink cup line and decorating equipment of Alpha Products, Inc., a
subsidiary of Aladdin Industries, Inc. for $625,000. The addition of these
assets complements the drink cup product line acquired in the Sterling
Acquisition.
The pro forma results listed below are unaudited and reflect purchase
accounting adjustments assuming the Sterling Acquisition and Tri-Plas
Acquisition occurred on December 31, 1994.
<TABLE>
<CAPTION>
APRIL 1,
1995
--------------
(IN THOUSANDS)
<S> <C>
Net sales...................................................................... $ 37,622
Income before income taxes..................................................... 1,767
Net income..................................................................... 1,762
Earnings per common share:
Primary...................................................................... .84
Fully diluted................................................................ .84
</TABLE>
F-25
<PAGE>
BPC HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(2) ACQUISITIONS--(CONTINUED)
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 acquisition 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 effect.
(3) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
MARCH 30, DECEMBER 30,
1996 1995
--------- ------------
(IN THOUSANDS)
<S> <C> <C>
12.25% Existing Senior Subordinated Notes............................ $ 100,000 $100,000
Nevada Industrial Revenue Bonds...................................... 6,000 6,000
Iowa Industrial Revenue Bonds........................................ 5,400 5,400
Capital lease obligation............................................. 950 1,002
Debt discount........................................................ (704) (726)
--------- ------------
111,646 111,676
Less current portion of long-term debt............................... 722 717
--------- ------------
$ 110,924 $110,959
--------- ------------
--------- ------------
</TABLE>
As a result of the issuance of $100 million of Existing Senior Subordinated
Notes (the "Notes") on April 21, 1994, the current portion of long-term debt is
limited to a $.5 million repayment of the industrial revenue bonds and the
monthly principal payments related to a capital lease obligation. The Company
also maintains a $28 million revolving line of credit with Fleet Capital
Corporation (by assignment from Shawmut Capital Corporation, by assignment from
Barclays Business Credit, Inc.). As of March 30, 1996, approximately $12 million
of this credit line was used to provide a letter of credit for the outstanding
industrial revenue bonds. Based on the borrowing formula as of March 30, 1996,
the Company had approximately $16 million of additional available credit under
the Fleet Capital Corporation credit line.
(4) SUBSEQUENT EVENT
On April 25, 1996, in connection with the patent infringement lawsuit filed
by Berry Sterling Corporation against Pescor Plastics, Inc., the United States
District Court for the Eastern District of Virginia entered an order that held
that Berry Sterling's patent for the design of a drink cup was not valid. The
Company is currently consulting with its advisors concerning an appeal of the
order.
F-26
<PAGE>
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER BERRY [LOGO]
PERSON IS AUTHORIZED IN CONNECTION WITH BPC HOLDING
ANY OFFERING MADE HEREBY TO GIVE ANY CORPORATION
INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR $105,000,000
REPRESENTATION MUST NOT BE RELIED UPON BPC HOLDING CORPORATION
AS HAVING BEEN AUTHORIZED BY THE COMPANY. 12 1/2% SERIES B SENIOR SECURED
THIS PROSPECTUS DOES NOT CONSTITUTE AN NOTES DUE 2006
OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITY OTHER THAN THE
SECURITIES OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY TO ANY PERSON
IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE
DATE HEREOF.
-------------------
TABLE OF CONTENTS
PAGE
----
Available Information............. ii
Incorporation of Certain Documents
by Reference.......................iii
Summary of Prospectus............. 1
Risk Factors...................... 10
The Exchange Offer................ 16
The Transaction................... 25
Use of Proceeds................... 27
Capitalization.................... 28
Pro Forma Condensed Consolidated
Financial Statements.............. 29 ------------
Selected Historical Financial Data 34 PROSPECTUS
Management's Discussion and Analysis ------------
of Financial Condition and Results
of Operations...................... 36 , 1996
Business............................42
Management..........................53
Principal Stockholders..............59
Certain Transactions................61
Description of Common Stock.........64
Description of Preferred Stock and
Warrants............................64
Description of Certain Indebtedness.65
Description of Senior Notes.........68
Certain Federal Income Tax
Considerations......................90
Plan of Distribution................95
Legal Matters.......................96
Experts.............................96
Index to Financial Statements.......F-1
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law (the
"DGCL"), Article VII of the Registrant's Restated Certificate of Incorporation
(the "Certificate of Incorporation") (Exhibit 3.1 to this Registration
Statement) eliminates the liability of the Registrant's directors to the
Registrant or its stockholders, except for liabilities related to breach of duty
of loyalty, actions not in good faith and certain other liabilities.
Section 145 of the DGCL provides for indemnification by the Registrant of
its directors and officers. In addition, Article IX, Section 1 of the
Registrant's By-Laws (the "By-laws") (Exhibit 3.2 to this Registration
Statement) requires the Registrant to indemnify any current or former director
or officer to the fullest extent permitted by the DGCL. The Registrant has also
obtained officers' and directors' liability insurance which insures against
liabilities that officers and directors of the Registrant may incur in such
capacities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------- ----------------------------------------------------------------------------------
<C> <S>
2.1 Asset Purchase Agreement dated February 12, 1992, among Berry Plastics Corporation
(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 (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 Corporation,
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
Corporation, 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 2, 1996
(the "Form 8-K") and incorporated herein by reference)
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)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------- ----------------------------------------------------------------------------------
<C> <S>
*2.9 Certificate of Merger of Mergerco with and into Holding, dated as of June 18, 1996
*3.1 Amended and Restated Certificate of Incorporation of Holding
3.2 By-laws of Holding (filed as Exhibit 3.2 to the Form S-1 and incorporated herein
by reference)
4.1 Form of Indenture 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) (filed as Exhibit 4.1 to the Form S-1 and incorporated
herein by reference) .
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
*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
*4.6 Registration Rights Agreement dated as of June 18, 1996, by and among Holding and
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ")
**5 Opinion of O'Sullivan Graev & Karabell, LLP (including consent of such firm)
regarding legality of 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 Form of Revolving Credit Agreement (filed as Exhibit 10.5 to the Form S-1 and
incorporated herein by reference)
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
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)
**10.7 Amendment to Beeler Employment Agreement dated June 30, 1996
10.8 Employment Agreement dated December 24, 1990, as amended, between the Company and
Douglas E. Bell ("Bell") (filed as Exhibit 10.11 to the Form S-1 and
incorporated herein by reference)
10.9 Amendment to Bell Employment Agreement dated November 30, 1995 (filed as Exhibit
10.10 to the 1995 Form 10-K and incorporated herein by reference)
**10.10 Amendment to Bell Employment Agreement dated June 30, 1996
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------- ----------------------------------------------------------------------------------
<C> <S>
10.11 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)
10.12 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)
**10.13 Amendment to Kratochvil Employment Agreement dated June 30, 1996
10.14 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)
10.15 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)
**10.16 Amendment to Boots Employment Agreement dated June 30, 1996
10.17 Guaranty dated as of February 12, 1992, by the Company in favor of the City of
Iowa Falls, Iowa, The First National Bank of Boston and certain other parties
named therein (filed as Exhibit 10.14 to the Form S-1 and incorporated herein by
reference)
10.18 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)
10.19 Loan and Trust Agreement dated as of August 30, 1988, as amended, among the City
of Iowa Falls, Iowa, Berry Iowa, the First National Bank of Boston, as Trustee,
and Canadian Imperial Bank of Commerce (New York) (filed as Exhibit 10.19 to the
Form S-1 and incorporated herein by reference)
10.20 Letter of Credit and Reimbursement Agreement among Berry Iowa, Shawmut Capital
Corporation and Barclays Bank PLC, New York Branch (filed as Exhibit 10.20 to
the 1994 Form 10-K and incorporated herein by reference)
10.21 Letter of Credit of Fleet National Bank of Connecticut (filed as Exhibit 10.26 to
the 1995 Form 10-K and incorporated herein by reference)
*10.22 Purchase Agreement dated as of June 12, 1996, between Holding and DLJ relating to
the 12.5% Senior Secured Notes due 2006
*10.23 Stockholders Agreement dated as of June 18, 1996, among Holding, Atlantic Equity
Partners International II, L.P., CVCA and the other parties thereto
*10.24 Warrant to purchase Class B Common Stock of Holding dated June 18, 1996, issued to
CVCA (Warrant No. 1)
*10.25 Warrant to purchase Class B Common Stock of Holding dated June 18, 1996, issued to
CVCA (Warrant No. 2)
*10.26 Warrant to purchase Class B Common Stock of Holding dated June 18, 1996, issued to
The Northwestern Mutual Life Insurance Company (Warrant No. 3)
*10.27 Warrant to purchase Class B Common Stock of Holding dated June 18, 1996, issued to
The Northwestern Mutual Life Insurance Company (Warrant No. 4)
*12.01 Computation of Ratio of Earnings to Fixed Charges
*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 (included on page S-1)
*24 Powers of Attorney (included on page II-6)
*25 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act
of 1939 of First Trust of New York, National Association, as Trustee
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------- ----------------------------------------------------------------------------------
<C> <S>
**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
**99.5 Form of Exchange Agent Agreement between the Registrant and First Trust of New
York, National Association, as Exchange Agent
</TABLE>
- ------------
* Filed herewith.
** To be filed by amendment.
(b) Financial Statement Schedules
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors on Financial Statement Schedules....................... S-2
Schedule I -- Condensed Financial Information of Registrant........................... S-3
Schedule II -- Valuation and Qualifying Accounts -- Three years ended December 30,
1995.................................................................................. S-5
</TABLE>
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
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the DGCL, the Certificate of
Incorporation and By-laws, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;
II-4
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes 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 Registrant 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 registrant hereby undertakes 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 registrant hereby undertakes 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 registrant hereby undertakes 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-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 17th day of July, 1996.
BPC HOLDING CORPORATION
By /s/ ROBERTO BUARON
...................................
Roberto Buaron
Chairman of the Board
POWER OF ATTORNEY
We, the undersigned directors and officers of BPC HOLDING CORPORATION, do
hereby constitute and appoint MARTIN R. IMBLER and JAMES M. KRATOCHVIL, or
either of them, our true and lawful attorneys and agents, to do any and all acts
and things in our name and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Corporation to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on the 17th day of July, 1996, by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
<S> <C>
/s/ ROBERTO BUARON Chairman of the Board and Director
.............................................
Roberto Buaron
/s/ MARTIN R. IMBLER President and Director (Principal Executive
............................................. Officer)
Martin R. Imbler
/s/ JAMES M. KRATOCHVIL Vice President, Chief Financial Officer and
............................................. Secretary (Principal Financial Officer and
James M. Kratochvil Principal Accounting Officer)
/s/ LAWRENCE G. GRAEV Director
.............................................
Lawrence G. Graev
/s/ JAMES A. LONG Director
.............................................
James A. Long
/s/ DONALD J. HOFMANN Director
.............................................
Donald J. Hofmann
/s/ ROBERT L. EGAN Director
.............................................
Robert L. Egan
/s/ DAVID M. CLARKE Director
.............................................
David M. Clarke
</TABLE>
II-6
<PAGE>
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 16, 1996 in the Registration Statement (Form S-4, No. 33-XXXXX) and
related Prospectus of BPC Holding Corporation for the registration of
$105,000,000 of 12.5% of Senior Secured Notes due 2006.
Indianapolis, Indiana
July 15, 1996
S-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS ON
FINANCIAL STATEMENT SCHEDULES
We have audited the consolidated financial statements of BPC Holding
Corporation as of December 31, 1994 and December 30, 1995, and for each of the
three years in the period ended December 30, 1995, and have issued our report
thereon dated February 16, 1996 (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 audits.
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.
Indianapolis, Indiana
February 16, 1996
S-2
<PAGE>
BPC HOLDING CORPORATION
(PARENT COMPANY)
SCHEDULE 1--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Due from Berry Plastics Corporation...................... $ 2,804 $ 2,870
Other assets (principally investment in subsidiary)...... (35,166) (41,350)
------------ ------------
Total assets............................................. $(32,362) $(38,480)
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Deferred compensation.................................... 122 $ 358
Preferred stock.......................................... -- --
Class A common stock..................................... -- --
Class B common stock..................................... -- --
Treasury stock........................................... (58) (58)
Additional paid-in capital............................... 960 871
Warrants................................................. 4,034 4,124
Deferred cost-restricted stock plan...................... -- (22)
Retained earnings (deficit).............................. (37,420) (43,753)
------------ ------------
Total stockholders' equity (deficit)..................... (32,484) (38,838)
------------ ------------
Total liability and stockholders' equity (deficit)....... $(32,362) $(38,480)
------------ ------------
------------ ------------
CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
YEAR ENDED
--------------------------------------
1995 1994 1993
------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales................................................ $ -- $ -- $ --
Cost of goods sold....................................... -- -- --
Gross profit............................................. -- -- --
Operating expenses....................................... (150) 513 761
Other (income) expense................................... -- -- --
------ ------------ ------------
Income (loss) before income taxes and equity in net
income (loss) of subsidiary............................ 150 (513) (761)
Equity in net income (loss) of subsidiary................ 6,183 2,678 (942)
------ ------------ ------------
Net income (loss)........................................ $6,333 $ 2,165 $ (1,703)
------ ------------ ------------
------ ------------ ------------
</TABLE>
S-3
<PAGE>
BPC HOLDING CORPORATION
(PARENT COMPANY)
SCHEDULE 1--CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------
1995 1994 1993
------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Net cash from operating activities............................. $ 1 $ (2,297) $ --
Net cash from investing activities............................. -- -- --
Net cash from financing activities:
Exercise of management stock options......................... -- 1,451 --
Proceeds from issuance of warrants........................... -- 871 --
Other........................................................ -- (25) --
Dividend received from wholly-owned subsidiary............... -- 50,000 1,781
Purchase of warrants......................................... -- -- (1,781)
Purchase of vested options................................... (1) -- --
Distribution on capital stock and other equity interests..... -- (50,000) --
------- -------- -------
Net cash from financing activities............................. -- -- --
------- -------- -------
Cash and equivalents at end of year............................ $ -- $ -- $ --
------- -------- -------
------- -------- -------
</TABLE>
Notes to Condensed Financial Statements
(1) Basis of Presentation. In the parent company--only financial statements, the
Company'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 the
Company's consolidated financial statements, which are included beginning on
page F-1.
(2) Guarantee. Berry had $111,676,000 and $112,287,000 of long-term debt
outstanding at December 30, 1995 and December 31, 1994, respectively. Under
the terms of the debt agreements, the Company has guaranteed the payment of
all principal and interest.
(3) Distribution on Capital Stock and Other Equity Interests. On April 21, 1994,
the date of the Offering, Berry Plastics Corporation, a subsidiary of the
Company, paid a $50.0 million dividend on its outstanding common stock. The
entire $50.0 million dividend was paid to the Company as the Company is the
sole stockholder of Berry Common Stock. The Company in turn used the $50.0
million to pay a distribution on its capital stock and certain other equity
interests.
S-4
<PAGE>
BPC HOLDING CORPORATION
(PARENT COMPANY)
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE CHARGED TO
AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND ACCOUNTS- DEDUCTIONS- END OF
DESCRIPTION OF YEAR EXPENSES DESCRIBE DESCRIBE YEAR
- ------------------------------------ --------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 30, 1995:
Allowance for doubtful accounts..... $ 502,645 $ 216,256 $ 299,144(3) $ 280,720(1) $ 737,325
--------- ---------- ---------- ----------- ----------
--------- ---------- ---------- ----------- ----------
Year ended December 31, 1994:
Allowance for doubtful accounts..... $ 363,812 $ 194,700 $ -- $ 55,867(1) $ 502,645
--------- ---------- ---------- ----------- ----------
--------- ---------- ---------- ----------- ----------
Year ended January 1, 1994:
Allowance for doubtful accounts..... $ 492,904 $ (3,526) $ -- $ 125,566(2) $ 363,812
--------- ---------- ---------- ----------- ----------
--------- ---------- ---------- ----------- ----------
</TABLE>
- ------------
(1) Uncollectible accounts written off, net of recoveries.
(2) Represents $94,259 of uncollectible accounts written off, net of recoveries,
and $31,307, relating to the closing of the Forest City, North Carolina
plant.
(3) Primarily relates to purchase of accounts receivable and related allowance
for Berry Sterling and Berry Tri-Plas.
S-5
Exhibit 2.9
CERTIFICATE OF MERGER
OF
BPC MERGERCO, INC.
WITH AND INTO
BPC HOLDING CORPORATION
UNDER SECTION 251 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Pursuant to Section 251 of the General Corporation Law of the State of
Delaware, BPC Holding Corporation, a Delaware corporation ("BPC"), hereby
---
certifies to the following information relating to the merger of BPC
Mergerco, Inc., a Delaware corporation ("Mergerco"), with and into BPC (the
--------
"Merger").
------
1. The names and states of incorporation of Mergerco and BPC, which
are the constituent corporations in the Merger (the "Constituent
-----------
Corporations"), are:
- ------------
Name State
---- -----
BPC Mergerco, Inc.. . . . . . . . . . . . Delaware
BPC Holding Corporation . . . . . . . . . Delaware
2. The Agreement and Plan of Merger, dated as of June 18, 1996,
between Mergerco and BPC (the "Merger Agreement"), setting forth the terms
----------------
and conditions of the Merger, has been approved, adopted, certified,
executed and acknowledged by each of the Constituent Corporations in
accordance with the provisions of Section 251 of the General Corporation
Law of the State of Delaware.
3. The name of the surviving corporation (the "Surviving
---------
Corporation") with respect to the Merger is "BPC Holding Corporation".
- -----------
4. The Amended and Restated Certificate of Incorporation of the
Surviving Corporation is hereby restated and amended to read in its
entirety as set forth in Annex A hereto.
-------
5. The Merger Agreement is on file at BPC's principal place of
business at 101 Oakley Street, Evansville, Indiana 47710. A copy of the
Merger Agreement will be provided without cost to any stockholder of either
Constituent Corporation who forwards a written request to BPC at its
principal place of business.
<PAGE>
IN WITNESS WHEREOF, this Certificate of Merger has been executed on
this 18th day of June, 1996.
BPC HOLDING CORPORATION
By /s/ Roberto Buaron
-----------------------------------------
Name: Roberto Buaron
Title: Chairman
-2-
<PAGE>
ANNEX A
-------
RESTATED CERTIFICATE OF INCORPORATION
OF
BPC HOLDING CORPORATION
The undersigned, Roberto Buaron and Joseph S. Levy, Chairman and Vice
President, respectively, of BPC HOLDING CORPORATION, a corporation
organized and existing under the laws of the State of Delaware, on behalf
of said corporation, hereby certify as follows:
1. The name of the corporation is BPC HOLDING CORPORATION (the
"Corporation"). The date of filing of its original Certificate of
Incorporation with the Secretary of State of the State of Delaware was
December 11, 1990, as amended and restated by the Amended and Restated
Certificate of Incorporation filed December 20, 1990, as further amended by
the Amended and Restated Certificate of Incorporation filed April 19, 1994,
further amended by the Certificate of Amendment to the Amended and Restated
Certificate of Incorporation filed May 5, 1995 and further amended by the
Certificate of Amendment filed June 14, 1996.
2. This Restated Certificate of Incorporation (the "Restated
Certificate") was duly adopted in accordance with Sections 103, 222, 242
and 245 of the General Corporation Law of the State of Delaware.
3. The text of the Certificate of Incorporation, as amended and
restated herein, shall read as follows:
ARTICLE FIRST
The name of the corporation is BPC HOLDING CORPORATION.
ARTICLE SECOND
The address of the registered office of the Corporation in the state
of Delaware is 9 East Loockerman Street, City of Dover, County of Kent,
Delaware 19901. The name of the registered agent of the Corporation at such
address is National Registered Agents, Inc.
ARTICLE THIRD
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
<PAGE>
ARTICLE FOURTH
Part A. Authorized Shares
-----------------
The total number of shares of capital stock which the Corporation has
authority to issue is 3,500,000 shares, consisting of:
(i) 1,000,000 shares of Preferred Stock, par value $.01 per
share ("Preferred Stock"), of which 600,000 shares shall be designated
Series A Senior Cumulative Exchangeable Preferred Stock (the "Series A
Preferred Stock");
(ii) 1,000,000 shares of Class A Common Stock, par value $.01 per
share ("Class A Common"), of which 500,000 shares shall be designated
voting shares ("Class A Voting Common") and 500,000 shares will be
designated non-voting shares ("Class A Non-Voting Common");
(iii) 1,000,000 shares of Class B Common Stock, par value $.01 per
share ("Class B Common"), of which 500,000 shares shall be designated
voting shares ("Class B Voting Common") and 500,000 shares will be
designated non-voting shares ("Class B Non-Voting Common"); and
(iv) 500,000 shares of non-voting Class C Common Stock, par value
$.01 per share ("Class C Common").
The Class A Common, Class B Common and Class C Common and any other
common stock issued hereafter are referred to collectively as the "Common
Stock". Shares of Preferred Stock and Common Stock shall have the rights,
preferences and limitations set forth below.
Part B. Preferred Stock
---------------
(i) General. Subject to limitations prescribed by the provisions
--------
of this Part B, Preferred Stock may be issued from time to time in one
or more series, each of such series to have such terms as stated in
the resolution or resolutions providing for the establishment of such
series adopted by the Board of Directors of the Corporation, as
hereinafter provided. Except as otherwise expressly stated in this
Part B or in the resolution or resolutions providing for the
establishment of a series, any shares of Preferred Stock which may be
redeemed, purchased or acquired by the Corporation may be reissued
except as otherwise provided by law.
Subject to limitations prescribed by the provisions of this Part B,
authority is hereby expressly granted to the Board of Directors to provide
for the issuance, from time to time, of shares of Preferred Stock in one or
more series, and, in connection with the establishment of any such series
by resolution or resolutions and by the filing of a certificate
2
<PAGE>
pursuant to the applicable law of the State of Delaware, to determine and
fix such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative participating, optional or other
special rights, and qualifications, limitations or restrictions thereof,
including without limitation thereof, dividend rights, conversion rights,
redemption privileges and liquidation preferences, as shall be stated in
such resolution or resolutions, all to the full extent permitted by the
General Corporation Law of the State of Delaware. Subject to limitations
prescribed by the provisions of this Part B and without limiting the
generality of the foregoing, the resolution or resolutions providing for
the establishment of any series of Preferred Stock may, to the extent
permitted by law, provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series. Except as
otherwise expressly stated in this Part B or in the resolution or
resolutions providing for the establishment of a series, no vote of the
holders of shares of Preferred Stock or Common Stock shall be a
prerequisite to the issuance of any shares of any series of the Preferred
Stock authorized by and complying with the conditions of this Certificate.
(ii) Series A Cumulative Exchangeable Preferred Stock.
------------------------------------------------
The designation and amount of the Series A Cumulative
Exchangeable Preferred Stock, par value $.01 per share, and the voting
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions of such series, are as follows:
Section 1. Designation and Amount; Rank.
----------------------------
(a) The shares of such series of Preferred Stock shall be
designated as the "Series A Senior Cumulative Exchangeable Preferred Stock"
(the "Series A Preferred Stock") and the number of shares initially
------------------------
constituting such series shall be 600,000, which number may be decreased
(but not increased) by the Board of Directors of the Corporation (the
"Board of Directors") without a vote of stockholders; provided, however,
------------------ -------- -------
that such number may not be decreased below the number of then currently
outstanding shares of Series A Preferred Stock. The stated value and
liquidation preference per share (the "Liquidation Preference") of the
----------------------
Series A Preferred Stock shall be $25.00.
(b) The Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets upon dissolution,
liquidation or winding up of the Corporation, prior to all other Capital
Stock of the Corporation (such other Capital Stock being herein referred to
as the "Junior Stock").
------------
3
<PAGE>
Section 2. Definitions.
-----------
Capitalized terms used herein shall have the meanings set forth
in this Section 2:
"Accumulated Dividends" means, on any specific date with respect
---------------------
to any share of Series A Preferred Stock, the dividends that have accrued
on such share as of such specific date in respect of Dividend Periods
ending on or prior to the Cash Dividend Date and that have not previously
been paid in cash.
"Affiliate" means, with respect to any specified Person, any
---------
other Person which, directly or indirectly, controls, is under common
control with, or is owned or controlled by, such specified Person. For
purposes of this definition, (i) "control" means, with respect to any
specified Person, either (x) the beneficial ownership of more than
30 percent of any class of equity securities or (y) the power to direct the
management or policies of the specified Person through the ownership of
voting securities, by contract, voting agreement or otherwise and (ii) the
terms "controlling", "control with" and "controlled by", etc., shall have
meanings correlative to the foregoing.
"Bankruptcy Law" means Title 11, United States Code, or any
--------------
similar Federal or state law for the relief of debtors.
"Berry" means Berry Plastics Corporation.
-----
"Berry Revolving Credit Facility" means the Berry Revolving
-------------------------------
Credit Facility, dated as of April 21, 1994, by and among Berry and Fleet
Capital Corporation providing for up to $28.0 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 which includes the addition, substitution or replacement of any or all
lenders thereunder under the same or any replacement agreement.
"Board of Directors" has the meaning ascribed to such term in
------------------
Section 1(a).
"BPC Senior Subordinated Notes" means the 12-1/4% Senior
-----------------------------
Subordinated Notes due 2004 issued pursuant to the BPC Senior Subordinated
Notes Indenture.
"BPC Senior Subordinated Notes Indenture" means the Indenture
---------------------------------------
dated as of April 21, 1994, among the Corporation, Berry Iowa Corporation
and Berry-CPI Plastics Corp., as Guarantors, Berry, and United States Trust
Company of New York, as Trustee, regarding the BPC Senior Subordinated
Notes.
"Business Day" means any day other than Saturday, Sunday or a day
------------
on which banking institutions in the State of New
4
<PAGE>
York are authorized or obligated by law or executive order to close.
"By-Laws" means the by-laws of the Corporation, as they may be
-------
amended or restated from time to time.
"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 required to be capitalized on a balance
sheet prepared in accordance with GAAP.
"Capital Stock" of any Person means any and all shares,
-------------
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including without limitation, any preferred stock, and 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, but excluding any debt securities convertible into
such equity.
"Cash Dividend Date" means the first Dividend Payment Date
------------------
occurring after the sixth (6th) anniversary of the Issue Date.
"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 Berry
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.
"Certificate of Incorporation" means the Certificate of
----------------------------
Incorporation of the Corporation, as it may be amended or restated from
time to time.
"Closing Date" has the meaning ascribed to such term in the
------------
Purchase Agreement.
5
<PAGE>
"Common Stock" means the Common Stock, of all classes, of the
------------
Corporation.
"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 12 months after the acquisition of such business) subsequent to
the Issue 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.
"Custodian" means any receiver, trustee, assignee, liquidator,
---------
custodian or similar official under any Bankruptcy Law.
"CVCA" means Chase Venture Capital Associates, L.P.
----
"DGCL" means the General Corporation Law of the State of
----
Delaware, as in effect from time to time.
"Disqualified Stock" means any Capital Stock which, by its terms
------------------
(or by the terms of any Capital Stock 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 December 31, 2006; provided, however, that any
-------- -------
Capital Stock that would otherwise be Disqualified Stock will not be
Disqualified Stock solely as a result of a maturity or redemption event
that is conditioned upon and subject to compliance with Section 4.07 of the
Senior Secured Note Indenture.
"Dividend Payment Date" means the last day of March, June,
---------------------
September and December in each year.
"Dividend Period" means each quarterly period ending on a
---------------
Dividend Payment Date.
6
<PAGE>
"Dividend Rate" means, with respect to each share of Series A
-------------
Preferred Stock, a rate of 14% per annum of the sum of the Liquidation
Preference and all accrued and unpaid dividends on such share (excluding
the amount of any dividends accrued since the immediately preceding
Dividend Payment Date), subject to adjustment as follows:
(i) upon the occurrence of any Event of Non-Compliance specified
in clause (a) of the definition of such term, the Dividend Rate (if
the then current Dividend Rate is less than 16% per annum) shall
immediately increase to 16% per annum; provided that any increase in
--------
the Dividend Rate resulting from the operation of this clause (i)
shall terminate as of the close of business on the first date
thereafter on which no Event of Noncompliance specified in clause (a)
of the definition of such term exists and the Dividend Rate shall
revert to the rate that otherwise would be in effect but for the
operation of this clause (i), subject to subsequent increases pursuant
to this clause (i); and
(ii) upon the occurrence of an Event of Non-Compliance specified
in clause (b) of the definition of such term, the Dividend Rate (if
the then current Dividend Rate is less than 15% per annum) shall
immediately increase to 15% per annum; provided that any increase in
--------
the Dividend Rate resulting from the operation of this clause (ii)
shall terminate as of the close of business on the first date
thereafter on which no Event of Noncompliance specified in clause (b)
of the definition of such term exists and the Dividend Rate shall
revert to the rate that otherwise would be in effect but for the
operation of this clause (ii), subject to subsequent increases
pursuant to this clause (ii).
"Event Leading to Voting Rights" means any of the following:
------------------------------
(a) the Corporation, commencing on the Cash Dividend Date, fails
for six (6) Dividend Periods (whether or not consecutive) to declare
and pay dividends in cash on shares of Series A Preferred Stock
pursuant to Section 3(a) in an amount equivalent to or exceeding the
full amount of dividends accrued and payable thereon, whether or not
such declaration or payment is legally permissible or is prohibited by
an agreement or instrument to which the Corporation is subject;
(b) (i) the Corporation or a Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law: (A) commences a voluntary
case; (B) consents to the entry of an order for relief against it in
an involuntary case; (C) consents to the appointment of a Custodian of
it or for any substantial part of its property; or (D) makes a general
assignment for the benefit of its creditors or takes any
7
<PAGE>
comparable action under any foreign laws relating to insolvency; or
(ii) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (A) is for relief against the Corporation or
any Significant Subsidiary in an involuntary case; (B) appoints a
Custodian of the Corporation or any Significant Subsidiary or for any
substantial part of its property; or (C) orders the winding up or
liquidation of the Corporation or any Significant Subsidiary or any
similar relief is granted under any foreign laws and the order, decree
or relief remains unstayed and in effect for 60 days; or
(c) outstanding Indebtedness of the Corporation or any
Subsidiary in an amount aggregating in excess of $10,000,000 is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof prior to final maturity.
"Event of Noncompliance" means any of the following:
----------------------
(a) the Corporation fails to declare and pay dividends in cash
on shares of Series A Preferred Stock on any Dividend Payment Date on
or after the Cash Dividend Date pursuant to Section 3(a) in an amount
equivalent to or exceeding the full amount of dividends (other than
Accumulated Dividends) then accrued and payable thereon, whether or
not such declaration or payment is legally permissible or is
prohibited by any agreement or instrument to which the Corporation is
subject; or
(b) the Corporation fails to perform, observe, or comply with
any covenant, agreement, obligation, or restriction required
hereunder, after giving effect to any grace period provided herein.
"Exchange" means the exchange of the Series A Preferred Stock for
--------
the Exchange Notes as provided in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
"Exchange Date" has the meaning ascribed to such term in Section
-------------
8(a).
"Exchange Indenture" means an indenture between the Corporation
------------------
and a trustee satisfactory to the Corporation and the holders of a majority
of the outstanding shares of Series A Preferred Stock in form and substance
satisfactory to the Corporation and holders of at least 66-2/3% of the
outstanding shares of Series A Preferred Stock and reflecting the terms set
forth in Exhibit F to the Purchase Agreement.
"Exchange Notes" means the Corporation's Senior Subordinated
--------------
Exchange Notes to be issued upon the Exchange under the Exchange Indenture.
8
<PAGE>
"Existing Indebtedness" means Indebtedness of the Corporation and
---------------------
its Subsidiaries (including the BPC Senior Subordinated Notes) in existence
on the Issue Date, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth
----
in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect on the Issue
Date.
"Guarantee" means a guarantee (other than by endorsement of
---------
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters
of credit and reimbursement agreements in respect thereof), of all or any
part of any Indebtedness.
"Hedging Obligations" means, with respect to any 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.
"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 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.
"International" means Atlantic Equity Partners International II,
-------------
L.P.
"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, Capital Stock or other
securities and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
9
<PAGE>
"Issue Date" means the first date on which shares of Series A
----------
Preferred Stock are issued by the Corporation pursuant to the Purchase
Agreement.
"Junior Payment" has the meaning ascribed to such term in Section
--------------
6.1(a).
"Junior Stock" has the meaning ascribed to such term in Section
------------
1(b).
"Lien" means any mortgage, pledge, security interest,
----
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Liquidation Preference" has the meaning ascribed to such term in
----------------------
Section 1(a).
"Mergerco" means BPC Mergerco, Inc. which was merged with and
--------
into the Corporation pursuant to the Certificate of Merger filed with the
Secretary of State of the State of Delaware June 18, 1996.
"Northwestern" means The Northwestern Mutual Life Insurance
------------
Company.
"Officer" means the Chairman of the Board, the President, any
-------
Vice President, the Treasurer or the Secretary of the Corporation, as
applicable.
"Officers' Certificate" means a certificate signed by two
---------------------
Officers.
"past due" has the meaning ascribed to such term in Section 3(a).
--------
"Permitted Investments" means (a) any Investments in the
---------------------
Corporation or in a Wholly Owned Subsidiary of the Corporation that is
engaged in the same or similar line of business as the Corporation and its
Subsidiaries were engaged in on the Issue Date and (b) any Investments in
Cash Equivalents.
"Person" means any individual, corporation, general or limited
------
partnership, joint venture, association, limited liability company, joint
stock company, trust, business trust, bank, trust company, estate
(including any beneficiaries thereof), unincorporated organization,
cooperative, association or governmental branch, authority, agency or
political subdivision thereof.
"Preferred Stock" means the preferred stock, par value $0.01 per
---------------
share, of the Corporation.
10
<PAGE>
"Purchase Agreement" means the Preferred Stock and Warrant
------------------
Purchase Agreement dated as of June 12, 1996, by and among the Corporation,
Mergerco, Northwestern and CVCA, as modified and supplemented and in effect
from time to time.
"Redemption Date" means the date of any redemption of the Series
---------------
A Preferred Stock pursuant to Section 7.
"Redemption Percentage" means the applicable redemption
---------------------
percentage set forth below, if the Redemption Date occurs during the period
beginning June 15 of the years indicated:
Redemption
Year Percentage
---- ----------
1999 110%
2000 108%
2001 106%
2002 104%
2003 102%
2004 and thereafter 100%
"Sale of the Corporation" means the sale of the Corporation to
-----------------------
one or more Persons that are not Affiliates of the Corporation in a single
or a series of related transactions pursuant to which the acquiring Person
or Persons acquire (i) all of the capital stock of the Corporation (whether
by way of sale, transfer, merger, consolidation or otherwise) or (ii) all
or substantially all of the assets of the Corporation and its Subsidiaries,
taken as a whole.
"SEC" means the Securities and Exchange Commission.
---
"Secretary" means the Secretary of the Corporation.
---------
"Senior Secured Notes" means the 12-1/2% senior secured notes
--------------------
issued by the Corporation pursuant to the terms of the Senior Secured Note
Indenture.
"Senior Secured Note Indenture" means the Indenture dated as of
-----------------------------
the Closing Date, between the Corporation and First Trust of New York, a
national association, as trustee, regarding the Senior Secured Notes as the
same may be modified and supplemented, and in effect from time to time.
"Senior Stock" means any stock of the Corporation ranking prior
------------
to, or on a parity with, the Series A Preferred Stock either with respect
to the payment of dividends or the distribution of assets, whether upon
liquidation or otherwise.
"Series A Preferred Stock" has the meaning ascribed to such term
------------------------
in Section 1(a).
11
<PAGE>
"Significant Subsidiary" means any Subsidiary that would be a
----------------------
"Significant Subsidiary" of the Corporation within the meaning of Rule 1-02
under Regulation S-X promulgated by the SEC.
"Specified Amount" means, on any specific date with respect to
----------------
any share of Series A Preferred Stock, the sum of (i) the Liquidation
Preference with respect to such share and (ii) the Accumulated Dividends
with respect to such share.
"Stated Maturity" means, with respect to any security, the date
---------------
specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision.
"Stockholders Agreement" means the Stockholders Agreement, dated
----------------------
the Closing Date, among the Corporation, International, CVCA, certain other
institutional holders, certain members of management of the Corporation and
CVCA and Northwestern as holders of Series A Preferred Stock with respect
to certain provisions thereof, as amended from time to time pursuant to its
terms.
"Stock Purchase Agreement" means the Stock Purchase and
------------------------
Recapitalization Agreement, dated as of June 12, 1996, among the
Corporation, Mergerco, certain purchasers listed on Schedule I thereto and
certain shareholders listed on Schedule II thereto, as amended from time to
time pursuant to its terms.
"Subsidiary" means, with respect to any Person, any corporation,
----------
association, partnership or other business entity of which more than 50% of
the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly
or indirectly, by (i) such Person, (ii) such Person and one or more
Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary
shall refer to a Subsidiary of the Corporation.
"Successor Corporation" has the meaning ascribed to such term in
---------------------
Section 6.8.
"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.
Section 3. Dividends and Distributions. (a) The holders of
---------------------------
shares of Series A Preferred Stock, in preference to the holders of shares
of Junior Stock, shall be entitled to receive quarterly, when, as and if
declared by the Board of Directors out of funds of the Corporation legally
available for
12
<PAGE>
the payment of dividends, cumulative dividends on each share at the
Dividend Rate. With respect to each Dividend Payment Date occurring on or
after the Cash Dividend Date, such dividends shall be paid in cash in
arrears. With respect to each Dividend Payment Date occurring prior to the
Cash Dividend Date, such dividends shall be paid, at the sole option of the
Corporation, in whole or in part, in cash in arrears, and to the extent the
Corporation does not pay such dividends in cash, then dividends owed to
such holder shall accrue quarterly on a compound basis. Dividends are
payable in arrears in respect of the Dividend Period ending on such
Dividend Payment Date so long as shares of Series A Preferred Stock are
outstanding (dividends not paid on any such date in accordance with the
terms of this Section 3 are referred to herein as "past due"); provided
-------- --------
that (i) the first Dividend Payment Date shall be September 30, 1996, in
respect of the period from the Issue Date through such date and (ii) any
past due dividends may be paid on any date fixed by the Board of Directors.
(b) Dividends payable pursuant to Section 3(a) shall begin to
accrue and be cumulative from the Issue Date. The amount of dividends
payable for any period shorter or longer than a full Dividend Period,
including the first Dividend Period, shall be determined on the basis of
twelve 30-day months and a 360-day year. Dividends paid on the shares of
Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
- --- ----
outstanding. Dividends paid on the shares of Series A Preferred Stock
shall be allocated pro rata on a share-by-share basis among all such shares
--- ----
at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend declared thereon, which record date shall
be no more than sixty (60) days nor less than ten (10) days prior to the
date fixed for the payment thereof. If no record date is fixed, the record
date for determining holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend declared thereon shall be at the close of
business on the day on which the Board of Directors declares such dividend.
(c) All accrued and unpaid dividends, to the extent theretofore
unpaid, shall be paid in full, in cash, on the 12th anniversary of the
Issue Date (the "12th Anniversary Date"). In the event all accrued and
---------------------
unpaid dividends are not paid in full, in cash, on the 12th Anniversary
Date or accrued dividends are not paid in full, in cash, on any Dividend
Payment Date following the 12th Anniversary Date, the holders of Series A
Preferred Stock shall have the right, notwithstanding anything to the
contrary in the Certificate of Incorporation, the By-Laws or any agreement
or instrument to which the Corporation is a party, voting together as a
single class, to elect the number of additional members to the Board of
Directors at each election of directors so that representatives of the
holders of Series A Preferred Stock shall constitute, at all times
thereafter, a
13
<PAGE>
majority of the Board of Directors. Such directors shall be elected in
accordance with the applicable procedures set forth in Section 5(b)(ii).
The directors elected pursuant to this Section 3(c) (and any successors
thereof) may continue to serve until a Sale of the Corporation is
consummated.
Section 4. Liquidation, Dissolution or Winding Up. (a) In the
--------------------------------------
event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of shares of Series A
Preferred Stock shall be entitled to receive, out of the assets of the
Corporation available for distribution to its stockholders, an amount equal
to the Liquidation Preference per share of Series A Preferred Stock plus
all accrued and unpaid dividends thereon to the date of such payment, and
no distribution shall be made to the holders of shares of Junior Stock upon
liquidation, dissolution or winding up unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received an amount equal
to the Liquidation Preference per share plus all accrued and unpaid
dividends thereon to the date of such payment (whether or not the
declaration or payment of such dividends is legally permissible or is
prohibited by any agreement or instrument to which the Corporation is
subject).
(b) Neither the consolidation, merger or other business
combination of the Corporation with or into any other Person or Persons nor
the sale, lease, exchange or conveyance of all or any part of the property,
assets or business of the Corporation, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation for purposes of this Section
4.
Section 5. Voting Rights. (a) Except as provided in this
-------------
Section 5 or in the Certificate of Incorporation, and except for any voting
rights provided by law, the holders of shares of Series A Preferred Stock
shall have no voting rights and their consent shall not be required for the
taking of any corporate action.
(b) (i) Upon the occurrence of any Event Leading to Voting
Rights, the holders of shares of Series A Preferred Stock shall have the
right, notwithstanding anything to the contrary in the Certificate of
Incorporation, the By-Laws or any agreement or instrument to which the
Corporation is a party, voting together as a single class, to elect two
(2) directors to the Board of Directors, all such directors to be in
addition to the number of directors constituting the Board of Directors
immediately prior to the accrual of such rights, with the remaining
directors to be elected by the other class or classes of stock entitled to
vote therefor at any meeting of the stockholders held for the purpose of
electing directors. The right of the holders of shares of Series A
Preferred Stock to elect members of the Board of Directors as set forth
herein shall continue until (A) with respect to an Event Leading to Voting
Rights specified in clause (a) of the definition of such term, such time as
all accrued and unpaid dividends that are in arrears are paid in full in
cash,
14
<PAGE>
and (B) with respect to any other Event Leading to Voting Rights, until
such event, occurrence or failure ceases to exist or has been cured, as the
case may be, at which time the special right of the holders of the Series A
Preferred Stock so to vote as a class for the election of directors and the
term of office of the directors elected by such persons shall terminate
upon resignation; provided, however, that such right shall again be
applicable with respect to any subsequent Event Leading to Voting Rights.
(ii) The right of the holders of Series A Preferred Stock to vote
for the election of directors herein may be exercised at any annual meeting
of stockholders of the Corporation or at any special meeting of
stockholders of the Corporation called for such purpose as hereinafter
provided or at any adjournment thereof, or by the written consent,
delivered to the Secretary, of the holders of a majority of all outstanding
shares of Series A Preferred Stock as of the record date of such written
consent. The Secretary may call, and upon the written request of the
holders of record of at least twenty percent (20%) of the outstanding
shares of Series A Preferred Stock addressed to the Secretary at the
principal executive offices of the Corporation shall call, a special
meeting of the holders of such shares for the election of such directors as
provided herein. Such meeting shall be held within thirty (30) days after
delivery of such request to the Secretary, at the place and upon the notice
required for meetings of stockholders provided in the By-Laws or by law for
the holding of meetings of stockholders. No such special meeting or
adjournment thereof shall be held on a date less than thirty (30) days
before an annual meeting of stockholders of the Corporation or any special
meeting in lieu thereof at which the holders of the Series A Preferred
Stock are given the opportunity to elect directors. If at any such annual
or special meeting or any adjournment thereof the holders of a majority of
the then outstanding shares of Series A Preferred Stock entitled to vote in
such election shall be present or represented by proxy, or if such majority
shall have acted by written consent in lieu of a meeting with respect
thereto, then the authorized number of directors shall be increased and the
holders of the Series A Preferred Stock shall be entitled to elect such
additional directors as provided herein. The absence of a quorum of the
holders of any other class or series of capital stock of the Corporation at
any such annual or special meeting shall not affect the exercise by the
holders of the Series A Preferred Stock of their right to elect directors
as set forth herein. Subject to Section 5(b)(i) and Section 3(c), the
directors so elected shall serve until the next annual meeting of
stockholders of the Corporation or until their successors shall be elected
and shall qualify. In case any of the directors elected by the holders of
the Series A Preferred Stock hereunder shall cease to serve as a director
for any reason prior to the expiration of his or her term, the holders of
the Series A Preferred Stock then outstanding and entitled to vote for such
director may, by written consent as hereinabove provided, or at a special
meeting of such holders called as provided above, elect a
15
<PAGE>
successor to hold office for the unexpired term of the director whose place
shall be vacant.
(iii) The rights of the holders of Series A Preferred Stock to
elect directors hereunder shall not be adversely affected by the voting or
other rights applicable to any other security of the Corporation.
(iv) Notwithstanding anything herein to the contrary, with
respect to the right of the holders of Series A Preferred Stock to elect
directors pursuant to Section 3(c) hereof, an affirmative vote by holders
representing 66-2/3% of all outstanding shares of Series A Preferred Stock
shall be required to elect such additional directors.
Section 6. Restrictive Covenants. For so long as any shares of
---------------------
Series A Preferred Stock shall be outstanding, and unless the consent or
approval of a greater number of shares shall then be required by law,
without first obtaining the consent or approval of the holders of at least
66-2/3% of the shares of Series A Preferred Stock then outstanding, voting
as a single class, given in person or by proxy at a meeting at which the
holders of such shares shall be entitled to vote separately as a class, or
by written consent:
6.1. Limitation on Junior Payments. (a) Subject to
-----------------------------
Section 6.1(b), the Corporation shall not, directly or indirectly,
(i) declare, pay, or set apart for payment on any Junior Stock, any
dividend or make any distribution on or in respect of Junior Stock
(including any payment in connection with any merger or consolidation
involving the Corporation or any of its Subsidiaries), except
dividends or distributions payable in shares (other than Disqualified
Stock) of the classes or series upon which such dividends are declared
or paid, or payable in shares of Common Stock with respect to Junior
Stock other than Common Stock, together with cash in lieu of
fractional shares, or (ii) purchase, redeem, retire or otherwise
acquire for value any Junior Stock (any such dividend, distribution,
purchase, redemption, or other acquisition being herein referred to as
a "Junior Payment").
--------------
(b) The provisions of Section 6.1(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock of the Corporation
made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Corporation (other than
Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary); (ii) the repurchase, redemption or other acquisition or
retirement for value of Capital Stock of the Corporation pursuant to
any management equity subscription, stockholder or stock option
agreement; provided, however, that (X) the aggregate price paid for
-------- -------
all such repurchased, redeemed, acquired or retired Capital Stock
shall not exceed $1.0 million in any fiscal year and (Y) no Default or
Event of
16
<PAGE>
Default (as defined in the Senior Secured Note Indenture) or Event of
Non-Compliance or Event Leading to Voting Rights shall have occurred
and be continuing immediately after such transaction; and (iii) any
repurchase of Capital Stock from an SBIC Holder (as defined in the
Purchase Agreement), in accordance with the terms of 6.2 of the
Purchase Agreement or the Stock Purchase Agreement (as the case may
be), arising out of a Regulatory Violation or a Regulatory Problem (as
defined in the Purchase Agreement).
6.2. Limitation on Payment Restrictions Affecting
--------------------------------------------
Subsidiaries. The Corporation 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 (i)(a) pay dividends or make any
other distributions to the Corporation or any of its Subsidiaries
(1) on its Capital Stock or (2) with respect to any other interest or
participation in, or measured by, its profits, or (b) pay any
Indebtedness owed to the Corporation or any of its Subsidiaries,
(ii) make loans or advances to the Corporation or any of its
Subsidiaries, (iii) transfer any of its properties or assets to the
Corporation or any of its Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (A) Existing
Indebtedness, (B) Indebtedness of Berry or Berry's Subsidiaries
permitted to be incurred under the Senior Secured Note Indenture,
(C) the Senior Secured Note Indenture and the Senior Secured Notes,
(D) applicable law, (E) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Corporation 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, (F) by reason of customary non-assignment
provisions in leases entered into in the ordinary course of business
and consistent with past practices, or (G) purchase money obligations
for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the
property so acquired.
6.3. Amendment of Financing Documents. The Corporation
--------------------------------
will not amend or supplement the Senior Secured Notes or the Senior
Secured Note Indenture, as in effect on the Closing Date (or enter
into any refinancing or replacement thereof, or any new financing
agreement) if (a) the restrictive covenants of such amended or
supplemented or new financing agreement would impair the ability of
the Corporation to perform its obligations set forth herein or in the
Purchase Agreement, or (b) the provisions of such amended or
supplemented or new financing agreement with respect to the payment of
dividends on, or the redemption
17
<PAGE>
of, Preferred Stock, are more onerous or restrictive to the
Corporation than the corresponding provisions set forth in the Senior
Secured Note Indenture as in effect on the Closing Date.
6.4. Limitation on Issuance of Subsidiary Securities. The
-----------------------------------------------
Corporation will cause its Subsidiaries not to issue any Capital Stock
(other than to the Corporation or any wholly-owned subsidiary of the
Corporation), unless the proceeds of such issuance are used to redeem
all (but not less than all) of the then outstanding shares of Series A
Preferred Stock on the terms and conditions set forth herein.
6.5. Senior Stock. The Corporation shall not (i)
------------
authorize, create or issue any class or series, or any shares of any
class or series, of Senior Stock, unless the proceeds from such
issuance are used to redeem or repurchase all (but not less than all)
of the then outstanding shares of Series A Preferred Stock pursuant to
the terms and conditions set forth herein and in the Purchase
Agreement; (ii) reclassify any shares of capital stock of the
Corporation into shares of Senior Stock; or (iii) authorize or issue
any security exchangeable for, convertible into, or evidencing the
right to purchase any shares of Senior Stock.
6.6. Certificate of Incorporation; By-Laws. The
-------------------------------------
Corporation shall not amend, alter or repeal the Certificate of
Incorporation or By-Laws to alter or change the preferences, rights or
powers of the Series A Preferred Stock so as to affect the holders of
the Series A Preferred Stock adversely, to otherwise impair the rights
of the holders of Series A Preferred Stock, or to increase the
authorized number of shares of Series A Preferred Stock.
6.7. Liquidation. The Corporation shall not effect the
-----------
voluntary liquidation, dissolution or winding up of the Corporation.
6.8 Merger and Consolidation. The Corporation shall not
------------------------
consolidate with or merge with or into, or convey, transfer, lease or
sell all or substantially all its assets to, any Person, unless:
(a) All outstanding shares of Series A Preferred Stock are
purchased as a part of such transaction at a per share price of not
less than the Liquidation Preference of each such share plus all
accrued and unpaid dividends thereon through the date of such
purchase; or
(b) (i) the Corporation is the surviving corporation or,
if the surviving corporation is not the Corporation, the resulting,
surviving or transferee Person (the "Successor Corporation") shall be
---------------------
a corporation organized and existing under the laws of the United
States
18
<PAGE>
of America, any State thereof or the District of Columbia and (x) the
Successor Corporation (if not the Corporation) shall expressly assume,
by an amendment to the Purchase Agreement in form and substance
satisfactory to the holders of at least 66-2/3% of all outstanding
shares of Series A Preferred Stock as of the date of such assumption,
all the obligations of the Corporation thereunder, and (y) the Series
A Preferred Stock shall be converted or exchanged for and shall become
shares of such Successor Corporation, having in respect of such
Successor Corporation the same powers, preferences and relative
participating, optional or other special rights, and the
qualifications, limitations or restrictions thereto, that the Series A
Preferred Stock had immediately prior to such transaction;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default (as defined in the Senior Secured
Note Indenture) exists and no Event of Non-Compliance or Event
Leading to Voting Rights shall have occurred and be continuing;
(iii) the Corporation or Successor Corporation, as the case
may be, will (x) at the time of the 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
of the Senior Secured Note Indenture and (y) will have a
Consolidated Net Worth immediately after the transaction equal to
or greater than the Consolidated Net Worth of the Corporation
immediately preceding the transaction; and
(iv) the Corporation shall have delivered to the holders of
the Series A Preferred Stock an Officers' Certificate stating
that such consolidation, merger, transfer or lease comply with
this Section 6.8.
The Successor Corporation shall succeed to, and be substituted for,
and may exercise every right and power of, the Corporation to the
extent set forth in the Purchase Agreement, but in the case of a lease
of all or substantially all its assets, the Corporation, shall not be
released from its obligations with respect to the Series A Preferred
Stock.
Notwithstanding clauses (ii) and (iii): (1) any Subsidiary of the
Corporation may consolidate with, merge into or transfer all or part
of its properties and assets to the Corporation and (2) the
Corporation may merge with an Affiliate incorporated solely for the
purpose of reincorporating the Corporation in another jurisdiction to
realize tax or other benefits.
19
<PAGE>
Section 6A. Other Covenants.
---------------
6A.1. Notification of Certain Events. The Corporation
------------------------------
shall mail to each holder of record of the Series A Preferred Stock,
within 30 days after the occurrence thereof, written notice in the
form of an Officers' Certificate of (i) the occurrence of any Event of
Non-Compliance and (ii) any failure by the Corporation to observe any
covenant specified herein and in Section 6.2 of the Purchase
Agreement.
6A.2. Distributions on Junior Stock. Except as otherwise
-----------------------------
provided for in Section 6.1(b) for so long as the Common Stock of the
Corporation is not registered pursuant to Section 12 or 15 of the
Securities Exchange Act of 1934, as amended, any dividends,
distributions or other payments made on or in respect of Junior Stock
shall be held by holders of Junior Stock in trust for the benefit of
the holders of Series A Preferred Stock and shall be remitted to the
holders of Series A Preferred Stock, on a pro-rata basis, until each
holder of Series A Preferred Stock has received an amount equal to the
per share Liquidation Preference plus all accrued and unpaid
dividends.
6A.3. Board Observers; Meetings. (a) For so long as CVCA
-------------------------
or its Affiliates or Northwestern or its Affiliates each hold in the
aggregate at least 33-1/3% of the then outstanding shares of Series A
Preferred Stock, and in addition to any rights CVCA may have as a
purchaser of Common Stock under the Stockholders Agreement, the Stock
Purchase Agreement or otherwise, the Corporation shall afford each of
CVCA and Northwestern the opportunity to have one (1) representative
each (each referred to as an "Observer") attend (at the Corporation's
--------
cost and expense) as an observer at (but not participate in or vote
at) each meeting of the Board of Directors. In addition, upon the
occurrence of an Event of Non-Compliance, CVCA and Northwestern shall
each be afforded the opportunity to appoint a second Observer to
attend (at the Corporation's sole cost and expense) as an observer at
(but not participate in or vote at) each meeting of the Board of
Directors. The Corporation shall give each Observer notice of all
such meetings at the same time and in the same manner as notice is
given to members of the Board of Directors. Each Observer shall be
entitled to receive all written materials and other information given
to the directors of the Corporation in connection with such meetings
at the same time and in the same manner and form such materials and
information are given to the directors, and copies of all minutes and
all resolutions adopted by the Board of Directors (whether at
meetings, by written consent or otherwise) promptly after such
adoption and (if applicable) approval thereof (it being understood
that such copies shall be certified by the Secretary of the
Corporation).
20
<PAGE>
(b) For so long as any shares of Series A Preferred Stock
shall be outstanding, regular meetings of the Board of Directors shall
be held at least three (3) times during the fiscal year of the
Corporation.
Section 7. Redemption. (a) Other than as set forth in clause
----------
(b) below, the Corporation shall have no right to redeem any shares of
Series A Preferred Stock prior to June 15, 1999. On and after June 15,
1999, to the extent that the Corporation shall have funds legally available
therefor, the Corporation shall have the right, at its sole option and
election, to redeem, at any time or from time to time, in whole or in part,
the outstanding shares of Series A Preferred Stock by paying therefor in
cash an amount per share equal to the sum of (i) the product of (A) the
Specified Amount of such share, times (B) the applicable Redemption
Percentage, and (ii) the amount of all accrued and unpaid dividends thereon
to the Redemption Date (excluding any Accumulated Dividends, but including
an amount equal to a prorated dividend from the immediately preceding
Dividend Payment Date to the Redemption Date).
(b) In the event that the Corporation shall effect a registered
initial public offering of the Common Stock under the Securities Act of
1933, as amended, the Corporation shall have the right to redeem, at its
sole option and election (subject to the legal availability of funds
therefor), all (but not less than all) of the outstanding shares of Series
A Preferred Stock for an amount per share (payable solely in cash out of
the proceeds of such offering) equal to the sum of (i) product of (A) the
Specified Amount of such share, times (B) the lesser of the applicable
Redemption Percentage or 107% and (ii) the amount of all accrued and unpaid
dividends thereon to the Redemption Date (excluding any Accumulated
Dividends, but including an amount equal to a prorated dividend from the
immediately preceding Dividend Payment Date to the Redemption Date);
provided that such redemption occurs within 45 days of the date of the
closing of such public offering.
(c) Notice of any redemption of shares of Series A Preferred
Stock pursuant to paragraph (a) or (b) of this Section 7 shall be mailed
---------
not less than ten (10) Business Days nor more than sixty (60) days prior to
the Redemption Date to each holder of shares of Series A Preferred Stock to
be redeemed, at such holder's address as it appears on the transfer books
of the Corporation. Each such notice shall state: (A) the Redemption
Date, (B) the place or places where the redemption price will be paid (if
other than the principal executive offices of the Corporation), (C) if less
than all the shares held by any holder are to be redeemed pursuant to
paragraph (a), the number of shares to be redeemed from such holder and
(D) that dividends on the shares of Series A Preferred Stock to be redeemed
will cease to accrue on the Redemption Date. In order to facilitate the
redemption of shares of Series A Preferred Stock, the Board of Directors
may fix a record date for the determination of shares of Series A Preferred
Stock to be redeemed, not more than
21
<PAGE>
sixty (60) days nor less than thirty (30) days prior to the applicable
Redemption Date. In the case of the redemption of less than all the
outstanding shares of Series A Preferred Stock pursuant to paragraph (a),
(I) the shares to be redeemed shall be selected pro rata, and there shall
--- ----
be redeemed from each holder, as nearly as practicable to the nearest whole
share, that proportion of all the shares to be redeemed which the number of
shares held of record by such holder bears to the total number of shares of
Series A Preferred Stock at the time outstanding; provided, however, that
-------- -------
if any holder of Series A Preferred Stock holds of record (or following
such redemption would hold of record) less than 100 shares in the
aggregate, then the Corporation may elect to redeem all such shares held of
record by such holder and there shall be redeemed from each other holder,
as nearly as practicable to the nearest whole share, that proportion of all
other shares to be redeemed which the number of shares held of record by
such holder bears to the total number of other shares of Series A Preferred
Stock at the time outstanding, and (II) if fewer than all shares
represented by any certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder
thereof.
(d) Notice having been mailed as specified in Section 7(c), and
provided that on or before the Redemption Date, specified in such notice
all funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the pro
rata benefit of the holders of the shares so called for redemption, so as
to be and to continue to be available therefor, then, from and after the
Redemption Date, dividends on the shares of Series A Preferred Stock called
for redemption shall cease to accrue and said shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof set forth
herein and otherwise as stockholders of the Corporation (except the right
to receive from the Corporation the redemption price in accordance with
this Section 7) shall cease.
Section 8. Exchange. (a) The shares of Series A Preferred
--------
Stock are exchangeable, in whole but not in part, at the option of the
Corporation, on any Dividend Payment Date (the "Exchange Date"), for that
-------------
principal amount of Exchange Notes equal to the Liquidation Preference of
the shares of Series A Preferred Stock to be exchanged, provided, that on
--------
or prior to the Exchange Date the Corporation shall have paid in cash to
the holders of outstanding shares of Series A Preferred Stock all accrued
and unpaid dividends on such Series A Preferred Stock to the Exchange Date,
and provided, further, that so long as any shares of Series A Preferred
-------- -------
Stock are held by CVCA or its Affiliates, no shares of Series A Preferred
Stock may be exchanged.
(b) The Corporation will mail to each holder of record of the
shares of Series A Preferred Stock written notice of its intention to make
the Exchange not less than ten (10) nor more than sixty (60) days prior to
the Exchange Date. Each such
22
<PAGE>
notice shall state: (i) the Exchange Date, (ii) the place or places where
certificates for such shares of Series A Preferred Stock are to be
surrendered for exchange into Exchange Notes (if other than the principal
executive offices of the Corporation) and (iii) that dividends on the
shares of Series A Preferred Stock to be exchanged will cease to accrue on
such Exchange Date. On the Exchange Date, the Corporation will (x) cause
the Exchange Notes to be executed, and, if necessary, authenticated, and
will cause the Exchange Indenture to be executed, by all applicable parties
and (y) deliver to each holder of Series A Preferred Stock one or more duly
executed Exchange Notes (as designated by such holder) in an aggregate
principal amount calculated in accordance with Section 8(a). The
Corporation will pay interest on the Exchange Notes at the rate and on the
dates set forth in the Exchange Notes.
(c) If notice has been mailed as specified in Section 8(b), and
provided that the Corporation shall issue the Exchange Notes in compliance
herewith and the terms and conditions of the Exchange Indenture, from and
after the Exchange Date dividends on the Series A Preferred Stock shall
cease to accrue and the Series A Preferred Stock shall no longer be deemed
to be outstanding, and all rights of the holders thereof set forth herein
and otherwise as shareholders of the Corporation (except any rights
specified herein in respect of the Exchange Notes) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares
of Series A Preferred Stock so exchanged, such shares shall be exchanged by
the Corporation for the Exchange Notes as aforesaid.
(d) The Corporation will pay any and all taxes that may be
payable in respect of the issuance and delivery of the Exchange Notes as
provided in this Section 8 and in the Exchange Indenture (excluding any tax
which may be payable in respect of any transfer involved in the issuance
and delivery of Exchange Notes in a name other than that in which the
shares of the Series A Preferred Stock so exchanged were registered).
Section 9. Reacquired Shares. Any shares of Series A Preferred
-----------------
Stock redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever (including pursuant to the Exchange in accordance with
Section 8) shall be retired and canceled promptly after the acquisition
thereof, and, if necessary to provide for the lawful redemption or purchase
of such shares, the capital represented by such shares shall be reduced in
accordance with the DGCL. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of another series of Preferred Stock (subject to any
applicable limitations set forth herein).
Part C. Common Stock
------------
Except as otherwise provided in this Part C or as otherwise required
by applicable law, all shares of Class A Common, Class B
23
<PAGE>
Common and Class C Common shall be identical in all respects and shall
entitle the holders thereof to the same rights and privileges, subject to
the same qualifications, limitations and restrictions.
Section 1. Voting Rights.
-------------
(a) Until a Conversion Event or a Mandatory Conversion Event,
except as otherwise required by applicable law, (i) all holders of
Class A Voting Common and Class B Voting Common (collectively, the
"Voting Common") shall be entitled to one vote per share on all
matters to be voted on by the Corporation's stockholders, and the
holders of Class A Voting Common and Class B Voting Common shall vote
together as a single class and (ii) Class A Non-Voting Common, Class B
Non-Voting Common and Class C Common shall not be entitled to vote on
any matter to be voted on by the Corporation's stockholders and shall
not be included in determining the number of shares voting or entitled
to vote on such matters.
(b) Upon the occurrence of a Conversion Event, except as
otherwise required by applicable law, all shares of Class A Common,
Class B Common and Class C Common shall be entitled to one vote per
share on all matters to be voted on by the Corporation's stockholders,
and the holders of Class A Common, Class B Common and Class C Common
shall vote together as a single class.
(c) Notwithstanding the above, and until the occurrence of a
Mandatory Conversion Event, no amendment or waiver of any provision of
this Part C of this Article Fourth shall be effective without the
affirmative vote or prior written consent of holders of a majority of
the then outstanding shares of Class A Common, voting or consenting as
a separate class.
(d) The Corporation shall not merge with or into, or consolidate
with any other Person if, under the terms pursuant to which such
merger or consolidation is to be effected, (i) the consideration to be
received by holders of one or more classes of Common Stock in such
merger or consolidation is less than the holders of such class or
classes would receive if the aggregate consideration to be received by
all holders of Common Stock were, as of the effectiveness of such
merger or consolidation, distributed by the Corporation to the holders
of Common Stock pursuant to the terms of this Article Fourth, unless
the Corporation shall have obtained the affirmative vote or prior
written consent of the holders of a majority of the then outstanding
shares of each such class of Common Stock, voting or consenting as a
separate class or (ii) any provision of this Part C of this Article
Fourth would be amended or waived, unless the Corporation shall have
obtained the affirmative vote or prior written consent of the holders
of a majority of the then outstanding shares of Class A Common, Class
B
24
<PAGE>
Common and Class C Common, each voting or consenting as a separate
class.
Section 2. Distributions. Until the earlier of the occurrence of a
-------------
Mandatory Conversion Event or the Preference Termination Time,
distributions to the holders of Common Stock shall be made in the following
priority:
(a) All Distributions shall be paid to the holders of Class A
Common (ratably among such holders based upon the number of shares of
Class A Common held by each such holder as of the time of such
Distribution), as a separate class and to the exclusion of holders of
all other Common Stock, until, as a result of such Distributions and
all prior Distributions pursuant to this paragraph 2(a), the Class A
Preferred Per Share Distribution Amount shall have been distributed to
the holders of all outstanding shares Class A Common as of the time of
such Distribution, and no Distribution or any portion thereof shall be
made under paragraph 2(b), 2(c) or 2(d) below until, as a result of
all Distributions pursuant to this paragraph 2(a), the entire Class A
Preferred Per Share Distribution Amount on the outstanding shares of
Class A Common as of the time of such Distribution shall have been
paid in full.
(b) After the Class A Preferred Per Share Distribution Amount
has been distributed pursuant to paragraph 2(a) above, all
Distributions shall be paid to the holders of Class B Common (ratably
among such holders based upon the number of shares of Class B Common
held by each such holder as of the time of such Distribution), as a
separate class and to the exclusion of holders of all other Common
Stock, until, as a result of such Distributions and all prior
Distributions pursuant to this paragraph 2(b), the Class B Preferred
Per Share Distribution Amount shall have been distributed to the
holders of all outstanding shares Class B Common as of the time of
such Distribution, and no Distribution or any portion thereof shall be
made under paragraph 2(c) or 2(d) below until, as a result of all
Distributions pursuant to this paragraph 2(b), the entire Class B
Preferred Per Share Distribution Amount on the outstanding shares of
Class B Common as of the time of such Distribution shall have been
paid in full.
(c) After the required amount of Distributions has been
distributed pursuant to paragraph 2(a) and 2(b) above, all
Distributions shall be paid to the holders of Class C Common (ratably
among such holders based upon the number of shares of Class C Common
held by each such holder as of the time of such Distribution).
(d) After the occurrence of a Mandatory Conversion Event or the
Preference Termination Time, all Distributions shall be paid to the
holders of Class A Common, Class B Common and Class C Common, as a
group ratably among such
25
<PAGE>
holders based upon the number of shares of Common Stock held by each
such holder as of the time of such Distribution.
Section 3. Stock Splits and Stock Dividends. The Corporation shall
--------------------------------
not in any manner subdivide (by stock split, stock dividend or otherwise)
or combine (by stock split, stock dividend or otherwise) the outstanding
Common Stock of one class unless the outstanding Common Stock of all the
other classes shall be proportionately subdivided or combined. All such
subdivisions and combinations shall be payable only in Class A Common to
the holders of Class A Common, in Class B Common to the holders of Class B
Common and in Class C Common to the holders of Class C Common or, upon the
occurrence of a Mandatory Conversion Event, in Common Stock to the holders
of Common Stock. In no event shall a stock split or stock dividend
constitute a return of the Class A Preferred Distribution Amount or the
Class B Preferred Distribution Amount.
Section 4. Registration of Transfer. The Corporation shall keep at
------------------------
its principal office (or such other place as the Corporation reasonably
designates) a register for the registration of shares of Common Stock.
Upon the surrender of any certificate representing shares of any class of
Common Stock at such place, the Corporation shall, at the request of the
registered holder of such certificate, execute and deliver a new
certificate or certificates in exchange therefor representing in the
aggregate the number of shares of such class represented by the surrendered
certificate, and the Corporation forthwith shall cancel such surrendered
certificate. Each such new certificate shall be registered in such name
and will represent such number of shares of such class as is requested by
the holder of the surrendered certificate and shall be substantially
identical in form to the surrendered certificate. The issuance of new
certificates shall be made without charge to the holders of the surrendered
certificates for any issuance tax in respect thereof or other cost incurred
by the Corporation in connection with such issuance.
Section 5. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Corporation (an affidavit of the registered holder will
be satisfactory) of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing one or more shares of any class of
Common Stock, and in the case of any such loss, theft or destruction, upon
receipt of indemnity reasonably satisfactory to the Corporation (provided
that if the holder is a financial institution or other institutional
investor its own agreement will be satisfactory), or, in the case of any
such mutilation upon surrender of such certificate, the Corporation shall
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and
dated the date of such lost, stolen, destroyed or mutilated certificate.
26
<PAGE>
Section 6. Notices. All notices referred to herein shall be in
-------
writing, shall be delivered personally or by first class mail, postage
prepaid, and shall be deemed to have been given when so delivered or mailed
to the Corporation at its principal executive offices and to any
stockholder at such holder's address as it appears in the stock records of
the Corporation (unless otherwise specified in a written notice to the
Corporation by such holder).
Section 7. Mandatory Conversion Event. Upon the occurrence of a
--------------------------
Mandatory Conversion Event, all shares of Common Stock then outstanding
shall, by virtue of, and simultaneously with, the occurrence of the
Mandatory Conversion Event, and without any action on the part of the
holders thereof, be deemed automatically converted into that number of
fully paid and non-assessable shares of a single class of Common Stock,
each of which shares shall be entitled to one vote per share on all matters
to be voted on by the Corporation's stockholders. After the occurrence of
a Mandatory Conversion Event, all Distributions shall be paid to the
holders of Common Stock ratably among such holders based upon the number of
shares of Common Stock held by each such holder as of the time of such
Distribution.
Section 8. Definitions
-----------
"Class A Preferred Per Share Distribution Amount" means $100 per share
-----------------------------------------------
of Class A Common. The Class A Preferred Per Share Distribution Amount
shall be adjusted equitably in the event of a subdivision (by stock split,
stock dividend or otherwise) or combination (by stock split, stock dividend
or otherwise) of the outstanding Common Stock.
"Class B Preferred Distribution Amount" means $100 per share of Class
-------------------------------------
B Common. The Class B Preferred Per Share Distribution Amount shall be
adjusted equitably in the event of a subdivision (by stock split, stock
dividend or otherwise) or combination (by stock split, stock dividend or
otherwise) of the outstanding Common Stock.
"Conversion Event" means any of the following: (i) the death,
----------------
disability or incapacity of Roberto Buaron, (ii) Roberto Buaron's failure
to control, directly or indirectly, Atlantic Equity Partners International
II, L.P. ("International") or (iii) (A) the percentage determined by
dividing (1) the sum of (x) the aggregate number of shares of Common Stock
held, beneficially and of record with full power to vote, directly or
indirectly, by International and its Related Persons of the type described
in clause (i)(x) of the definition thereof which are Holders (as defined in
-------------
the Stockholders Agreement) and (y) all other shares of Common Stock which
Roberto Buaron has the power to vote, directly or indirectly, by way of
voting agreement, proxy or otherwise for the election of directors to the
Board of Directors by (2) the number of shares of Common Stock then
--
outstanding on a fully diluted basis (determined as though there were only
a single class of Common Stock) shall at any time be less than (B)
---------
27
<PAGE>
two-thirds of the percentage determined by dividing (1) the number of
shares of Common Stock so held by International immediately following the
Closing Date (as defined in the Stock Purchase Agreement) by (2) the number
--
of shares of Common Stock outstanding on a fully diluted basis (determined
as though there were only a single class of Common Stock) immediately
following the Closing Date.
"Distribution" means each distribution made by the Corporation to
------------
holders of any Common Stock of the Corporation, whether in cash, property,
or securities of the Corporation and whether by dividend, liquidating
distribution, redemption, repurchase or otherwise; provided that none of
the following shall be a Distribution: (i) any recapitalization or exchange
of any shares of Common Stock, (ii) any subdivision (by stock split, stock
dividend or otherwise) or any combination (by stock split, stock dividend
or otherwise) of any outstanding shares of Common Stock (iii) any
distribution paid as a result of the repurchase of any capital stock held
by an employee in connection with such employee's employment by the
Corporation or any of its Subsidiaries (as defined in the Stock Purchase
Agreement) or (iv) any distribution paid to an SBIC Holder (as defined in
the Stock Purchase Agreement) in connection with a Regulatory Violation (as
defined in the Stock Purchase Agreement).
"Mandatory Conversion Event" means the consummation of the initial
--------------------------
public offering of shares of Common Stock of the Corporation which results
in (i) a gross selling price per share of Common Stock (subject to
adjustment for stock splits, dividends, subdivisions, combinations,
reclassifications, etc.) equal to at least $250 and (ii) aggregate gross
proceeds to the Corporation of not less than $50,000,000.
"Person" means any individual, corporation, general or limited
------
partnership, joint venture, association, limited liability company, joint
stock company, trust, business trust, bank, trust company, estate
(including any beneficiaries thereof), unincorporated organization,
cooperative, association or governmental branch, authority, agency or
political subdivision thereof.
"Preference Termination Time" means the time at which the aggregate of
---------------------------
all Distributions paid to the holders of the then outstanding shares of
Common Stock is equal to $100 per share (the "Distribution Threshold").
The Distribution Threshold shall be adjusted equitably in the event of a
stock dividend, stock split, reverse stock split, combination of shares or
other similar event. In the event that a Distribution is in an amount that
is greater than that required to equal the Distribution Threshold, the
Distribution shall be deemed to be two Distributions, the first equal to
the amount required to reach the Distribution Threshold and the second
equal to the balance, and the Preference Termination Time shall be deemed
to occur upon the payment of the first deemed Distribution but prior to the
second deemed Distribution.
28
<PAGE>
"Related Person" means, (i) any Person that is controlled by Roberto
--------------
Buaron or (ii) any partner, shareholder or similar equity holder of
International or such Person described in clause (i) above that receives
Securities (as defined in the Stockholders Agreement) from International or
such Person in connection with a wind-up, liquidation or similar
distribution of or by International or such Person. For purpose of this
Restated Certificate of Incorporation, "control" and its derivatives shall
mean, with respect to any Person, the power to direct and control the
management or policies of such Person, whether through the beneficial
ownership of voting securities or other evidence of equity ownership, by
contract or agreement or otherwise.
"Stockholders Agreement" means the Stockholders Agreement, dated June
----------------------
18, 1996, among the Corporation, International, Chase Venture Capital
Associates, L.P. ("CVCA"), certain other institutional holders, certain
members of management of the Corporation and CVCA and The Northwestern
Mutual Life Insurance Company as holders of Series A Preferred Stock with
respect to certain provisions thereof, as amended from time to time
pursuant to its terms.
"Stock Purchase Agreement" means the Stock Purchase and
------------------------
Recapitalization Agreement, dated as of June 12, 1996, as amended or
otherwise modified from time to time, among the Corporation, International,
and the other parties thereto.
ARTICLE FIFTH
The Restated Certificate of Incorporation of the Corporation shall
constitute a restatement of, and shall supersede the Certificate of
Incorporation of the Corporation, filed on December 11, 1990, as amended by
the Amended and Restated Certificate of Incorporation filed on April 19,
1994, further amended by the Certificate of Amendment to the Amended and
Restated Certificate of Incorporation filed May 5, 1995 and further amended
by the Certificate of Amendment filed June 14, 1996.
ARTICLE SIXTH
Subject to limitations prescribed by the provisions of Part B, the
number of directors of the Corporation shall be such as from time to time
shall be fixed in the manner provided in the By-laws of the Corporation.
The election of directors of the Corporation need not be by ballot unless
the By-laws so require.
ARTICLE SEVENTH
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except (i) for any breach of the director's
duty of loyalty to the Corporation or its
29
<PAGE>
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived any improper personal benefit. If the
Delaware General Corporation Law is amended after the date of incorporation
of the Corporation to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification.
ARTICLE EIGHTH
Except as otherwise limited herein (including Part B of Article
Fourth), for the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation and of its directors and
stockholders, it is further provided:
(a) In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors is
expressly authorized and empowered:
(i) to make, alter, amend or repeal the By-laws in any
manner not inconsistent with the laws of the State of Delaware or
this Certificate of Incorporation;
(ii) to determine whether any, and if any, what part, of
the net profits of the Corporation or of its surplus shall be
declared in dividends and paid to the stockholders, and to direct
and determine the use and disposition of any such net profits or
such surplus; and
(iii) to fix from time to time the amount of net profits of
the Corporation or of its surplus to be reserved as working
capital or for any other lawful purpose.
In addition to the powers and authorities herein or by statute
expressly conferred upon it, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of
the laws of the State of Delaware, of this Certificate of
Incorporation and of the By-laws of the Corporation.
30
<PAGE>
(b) Any director or any officer elected or appointed by the
stockholders or by the Board of Directors may be removed at any time
in such manner as shall be provided in the By-laws of the Corporation.
(c) From time to time any of the provisions of this Certificate
of Incorporation may be altered, amended or repealed, and other
provisions authorized by the laws of the State of Delaware at the time
in force may be added or inserted, in the manner and at the time
prescribed by said laws, and all rights at any time conferred upon the
stockholders of the Corporation by this Certificate of Incorporation
are granted subject to the provisions of this paragraph (c).
ARTICLE NINTH
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them, or between the
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of the Corporation or of any creditor or stockholder
thereof or on the application of any receiver or receivers appointed for
the Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code, or on the application of trustees in dissolution or of any
receiver or receivers appointed for the Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code, order a meeting of the
creditors or class of creditors, or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, or of the
stockholders or class of stockholders of the Corporation, as the case may
be, agree on any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned
by the court to which the said application has been made, be binding on all
the creditors or class of creditors, or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
31
<PAGE>
IN WITNESS WHEREOF, BPC HOLDING CORPORATION has caused this Restated
Certificate of Incorporation to be signed by its Chairman, and attested by
its Vice President, this 18th day of June, 1996.
BPC HOLDING CORPORATION
By: /s/ Roberto Buaron
----------------------------
Name: Roberto Buaron
Title: Chairman
ATTEST:
By: /s/ Joseph S. Levy
---------------------------
Name: Joseph S. Levy
Title: Vice President
32
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
BPC HOLDING CORPORATION
The undersigned, Roberto Buaron and Joseph S. Levy, Chairman and Vice
President, respectively, of BPC HOLDING CORPORATION, a corporation
organized and existing under the laws of the State of Delaware, on behalf
of said corporation, hereby certify as follows:
1. The name of the corporation is BPC HOLDING CORPORATION (the
"Corporation"). The date of filing of its original Certificate of
Incorporation with the Secretary of State of the State of Delaware was
December 11, 1990, as amended and restated by the Amended and Restated
Certificate of Incorporation filed December 20, 1990, as further amended by
the Amended and Restated Certificate of Incorporation filed April 19, 1994,
further amended by the Certificate of Amendment to the Amended and Restated
Certificate of Incorporation filed May 5, 1995 and further amended by the
Certificate of Amendment filed June 14, 1996.
2. This Restated Certificate of Incorporation (the "Restated
Certificate") was duly adopted in accordance with Sections 103, 222, 242
and 245 of the General Corporation Law of the State of Delaware.
3. The text of the Certificate of Incorporation, as amended and
restated herein, shall read as follows:
ARTICLE FIRST
The name of the corporation is BPC HOLDING CORPORATION.
ARTICLE SECOND
The address of the registered office of the Corporation in the state
of Delaware is 9 East Loockerman Street, City of Dover, County of Kent,
Delaware 19901. The name of the registered agent of the Corporation at such
address is National Registered Agents, Inc.
ARTICLE THIRD
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
<PAGE>
ARTICLE FOURTH
Part A. Authorized Shares
-----------------
The total number of shares of capital stock which the Corporation has
authority to issue is 3,500,000 shares, consisting of:
(i) 1,000,000 shares of Preferred Stock, par value $.01 per
share ("Preferred Stock"), of which 600,000 shares shall be designated
Series A Senior Cumulative Exchangeable Preferred Stock (the "Series A
Preferred Stock");
(ii) 1,000,000 shares of Class A Common Stock, par value $.01 per
share ("Class A Common"), of which 500,000 shares shall be designated
voting shares ("Class A Voting Common") and 500,000 shares will be
designated non-voting shares ("Class A Non-Voting Common");
(iii) 1,000,000 shares of Class B Common Stock, par value $.01 per
share ("Class B Common"), of which 500,000 shares shall be designated
voting shares ("Class B Voting Common") and 500,000 shares will be
designated non-voting shares ("Class B Non-Voting Common"); and
(iv) 500,000 shares of non-voting Class C Common Stock, par value
$.01 per share ("Class C Common").
The Class A Common, Class B Common and Class C Common and any other
common stock issued hereafter are referred to collectively as the "Common
Stock". Shares of Preferred Stock and Common Stock shall have the rights,
preferences and limitations set forth below.
Part B. Preferred Stock
---------------
(i) General. Subject to limitations prescribed by the provisions
--------
of this Part B, Preferred Stock may be issued from time to time in one
or more series, each of such series to have such terms as stated in
the resolution or resolutions providing for the establishment of such
series adopted by the Board of Directors of the Corporation, as
hereinafter provided. Except as otherwise expressly stated in this
Part B or in the resolution or resolutions providing for the
establishment of a series, any shares of Preferred Stock which may be
redeemed, purchased or acquired by the Corporation may be reissued
except as otherwise provided by law.
Subject to limitations prescribed by the provisions of this Part B,
authority is hereby expressly granted to the Board of Directors to provide
for the issuance, from time to time, of shares of Preferred Stock in one or
more series, and, in connection with the establishment of any such series
by resolution or resolutions and by the filing of a certificate
<PAGE>
pursuant to the applicable law of the State of Delaware, to determine and
fix such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative participating, optional or other
special rights, and qualifications, limitations or restrictions thereof,
including without limitation thereof, dividend rights, conversion rights,
redemption privileges and liquidation preferences, as shall be stated in
such resolution or resolutions, all to the full extent permitted by the
General Corporation Law of the State of Delaware. Subject to limitations
prescribed by the provisions of this Part B and without limiting the
generality of the foregoing, the resolution or resolutions providing for
the establishment of any series of Preferred Stock may, to the extent
permitted by law, provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series. Except as
otherwise expressly stated in this Part B or in the resolution or
resolutions providing for the establishment of a series, no vote of the
holders of shares of Preferred Stock or Common Stock shall be a
prerequisite to the issuance of any shares of any series of the Preferred
Stock authorized by and complying with the conditions of this Certificate.
(ii) Series A Cumulative Exchangeable Preferred Stock.
------------------------------------------------
The designation and amount of the Series A Cumulative
Exchangeable Preferred Stock, par value $.01 per share, and the voting
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions of such series, are as follows:
Section 1. Designation and Amount; Rank.
----------------------------
(a) The shares of such series of Preferred Stock shall be
designated as the "Series A Senior Cumulative Exchangeable Preferred Stock"
(the "Series A Preferred Stock") and the number of shares initially
------------------------
constituting such series shall be 600,000, which number may be decreased
(but not increased) by the Board of Directors of the Corporation (the
"Board of Directors") without a vote of stockholders; provided, however,
------------------ -------- -------
that such number may not be decreased below the number of then currently
outstanding shares of Series A Preferred Stock. The stated value and
liquidation preference per share (the "Liquidation Preference") of the
----------------------
Series A Preferred Stock shall be $25.00.
(b) The Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets upon dissolution,
liquidation or winding up of the Corporation, prior to all other Capital
Stock of the Corporation (such other Capital Stock being herein referred to
as the "Junior Stock").
------------
3
<PAGE>
Section 2. Definitions.
-----------
Capitalized terms used herein shall have the meanings set forth
in this Section 2:
"Accumulated Dividends" means, on any specific date with respect
---------------------
to any share of Series A Preferred Stock, the dividends that have accrued
on such share as of such specific date in respect of Dividend Periods
ending on or prior to the Cash Dividend Date and that have not previously
been paid in cash.
"Affiliate" means, with respect to any specified Person, any
---------
other Person which, directly or indirectly, controls, is under common
control with, or is owned or controlled by, such specified Person. For
purposes of this definition, (i) "control" means, with respect to any
specified Person, either (x) the beneficial ownership of more than
30 percent of any class of equity securities or (y) the power to direct the
management or policies of the specified Person through the ownership of
voting securities, by contract, voting agreement or otherwise and (ii) the
terms "controlling", "control with" and "controlled by", etc., shall have
meanings correlative to the foregoing.
"Bankruptcy Law" means Title 11, United States Code, or any
--------------
similar Federal or state law for the relief of debtors.
"Berry" means Berry Plastics Corporation.
-----
"Berry Revolving Credit Facility" means the Berry Revolving
-------------------------------
Credit Facility, dated as of April 21, 1994, by and among Berry and Fleet
Capital Corporation providing for up to $28.0 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 which includes the addition, substitution or replacement of any or all
lenders thereunder under the same or any replacement agreement.
"Board of Directors" has the meaning ascribed to such term in
------------------
Section 1(a).
"BPC Senior Subordinated Notes" means the 12-1/4% Senior
-----------------------------
Subordinated Notes due 2004 issued pursuant to the BPC Senior Subordinated
Notes Indenture.
"BPC Senior Subordinated Notes Indenture" means the Indenture
---------------------------------------
dated as of April 21, 1994, among the Corporation, Berry Iowa Corporation
and Berry-CPI Plastics Corp., as Guarantors, Berry, and United States Trust
Company of New York, as Trustee, regarding the BPC Senior Subordinated
Notes.
"Business Day" means any day other than Saturday, Sunday or a day
------------
on which banking institutions in the State of New
4
<PAGE>
York are authorized or obligated by law or executive order to close.
"By-Laws" means the by-laws of the Corporation, as they may be
-------
amended or restated from time to time.
"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 required to be capitalized on a balance
sheet prepared in accordance with GAAP.
"Capital Stock" of any Person means any and all shares,
-------------
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including without limitation, any preferred stock, and 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, but excluding any debt securities convertible into
such equity.
"Cash Dividend Date" means the first Dividend Payment Date
------------------
occurring after the sixth (6th) anniversary of the Issue Date.
"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 Berry
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.
"Certificate of Incorporation" means the Certificate of
----------------------------
Incorporation of the Corporation, as it may be amended or restated from
time to time.
"Closing Date" has the meaning ascribed to such term in the
------------
Purchase Agreement.
5
<PAGE>
"Common Stock" means the Common Stock, of all classes, of the
------------
Corporation.
"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 12 months after the acquisition of such business) subsequent to
the Issue 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.
"Custodian" means any receiver, trustee, assignee, liquidator,
---------
custodian or similar official under any Bankruptcy Law.
"CVCA" means Chase Venture Capital Associates, L.P.
----
"DGCL" means the General Corporation Law of the State of
----
Delaware, as in effect from time to time.
"Disqualified Stock" means any Capital Stock which, by its terms
------------------
(or by the terms of any Capital Stock 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 December 31, 2006; provided, however, that any
-------- -------
Capital Stock that would otherwise be Disqualified Stock will not be
Disqualified Stock solely as a result of a maturity or redemption event
that is conditioned upon and subject to compliance with Section 4.07 of the
Senior Secured Note Indenture.
"Dividend Payment Date" means the last day of March, June,
---------------------
September and December in each year.
"Dividend Period" means each quarterly period ending on a
---------------
Dividend Payment Date.
6
<PAGE>
"Dividend Rate" means, with respect to each share of Series A
-------------
Preferred Stock, a rate of 14% per annum of the sum of the Liquidation
Preference and all accrued and unpaid dividends on such share (excluding
the amount of any dividends accrued since the immediately preceding
Dividend Payment Date), subject to adjustment as follows:
(i) upon the occurrence of any Event of Non-Compliance specified
in clause (a) of the definition of such term, the Dividend Rate (if
the then current Dividend Rate is less than 16% per annum) shall
immediately increase to 16% per annum; provided that any increase in
--------
the Dividend Rate resulting from the operation of this clause (i)
shall terminate as of the close of business on the first date
thereafter on which no Event of Noncompliance specified in clause (a)
of the definition of such term exists and the Dividend Rate shall
revert to the rate that otherwise would be in effect but for the
operation of this clause (i), subject to subsequent increases pursuant
to this clause (i); and
(ii) upon the occurrence of an Event of Non-Compliance specified
in clause (b) of the definition of such term, the Dividend Rate (if
the then current Dividend Rate is less than 15% per annum) shall
immediately increase to 15% per annum; provided that any increase in
--------
the Dividend Rate resulting from the operation of this clause (ii)
shall terminate as of the close of business on the first date
thereafter on which no Event of Noncompliance specified in clause (b)
of the definition of such term exists and the Dividend Rate shall
revert to the rate that otherwise would be in effect but for the
operation of this clause (ii), subject to subsequent increases
pursuant to this clause (ii).
"Event Leading to Voting Rights" means any of the following:
------------------------------
(a) the Corporation, commencing on the Cash Dividend Date, fails
for six (6) Dividend Periods (whether or not consecutive) to declare
and pay dividends in cash on shares of Series A Preferred Stock
pursuant to Section 3(a) in an amount equivalent to or exceeding the
full amount of dividends accrued and payable thereon, whether or not
such declaration or payment is legally permissible or is prohibited by
an agreement or instrument to which the Corporation is subject;
(b) (i) the Corporation or a Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law: (A) commences a voluntary
case; (B) consents to the entry of an order for relief against it in
an involuntary case; (C) consents to the appointment of a Custodian of
it or for any substantial part of its property; or (D) makes a general
assignment for the benefit of its creditors or takes any
7
<PAGE>
comparable action under any foreign laws relating to insolvency; or
(ii) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (A) is for relief against the Corporation or
any Significant Subsidiary in an involuntary case; (B) appoints a
Custodian of the Corporation or any Significant Subsidiary or for any
substantial part of its property; or (C) orders the winding up or
liquidation of the Corporation or any Significant Subsidiary or any
similar relief is granted under any foreign laws and the order, decree
or relief remains unstayed and in effect for 60 days; or
(c) outstanding Indebtedness of the Corporation or any
Subsidiary in an amount aggregating in excess of $10,000,000 is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof prior to final maturity.
"Event of Noncompliance" means any of the following:
----------------------
(a) the Corporation fails to declare and pay dividends in cash
on shares of Series A Preferred Stock on any Dividend Payment Date on
or after the Cash Dividend Date pursuant to Section 3(a) in an amount
equivalent to or exceeding the full amount of dividends (other than
Accumulated Dividends) then accrued and payable thereon, whether or
not such declaration or payment is legally permissible or is
prohibited by any agreement or instrument to which the Corporation is
subject; or
(b) the Corporation fails to perform, observe, or comply with
any covenant, agreement, obligation, or restriction required
hereunder, after giving effect to any grace period provided herein.
"Exchange" means the exchange of the Series A Preferred Stock for
--------
the Exchange Notes as provided in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
"Exchange Date" has the meaning ascribed to such term in Section
-------------
8(a).
"Exchange Indenture" means an indenture between the Corporation
------------------
and a trustee satisfactory to the Corporation and the holders of a majority
of the outstanding shares of Series A Preferred Stock in form and substance
satisfactory to the Corporation and holders of at least 66-2/3% of the
outstanding shares of Series A Preferred Stock and reflecting the terms set
forth in Exhibit F to the Purchase Agreement.
"Exchange Notes" means the Corporation's Senior Subordinated
--------------
Exchange Notes to be issued upon the Exchange under the Exchange Indenture.
8
<PAGE>
"Existing Indebtedness" means Indebtedness of the Corporation and
---------------------
its Subsidiaries (including the BPC Senior Subordinated Notes) in existence
on the Issue Date, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth
----
in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect on the Issue
Date.
"Guarantee" means a guarantee (other than by endorsement of
---------
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters
of credit and reimbursement agreements in respect thereof), of all or any
part of any Indebtedness.
"Hedging Obligations" means, with respect to any 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.
"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 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.
"International" means Atlantic Equity Partners International II,
-------------
L.P.
"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, Capital Stock or other
securities and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
9
<PAGE>
"Issue Date" means the first date on which shares of Series A
----------
Preferred Stock are issued by the Corporation pursuant to the Purchase
Agreement.
"Junior Payment" has the meaning ascribed to such term in Section
--------------
6.1(a).
"Junior Stock" has the meaning ascribed to such term in Section
------------
1(b).
"Lien" means any mortgage, pledge, security interest,
----
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Liquidation Preference" has the meaning ascribed to such term in
----------------------
Section 1(a).
"Mergerco" means BPC Mergerco, Inc. which was merged with and
--------
into the Corporation pursuant to the Certificate of Merger filed with the
Secretary of State of the State of Delaware June 18, 1996.
"Northwestern" means The Northwestern Mutual Life Insurance
------------
Company.
"Officer" means the Chairman of the Board, the President, any
-------
Vice President, the Treasurer or the Secretary of the Corporation, as
applicable.
"Officers' Certificate" means a certificate signed by two
---------------------
Officers.
"past due" has the meaning ascribed to such term in Section 3(a).
--------
"Permitted Investments" means (a) any Investments in the
---------------------
Corporation or in a Wholly Owned Subsidiary of the Corporation that is
engaged in the same or similar line of business as the Corporation and its
Subsidiaries were engaged in on the Issue Date and (b) any Investments in
Cash Equivalents.
"Person" means any individual, corporation, general or limited
------
partnership, joint venture, association, limited liability company, joint
stock company, trust, business trust, bank, trust company, estate
(including any beneficiaries thereof), unincorporated organization,
cooperative, association or governmental branch, authority, agency or
political subdivision thereof.
"Preferred Stock" means the preferred stock, par value $0.01 per
---------------
share, of the Corporation.
10
<PAGE>
"Purchase Agreement" means the Preferred Stock and Warrant
------------------
Purchase Agreement dated as of June 12, 1996, by and among the Corporation,
Mergerco, Northwestern and CVCA, as modified and supplemented and in effect
from time to time.
"Redemption Date" means the date of any redemption of the Series
---------------
A Preferred Stock pursuant to Section 7.
"Redemption Percentage" means the applicable redemption
---------------------
percentage set forth below, if the Redemption Date occurs during the period
beginning June 15 of the years indicated:
Redemption
Year Percentage
---- ----------
1999 110%
2000 108%
2001 106%
2002 104%
2003 102%
2004 and thereafter 100%
"Sale of the Corporation" means the sale of the Corporation to
-----------------------
one or more Persons that are not Affiliates of the Corporation in a single
or a series of related transactions pursuant to which the acquiring Person
or Persons acquire (i) all of the capital stock of the Corporation (whether
by way of sale, transfer, merger, consolidation or otherwise) or (ii) all
or substantially all of the assets of the Corporation and its Subsidiaries,
taken as a whole.
"SEC" means the Securities and Exchange Commission.
---
"Secretary" means the Secretary of the Corporation.
---------
"Senior Secured Notes" means the 12-1/2% senior secured notes
--------------------
issued by the Corporation pursuant to the terms of the Senior Secured Note
Indenture.
"Senior Secured Note Indenture" means the Indenture dated as of
-----------------------------
the Closing Date, between the Corporation and First Trust of New York, a
national association, as trustee, regarding the Senior Secured Notes as the
same may be modified and supplemented, and in effect from time to time.
"Senior Stock" means any stock of the Corporation ranking prior
------------
to, or on a parity with, the Series A Preferred Stock either with respect
to the payment of dividends or the distribution of assets, whether upon
liquidation or otherwise.
"Series A Preferred Stock" has the meaning ascribed to such term
------------------------
in Section 1(a).
11
<PAGE>
"Significant Subsidiary" means any Subsidiary that would be a
----------------------
"Significant Subsidiary" of the Corporation within the meaning of Rule 1-02
under Regulation S-X promulgated by the SEC.
"Specified Amount" means, on any specific date with respect to
----------------
any share of Series A Preferred Stock, the sum of (i) the Liquidation
Preference with respect to such share and (ii) the Accumulated Dividends
with respect to such share.
"Stated Maturity" means, with respect to any security, the date
---------------
specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision.
"Stockholders Agreement" means the Stockholders Agreement, dated
----------------------
the Closing Date, among the Corporation, International, CVCA, certain other
institutional holders, certain members of management of the Corporation and
CVCA and Northwestern as holders of Series A Preferred Stock with respect
to certain provisions thereof, as amended from time to time pursuant to its
terms.
"Stock Purchase Agreement" means the Stock Purchase and
------------------------
Recapitalization Agreement, dated as of June 12, 1996, among the
Corporation, Mergerco, certain purchasers listed on Schedule I thereto and
certain shareholders listed on Schedule II thereto, as amended from time to
time pursuant to its terms.
"Subsidiary" means, with respect to any Person, any corporation,
----------
association, partnership or other business entity of which more than 50% of
the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly
or indirectly, by (i) such Person, (ii) such Person and one or more
Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary
shall refer to a Subsidiary of the Corporation.
"Successor Corporation" has the meaning ascribed to such term in
---------------------
Section 6.8.
"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.
Section 3. Dividends and Distributions. (a) The holders of
---------------------------
shares of Series A Preferred Stock, in preference to the holders of shares
of Junior Stock, shall be entitled to receive quarterly, when, as and if
declared by the Board of Directors out of funds of the Corporation legally
available for
12
<PAGE>
the payment of dividends, cumulative dividends on each share at the
Dividend Rate. With respect to each Dividend Payment Date occurring on or
after the Cash Dividend Date, such dividends shall be paid in cash in
arrears. With respect to each Dividend Payment Date occurring prior to the
Cash Dividend Date, such dividends shall be paid, at the sole option of the
Corporation, in whole or in part, in cash in arrears, and to the extent the
Corporation does not pay such dividends in cash, then dividends owed to
such holder shall accrue quarterly on a compound basis. Dividends are
payable in arrears in respect of the Dividend Period ending on such
Dividend Payment Date so long as shares of Series A Preferred Stock are
outstanding (dividends not paid on any such date in accordance with the
terms of this Section 3 are referred to herein as "past due"); provided
-------- --------
that (i) the first Dividend Payment Date shall be September 30, 1996, in
respect of the period from the Issue Date through such date and (ii) any
past due dividends may be paid on any date fixed by the Board of Directors.
(b) Dividends payable pursuant to Section 3(a) shall begin to
accrue and be cumulative from the Issue Date. The amount of dividends
payable for any period shorter or longer than a full Dividend Period,
including the first Dividend Period, shall be determined on the basis of
twelve 30-day months and a 360-day year. Dividends paid on the shares of
Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
- --- ----
outstanding. Dividends paid on the shares of Series A Preferred Stock
shall be allocated pro rata on a share-by-share basis among all such shares
--- ----
at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend declared thereon, which record date shall
be no more than sixty (60) days nor less than ten (10) days prior to the
date fixed for the payment thereof. If no record date is fixed, the record
date for determining holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend declared thereon shall be at the close of
business on the day on which the Board of Directors declares such dividend.
(c) All accrued and unpaid dividends, to the extent theretofore
unpaid, shall be paid in full, in cash, on the 12th anniversary of the
Issue Date (the "12th Anniversary Date"). In the event all accrued and
---------------------
unpaid dividends are not paid in full, in cash, on the 12th Anniversary
Date or accrued dividends are not paid in full, in cash, on any Dividend
Payment Date following the 12th Anniversary Date, the holders of Series A
Preferred Stock shall have the right, notwithstanding anything to the
contrary in the Certificate of Incorporation, the By-Laws or any agreement
or instrument to which the Corporation is a party, voting together as a
single class, to elect the number of additional members to the Board of
Directors at each election of directors so that representatives of the
holders of Series A Preferred Stock shall constitute, at all times
thereafter, a
13
<PAGE>
majority of the Board of Directors. Such directors shall be elected in
accordance with the applicable procedures set forth in Section 5(b)(ii).
The directors elected pursuant to this Section 3(c) (and any successors
thereof) may continue to serve until a Sale of the Corporation is
consummated.
Section 4. Liquidation, Dissolution or Winding Up. (a) In the
--------------------------------------
event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of shares of Series A
Preferred Stock shall be entitled to receive, out of the assets of the
Corporation available for distribution to its stockholders, an amount equal
to the Liquidation Preference per share of Series A Preferred Stock plus
all accrued and unpaid dividends thereon to the date of such payment, and
no distribution shall be made to the holders of shares of Junior Stock upon
liquidation, dissolution or winding up unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received an amount equal
to the Liquidation Preference per share plus all accrued and unpaid
dividends thereon to the date of such payment (whether or not the
declaration or payment of such dividends is legally permissible or is
prohibited by any agreement or instrument to which the Corporation is
subject).
(b) Neither the consolidation, merger or other business
combination of the Corporation with or into any other Person or Persons nor
the sale, lease, exchange or conveyance of all or any part of the property,
assets or business of the Corporation, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation for purposes of this Section
4.
Section 5. Voting Rights. (a) Except as provided in this
-------------
Section 5 or in the Certificate of Incorporation, and except for any voting
rights provided by law, the holders of shares of Series A Preferred Stock
shall have no voting rights and their consent shall not be required for the
taking of any corporate action.
(b) (i) Upon the occurrence of any Event Leading to Voting
Rights, the holders of shares of Series A Preferred Stock shall have the
right, notwithstanding anything to the contrary in the Certificate of
Incorporation, the By-Laws or any agreement or instrument to which the
Corporation is a party, voting together as a single class, to elect two
(2) directors to the Board of Directors, all such directors to be in
addition to the number of directors constituting the Board of Directors
immediately prior to the accrual of such rights, with the remaining
directors to be elected by the other class or classes of stock entitled to
vote therefor at any meeting of the stockholders held for the purpose of
electing directors. The right of the holders of shares of Series A
Preferred Stock to elect members of the Board of Directors as set forth
herein shall continue until (A) with respect to an Event Leading to Voting
Rights specified in clause (a) of the definition of such term, such time as
all accrued and unpaid dividends that are in arrears are paid in full in
cash,
14
<PAGE>
and (B) with respect to any other Event Leading to Voting Rights, until
such event, occurrence or failure ceases to exist or has been cured, as the
case may be, at which time the special right of the holders of the Series A
Preferred Stock so to vote as a class for the election of directors and the
term of office of the directors elected by such persons shall terminate
upon resignation; provided, however, that such right shall again be
applicable with respect to any subsequent Event Leading to Voting Rights.
(ii) The right of the holders of Series A Preferred Stock to vote
for the election of directors herein may be exercised at any annual meeting
of stockholders of the Corporation or at any special meeting of
stockholders of the Corporation called for such purpose as hereinafter
provided or at any adjournment thereof, or by the written consent,
delivered to the Secretary, of the holders of a majority of all outstanding
shares of Series A Preferred Stock as of the record date of such written
consent. The Secretary may call, and upon the written request of the
holders of record of at least twenty percent (20%) of the outstanding
shares of Series A Preferred Stock addressed to the Secretary at the
principal executive offices of the Corporation shall call, a special
meeting of the holders of such shares for the election of such directors as
provided herein. Such meeting shall be held within thirty (30) days after
delivery of such request to the Secretary, at the place and upon the notice
required for meetings of stockholders provided in the By-Laws or by law for
the holding of meetings of stockholders. No such special meeting or
adjournment thereof shall be held on a date less than thirty (30) days
before an annual meeting of stockholders of the Corporation or any special
meeting in lieu thereof at which the holders of the Series A Preferred
Stock are given the opportunity to elect directors. If at any such annual
or special meeting or any adjournment thereof the holders of a majority of
the then outstanding shares of Series A Preferred Stock entitled to vote in
such election shall be present or represented by proxy, or if such majority
shall have acted by written consent in lieu of a meeting with respect
thereto, then the authorized number of directors shall be increased and the
holders of the Series A Preferred Stock shall be entitled to elect such
additional directors as provided herein. The absence of a quorum of the
holders of any other class or series of capital stock of the Corporation at
any such annual or special meeting shall not affect the exercise by the
holders of the Series A Preferred Stock of their right to elect directors
as set forth herein. Subject to Section 5(b)(i) and Section 3(c), the
directors so elected shall serve until the next annual meeting of
stockholders of the Corporation or until their successors shall be elected
and shall qualify. In case any of the directors elected by the holders of
the Series A Preferred Stock hereunder shall cease to serve as a director
for any reason prior to the expiration of his or her term, the holders of
the Series A Preferred Stock then outstanding and entitled to vote for such
director may, by written consent as hereinabove provided, or at a special
meeting of such holders called as provided above, elect a
15
<PAGE>
successor to hold office for the unexpired term of the director whose place
shall be vacant.
(iii) The rights of the holders of Series A Preferred Stock to
elect directors hereunder shall not be adversely affected by the voting or
other rights applicable to any other security of the Corporation.
(iv) Notwithstanding anything herein to the contrary, with
respect to the right of the holders of Series A Preferred Stock to elect
directors pursuant to Section 3(c) hereof, an affirmative vote by holders
representing 66-2/3% of all outstanding shares of Series A Preferred Stock
shall be required to elect such additional directors.
Section 6. Restrictive Covenants. For so long as any shares of
---------------------
Series A Preferred Stock shall be outstanding, and unless the consent or
approval of a greater number of shares shall then be required by law,
without first obtaining the consent or approval of the holders of at least
66-2/3% of the shares of Series A Preferred Stock then outstanding, voting
as a single class, given in person or by proxy at a meeting at which the
holders of such shares shall be entitled to vote separately as a class, or
by written consent:
6.1. Limitation on Junior Payments. (a) Subject to
-----------------------------
Section 6.1(b), the Corporation shall not, directly or indirectly,
(i) declare, pay, or set apart for payment on any Junior Stock, any
dividend or make any distribution on or in respect of Junior Stock
(including any payment in connection with any merger or consolidation
involving the Corporation or any of its Subsidiaries), except
dividends or distributions payable in shares (other than Disqualified
Stock) of the classes or series upon which such dividends are declared
or paid, or payable in shares of Common Stock with respect to Junior
Stock other than Common Stock, together with cash in lieu of
fractional shares, or (ii) purchase, redeem, retire or otherwise
acquire for value any Junior Stock (any such dividend, distribution,
purchase, redemption, or other acquisition being herein referred to as
a "Junior Payment").
--------------
(b) The provisions of Section 6.1(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock of the Corporation
made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Corporation (other than
Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary); (ii) the repurchase, redemption or other acquisition or
retirement for value of Capital Stock of the Corporation pursuant to
any management equity subscription, stockholder or stock option
agreement; provided, however, that (X) the aggregate price paid for
-------- -------
all such repurchased, redeemed, acquired or retired Capital Stock
shall not exceed $1.0 million in any fiscal year and (Y) no Default or
Event of
16
<PAGE>
Default (as defined in the Senior Secured Note Indenture) or Event of
Non-Compliance or Event Leading to Voting Rights shall have occurred
and be continuing immediately after such transaction; and (iii) any
repurchase of Capital Stock from an SBIC Holder (as defined in the
Purchase Agreement), in accordance with the terms of 6.2 of the
Purchase Agreement or the Stock Purchase Agreement (as the case may
be), arising out of a Regulatory Violation or a Regulatory Problem (as
defined in the Purchase Agreement).
6.2. Limitation on Payment Restrictions Affecting
--------------------------------------------
Subsidiaries. The Corporation 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 (i)(a) pay dividends or make any
other distributions to the Corporation or any of its Subsidiaries
(1) on its Capital Stock or (2) with respect to any other interest or
participation in, or measured by, its profits, or (b) pay any
Indebtedness owed to the Corporation or any of its Subsidiaries,
(ii) make loans or advances to the Corporation or any of its
Subsidiaries, (iii) transfer any of its properties or assets to the
Corporation or any of its Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (A) Existing
Indebtedness, (B) Indebtedness of Berry or Berry's Subsidiaries
permitted to be incurred under the Senior Secured Note Indenture,
(C) the Senior Secured Note Indenture and the Senior Secured Notes,
(D) applicable law, (E) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Corporation 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, (F) by reason of customary non-assignment
provisions in leases entered into in the ordinary course of business
and consistent with past practices, or (G) purchase money obligations
for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the
property so acquired.
6.3. Amendment of Financing Documents. The Corporation
--------------------------------
will not amend or supplement the Senior Secured Notes or the Senior
Secured Note Indenture, as in effect on the Closing Date (or enter
into any refinancing or replacement thereof, or any new financing
agreement) if (a) the restrictive covenants of such amended or
supplemented or new financing agreement would impair the ability of
the Corporation to perform its obligations set forth herein or in the
Purchase Agreement, or (b) the provisions of such amended or
supplemented or new financing agreement with respect to the payment of
dividends on, or the redemption
17
<PAGE>
of, Preferred Stock, are more onerous or restrictive to the
Corporation than the corresponding provisions set forth in the Senior
Secured Note Indenture as in effect on the Closing Date.
6.4. Limitation on Issuance of Subsidiary Securities. The
-----------------------------------------------
Corporation will cause its Subsidiaries not to issue any Capital Stock
(other than to the Corporation or any wholly-owned subsidiary of the
Corporation), unless the proceeds of such issuance are used to redeem
all (but not less than all) of the then outstanding shares of Series A
Preferred Stock on the terms and conditions set forth herein.
6.5. Senior Stock. The Corporation shall not (i)
------------
authorize, create or issue any class or series, or any shares of any
class or series, of Senior Stock, unless the proceeds from such
issuance are used to redeem or repurchase all (but not less than all)
of the then outstanding shares of Series A Preferred Stock pursuant to
the terms and conditions set forth herein and in the Purchase
Agreement; (ii) reclassify any shares of capital stock of the
Corporation into shares of Senior Stock; or (iii) authorize or issue
any security exchangeable for, convertible into, or evidencing the
right to purchase any shares of Senior Stock.
6.6. Certificate of Incorporation; By-Laws. The
-------------------------------------
Corporation shall not amend, alter or repeal the Certificate of
Incorporation or By-Laws to alter or change the preferences, rights or
powers of the Series A Preferred Stock so as to affect the holders of
the Series A Preferred Stock adversely, to otherwise impair the rights
of the holders of Series A Preferred Stock, or to increase the
authorized number of shares of Series A Preferred Stock.
6.7. Liquidation. The Corporation shall not effect the
-----------
voluntary liquidation, dissolution or winding up of the Corporation.
6.8 Merger and Consolidation. The Corporation shall not
------------------------
consolidate with or merge with or into, or convey, transfer, lease or
sell all or substantially all its assets to, any Person, unless:
(a) All outstanding shares of Series A Preferred Stock are
purchased as a part of such transaction at a per share price of not
less than the Liquidation Preference of each such share plus all
accrued and unpaid dividends thereon through the date of such
purchase; or
(b) (i) the Corporation is the surviving corporation or,
if the surviving corporation is not the Corporation, the resulting,
surviving or transferee Person (the "Successor Corporation") shall be
---------------------
a corporation organized and existing under the laws of the United
States
18
<PAGE>
of America, any State thereof or the District of Columbia and (x) the
Successor Corporation (if not the Corporation) shall expressly assume,
by an amendment to the Purchase Agreement in form and substance
satisfactory to the holders of at least 66-2/3% of all outstanding
shares of Series A Preferred Stock as of the date of such assumption,
all the obligations of the Corporation thereunder, and (y) the Series
A Preferred Stock shall be converted or exchanged for and shall become
shares of such Successor Corporation, having in respect of such
Successor Corporation the same powers, preferences and relative
participating, optional or other special rights, and the
qualifications, limitations or restrictions thereto, that the Series A
Preferred Stock had immediately prior to such transaction;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default (as defined in the Senior Secured
Note Indenture) exists and no Event of Non-Compliance or Event
Leading to Voting Rights shall have occurred and be continuing;
(iii) the Corporation or Successor Corporation, as the case
may be, will (x) at the time of the 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
of the Senior Secured Note Indenture and (y) will have a
Consolidated Net Worth immediately after the transaction equal to
or greater than the Consolidated Net Worth of the Corporation
immediately preceding the transaction; and
(iv) the Corporation shall have delivered to the holders of
the Series A Preferred Stock an Officers' Certificate stating
that such consolidation, merger, transfer or lease comply with
this Section 6.8.
The Successor Corporation shall succeed to, and be substituted for,
and may exercise every right and power of, the Corporation to the
extent set forth in the Purchase Agreement, but in the case of a lease
of all or substantially all its assets, the Corporation, shall not be
released from its obligations with respect to the Series A Preferred
Stock.
Notwithstanding clauses (ii) and (iii): (1) any Subsidiary of the
Corporation may consolidate with, merge into or transfer all or part
of its properties and assets to the Corporation and (2) the
Corporation may merge with an Affiliate incorporated solely for the
purpose of reincorporating the Corporation in another jurisdiction to
realize tax or other benefits.
19
<PAGE>
Section 6A. Other Covenants.
---------------
6A.1. Notification of Certain Events. The Corporation
------------------------------
shall mail to each holder of record of the Series A Preferred Stock,
within 30 days after the occurrence thereof, written notice in the
form of an Officers' Certificate of (i) the occurrence of any Event of
Non-Compliance and (ii) any failure by the Corporation to observe any
covenant specified herein and in Section 6.2 of the Purchase
Agreement.
6A.2. Distributions on Junior Stock. Except as otherwise
-----------------------------
provided for in Section 6.1(b) for so long as the Common Stock of the
Corporation is not registered pursuant to Section 12 or 15 of the
Securities Exchange Act of 1934, as amended, any dividends,
distributions or other payments made on or in respect of Junior Stock
shall be held by holders of Junior Stock in trust for the benefit of
the holders of Series A Preferred Stock and shall be remitted to the
holders of Series A Preferred Stock, on a pro-rata basis, until each
holder of Series A Preferred Stock has received an amount equal to the
per share Liquidation Preference plus all accrued and unpaid
dividends.
6A.3. Board Observers; Meetings. (a) For so long as CVCA
-------------------------
or its Affiliates or Northwestern or its Affiliates each hold in the
aggregate at least 33-1/3% of the then outstanding shares of Series A
Preferred Stock, and in addition to any rights CVCA may have as a
purchaser of Common Stock under the Stockholders Agreement, the Stock
Purchase Agreement or otherwise, the Corporation shall afford each of
CVCA and Northwestern the opportunity to have one (1) representative
each (each referred to as an "Observer") attend (at the Corporation's
--------
cost and expense) as an observer at (but not participate in or vote
at) each meeting of the Board of Directors. In addition, upon the
occurrence of an Event of Non-Compliance, CVCA and Northwestern shall
each be afforded the opportunity to appoint a second Observer to
attend (at the Corporation's sole cost and expense) as an observer at
(but not participate in or vote at) each meeting of the Board of
Directors. The Corporation shall give each Observer notice of all
such meetings at the same time and in the same manner as notice is
given to members of the Board of Directors. Each Observer shall be
entitled to receive all written materials and other information given
to the directors of the Corporation in connection with such meetings
at the same time and in the same manner and form such materials and
information are given to the directors, and copies of all minutes and
all resolutions adopted by the Board of Directors (whether at
meetings, by written consent or otherwise) promptly after such
adoption and (if applicable) approval thereof (it being understood
that such copies shall be certified by the Secretary of the
Corporation).
20
<PAGE>
(b) For so long as any shares of Series A Preferred Stock
shall be outstanding, regular meetings of the Board of Directors shall
be held at least three (3) times during the fiscal year of the
Corporation.
Section 7. Redemption. (a) Other than as set forth in clause
----------
(b) below, the Corporation shall have no right to redeem any shares of
Series A Preferred Stock prior to June 15, 1999. On and after June 15,
1999, to the extent that the Corporation shall have funds legally available
therefor, the Corporation shall have the right, at its sole option and
election, to redeem, at any time or from time to time, in whole or in part,
the outstanding shares of Series A Preferred Stock by paying therefor in
cash an amount per share equal to the sum of (i) the product of (A) the
Specified Amount of such share, times (B) the applicable Redemption
Percentage, and (ii) the amount of all accrued and unpaid dividends thereon
to the Redemption Date (excluding any Accumulated Dividends, but including
an amount equal to a prorated dividend from the immediately preceding
Dividend Payment Date to the Redemption Date).
(b) In the event that the Corporation shall effect a registered
initial public offering of the Common Stock under the Securities Act of
1933, as amended, the Corporation shall have the right to redeem, at its
sole option and election (subject to the legal availability of funds
therefor), all (but not less than all) of the outstanding shares of Series
A Preferred Stock for an amount per share (payable solely in cash out of
the proceeds of such offering) equal to the sum of (i) product of (A) the
Specified Amount of such share, times (B) the lesser of the applicable
Redemption Percentage or 107% and (ii) the amount of all accrued and unpaid
dividends thereon to the Redemption Date (excluding any Accumulated
Dividends, but including an amount equal to a prorated dividend from the
immediately preceding Dividend Payment Date to the Redemption Date);
provided that such redemption occurs within 45 days of the date of the
closing of such public offering.
(c) Notice of any redemption of shares of Series A Preferred
Stock pursuant to paragraph (a) or (b) of this Section 7 shall be mailed
---------
not less than ten (10) Business Days nor more than sixty (60) days prior to
the Redemption Date to each holder of shares of Series A Preferred Stock to
be redeemed, at such holder's address as it appears on the transfer books
of the Corporation. Each such notice shall state: (A) the Redemption
Date, (B) the place or places where the redemption price will be paid (if
other than the principal executive offices of the Corporation), (C) if less
than all the shares held by any holder are to be redeemed pursuant to
paragraph (a), the number of shares to be redeemed from such holder and
(D) that dividends on the shares of Series A Preferred Stock to be redeemed
will cease to accrue on the Redemption Date. In order to facilitate the
redemption of shares of Series A Preferred Stock, the Board of Directors
may fix a record date for the determination of shares of Series A Preferred
Stock to be redeemed, not more than
21
<PAGE>
sixty (60) days nor less than thirty (30) days prior to the applicable
Redemption Date. In the case of the redemption of less than all the
outstanding shares of Series A Preferred Stock pursuant to paragraph (a),
(I) the shares to be redeemed shall be selected pro rata, and there shall
--- ----
be redeemed from each holder, as nearly as practicable to the nearest whole
share, that proportion of all the shares to be redeemed which the number of
shares held of record by such holder bears to the total number of shares of
Series A Preferred Stock at the time outstanding; provided, however, that
-------- -------
if any holder of Series A Preferred Stock holds of record (or following
such redemption would hold of record) less than 100 shares in the
aggregate, then the Corporation may elect to redeem all such shares held of
record by such holder and there shall be redeemed from each other holder,
as nearly as practicable to the nearest whole share, that proportion of all
other shares to be redeemed which the number of shares held of record by
such holder bears to the total number of other shares of Series A Preferred
Stock at the time outstanding, and (II) if fewer than all shares
represented by any certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder
thereof.
(d) Notice having been mailed as specified in Section 7(c), and
provided that on or before the Redemption Date, specified in such notice
all funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the pro
rata benefit of the holders of the shares so called for redemption, so as
to be and to continue to be available therefor, then, from and after the
Redemption Date, dividends on the shares of Series A Preferred Stock called
for redemption shall cease to accrue and said shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof set forth
herein and otherwise as stockholders of the Corporation (except the right
to receive from the Corporation the redemption price in accordance with
this Section 7) shall cease.
Section 8. Exchange. (a) The shares of Series A Preferred
--------
Stock are exchangeable, in whole but not in part, at the option of the
Corporation, on any Dividend Payment Date (the "Exchange Date"), for that
-------------
principal amount of Exchange Notes equal to the Liquidation Preference of
the shares of Series A Preferred Stock to be exchanged, provided, that on
--------
or prior to the Exchange Date the Corporation shall have paid in cash to
the holders of outstanding shares of Series A Preferred Stock all accrued
and unpaid dividends on such Series A Preferred Stock to the Exchange Date,
and provided, further, that so long as any shares of Series A Preferred
-------- -------
Stock are held by CVCA or its Affiliates, no shares of Series A Preferred
Stock may be exchanged.
(b) The Corporation will mail to each holder of record of the
shares of Series A Preferred Stock written notice of its intention to make
the Exchange not less than ten (10) nor more than sixty (60) days prior to
the Exchange Date. Each such
22
<PAGE>
notice shall state: (i) the Exchange Date, (ii) the place or places where
certificates for such shares of Series A Preferred Stock are to be
surrendered for exchange into Exchange Notes (if other than the principal
executive offices of the Corporation) and (iii) that dividends on the
shares of Series A Preferred Stock to be exchanged will cease to accrue on
such Exchange Date. On the Exchange Date, the Corporation will (x) cause
the Exchange Notes to be executed, and, if necessary, authenticated, and
will cause the Exchange Indenture to be executed, by all applicable parties
and (y) deliver to each holder of Series A Preferred Stock one or more duly
executed Exchange Notes (as designated by such holder) in an aggregate
principal amount calculated in accordance with Section 8(a). The
Corporation will pay interest on the Exchange Notes at the rate and on the
dates set forth in the Exchange Notes.
(c) If notice has been mailed as specified in Section 8(b), and
provided that the Corporation shall issue the Exchange Notes in compliance
herewith and the terms and conditions of the Exchange Indenture, from and
after the Exchange Date dividends on the Series A Preferred Stock shall
cease to accrue and the Series A Preferred Stock shall no longer be deemed
to be outstanding, and all rights of the holders thereof set forth herein
and otherwise as shareholders of the Corporation (except any rights
specified herein in respect of the Exchange Notes) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares
of Series A Preferred Stock so exchanged, such shares shall be exchanged by
the Corporation for the Exchange Notes as aforesaid.
(d) The Corporation will pay any and all taxes that may be
payable in respect of the issuance and delivery of the Exchange Notes as
provided in this Section 8 and in the Exchange Indenture (excluding any tax
which may be payable in respect of any transfer involved in the issuance
and delivery of Exchange Notes in a name other than that in which the
shares of the Series A Preferred Stock so exchanged were registered).
Section 9. Reacquired Shares. Any shares of Series A Preferred
-----------------
Stock redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever (including pursuant to the Exchange in accordance with
Section 8) shall be retired and canceled promptly after the acquisition
thereof, and, if necessary to provide for the lawful redemption or purchase
of such shares, the capital represented by such shares shall be reduced in
accordance with the DGCL. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of another series of Preferred Stock (subject to any
applicable limitations set forth herein).
Part C. Common Stock
------------
Except as otherwise provided in this Part C or as otherwise required
by applicable law, all shares of Class A Common, Class B
23
<PAGE>
Common and Class C Common shall be identical in all respects and shall
entitle the holders thereof to the same rights and privileges, subject to
the same qualifications, limitations and restrictions.
Section 1. Voting Rights.
-------------
(a) Until a Conversion Event or a Mandatory Conversion Event,
except as otherwise required by applicable law, (i) all holders of
Class A Voting Common and Class B Voting Common (collectively, the
"Voting Common") shall be entitled to one vote per share on all
matters to be voted on by the Corporation's stockholders, and the
holders of Class A Voting Common and Class B Voting Common shall vote
together as a single class and (ii) Class A Non-Voting Common, Class B
Non-Voting Common and Class C Common shall not be entitled to vote on
any matter to be voted on by the Corporation's stockholders and shall
not be included in determining the number of shares voting or entitled
to vote on such matters.
(b) Upon the occurrence of a Conversion Event, except as
otherwise required by applicable law, all shares of Class A Common,
Class B Common and Class C Common shall be entitled to one vote per
share on all matters to be voted on by the Corporation's stockholders,
and the holders of Class A Common, Class B Common and Class C Common
shall vote together as a single class.
(c) Notwithstanding the above, and until the occurrence of a
Mandatory Conversion Event, no amendment or waiver of any provision of
this Part C of this Article Fourth shall be effective without the
affirmative vote or prior written consent of holders of a majority of
the then outstanding shares of Class A Common, voting or consenting as
a separate class.
(d) The Corporation shall not merge with or into, or consolidate
with any other Person if, under the terms pursuant to which such
merger or consolidation is to be effected, (i) the consideration to be
received by holders of one or more classes of Common Stock in such
merger or consolidation is less than the holders of such class or
classes would receive if the aggregate consideration to be received by
all holders of Common Stock were, as of the effectiveness of such
merger or consolidation, distributed by the Corporation to the holders
of Common Stock pursuant to the terms of this Article Fourth, unless
the Corporation shall have obtained the affirmative vote or prior
written consent of the holders of a majority of the then outstanding
shares of each such class of Common Stock, voting or consenting as a
separate class or (ii) any provision of this Part C of this Article
Fourth would be amended or waived, unless the Corporation shall have
obtained the affirmative vote or prior written consent of the holders
of a majority of the then outstanding shares of Class A Common, Class
B
24
<PAGE>
Common and Class C Common, each voting or consenting as a separate
class.
Section 2. Distributions. Until the earlier of the occurrence of a
-------------
Mandatory Conversion Event or the Preference Termination Time,
distributions to the holders of Common Stock shall be made in the following
priority:
(a) All Distributions shall be paid to the holders of Class A
Common (ratably among such holders based upon the number of shares of
Class A Common held by each such holder as of the time of such
Distribution), as a separate class and to the exclusion of holders of
all other Common Stock, until, as a result of such Distributions and
all prior Distributions pursuant to this paragraph 2(a), the Class A
Preferred Per Share Distribution Amount shall have been distributed to
the holders of all outstanding shares Class A Common as of the time of
such Distribution, and no Distribution or any portion thereof shall be
made under paragraph 2(b), 2(c) or 2(d) below until, as a result of
all Distributions pursuant to this paragraph 2(a), the entire Class A
Preferred Per Share Distribution Amount on the outstanding shares of
Class A Common as of the time of such Distribution shall have been
paid in full.
(b) After the Class A Preferred Per Share Distribution Amount
has been distributed pursuant to paragraph 2(a) above, all
Distributions shall be paid to the holders of Class B Common (ratably
among such holders based upon the number of shares of Class B Common
held by each such holder as of the time of such Distribution), as a
separate class and to the exclusion of holders of all other Common
Stock, until, as a result of such Distributions and all prior
Distributions pursuant to this paragraph 2(b), the Class B Preferred
Per Share Distribution Amount shall have been distributed to the
holders of all outstanding shares Class B Common as of the time of
such Distribution, and no Distribution or any portion thereof shall be
made under paragraph 2(c) or 2(d) below until, as a result of all
Distributions pursuant to this paragraph 2(b), the entire Class B
Preferred Per Share Distribution Amount on the outstanding shares of
Class B Common as of the time of such Distribution shall have been
paid in full.
(c) After the required amount of Distributions has been
distributed pursuant to paragraph 2(a) and 2(b) above, all
Distributions shall be paid to the holders of Class C Common (ratably
among such holders based upon the number of shares of Class C Common
held by each such holder as of the time of such Distribution).
(d) After the occurrence of a Mandatory Conversion Event or the
Preference Termination Time, all Distributions shall be paid to the
holders of Class A Common, Class B Common and Class C Common, as a
group ratably among such
25
<PAGE>
holders based upon the number of shares of Common Stock held by each
such holder as of the time of such Distribution.
Section 3. Stock Splits and Stock Dividends. The Corporation shall
--------------------------------
not in any manner subdivide (by stock split, stock dividend or otherwise)
or combine (by stock split, stock dividend or otherwise) the outstanding
Common Stock of one class unless the outstanding Common Stock of all the
other classes shall be proportionately subdivided or combined. All such
subdivisions and combinations shall be payable only in Class A Common to
the holders of Class A Common, in Class B Common to the holders of Class B
Common and in Class C Common to the holders of Class C Common or, upon the
occurrence of a Mandatory Conversion Event, in Common Stock to the holders
of Common Stock. In no event shall a stock split or stock dividend
constitute a return of the Class A Preferred Distribution Amount or the
Class B Preferred Distribution Amount.
Section 4. Registration of Transfer. The Corporation shall keep at
------------------------
its principal office (or such other place as the Corporation reasonably
designates) a register for the registration of shares of Common Stock.
Upon the surrender of any certificate representing shares of any class of
Common Stock at such place, the Corporation shall, at the request of the
registered holder of such certificate, execute and deliver a new
certificate or certificates in exchange therefor representing in the
aggregate the number of shares of such class represented by the surrendered
certificate, and the Corporation forthwith shall cancel such surrendered
certificate. Each such new certificate shall be registered in such name
and will represent such number of shares of such class as is requested by
the holder of the surrendered certificate and shall be substantially
identical in form to the surrendered certificate. The issuance of new
certificates shall be made without charge to the holders of the surrendered
certificates for any issuance tax in respect thereof or other cost incurred
by the Corporation in connection with such issuance.
Section 5. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Corporation (an affidavit of the registered holder will
be satisfactory) of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing one or more shares of any class of
Common Stock, and in the case of any such loss, theft or destruction, upon
receipt of indemnity reasonably satisfactory to the Corporation (provided
that if the holder is a financial institution or other institutional
investor its own agreement will be satisfactory), or, in the case of any
such mutilation upon surrender of such certificate, the Corporation shall
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and
dated the date of such lost, stolen, destroyed or mutilated certificate.
26
<PAGE>
Section 6. Notices. All notices referred to herein shall be in
-------
writing, shall be delivered personally or by first class mail, postage
prepaid, and shall be deemed to have been given when so delivered or mailed
to the Corporation at its principal executive offices and to any
stockholder at such holder's address as it appears in the stock records of
the Corporation (unless otherwise specified in a written notice to the
Corporation by such holder).
Section 7. Mandatory Conversion Event. Upon the occurrence of a
--------------------------
Mandatory Conversion Event, all shares of Common Stock then outstanding
shall, by virtue of, and simultaneously with, the occurrence of the
Mandatory Conversion Event, and without any action on the part of the
holders thereof, be deemed automatically converted into that number of
fully paid and non-assessable shares of a single class of Common Stock,
each of which shares shall be entitled to one vote per share on all matters
to be voted on by the Corporation's stockholders. After the occurrence of
a Mandatory Conversion Event, all Distributions shall be paid to the
holders of Common Stock ratably among such holders based upon the number of
shares of Common Stock held by each such holder as of the time of such
Distribution.
Section 8. Definitions
-----------
"Class A Preferred Per Share Distribution Amount" means $100 per share
-----------------------------------------------
of Class A Common. The Class A Preferred Per Share Distribution Amount
shall be adjusted equitably in the event of a subdivision (by stock split,
stock dividend or otherwise) or combination (by stock split, stock dividend
or otherwise) of the outstanding Common Stock.
"Class B Preferred Distribution Amount" means $100 per share of Class
-------------------------------------
B Common. The Class B Preferred Per Share Distribution Amount shall be
adjusted equitably in the event of a subdivision (by stock split, stock
dividend or otherwise) or combination (by stock split, stock dividend or
otherwise) of the outstanding Common Stock.
"Conversion Event" means any of the following: (i) the death,
----------------
disability or incapacity of Roberto Buaron, (ii) Roberto Buaron's failure
to control, directly or indirectly, Atlantic Equity Partners International
II, L.P. ("International") or (iii) (A) the percentage determined by
dividing (1) the sum of (x) the aggregate number of shares of Common Stock
held, beneficially and of record with full power to vote, directly or
indirectly, by International and its Related Persons of the type described
in clause (i)(x) of the definition thereof which are Holders (as defined in
-------------
the Stockholders Agreement) and (y) all other shares of Common Stock which
Roberto Buaron has the power to vote, directly or indirectly, by way of
voting agreement, proxy or otherwise for the election of directors to the
Board of Directors by (2) the number of shares of Common Stock then
--
outstanding on a fully diluted basis (determined as though there were only
a single class of Common Stock) shall at any time be less than (B)
---------
27
<PAGE>
two-thirds of the percentage determined by dividing (1) the number of
shares of Common Stock so held by International immediately following the
Closing Date (as defined in the Stock Purchase Agreement) by (2) the number
--
of shares of Common Stock outstanding on a fully diluted basis (determined
as though there were only a single class of Common Stock) immediately
following the Closing Date.
"Distribution" means each distribution made by the Corporation to
------------
holders of any Common Stock of the Corporation, whether in cash, property,
or securities of the Corporation and whether by dividend, liquidating
distribution, redemption, repurchase or otherwise; provided that none of
the following shall be a Distribution: (i) any recapitalization or exchange
of any shares of Common Stock, (ii) any subdivision (by stock split, stock
dividend or otherwise) or any combination (by stock split, stock dividend
or otherwise) of any outstanding shares of Common Stock (iii) any
distribution paid as a result of the repurchase of any capital stock held
by an employee in connection with such employee's employment by the
Corporation or any of its Subsidiaries (as defined in the Stock Purchase
Agreement) or (iv) any distribution paid to an SBIC Holder (as defined in
the Stock Purchase Agreement) in connection with a Regulatory Violation (as
defined in the Stock Purchase Agreement).
"Mandatory Conversion Event" means the consummation of the initial
--------------------------
public offering of shares of Common Stock of the Corporation which results
in (i) a gross selling price per share of Common Stock (subject to
adjustment for stock splits, dividends, subdivisions, combinations,
reclassifications, etc.) equal to at least $250 and (ii) aggregate gross
proceeds to the Corporation of not less than $50,000,000.
"Person" means any individual, corporation, general or limited
------
partnership, joint venture, association, limited liability company, joint
stock company, trust, business trust, bank, trust company, estate
(including any beneficiaries thereof), unincorporated organization,
cooperative, association or governmental branch, authority, agency or
political subdivision thereof.
"Preference Termination Time" means the time at which the aggregate of
---------------------------
all Distributions paid to the holders of the then outstanding shares of
Common Stock is equal to $100 per share (the "Distribution Threshold").
The Distribution Threshold shall be adjusted equitably in the event of a
stock dividend, stock split, reverse stock split, combination of shares or
other similar event. In the event that a Distribution is in an amount that
is greater than that required to equal the Distribution Threshold, the
Distribution shall be deemed to be two Distributions, the first equal to
the amount required to reach the Distribution Threshold and the second
equal to the balance, and the Preference Termination Time shall be deemed
to occur upon the payment of the first deemed Distribution but prior to the
second deemed Distribution.
28
<PAGE>
"Related Person" means, (i) any Person that is controlled by Roberto
--------------
Buaron or (ii) any partner, shareholder or similar equity holder of
International or such Person described in clause (i) above that receives
Securities (as defined in the Stockholders Agreement) from International or
such Person in connection with a wind-up, liquidation or similar
distribution of or by International or such Person. For purpose of this
Restated Certificate of Incorporation, "control" and its derivatives shall
mean, with respect to any Person, the power to direct and control the
management or policies of such Person, whether through the beneficial
ownership of voting securities or other evidence of equity ownership, by
contract or agreement or otherwise.
"Stockholders Agreement" means the Stockholders Agreement, dated June
----------------------
18, 1996, among the Corporation, International, Chase Venture Capital
Associates, L.P. ("CVCA"), certain other institutional holders, certain
members of management of the Corporation and CVCA and The Northwestern
Mutual Life Insurance Company as holders of Series A Preferred Stock with
respect to certain provisions thereof, as amended from time to time
pursuant to its terms.
"Stock Purchase Agreement" means the Stock Purchase and
------------------------
Recapitalization Agreement, dated as of June 12, 1996, as amended or
otherwise modified from time to time, among the Corporation, International,
and the other parties thereto.
ARTICLE FIFTH
The Restated Certificate of Incorporation of the Corporation shall
constitute a restatement of, and shall supersede the Certificate of
Incorporation of the Corporation, filed on December 11, 1990, as amended by
the Amended and Restated Certificate of Incorporation filed on April 19,
1994, further amended by the Certificate of Amendment to the Amended and
Restated Certificate of Incorporation filed May 5, 1995 and further amended
by the Certificate of Amendment filed June 14, 1996.
ARTICLE SIXTH
Subject to limitations prescribed by the provisions of Part B, the
number of directors of the Corporation shall be such as from time to time
shall be fixed in the manner provided in the By-laws of the Corporation.
The election of directors of the Corporation need not be by ballot unless
the By-laws so require.
ARTICLE SEVENTH
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except (i) for any breach of the director's
duty of loyalty to the Corporation or its
29
<PAGE>
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived any improper personal benefit. If the
Delaware General Corporation Law is amended after the date of incorporation
of the Corporation to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification.
ARTICLE EIGHTH
Except as otherwise limited herein (including Part B of Article
Fourth), for the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation and of its directors and
stockholders, it is further provided:
(a) In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors is
expressly authorized and empowered:
(i) to make, alter, amend or repeal the By-laws in any
manner not inconsistent with the laws of the State of Delaware or
this Certificate of Incorporation;
(ii) to determine whether any, and if any, what part, of
the net profits of the Corporation or of its surplus shall be
declared in dividends and paid to the stockholders, and to direct
and determine the use and disposition of any such net profits or
such surplus; and
(iii) to fix from time to time the amount of net profits of
the Corporation or of its surplus to be reserved as working
capital or for any other lawful purpose.
In addition to the powers and authorities herein or by statute
expressly conferred upon it, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of
the laws of the State of Delaware, of this Certificate of
Incorporation and of the By-laws of the Corporation.
30
<PAGE>
(b) Any director or any officer elected or appointed by the
stockholders or by the Board of Directors may be removed at any time
in such manner as shall be provided in the By-laws of the Corporation.
(c) From time to time any of the provisions of this Certificate
of Incorporation may be altered, amended or repealed, and other
provisions authorized by the laws of the State of Delaware at the time
in force may be added or inserted, in the manner and at the time
prescribed by said laws, and all rights at any time conferred upon the
stockholders of the Corporation by this Certificate of Incorporation
are granted subject to the provisions of this paragraph (c).
ARTICLE NINTH
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them, or between the
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of the Corporation or of any creditor or stockholder
thereof or on the application of any receiver or receivers appointed for
the Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code, or on the application of trustees in dissolution or of any
receiver or receivers appointed for the Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code, order a meeting of the
creditors or class of creditors, or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, or of the
stockholders or class of stockholders of the Corporation, as the case may
be, agree on any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned
by the court to which the said application has been made, be binding on all
the creditors or class of creditors, or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
31
<PAGE>
IN WITNESS WHEREOF, BPC HOLDING CORPORATION has caused this Restated
Certificate of Incorporation to be signed by its Chairman, and attested by
its Vice President, this 18th day of June, 1996.
BPC HOLDING CORPORATION
By: /s/ Roberto Buaron
----------------------------
Name: Roberto Buaron
Title: Chairman
ATTEST:
By: /s/ Joseph S. Levy
---------------------------
Name: Joseph S. Levy
Title: Vice President
32
Exhibit 4.3
EXECUTION COPY
================================================================================
- --------------------------------------------------------------------------------
BPC HOLDING CORPORATION
SERIES A AND SERIES B
$105,000,000
12 1/2% SENIOR SECURED NOTES DUE 2006
_________________
INDENTURE
Dated as of June 18, 1996
_________________
_________________
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
_________________
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06;10.03
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06;10.03
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03;4.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.02
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03;10.04
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05,11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
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 . . . . . . . . . . . . . . . . . 12
Section 1.03. Incorporation by Reference of Trust Indenture Act . 12
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . 13
ARTICLE 2
THE SENIOR NOTES
Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . 13
Section 2.02. Execution and Authentication . . . . . . . . . . . 14
Section 2.03. Registrar and Paying Agent . . . . . . . . . . . . 15
Section 2.04. Paying Agent to Hold Money in Trust . . . . . . . . 15
Section 2.05. Lists of Holders of the Notes . . . . . . . . . . . 16
Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . 16
Section 2.07. Replacement Senior Notes . . . . . . . . . . . . . 21
Section 2.08. Outstanding Senior Notes . . . . . . . . . . . . . 22
Section 2.09. Treasury Senior Notes . . . . . . . . . . . . . . . 22
Section 2.10. Temporary Senior Notes . . . . . . . . . . . . . . 22
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . 23
Section 2.12. Record Date . . . . . . . . . . . . . . . . . . . . 23
Section 2.13. Defaulted Interest . . . . . . . . . . . . . . . . 23
Section 2.14. Book-Entry Provisions for Global Notes. . . . . . . 23
Section 2.15. Deposit of Monies . . . . . . . . . . . . . . . . . 24
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee . . . . . . . . . . . . . . . . 24
Section 3.02. Selection of Senior Notes to Be Redeemed . . . . . 24
Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . 25
Section 3.04. Effect of Notice of Redemption . . . . . . . . . . 26
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . 26
Section 3.06. Senior Notes Redeemed in Part . . . . . . . . . . . 26
Section 3.07. Optional Redemption . . . . . . . . . . . . . . . . 26
Section 3.08. Mandatory Redemption . . . . . . . . . . . . . . . 27
Section 3.09. Offer to Purchase by Application of Excess Proceeds 27
ARTICLE 4
COVENANTS
Section 4.01. Payment of Senior Notes . . . . . . . . . . . . . . 29
Section 4.02. Maintenance of Office or Agency . . . . . . . . . . 30
Section 4.03. Reports . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.04. Compliance Certificate . . . . . . . . . . . . . . 31
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . 31
i
<PAGE>
Section 4.06. Stay, Extension and Usury Laws . . . . . . . . . . 31
Section 4.07. Restricted Payments . . . . . . . . . . . . . . . . 32
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries . . . . . . . . . . . . . . . . . . . 34
Section 4.09. Incurrence of Indebtedness and Issuance of
Disqualified Stock . . . . . . . . . . . . . . . . 34
Section 4.10. Asset Sales . . . . . . . . . . . . . . . . . . . . 36
Section 4.11. Transactions with Affiliates . . . . . . . . . . . 37
Section 4.12. Liens . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.13. Corporate Existence . . . . . . . . . . . . . . . . 38
Section 4.14. Offer to Purchase Upon Change of Control . . . . . 38
Section 4.15. Limitation on Creation of New Parent Company . . . 39
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets . . . . . 39
Section 5.02. Successor Corporation Substituted . . . . . . . . . 40
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . 40
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . 42
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . 43
Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . 43
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . 43
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . 43
Section 6.07. Rights of Holders of Senior Notes to Receive
Payment . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . 44
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . 44
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . 45
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . 45
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . 45
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . 47
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . 47
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . 47
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . 48
Section 7.06. Reports by Trustee to Holders of the Senior Notes . 48
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . 48
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . 49
Section 7.09. Successor Trustee by Merger, etc . . . . . . . . . 50
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . 50
Section 7.11. Preferential Collection of Claims Against The
Company . . . . . . . . . . . . . . . . . . . . . . 50
ii
<PAGE>
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . 51
Section 8.02. Legal Defeasance and Discharge . . . . . . . . . . 51
Section 8.03. Covenant Defeasance . . . . . . . . . . . . . . . . 51
Section 8.04. Conditions to Legal or Covenant Defeasance . . . . 52
Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions. . . . . . 53
Section 8.06. Repayment to The Company . . . . . . . . . . . . . 54
Section 8.07. Reinstatement . . . . . . . . . . . . . . . . . . . 54
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of the Senior Notes . . 54
Section 9.02. With Consent of Holders of Senior Notes . . . . . . 55
Section 9.03. Compliance with Trust Indenture Act . . . . . . . . 56
Section 9.04. Revocation and Effect of Consents . . . . . . . . . 57
Section 9.05. Notation on or Exchange of Senior Notes . . . . . . 57
Section 9.06. Trustee to Sign Amendments, etc . . . . . . . . . . 57
ARTICLE 10
COLLATERAL AND SECURITY
Section 10.01. Holding Pledge Agreement . . . . . . . . . . . . . 57
Section 10.02. Recording and Opinions . . . . . . . . . . . . . . 58
Section 10.03. Release of Collateral . . . . . . . . . . . . . . . 59
Section 10.04. Certificates of the Company . . . . . . . . . . . . 59
Section 10.05. Certificates of the Trustee . . . . . . . . . . . . 60
Section 10.06. Authorization of Actions to Be Taken by the Trustee
Under the Holding Pledge Agreement . . . . . . . . 60
Section 10.07. Authorization of Receipt of Funds by the Trustee
Under the Holding Pledge Agreement . . . . . . . . 60
Section 10.08. Termination of Security Interest. . . . . . . . . . 60
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls . . . . . . . . . . . 61
Section 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . 61
Section 11.03. Communication by Holders of Senior Notes with Other
Holders of Senior Notes . . . . . . . . . . . . . . 62
Section 11.04. Certificate and Opinion as to Conditions Precedent 62
Section 11.05. Statements Required in Certificate or Opinion . . . 62
Section 11.06. Rules by Trustee and Agents . . . . . . . . . . . . 63
Section 11.07. No Personal Liability of Directors, Officers,
Employees and Stockholders . . . . . . . . . . . . 63
Section 11.08. Governing Law . . . . . . . . . . . . . . . . . . . 63
Section 11.09. No Adverse Interpretation of Other Agreements . . . 63
iii
<PAGE>
Section 11.10. Successors . . . . . . . . . . . . . . . . . . . . 63
Section 11.11. Severability . . . . . . . . . . . . . . . . . . . 63
Section 11.12. Counterpart Originals . . . . . . . . . . . . . . . 63
Section 11.13. Table of Contents, Headings, etc . . . . . . . . . 64
iv
<PAGE>
INDENTURE dated as of June 18, 1996 between BPC HOLDING CORPORATION
(the "Company") and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as
trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the holders (the "Holders")
of the 12 1/2% Series A Senior Secured Notes due 2006 (the "Series A Senior
Notes") and the 12 1/2% Series B Senior Secured Notes due 2006 (the "Series B
Senior Notes" and, together with the Series A Senior Notes, the "Senior
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 is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or
in contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a
Lien encumbering any asset acquired by such specified Person.
"Acquisition" means any acquisition of a controlling interest in any
business or enterprise or any assets constituting any business or line of
business and all fees and expenses related thereto.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership
of 10% or more of the voting securities of a Person shall be deemed to be
control. Neither CVCA (as defined herein) nor its Affiliates will be
deemed an Affiliate of the Company or any of its Subsidiaries for purposes
of this definition solely by reason of such entities' direct or indirect
beneficial ownership of 30% or less of the voting Common Stock of the
Company or by reason of any employee of such entities being appointed to
the Board of Directors of the Company.
"Agent" means the Registrar or any Paying Agent.
"Asset Sale" means (i) the sale, lease, conveyance, transfer 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 the provisions of this Indenture described in
Sections 4.14 or 5.01), 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 (b) for net
proceeds in excess of $250,000. For purposes 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 (iii) the issuance or
sale of Equity Interests of any Subsidiary of the Company,
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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.
"Berry" means Berry Plastics Corporation, a Delaware corporation.
"Berry Revolving Credit Facility" means the Berry Revolving Credit
Facility, dated as of April 21, 1994, by and among Berry and Fleet Capital
Corporation providing for up to $28.0 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 which includes
the addition, substitution or replacement of any or all lenders thereunder
under the same or any replacement agreement.
"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 (b) 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.
"CVCA" means Chase Venture Capital Associates , L.P.
"Capital Expenditure" means any expenditure to acquire or lease
property, plant or equipment useful, ancillary or related to the business
of Berry or any subsidiary thereof and expenditures to pay related fees and
expenses.
"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 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'
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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 Berry 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 the assets of the Company and
its Subsidiaries (or of Berry and its Subsidiaries) to any person or group
(as such term is used in Section 13(d)(3) of the Exchange Act) (other than
the Principals and their Related Parties (as defined below)), (ii) the
adoption of a plan relating to the liquidation or dissolution of the
Company or Berry, (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 the Company 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 the Company 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
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 50% of the
voting power of the voting stock of the Company by way of purchase, merger
or consolidation or otherwise if such acquisition occurs subsequent to the
Initial Public Offering, (v) such time as the Company ceases to be the
direct owner of all of the outstanding Equity Interests, including options,
warrants or similar rights, of Berry, and (vi) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors.
"Collateral Agent" means First Trust of New York, National
Association, as Collateral Agent under the Holding Pledge Agreement, or any
successor thereto appointed pursuant to such Agreement.
"Collateral Documents" means the Holding Pledge Agreement and all
related agreements, instruments, financing statements or other documents
that set forth or limit the Lien of the Trustee in the Pledged Collateral.
"Company" means BPC Holding Corporation, a Delaware corporation.
"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 (b) 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 Consoli-
dated 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
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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 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
finance, and (c) interest actually paid by such Person or its Subsidiaries
under a Guarantee of Indebtedness of any other Person.
"Consolidated Net Income" 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 actually paid in cash to the referent Person or a Wholly
Owned Subsidiary thereof, (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, (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 12 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.
"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.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of
such Board of Directors on the Issuance Date or (ii)
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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 11.02 hereof or such other address as to
which the Trustee may give notice to the Company.
"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 Senior Notes" means Senior Notes that are in the form of
the Senior Notes attached hereto as Exhibit A, that do not include the
information called for by footnote 1 thereof.
"Depository" means, with respect to the Senior Notes issuable or
issued in whole or in part in global form, the Person specified in Section
2.03 hereof as the Depository with respect to the Senior Notes, until a
successor shall have been appointed and become such pursuant to the
applicable provision of this Indenture, and, thereafter, "Depository" shall
mean or include such successor.
"Disqualified Stock" means any Capital Stock which, by its terms (or
by the terms of any Capital Stock to 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 December 31, 2006; provided, however, that any Capital Stock
that would otherwise be Disqualified Stock will not be Disqualified Stock
solely as a result of a maturity or redemption event that is conditioned
upon and subject to compliance with Section 4.07 hereof.
"Eligible Institution" means a commercial banking institution that
has combined capital and surplus of not less than $500.0 million or its
equivalent in foreign currency, whose debt (or the debt of whose holding
company) is rates "A" (or higher) according to S&P or "A2" (or higher) by
Moody's at the time of which any investment or rollover therein is made.
"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).
"Escrow Account" means the Escrow Account for the initial deposit of
approximately $35.5 million of the net proceeds from the sale of the Senior
Notes, under the Escrow and Disbursement Agreement.
"Escrow Agent" means First Trust of New York, National Association,
as Escrow Agent under the Escrow and Disbursement Agreement, or any
successor thereto appointed pursuant to such Agreement.
"Escrow and Disbursement Agreement" means the Pledge, Escrow and
Disbursement Agreement, dated as of the date of this Indenture, by and
among the Escrow Agent, the Trustee and the Company, governing the
disbursement of funds from the Escrow Account, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series A Senior
Notes for Series B Senior Notes.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (including the Existing Senior Subordinated Notes) in
existence on the Issuance Date, until such amounts are repaid.
"Existing Senior Subordinated Notes" means the 12.25% Senior
Subordinated Notes due 2004 of Berry.
"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 (b) 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
Disqualified 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.
"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 Issuance
Date.
"Global Note" means a Senior Note that contains the paragraph
referred to in footnote 1 to the form of the Senior Note attached hereto as
Exhibit A.
"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.
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"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters
of credit and reimbursement agreements in respect thereof), of all or any
part of any Indebtedness.
"Hedging Obligations" means, with respect to any 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 Senior Note is registered.
"Holding Pledge Agreement" means the Holding Pledge Agreement, dated
as June 18, 1996 between the Company and the Trustee.
"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 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 Senior Notes.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
"Leveraged Recapitalization" means any dividend or distribution to
any or all of the equity holders of a New Parent Company or any redemption
or repurchase of the Equity Interests of such equity holders that is funded
directly or indirectly by the incurrence of $10.0 million or more of
Indebtedness.
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"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).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Marketable Securities" means (a) Government Securities having a
maturity date on or before the date on which the payments of interest on
the Senior Notes to which such Government Securities are pledged to secure
occur; (b) any certificate of deposit maturing not more than 270 days after
the date of acquisition issued by, or time deposit of, an Eligible
Institution, (c) commercial paper maturing not more than 270 days after the
date of acquisition of an issuer (other than an Affiliate of the Company)
with a rating, at the time as of which any investment therein is made, of
"A-1" (or higher) according to S&P or "P-1" (or higher) according to
Moody's or carrying an equivalent rating by a nationally recognized rating
agency if both of the two named rating agencies cease publishing ratings of
investments, (d) any bankers acceptances or money market deposit accounts
issued by an Eligible Institution and (e) any fund investing exclusively in
investment of the type described in clauses (a) through (d) above.
"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 (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
excluding 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 Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of
any non-cash consideration received in 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
indemnification or adjustment in respect of the sale price of such asset or
assets established in accordance with GAAP.
"New Parent Company" means any corporation, partnership, limited
liability company or similar entity, all or substantially all of whose
assets consist of a direct or indirect interest in at least a majority of
the outstanding Capital Stock of the Company; provided, however that this
definition shall not include any corporation, partnership, limited
liability company, or similar entity, all or substantially all of whose
assets consist of a direct or indirect interest in at least a majority of
the outstanding Capital Stock of the Company immediately subsequent to the
consummation of the Transaction.
"New Senior Notes" means the 12 1/2% Senior Secured Notes due 2006 of
the Company, issued pursuant to the Registration Rights Agreement.
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"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum, dated June 12,
1996, relating to the Company's Senior Notes.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary 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, delivered to the Trustee that
meets the requirements of Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of
Section 11.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company 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 Liens" means (i) Liens on the assets of any Subsidiary of
the Company to secure Indebtedness of any Subsidiary of the Company that
may be incurred pursuant to this Indenture; (ii) Liens in favor of the
Company; (iii) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company or any 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; (iv) Liens on property existing at the time of acquisition thereof
by the Company or any Subsidiary of the Company, provided that such Liens
were in existence prior to the contemplation of such acquisition; (v) Liens
to secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens existing on the date of this
Indenture; (vii) 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;
(viii) Liens incurred in the ordinary course of business of the Company or
any Subsidiary of the Company that (a) are not incurred in connection with
the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the
aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Subsidiary; and (ix) Liens securing Obligations under the Senior Notes and
this Indenture.
"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); (b) 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
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extended, refinanced, renewed, replaced, defeased or refunded; and (c) the
Refinancing Indebtedness is pari passu or subordinated in right of payment
to the Senior Notes on terms at least as favorable to the holders of Senior
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.
"Pledged Collateral" means all amounts held by the Collateral Agent
under the terms of the Holding Pledge Agreement.
"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 the second paragraph or in
clauses (b), (c) or (f) of the third paragraph of Section 4.09.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of June 18, 1996, 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.
"Related Party" means with respect to a 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).
"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.
"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 Berry 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.
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"Senior Indebtedness" means the Senior Bank Indebtedness.
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, (x) any Indebtedness of the
Company, (y) any trade payables or (z) any Indebtedness that is incurred in
violation of this Indenture.
"Senior Note Custodian" means the Trustee, as custodian for the
Depository with respect to the Senior Notes in global form, or any
successor entity thereto.
"Senior Notes" means the Company's 12 1/2% Series A Senior Secured Notes
due 2006 issued pursuant to this Indenture and 12 1/2% Series B Senior Secured
Notes due 2006 issued in exchange for 12 1/2% Series A Senior Secured Notes
due 2006.
"Stated Maturity" means with respect to any debt security, the date
specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable.
"Stock Exchange" means the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market.
"Strategic Equity Sale" means any sale of Equity Interests of the
Company that are not Disqualified Stock in a sale to one or more investors
provided that the net proceeds from such sale exceed $10 million.
"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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sec.Sec. 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under
the TIA.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"Transaction" means the Transaction as defined in the Offering
Memorandum, dated June 12, 1996, relating to the offering of the Senior
Notes.
"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.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (ii)
the then outstanding principal amount of such Indebtedness.
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"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.
"Voting Stock" of any person means Capital Stock of such person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such person, whether at all times or only
so long as no senior class of securities has voting power by reason of any
contingency.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction" 4.11
"Asset Sale Offer" . . . . . . . . 3.09
"Change of Control Offer" . . . . . 4.14
"Change of Control Payment" 4.14
"Change of Control Payment Date" . 4.14
"Covenant Defeasance" 8.03
"Event of Default" . . . . . . . . 6.01
"Excess Proceeds" . . . . . . . . . 4.10
"incur" . . . . . . . . . . . . . . 4.09
"Legal Defeasance" 8.02
"Offer Amount" . . . . . . . . . . 3.09
"Offer Period" . . . . . . . . . . 3.09
"Paying Agent" . . . . . . . . . . 2.03
"Purchase Date" . . . . . . . . . . 3.09
"Registrar" . . . . . . . . . . . . 2.03
"Restricted Payments" . . . . . . . 4.07
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this
Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Senior Notes;
"indenture security Holder" means a Holder of a Senior Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Senior Notes means the Company and any successor
obligor upon the Senior Notes.
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All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2
THE SENIOR NOTES
SECTION 2.01. FORM AND DATING.
The Senior Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Senior Notes
---------
may have notations, legends or endorsements required by law, stock exchange
rule or usage. Each Senior Note shall be dated the date of its
authentication. The Senior Notes initially shall be in denominations of
$1,000 and integral multiples thereof.
The terms and provisions contained in the Senior Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Senior Notes issued in global form shall be substantially in the form
of Exhibit A attached hereto (including the text referred to in footnote 1
thereto). Senior Notes issued in the form of Definitive Senior Notes shall
be substantially in the form of Exhibit A attached hereto (but without
---------
including the text referred to in footnote 1 thereto). Each Global Note
shall represent such of the outstanding Senior Notes as shall be specified
therein and each shall provide that it shall represent the aggregate amount
of outstanding Senior Notes from time to time reflected by adjustments made
on the records of the Trustee and that the aggregate amount of outstanding
Senior Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions or the
issuance of any Senior Notes issued pursuant to the last paragraph of
Section 2.02. The amount of any increase or decrease in the amount of
outstanding Senior Notes represented by a Global Note shall be reflected by
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adjustments made in the records of the Trustee in accordance with
instructions given by the Holder thereof as required by Section 2.06
hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Senior Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Senior
Notes and may be in facsimile form.
If an Officer whose signature is on a Senior Note no longer holds
that office at the time a Senior Note is authenticated, the Senior Note
shall nevertheless be valid.
A Senior Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that
the Senior Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Senior Notes for original issue up to the aggregate
principal amount stated in paragraph 4 of the Senior Notes. The aggregate
principal amount of Senior Notes outstanding at any time may not exceed
such amount except as provided in Section 2.07 hereof or in this Section.
The Trustee may (at the Company's expense) appoint an authenticating
agent acceptable to the Company to authenticate Senior Notes. An
authenticating agent may authenticate Senior 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 an Affiliate of the
Company.
The Trustee shall authenticate (i) Series A Senior Notes for original
issue in the aggregate principal amount not to exceed $105,000,000 plus
such additional Senior Notes that may be paid as interest or Liquidated
Damages as provided in the Senior Notes except as otherwise provided in
Section 2.02 and 2.07 hereof, and (ii) Series B Senior Notes from time to
time for issue in the aggregate amount not to exceed $105,000,000 plus such
additional Senior Notes that may be paid as interest or Liquidated Damages
as provided in the Senior Notes except as otherwise provided in Section
2.02 and 2.07 hereof, for issuance in exchange for a like principal amount
of Series A Senior Notes pursuant to an exchange offer registration
statement under the Securities Act or pursuant to an Exchange Offer (as
defined in the Registration Rights Agreement), in each case upon a written
order of the Company in the form of an Officers' Certificate. Series B
Senior Notes may have such distinctive series designation as, and such
changes in the form thereof, as are specified in the written order referred
to in the preceding sentence. The Officers' Certificate shall specify the
amount of Senior Notes to be authenticated and the date on which the Senior
Notes are to be authenticated, whether the Senior Notes are to be Series A
Senior Notes or Series B Senior Notes, whether the Senior Notes are to be
issued as Transfer Restricted Securities or such other information as the
Trustee may reasonably request. The aggregate principal amount of Senior
Notes outstanding at any time may not exceed $105,000,000 plus such
additional Senior Notes that may be paid as interest or Liquidated Damages
as provided in the Senior Notes, except as provided in Sections 2.02 and
2.07.
When the Company elects, as permitted by the terms of the Senior
Notes, to accrue and defer, rather than pay, all or any part of any
interest payment due on the Senior Notes, the Company shall add the
deferred amount of interest to the aggregate principal amount of the
outstanding securities and shall issue in lieu of payment of such interest
additional Senior Notes as provided in this Section 2.02. The
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Company shall give written notice to the Trustee of such election on or
before the record date for the applicable interest payment date which
notice shall instruct the Trustee to, upon receipt of such notice together
with (i) a copy, certified by the secretary or assistant secretary of the
Company, of the resolution adopted by the Board authorizing the issuance of
the appropriate principal amount of Senior Notes and (ii) an Officers'
Certificate setting forth the denominations and series of Senior Notes to
be issued and demonstrating the computation of the principal amount of
Senior Notes issuable to each Holder of outstanding Senior Notes, the
Trustee shall authenticate for original issue on such interest payment date
Senior Notes in an aggregate principal amount equal to the amount of
interest not to be paid in cash on such interest payment date. The
issuance of such Senior Notes shall constitute payment in full of the
interest in lieu of the cash payment of which such Senior Notes are issued.
Each issuance of Senior Notes in lieu of the payment of interest in cash on
the Senior Notes shall be made pro rata with respect to the outstanding
Senior Notes. Each Senior Note shall be subject to the same terms and
conditions.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Senior Notes
may be presented for registration of transfer or for exchange ("Registrar")
and (ii) an office or agency where Senior Notes may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of the
Senior Notes and of their transfer and exchange. The Company may appoint
one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or
any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Senior Note Custodian with respect to the
Global 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 Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on
the Senior Notes, and shall notify the Trustee of any default by the
Company 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 Subsidiary) shall have no
further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon the
occurrence of either event specified in Section 6.01(h) or (i), the Trustee
shall serve as Paying Agent for the Senior Notes.
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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 all Holders and shall otherwise comply with TIA Sec. 312(a). If the
Trustee is not the Registrar, the Company 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 the Holders of Senior Notes and the Company shall otherwise
comply with TIA Sec. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Senior Notes. When
Definitive Senior Notes are presented by a Holder to the
Registrar with a request:
(x) to register the transfer of the Definitive Senior Notes; or
(y) to exchange such Definitive Senior Notes for an equal
principal amount of Definitive Senior Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met;
provided, however, that the Definitive Senior Notes presented or
surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar
duly executed by such Holder or by his attorney, duly
authorized in writing; and
(ii) in the case of a Definitive Senior Note that is a Transfer
Restricted Security, such request shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification to that
effect from such Holder (in substantially the form of
Exhibit B hereto); or
---------
(B) if such Transfer Restricted Security is being transferred
to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A
under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect from such Holder (in substantially the form of
Exhibit B hereto); or
---------
(C) if such Transfer Restricted Security is being transferred
in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that
effect from such Holder (in substantially the form of
Exhibit B hereto) and an Opinion of Counsel from such Holder
---------
or the transferee reasonably acceptable
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to the Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(b) Transfer of Definitive Senior Notes for a Beneficial Interest
in a Global Note. Definitive Senior Notes may not be exchanged
for a beneficial interest in a Global Note except upon
satisfaction of the requirements set forth below. Upon receipt
by the Trustee of Definitive Senior Notes, duly endorsed or
accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(i) if such Definitive Senior Notes are Transfer Restricted
Securities, a certification from the Holder thereof (in
substantially the form of Exhibit B hereto) to the effect
---------
that such Definitive Senior Notes are being transferred by
such Holder to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Senior Notes are Transfer
Restricted Securities, written instructions from the Holder
thereof directing the Trustee to make, or to direct the
Senior Note Custodian to make, an endorsement on the Global
Note to reflect an increase in the aggregate principal
amount of the Senior Notes represented by the Global Note,
in which case the Trustee shall cancel such Definitive Senior
Notes in accordance with Section 2.11 hereof and cause, or direct
the Senior Note Custodian to cause, in accordance with the
standing instructions and procedures existing between the
Depository and the Senior Note Custodian, the aggregate principal
amount of Senior Notes represented by the Global Note to be
increased accordingly. If no Global Notes are then outstanding,
the Company shall issue and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal
amount.
(c) Transfer and Exchange of a Global Note. The transfer and
exchange of a Global Note or beneficial interests therein shall
be effected through the Depository, in accordance with this
Indenture and the procedures of the Depository therefor, which
shall include restrictions on transfer comparable to those set
forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for
Definitive Senior Note.
(i) Any Person having a beneficial interest in a Global Note may
upon request exchange such beneficial interest for
Definitive Senior Notes. Upon receipt by the Trustee of
written instructions or such other form of instructions as
is customary for the Depository, from the Depository or its
nominee on behalf of any Person having a beneficial interest
in a Global Note, and, in the case of Transfer Restricted
Securities, the following additional information and
documents (all of which may be submitted by facsimile):
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(A) if such beneficial interest is being transferred to the
Person designated by the Depository as being the
beneficial owner, a certification to that effect from
such Person (in substantially the form of Exhibit B
---------
hereto);
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A
under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from the transferor (in substantially the
form of Exhibit B hereto); or
---------
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferor (in substantially the
form of Exhibit B hereto) and an Opinion of Counsel from
---------
the transferee or transferor reasonably acceptable to the
Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act,
in which case the Trustee or the Senior Note Custodian, at the
direction of the Trustee, shall, in accordance with the
standing instructions and procedures existing between the
Depository and the Senior Note Custodian, cause the aggregate
principal amount of a Global Note to be reduced accordingly
and, following such reduction, the Company shall execute and,
upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate and deliver
to the transferee Definitive Senior Notes in the appropriate
principal amount.
(ii) Definitive Senior Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.06(d)
shall be registered in such names and in such authorized
denominations as the Depository, pursuant to instructions
from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such
Definitive Senior Notes to the Persons in whose names such
Definitive Senior Notes are so registered.
(e) Restrictions on Transfer and Exchange of a Global Note.
Notwithstanding any other provision of this Indenture (other
than the provisions set forth in subsection (f) of this Section
2.06), a Global Note may not be transferred as a whole except
by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee
of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Senior Notes in Absence of
Depository. If at any time:
(i) the Depository for the Senior Notes notifies the Company
that the Depository is unwilling or unable to continue as
Depository for the Global Note and a successor Depository for
the Global Note is not appointed by the Company within 90 days
after delivery of such notice; or
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(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive
Senior Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon
receipt of an authentication order in accordance with Section 2.02
hereof, authenticate and deliver, Definitive Senior Notes in an
aggregate principal amount equal to the principal amount of the
Global Note in exchange for such Global Note.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Senior Note certificate evidencing a Global Note
and Definitive Senior Notes (and all Senior Notes issued in
exchange therefor or substitution thereof) shall bear legends
in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF BPC HOLDING CORPORATION (THE
"COMPANY") THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED STATES TO
A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A UNDER THE SECURITIES ACT, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
OR (C) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) 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 (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act and upon receipt of an Officers' Certificate
certifying that the registration statement, if applicable, is
effective and directing the Trustee to authenticate and deliver
unlegended Senior Notes:
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(A) in the case of any Transfer Restricted Securities that
are Definitive Senior Notes, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted
Securities for Definitive Senior Notes that do not bear the
legend set forth in (i) above and rescind any restriction on
the transfer of such Transfer Restricted Securities; and
(B) in the case of any Transfer Restricted Securities
represented by a Global Note, such Transfer Restricted
Securities shall not be required to bear the legend set
forth in (i) above, but shall continue to be subject to the
provisions of Section 2.06(c) hereof; provided, however,
that with respect to any request for an exchange of Transfer
Restricted Securities that are represented by a Global Note
for Definitive Senior Notes that do not bear the legend set
forth in (i) above, which request is made in reliance upon
Rule 144, the Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant to Rule
144 (such certification to be substantially in the form of
Exhibit B hereto).
---------
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof,
the Trustee shall authenticate Series B Senior Notes in
exchange for Series A Senior Notes accepted for exchange in the
Exchange Offer, which Series B Senior Notes shall not bear the
legend set forth in (i) above, and the Company shall direct the
Registrar to rescind any restriction on the transfer of such
Senior Notes, in each case unless the Company determines that
the Holder of such Series A Senior Notes is either (A) a
broker-dealer, (B) a Person participating in the distribution
of the Series A Senior Notes or (C) a Person who is an
affiliate (as defined in Rule 144A) of the Company.
(h) Cancellation and/or Adjustment of a Global Note. At such time
as all beneficial interests in a Global Note have been
exchanged for Definitive Senior Notes, redeemed, repurchased or
cancelled, or a Series A Senior Note Global Note has been
exchanged for interests in a Series B Senior Note Global Note
such Global Note shall be returned to or retained and cancelled
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 Definitive Senior Notes,
redeemed, repurchased or cancelled, the principal amount of
Senior Notes represented by such Global Note shall be reduced
accordingly and an adjustment shall be made on the Trustee's
records to reflect such reduction.
(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
Definitive Senior Notes and Global Notes at the Registrar's
request.
(ii) No service charge shall be made to a Holder 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
3.07, 4.10, 4.14 and 9.05 hereto).
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(iii) All Definitive Senior Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Senior Notes
or Global Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Definitive Senior Notes or Global
Notes surrendered upon such registration of transfer or
exchange.
(iv) Neither the Company, the Registrar nor the Trustee shall be
required:
(A) to issue, to register the transfer of or to exchange
Senior Notes during a period beginning at the opening of
business 15 days before the day of any selection of Senior
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 Senior
Note so selected for redemption in whole or in part, except
the unredeemed portion of any Senior Note being redeemed in
part; or
(C) to register the transfer of or to exchange a Senior Note
between a record date and the next succeeding interest
payment date.
(v) Prior to due presentment for the registration of a transfer
of any Senior Note, the Trustee, any Agent and the Company
may deem and treat the Person in whose name any Senior Note
is registered as the absolute owner of such Senior Note for
the purpose of receiving payment of principal of and
interest on such Senior Notes, and neither the Trustee, any
Agent nor the Company shall be affected by notice to the
contrary.
(vi) The Trustee shall authenticate Definitive Senior Notes and a
Global Note in accordance with the provisions of Section
2.02 hereof.
SECTION 2.07. REPLACEMENT SENIOR NOTES.
If any mutilated Senior 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 Senior Note, the Company shall issue and
the Trustee, upon the written order of the Company signed by two Officers
of the Company, shall authenticate a replacement Senior Note if the
Trustee's requirements are met. If required by the Trustee or the Company,
an indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the
Trustee, any Agent and any authenticating agent from any loss that any of
them may suffer if a Senior Note is replaced. The Company and the Trustee
may charge for their expenses in replacing a Senior Note.
Every replacement Senior Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture
equally and proportionately with all other Senior Notes duly issued
hereunder.
SECTION 2.08. OUTSTANDING SENIOR NOTES.
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The Senior Notes outstanding at any time are all the Senior Notes
authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions
hereof, and those described in this Section as not outstanding. Except as
set forth in Section 2.09 hereof, a Senior Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Senior Note.
If a Senior 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 Senior Note is held by a bona fide purchaser.
If the principal amount of any Senior Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date,
money sufficient to pay Senior Notes payable on that date, then on and
after that date such Senior Notes shall be deemed to be no longer
outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY SENIOR NOTES.
In determining whether the Holders of the required principal amount
of Senior Notes have concurred in any direction, waiver or consent, Senior
Notes owned by the Company, or by any Affiliate thereof shall be considered
as though not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
waiver or consent, only Senior Notes as to which a Responsible Officer of
the Trustee has received written notice are so owned shall be so
disregarded.
SECTION 2.10. TEMPORARY SENIOR NOTES.
Until Definitive Senior Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Senior Notes upon a
written order of the Company signed by two Officers of the Company. The
written order shall specify the amount of temporary Senior Notes to be
authenticated and whether such Senior Notes shall bear the legend referred
to in Section 2.06(g)(i). Temporary Senior Notes shall be substantially in
the form of Definitive Senior Notes but may have variations that the
Company considers appropriate for temporary Senior Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the
Company shall prepare and the Trustee shall upon receipt of a written order
of the Company signed by two Officers authenticate definitive Senior Notes
in exchange for temporary Senior Notes.
Holders of temporary Senior Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Senior Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Senior Notes surrendered to them for registration of transfer, exchange
or payment. The Trustee and no one else shall cancel all Senior Notes
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall destroy cancelled Senior Notes (subject to the
record retention requirement of the Exchange Act). Certification of the
destruction of all cancelled Senior Notes shall be delivered to the
Company. The Company may
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not issue new Senior Notes to replace Senior Notes that it has paid or that
have been delivered to the Trustee for cancellation other than in
connection with the Exchange Offer.
SECTION 2.12. RECORD DATE.
The record date for purposes of determining the identity of Holders
of the Senior 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 Sec. 316 (c).
SECTION 2.13. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Senior Notes,
it shall pay the defaulted interest in any lawful manner plus, to the
extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, in each case at the
rate provided in the Senior Notes and in Section 4.01 hereof. The Company
shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Senior Note and the date of the proposed
payment. The Company shall fix or cause to be fixed each such special
record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such
defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the
name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment
date and the amount of such interest to be paid.
SECTION 2.14. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES.
(a) The Global Note initially shall (i) be registered in the name
of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Section 2.06(g).
Members of, or participants in, the Depository ("Agent Members")
shall have rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Note, and the Depository may be treated by the Company,
the Trustee and any Agent of the Company or the Trustee as the owner of the
Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any Agent of the
Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as
between the Depository and its Agent Members the operation of customary
practices governing the exercise of the rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Note may
be transferred or exchanged for Definitive Senior Notes in accordance with
the rules and procedures of the Depository and the provisions of Section
2.06. In addition, Definitive Senior Notes shall be transferred to all
beneficial owners in exchange for beneficial interests in the Global Note
if (i) the Depository notifies the Company that it is unwilling or unable
to continue as Depository for the Global Note and a successor Depository is
not appointed by the Company within 90 days of such notice or (ii) an Event
of Default has occurred and is continuing and the Registrar has received a
written request from the Depository to issue Definitive Senior Notes.
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(c) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Definitive Senior Notes
are to be issued) reflect on its books and records the date and a decrease
in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, which the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Definitive Senior Notes of like tenor
and amount.
SECTION 2.15. DEPOSIT OF MONIES.
Prior to 10:00 a.m. New York City time on each interest payment date,
maturity date, redemption date, Change of Control Payment Date and Purchase
Date, the Company shall have deposited with the Paying Agent in immediately
available funds money sufficient to make cash payments, if any, due on such
interest payment date, maturity date, redemption date, Change of Control
Payment Date and Purchase Date, as the case may be, in a timely manner
which permits the Paying Agent to remit payment to the Holders on such
interest payment date, maturity date, redemption date, Change of Control
Payment Date and Purchase Date, as the case may be.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Senior Notes pursuant to the optional
redemption provisions hereof, it shall furnish to the Trustee, at least 45
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 Senior Notes to be redeemed and (iv) the redemption
price.
SECTION 3.02. SELECTION OF SENIOR NOTES TO BE REDEEMED.
If less than all of the Senior Notes are to be redeemed at any time,
the Trustee shall select the Senior Notes to be redeemed among the Holders
of the Senior Notes in compliance with the requirements of the principal
national securities exchange, if any, on which the Senior Notes are listed
or, if the Senior 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 that the Senior Notes are listed on a national
securities exchange, the Company shall notify the Trustee, in writing, of
the redemption requirements, if any, of such national securities exchange.
In the event of partial redemption by lot, the particular Senior 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 Senior Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Senior Notes selected for redemption and, in the case of any Senior Note
selected for partial redemption, the principal amount thereof to be
redeemed. Senior Notes and portions of Senior Notes selected shall be in
amounts of $1,000 or whole multiples of $1,000; except that if all of the
Senior Notes of a Holder are to be redeemed, the entire outstanding amount
of Senior Notes held by such Holder, even if not a multiple of $1,000,
shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture
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that apply to Senior Notes called for redemption also apply to portions of
Senior Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Senior Notes are to be redeemed at its registered address.
The notice shall identify the Senior Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Senior Note is being redeemed in part, the portion of
the principal amount of such Senior Note to be redeemed and
that, after the redemption date upon surrender of such Senior
Note, a new Senior Note or Senior Notes in principal amount
equal to the unredeemed portion shall be issued upon surrender
of the original Senior Note;
(d) the name and address of the Paying Agent;
(e) that Senior Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest and Liquidated Damages, if any, on Senior
Notes called for redemption cease to accrue on and after the
redemption date;
(g) the paragraph of the Senior Notes and/or Section of this
Indenture pursuant to which the Senior Notes called for
redemption are being redeemed; and
(h) the CUSIP number and 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 Senior 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, Senior 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.
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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 and Liquidated Damages, if
any, on all Senior Notes to be redeemed on that date. The Trustee or the
Paying Agent shall promptly return to the Company upon its written request
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, accrued
interest on and Liquidated Damages, if any, all Senior Notes to be
redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest and Liquidated
Damages, if any, shall cease to accrue on the Senior Notes or the portions
of Senior Notes called for redemption. If a Senior 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 and Liquidated Damages,
if any, shall be paid to the Person in whose name such Senior Note was
registered at the close of business on such record date. If any Senior
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, and
Liquidated Damages, if any, 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 Senior Notes and in
Section 4.01 hereof.
SECTION 3.06. SENIOR NOTES REDEEMED IN PART.
Upon surrender of a Senior Note that is redeemed in part, the Company
shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Senior Note
equal in principal amount to the unredeemed portion of the Senior Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Senior Notes prior to June
15, 1999. Thereafter, the Company shall have the option to redeem the
Senior Notes, in whole or in part, 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 June 15 of the years
indicated below:
YEAR PERCENTAGE
---- ----------
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 110.00%
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 110.00%
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 108.00%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 105.33%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . 102.67%
2004 and thereafter . . . . . . . . . . . . . . . . . . . 100.00%
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(b) Notwithstanding the foregoing, the Company, prior to June 15,
1999, may redeem up to a maximum of 33 1/3% of the aggregate principal amount
of the Senior Notes then outstanding at a redemption price of 112.5% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, to the date of redemption, if any, with the net proceeds of a
Strategic Equity Sale of the common stock of the Company; provided that at
least 66 2/3% in aggregate principal amount of the Senior Notes remain
outstanding immediately after the occurrence of such redemption; and
provided, further, that such redemption shall occur within 90 days of the
date of the closing of such Strategic Equity Sale.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under the Sections 3.09, 4.10 and 4.14 hereof,
the Company shall not be required to make mandatory redemption or sinking
fund payments with respect to the Senior 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 Senior 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 Senior
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 Senior
Notes tendered in response to the Asset Sale Offer. Payment for any Senior
Notes so purchased shall be made in the same manner as interest payments
are made.
The Company shall comply with any tender offer rules under the
Exchange Act which may then be applicable, including Rule 14e-1, in
connection with any offer required to be made by the Company to repurchase
the Senior Notes as a result of an Asset Sale Offer. To the extent that
the provisions of any securities laws or regulations conflict with
provisions of this Section 3.09, the Company shall comply with the
applicable securities laws or regulations and shall not be deemed to have
breached its obligations hereunder by virtue thereof.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Senior Note is registered at
the close of business on such record date, and no additional interest shall
be payable to Holders who tender Senior 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 Senior 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:
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(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 Senior Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any
Senior 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 Senior Note purchased pursuant
to any Asset Sale Offer shall be required to surrender the
Senior Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Senior Note completed, or
transfer by book-entry transfer, 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 Senior Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have
such Senior Note purchased;
(h) that, if the aggregate principal amount of Senior Notes
surrendered by Holders exceeds the Offer Amount, the Company
shall select the Senior Notes to be purchased on a pro rata
basis (with such adjustments as may be deemed appropriate by
the Company so that only Senior Notes in denominations of
$1,000, or integral multiples thereof, shall be purchased,
unless all of the Senior Notes are being purchased); and
(i) that Holders whose Senior Notes were purchased only in part
shall be issued new Senior Notes equal in principal amount to
the unpurchased portion of the Senior Notes surrendered (or
transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Senior Notes or portions thereof tendered pursuant to
the Asset Sale Offer, or if less than the Offer Amount has been tendered,
all Senior Notes tendered, and shall deliver to the Trustee an Officers'
Certificate stating that such Senior Notes or portions thereof were
accepted for payment by the Company in accordance with the terms of this
Section 3.09. The Company, the Depository 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 Senior Notes tendered by such Holder and accepted
by the Company for purchase, and the Company shall promptly issue a new
Senior Note, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Senior Note to such Holder, in a
principal amount equal to any unpurchased portion of the Senior Note
surrendered. Any Senior Note
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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 SENIOR NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Senior Notes (including any additional interest
required to be paid pursuant to the provisions of the Registration Rights
Agreement) on the dates and in the manner provided in the Senior Notes
provided, however, that from December 15, 1999 to and including June 15,
2001, the Company may elect to pay all or a portion of an installment of
interest on the Senior Notes by delivering to the Trustee a written order
of the Company signed by an Officer of the Company requesting that the
Trustee deliver Notes (valued at 100% of the principal amount thereof) in
lieu of the cash interest payment due at such time. After June 15, 2001,
installments of interest are payable in cash only. 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 Subsidiary thereof, 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 or Liquidated Damages, 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
Senior 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 (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 or Registrar) where Senior Notes may be
surrendered for registration of transfer or for exchange and where notices
and demands to or upon the Company in respect of the Senior 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 Senior 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.
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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 hereof.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the
SEC, so long as any Senior Notes are outstanding, the Company
shall furnish to the Trustee and Holders of Senior Notes
(i) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms
10-Q and 10-K if the Company were required to file such Forms,
including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Company's
certified independent accountants and (ii) all current reports
that would be required to be filed with the SEC on Form 8-K if
the Company were required to file such reports. In addition,
whether or not required by the rules and regulations of the
SEC, the Company shall file a copy of all such information and
reports with the SEC for public availability (unless the SEC
will not accept such a filing) and make such information
available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA
Sec. 314(a).
(b) For so long as any Senior Notes remain outstanding, the Company
shall furnish to all 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 until such time as the Company has either
exchanged the Senior Notes for the New Senior Notes or until
such time as the holders thereof have disposed of such Senior
Notes pursuant to an effective registration statement filed by
the Company.
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SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company 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 during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed
and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that
to the best of his or her knowledge the Company 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 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 Senior Notes is prohibited or if such event has
occurred, a description of the event and what action the
Company 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(a) 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) The Company shall, so long as any of the Senior 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 is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
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 Senior Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company 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 the Company (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
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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
other payment or 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);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any Subsidiary (other than any such Equity
Interests owned by the Company or any Wholly Owned Subsidiary of the
Company); (iii) purchase, redeem or otherwise acquire or retire for value,
any Indebtedness of the Company which ranks subordinated in right to
payment to the Senior Notes other than Guarantees of the Existing Senior
Subordinated Notes; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments") unless, at the
time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(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)
or (B) in the case of any Restricted Payment 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) 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 (1)
Equity Interests (or convertible debt securities) sold to a
Subsidiary of the Company, (2) Disqualified Stock or debt
securities that have been converted into Disqualified Stock and
(3) Equity Interests issued in connection with the
Transaction).
The foregoing provisions shall not prohibit:
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(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 Disqualified Stock);
(iii) the defeasance, redemption or repurchase of pari passu or
subordinated Indebtedness in a Permitted Refinancing;
(iv) the repurchase, redemption or other acquisition or
retirement for value of an Equity Interest of the Company
pursuant to any management equity subscription, shareholder
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 $1.0 million in any fiscal year
and (b) no Default or Event of Default shall have occurred
and be continuing immediately after such transaction;
(v) Investments in joint venture or similar projects in a
business similar to that conducted by the Company and its
Subsidiaries on the Issuance Date in an amount not to exceed
$1.0 million;
(vi) any Restricted Payment to pay cash dividends on the New
Preferred Stock (as defined in the Offering Memorandum)
after the sixth anniversary of the Issuance Date excluding
any dividends due, not paid and cumulated prior to the sixth
anniversary of the Issuance Date, provided no Default or
Event of Default has occurred and is continuing; and
(vii) any Restricted Payment in connection with the consummation
of the Transaction.
The amount of all Restricted Payments (including, without limitation,
all Restricted Payments permitted to be made pursuant to this Section
4.07), other than cash, shall be the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) on the date of such Restricted Payment of the
asset(s) proposed to be transferred by the Company or such Subsidiary, as
the case may be, pursuant to such Restricted Payment. Not later than the
date of making any Restricted Payment (other than any such Restricted
Payment permitted by the immediately preceding clauses (i) through (vii)),
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.
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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:
(i) (a) pay dividends or make any other distributions to the
Company or any of its Subsidiaries (1) on its Capital Stock
or (2) with respect to any other interest or participation
in, or measured by, its profits, or (b) pay any indebtedness
owed to the Company or any of its Subsidiaries;
(ii) make loans or advances to the Company or any of its
Subsidiaries; or
(iii) transfer any of its properties or assets to the Company or
any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of:
(a) Existing Indebtedness as in effect on the Issuance Date
including the Existing Senior Subordinated Notes;
(b) Indebtedness of Berry, or any of Berry's subsidiaries,
permitted to be incurred under this Indenture;
(c) this Indenture and the Senior Notes;
(d) applicable law;
(e) 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;
(f) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent
with past practices; or
(g) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so
acquired.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED
STOCK.
(a) The Company shall not (i) 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 other than:
(A) the Senior Notes; (B) subordinated Guarantees of the
Existing Senior Subordinated Notes; or (C) unsecured Guarantees
of the Obligations under the Berry Revolving Credit Facility or
any other
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Indebtedness permitted to be incurred by any subsidiary of Holding
under this Indenture or (ii) issue shares of Disqualified Stock.
(b) The Company shall not permit any of its Subsidiaries to incur
any Indebtedness (including, without limitation, Acquired Debt)
and that the Company shall not permit any of its Subsidiaries
to issue, any shares of Disqualified Stock; provided, however,
that Subsidiaries of the Company may incur Indebtedness or
issue shares of Disqualified Stock if after giving effect to
such incurrence or issuance, the Fixed Charge Coverage Ratio
for the Company and its Subsidiaries, taken together on a
consolidated basis, for the most recently ended four full
fiscal quarters for which internal financial statements are
available as of the date on which such Indebtedness is incurred
or such Disqualified Stock is issued would have been at least
1.75 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom and including
the earnings of any business acquired with the proceeds
therefrom), as if the additional Indebtedness is incurred, or
the Disqualified Stock had been issued, as the case may be, at
the beginning of such four-quarter period.
The provisions of (b) above and, with respect to (iii), (vii) and (viii)
below, the provisions of (a) and (b) above shall not apply to:
(i) revolving credit Indebtedness and letters of credit pursuant
to the Berry Revolving Credit Facility in an aggregate
principal amount not to exceed at any one time outstanding
the greater of (A) $28.0 million in principal amount (with
letters of credit being deemed to have a principal amount
equal to the maximum potential liability of Berry
thereunder), less the aggregate amount of all repayments
after the Issuance Date that permanently reduce the
commitment under the Berry Revolving Credit Facility and (B)
the Borrowing Base;
(ii) the Existing Indebtedness;
(iii) the Senior Notes, including any additional Senior Notes
issued in respect of the payment of interest on outstanding
Senior Notes or for the payment of Liquidated Damages;
(iv) the incurrence of Refinancing Indebtedness; provided,
however, that such Refinancing Indebtedness is a Permitted
Refinancing;
(v) 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;
(vi) incurrence of Indebtedness (including Acquired Debt) or
issuance of shares of Disqualified Stock of Berry or its
Subsidiaries, if after giving effect to such incurrence or
issuance, the Fixed Charge Coverage Ratio for Berry, taken
together on a consolidated basis with all of the
Subsidiaries of Berry, for the most recently ended four full
fiscal quarters for which internal financial statements are
available as of the date on which such 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
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forma application of the net proceeds therefrom and including
the earnings of any business acquired 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 that such Indebtedness is incurred or shares of
Disqualified Stock are issued, as the case may be, for the
purpose of financing Acquisitions or Capital Expenditures;
(vii) the incurrence of Indebtedness (in addition to Indebtedness
permitted by any other clause of this paragraph) in an
aggregate principal amount (or accreted value, as
applicable) at any time outstanding not to exceed $1.0
million; and
(viii) Indebtedness between or among Holding and any of its
Subsidiaries.
For purposes of this Indenture, the accretion or amortization of
original issue discount, or the issuance of additional Indebtedness in
respect of the payment of interest on Indebtedness or the payment of
Liquidated Damages shall not be deemed an "incurrence" of Indebtedness if a
corresponding amount is taken into account for purposes of determining
Consolidated Interest Expense at such time.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any Subsidiary to, directly
or indirectly, conduct an Asset Sale unless:
(i) 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 of the Company set forth in an Officer's 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 $1.0 million) of
the shares or assets sold or otherwise disposed of; and
(ii) at least 75% of such 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 Senior
Notes) 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 provision.
Within 180 days after any Asset Sale, the Company may apply the Net
Proceeds from such Asset Sale to either (i) permanently reduce Senior
Indebtedness of the Company or Indebtedness of Berry or of any Subsidiary
of Berry, or (ii) 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 or any Subsidiary thereof was
engaged in on the Issuance Date. Pending the final application of any such
Net Proceeds, the Company or any Subsidiary thereof 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
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"Excess Proceeds." If the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall make an offer to all holders of Senior Notes (an
"Asset Sale Offer") to purchase the maximum principal amount of Senior
Notes, that is an integral multiple of $1,000 (unless all of the Senior
Notes are being purchased), 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 the
date of purchase, in accordance with the procedures set forth in this
Indenture. To the extent that the aggregate purchase price of Senior 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 Senior Notes surrendered by holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Senior
Notes to be purchased in the manner described under Sections 3.02 hereof.
Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset to zero.
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 Senior Notes in connection with an Asset Sale.
Notwithstanding the foregoing, the Company shall not, and shall not
permit Berry to, directly or indirectly, sell, transfer, lease, convey,
dispose of or issue any Equity Interests of Berry except to the Company.
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 $2.0 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 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 Company or such Subsidiary from a
financial point of view issued by an investment banking firm
of national standing;
provided, however, that the following shall not be deemed
Affiliate Transactions: (A) 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, (B) transactions between or among the Company
and/or its Subsidiaries, (C) Restricted Payments permitted by the
provisions of Section 4.07 hereof, (D) management
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fees payable to First Atlantic in an amount not to exceed $750,000
per annum plus out-of-pocket expenses, (E) a fee payable to First
Atlantic not to exceed $1,250,000 in respect of the Transaction,
(F) any transaction fee payable to First Atlantic pursuant to the
terms of the New Stockholders Agreement not to exceed $1,250,000
for any transaction consummated and out-of-pocket expenses in
respect of any such transaction (whether or not consummated) and
(G) a fee payable to Chase Securities Inc. not to exceed $500,000
in respect of the Transaction.
SECTION 4.12. LIENS.
The Company shall not directly or indirectly create, incur, assume or
suffer to exist any Lien on the Capital Stock of Berry other than liens
arising pursuant to the Holding Pledge Agreement. In addition, 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 on any asset
now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except Permitted
Liens.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company 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 its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or
any such Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Subsidiaries; provided, that the
Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business
of the Company and its Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Senior
Notes.
SECTION 4.14. OFFER TO PURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, the Company shall make an
offer (the "Change of Control Offer") to each Holder of Senior Notes to
repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Senior Notes at a purchase price equal to 101% of
the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of repurchase (in either case, the
"Change of Control Payment"). Within ten days following any Change of
Control, the Company shall mail a notice to each Holder stating: (1) that
the Change of Control Offer is being made pursuant to this Section 4.14 and
that all Senior Notes tendered shall be accepted for payment; (2) the
purchase price and the purchase date, which shall be no later than 30
business days from the date such notice is mailed (the "Change of Control
Payment Date"); (3) that any Senior Note not tendered will continue to
accrete or accrue interest; (4) that, unless the Company defaults in the
payment of the Change of Control Payment, all Senior Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrete or
accrue interest after the Change of Control Payment Date; (5) that Holders
electing to have any Senior Notes purchased pursuant to a Change of Control
Offer
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shall be required to surrender the Senior Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Senior 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; (6) 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 Senior Notes delivered for purchase,
and a statement that such Holder is withdrawing his election to have the
Senior Notes purchased; and (7) that Holders whose Senior Notes are being
purchased only in part shall be issued new Senior Notes equal in principal
amount to the unpurchased portion of the Senior Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof, unless all of such Holders Senior Notes are
being purchased. 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 Senior Notes as a result of a Change of
Control.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment all Senior Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with
the Paying Agent an amount equal to the Change of Control Payment in
respect of all Senior Notes or portions thereof so tendered and (3) deliver
or cause to be delivered to the Trustee the Senior Notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of Senior Notes or portions thereof being purchased by the Company.
The Paying Agent shall promptly mail to each Holder of Senior Notes so
tendered payment in an amount equal to the purchase price for the Senior
Notes, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Senior Note equal in
principal amount to any unpurchased portion of the Senior Notes surrendered
by such Holder, if any; provided, that each such new Senior Note shall be
in a principal amount of $1,000 or an integral multiple thereof, unless all
of such Holders Senior Notes are being purchased. 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 4.15. LIMITATION ON CREATION OF NEW PARENT COMPANY.
Holding shall not permit a New Parent Company to consummate a Leveraged
Recapitalization.
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
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition 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
entity or Person
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formed by or surviving any such consolidation or merger (if other than the
Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Senior Notes and this Indenture and,
if applicable, the Collateral Documents pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists;
and (iv) except in the case of a merger of the Company with or into a
Wholly Owned Subsidiary of the Company, the Company or the entity or 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 (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 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 in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company
is merged or to which such sale, assignment, transfer, lease, conveyance or
other disposition is made shall succeed to, and be substituted for (so that
from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Indenture referring
to the "Company" shall refer instead to the successor corporation and not
to the Company), and may exercise every right and power of the Company
under this Indenture with the same effect as if such successor Person had
been named as the Company herein; provided, however, that the predecessor
Company shall not be relieved from the obligation to pay the principal of
and interest on the Senior Notes except in the case of a sale of all of the
Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on the
Senior Notes and such default continues for a period of 30
days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Senior Notes 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 4.14 hereof;
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(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture
or the Senior Notes for 60 days after notice to the Company by
the Trustee or the Holders of at least 25% in principal amount
of the Senior 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 or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries) whether
such Indebtedness or Guarantee now exists, or is created after
the date of this Indenture, which default (i) is caused by a
failure to pay principal of or premium, if any, or interest on
such Indebtedness prior to the expiration of any grace period
provided in such Indebtedness on the date of such default (a
"Payment Default") or (ii) results in the acceleration of such
Indebtedness prior to its express final maturity date 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 or any of its Subsidiaries and such
judgment or judgments remain unpaid or undischarged for a
period of 60 days, provided that the aggregate of all such
undischarged judgments exceeds $2.0 million;
(g) breach or default by the Company in the performance of any
covenant set forth in the Holding Pledge Agreement which
continues for 60 days after notice to comply, or repudiation by
the Company of its obligations under the Holding Pledge
Agreement or the unenforceability of the Holding Pledge
Agreement against the Company for any reason;
(h) the Company or any of its Subsidiaries:
(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 or any of its Subsidiaries
in an involuntary case;
(ii) appoints a Custodian of the Company or any of its
Subsidiaries for all or substantially all of the property of
the Company or any of its Subsidiaries; or
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(iii) orders the liquidation of the Company or any of its
Subsidiaries;
and the order or decree remains unstayed and in effect for 60
consecutive days.
Specific rights and remedies of the Trustee under the Collateral
Documents shall include the right of the Trustee or the appropriate Person
under federal or state law to sell the Pledged Collateral and to apply the
net proceeds to the Indebtedness evidenced by the Senior Notes in
accordance with the terms of this Indenture and the Collateral Documents.
SECTION 6.02. ACCELERATION.
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 Senior
Notes may declare all the Senior Notes to be due and payable immediately;
upon any such declaration, the Senior Notes shall become due and payable
immediately. 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 or any of its Subsidiaries, all outstanding Senior Notes
shall be due and payable immediately without further action or notice.
Holders of the Senior Notes may not enforce this Indenture or the Senior
Notes except as provided in this Indenture. The Holders of a majority in
principal amount of the then outstanding Senior Notes by written notice to
the Trustee may on behalf of all of the Holders rescind any acceleration
and its consequences if the rescission would not conflict with any judgment
or decree and if 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.
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
Senior Notes pursuant to Section 3.07 hereof, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by
law upon the acceleration of the Senior Notes. If an Event of Default
occurs prior to June 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 Senior Notes prior to such
date, then, upon acceleration of the Senior Notes, an additional premium
shall also become and be immediately due and payable in an amount, for each
of the years beginning on June 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):
YEAR PERCENTAGE
---- ----------
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . 118.00%
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . 115.30%
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . 112.70%
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 110.00%
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,
Liquidated Damages if any, and interest on the Senior
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Notes or to enforce the performance of any provision of the Senior Notes,
this Indenture, the Escrow and Disbursement Agreement or the Holding Pledge
Agreement.
The Trustee may maintain a proceeding even if it does not possess any
of the Senior Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Senior Note in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by
law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Senior Notes by notice to the Trustee may on behalf of
the Holders of all of the Senior Notes waive an existing Default or Event
of Default and its consequences hereunder, except a continuing Default or
Event of Default in the payment of the principal of, premium and Liquidated
Damages, if any, or interest on, the Senior Notes (including in connection
with an offer to purchase) (provided, however, that the Holders of a
majority in aggregate principal amount of the then outstanding Senior Notes
may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration in accordance with
Section 6.02 hereof). 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
Senior 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 including the exercise of any remedy
under the Collateral Documents. 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
Senior Notes or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Senior Note may pursue a remedy with respect to this
Indenture or the Senior Notes only if:
(a) the Holder of a Senior 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 Senior Notes make a written request to the Trustee
to pursue the remedy;
(c) such Holder of a Senior Note or Holders of Senior Notes offer
and, if requested, provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or
expense;
(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
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(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Senior Notes do not
give the Trustee a direction inconsistent with the request.
A Holder of a Senior Note may not use this Indenture to prejudice the
rights of another Holder of a Senior Note or to obtain a preference or
priority over another Holder of a Senior Note.
SECTION 6.07. RIGHTS OF HOLDERS OF SENIOR NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Senior Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Senior Note, on or after
the respective due dates expressed in the Senior Note (including in
connection with an offer to purchase), or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) 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 Senior 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 Senior Notes allowed in any judicial
proceedings relative to the Company (or any other obligor upon the Senior
Notes), its creditors or its property and shall be entitled and empowered
to collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due
to it for the reasonable compensation, 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 Senior 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.
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SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to Holders of Senior Notes for amounts due and unpaid on the
Senior 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 Senior Notes for principal, premium and
Liquidated Damages, if any and interest, respectively; and
Third: 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 Senior 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 does not apply to a suit
by the Trustee, a suit by a Holder of a Senior Note pursuant to Section
6.07 hereof, or a suit by Holders of more than 10% in principal amount of
the then outstanding Senior 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 the Collateral Documents, 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 Collateral
Documents and the Trustee need perform only those duties
that are specifically set forth in this Indenture and the
Collateral Documents and no others, and no implied covenants
or obligations shall be read into this Indenture against the
Trustee; and
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(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 and the
Collateral Documents. However, the Trustee shall examine
the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture but need
not verify the content of such certificates and opinions.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is
subject to paragraphs (a), (b), (c) and (e) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The
Trustee shall be under no obligation to exercise any of its
rights and powers under this Indenture at the request of any
Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with
the 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 need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate 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 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.
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(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 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 Senior Notes and may otherwise deal with the Company or
any Affiliate of the Company 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, the Collateral Documents
or the Senior Notes, it shall not be accountable for the Company's use of
the proceeds from the Senior Notes or any money paid to the Company or upon
the Company's direction under any provision of this Indenture or the
Collateral Documents, 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 Senior Notes or any other document in
connection with the sale of the Senior 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 a Responsible Officer of the Trustee, the Trustee shall mail to
Holders of Senior 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 or Liquidated Damages, if any,
or interest on any Senior 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
Senior Notes.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Senior Notes remain
outstanding, the Trustee shall mail to the Holders of the Senior Notes a
brief report dated as of such reporting date that complies with TIA
Sec. 313(a) (but if no event described in TIA Sec. 313(a) has occurred within
the twelve months preceding the reporting date, no report need be
transmitted). The Trustee also shall comply with TIA Sec. 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA
Sec. 313(c).
A copy of each report at the time of its mailing to the Holders of
Senior Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Company has informed the Trustee in writing the
Senior Notes are listed in accordance with TIA Sec. 313(d). The Company shall
promptly notify the Trustee when the Senior Notes are listed on any stock
exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder.
To the extent permitted by law, the Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company 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 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, the
Collateral Documents or the Escrow and Disbursement Agreement against the
Company (including this Section 7.07) and defending itself against any
claim (whether asserted by the Company or any Holder or any other person)
or liability in connection with the exercise or performance of any of its
powers or duties hereunder or under the Collateral Documents or the Escrow
and Disbursement Agreement 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 of its obligations hereunder. The Company shall defend
the claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Senior Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Senior Notes. Such lien shall survive
the satisfaction and discharge of this Indenture (including, without
limitation, any termination under any Bankruptcy Law) or the resignation or
removal of the Trustee, as the case may be.
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
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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 Sec. 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
Senior Notes of a majority in principal amount of the then outstanding
Senior 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.
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 Senior 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,
or the Holders of Senior Notes of at least 10% in principal amount of the
then outstanding Senior 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 Senior Note
who has been a Holder of a Senior Note for at least six months, fails to
comply with Section 7.10, such Holder of a Senior 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 the duties of
the Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to the Holders of the Senior Notes. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, provided that 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 obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
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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. The Trustee and its direct parent shall at
all times have a combined capital surplus of at least $100 million. If
such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for purposes of this Section 7.10 the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sec. 310(a)(1), (2) and (5). The Trustee is subject to
TIA Sec. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA Sec. 311(a), excluding any creditor
relationship listed in TIA Sec. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Sec. 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, at any time, elect to
have either Section 8.02 or 8.03 hereof be applied to all outstanding
Senior 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 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 Senior Notes 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 Senior
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 (b) below, and to have satisfied all its other
obligations under such Senior Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute instruments in
form and substance satisfactory to the Company and the Trustee
acknowledging the same),
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except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of
outstanding Senior 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 or Liquidated Damages, if any, and
interest on such Senior Notes when such payments are due, (b) the Company's
obligations with respect to such Senior 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 obligations in connection therewith and
(d) the provisions of 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 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 and 4.14 and Article 10
hereof with respect to the outstanding Senior Notes on and after the date
the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Senior 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 Senior Notes shall not be deemed outstanding for accounting purposes).
For this purpose, Covenant Defeasance means that, with respect to the
outstanding Senior 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 Senior 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) and Sections 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 Senior 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 of the Senior Notes, cash
in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as shall be sufficient, in
the opinion of a nationally recognized firm of independent
public accounts, to pay the principal of, premium, if any, and
interest and Liquidated Damages on the outstanding Senior Notes
on the stated maturity or on the applicable redemption date, as
the case may be, and the Company must specify whether the
Senior Notes are being defeased to maturity or to a particular
redemption date;
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(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 date of this Indenture, there has been
a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders of the outstanding
Senior Notes shall not recognize income, gain or loss for
federal income tax purposes as a result of such Legal
Defeasance and shall be subject to federal income tax on the
same amounts, in the same manner and at the same time 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 Senior
Notes shall not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and
shall 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 shall be used to
defease the Senior Notes pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections
6.01(h) and 6.01(i) hereof are concerned, at any time in the
period ending on the 123rd day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under any
material agreement or instrument (other than this Indenture) to
which the Company or any of its 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 after the day on which al applicable
preference periods have run, the trust funds shall 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 Senior
Notes over the other creditors of the Company with the intent
of defeating, hindering, delaying or defrauding any other
creditors of the Company; 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 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.
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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 Senior Notes shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Senior Notes and this Indenture,
to the payment, either directly or through any Paying Agent (including the
Company acting as Paying Agent), to the Holders of such Senior Notes of all
sums due and to become due thereon in respect of principal, premium or
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 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 Senior 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
written 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 THE 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
or Liquidated Damages, if any, or interest on any Senior Note and remaining
unclaimed for two years after such principal, and premium, if any, or
interest or Liquidated Damages, if any, has become due and payable shall be
paid to the Company on its written request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Senior Note
shall thereafter, as a secured 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 shall 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 obligations
under this Indenture and the Senior 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 makes any payment of principal
of, premium, if any, or interest or Liquidated Damages, if any, on any
Senior Note
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following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Senior 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 THE SENIOR NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture, the Senior Notes, the
Escrow and Disbursement Agreement or the Collateral Documents without the
consent of any Holder of a Senior Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Notes in addition to or in
place of certificated Senior Notes;
(c) to provide for the assumption of the Company's obligations to
the Holders of the Senior Notes in the case of a merger or
consolidation pursuant to Article Five hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Senior Notes or that does not
adversely affect the legal rights hereunder of any Holder of
the Senior Note;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to enter into additional or supplemental Collateral Documents.
Upon the written request of the Company accompanied by a resolution
of its Board of Directors authorizing the execution of any such amended or
supplemental Indenture or Collateral Documents, and upon receipt by the
Trustee of the documents described in Section 9.06 hereof, the Trustee
shall join with the Company in the execution of any amended or supplemental
Indenture or Collateral Documents 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 SENIOR NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture, the Collateral Documents
and the Senior Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Senior Notes then
outstanding (including consents obtained in connection with a purchase of
or a tender offer or exchange offer for the Senior 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,
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premium or Liquidated Damages, if any, or interest on the Senior Notes,
except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture, the
Collateral Documents or the Senior Notes may be waived with the consent of
the Holders of a majority in aggregate principal amount of the then
outstanding Senior Notes (including consents obtained in connection with a
purchase of or a tender offer or exchange offer for the Senior Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supple-
mental Indenture or Collateral Documents, and upon the filing with the
Trustee of evidence satisfactory to the Trustee of the consent of the
Holders of Senior 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 in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture or Collateral Documents
affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise, in which case the Trustee may, but shall not be obligated to,
enter into such amended or supplemental Indenture or, the Collateral
Documents.
It shall not be necessary for the consent of the Holders of Senior
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 each Senior Note
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 Collateral Documents or
waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Senior Notes then outstanding
may waive compliance in a particular instance by the Company with any
provision of this Indenture or, the Collateral Documents or the Senior
Notes. However, without the consent of each Holder affected, an amendment,
supplement or waiver may not (with respect to any Senior Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Senior Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Senior Note or alter or waive any of the provisions with
respect to the redemption of the Senior Notes (other than with
respect to Sections 3.09, 4.10 and 4.14);
(c) reduce the rate of or change the time for payment of interest
on any Senior Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium or Liquidated Damages, if any, or interest on the
Senior Notes (except a rescission of acceleration of the Senior
Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Senior Notes and a
waiver of the payment default that resulted from such
acceleration);
(e) make any Senior Note payable in money other than that stated in
the Senior Notes;
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(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Senior
Notes to receive payments of principal of premium or Liquidated
Damages, if any, or interest on the Senior Notes;
(g) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions;
(h) waive a redemption payment with respect to any Senior Note
(other than a payment required by Sections 3.09, 4.10 and 4.14
hereof);
(i) make any change in the provisions of this Article Nine; or
(j) release all or substantially all of the Pledged Collateral from
the lien of this Indenture or the Collateral Documents.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Collateral
Documents or the Senior Notes shall be set forth in a amended or
supplemental Indenture that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Senior Note is a continuing consent by the Holder
and every subsequent Holder of a Senior Note or portion of a Senior Note
that evidences the same debt as the consenting Holder's Senior Note, even
if notation of the consent is not made on any Senior Note. However, any
such Holder or subsequent Holder of a Senior Note may revoke the consent as
to its Senior 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.
The Company may fix a record date for determining which Holders of
the Senior Notes must consent to such amendment, supplement or waiver. If
the Company fixes a record date, the record date shall be fixed at (i) the
later of 30 days prior to the first solicitation of such consent or the
date of the most recent list of Holders of Senior Notes furnished for the
Trustee prior to such solicitation pursuant to Section 2.05 or (ii) such
other date as the Company shall designate.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SENIOR NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Note thereafter authenticated. The
Company in exchange for all Senior Notes may issue and the Trustee shall
authenticate new Senior Notes that reflect the amendment, supplement or
waiver.
Failure to make the appropriate notation or issue a new Senior 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 or
Collateral Document 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 may not sign an
amendment or supplemental Indenture or Collateral Document until the Board
of Directors approves it. In signing such amendment, the Trustee shall be
entitled to receive indemnity satisfactory to it. In executing any amended
or supplemental indenture or Collateral Document, the Trustee shall be
entitled to receive and (subject to Section 7.01) shall be fully protected
in relying upon, an Officer's Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental indenture or Collateral
Document is authorized or permitted by this Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. HOLDING PLEDGE AGREEMENT.
The due and punctual payment of the principal of and interest and
Liquidated Damages, if any, on the Senior Notes when and as the same shall
be due and payable, whether on an interest payment date, at maturity, by
acceleration, repurchase, redemption or otherwise, and interest on the
overdue principal of and interest and premium or Liquidated Damages (to the
extent permitted by law), if any, on the Senior Notes and performance of
all other obligations of the Company to the Holders of Senior Notes or the
Trustee under this Indenture and the Senior Notes, according to the terms
hereunder or thereunder, shall be secured as provided in the Holding Pledge
Agreement. Each Holder of Senior Notes, by its acceptance thereof,
consents and agrees to the terms of the Holding Pledge Agreement
(including, without limitation, the provisions providing for foreclosure
and release of Pledged Collateral) as the same may be in effect or may be
amended from time to time in accordance with its terms and authorizes and
directs the Collateral Agent to enter into the Holding Pledge Agreement and
to perform its obligations and exercise its rights thereunder in accordance
therewith. The Company shall deliver to the Trustee copies of all
documents delivered to the Collateral Agent pursuant to the Holding Pledge
Agreement, and shall do or cause to be done all such acts and things as may
be necessary or proper, or as may be required by the provisions of the
Holding Pledge Agreement, to assure and confirm to the Trustee and the
Collateral Agent the security interest in the Pledged Collateral
contemplated hereby, by the Holding Pledge Agreement or any part thereof,
as from time to time constituted, so as to render the same available for
the security and benefit of this Indenture and of the Senior Notes secured
hereby, according to the intent and purposes herein expressed. The Company
shall take, or shall cause its Subsidiaries to take, any and all actions
reasonably required to cause the Holding Pledge Agreement to create and
maintain, as security for the Obligations of the Company hereunder, a valid
and enforceable perfected first priority Lien in and on all the Pledged
Collateral, in favor of the Collateral Agent for the benefit of the Holders
of Senior Notes, superior to and prior to the rights of all third Persons
and subject to no other Liens than Permitted Liens.
SECTION 10.02. RECORDING AND OPINIONS.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either
(i) stating that in the opinion of such counsel all action has been taken
with respect to the recording, registering and filing of this Indenture,
financing statements or other
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instruments necessary to make effective the Lien intended to be created by
the Holding Pledge Agreement, and reciting with respect to the security
interests in the Pledged Collateral, the details of such action, or (ii)
stating that, in the opinion of such counsel, no such action is necessary
to make such Lien effective.
(b) The Company shall furnish to the Collateral Agent and the Trustee
on May 15 in each year beginning with May 15, 1997, an Opinion of Counsel,
dated as of such date, either (i) (A) stating that, in the opinion of such
counsel, action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and refiling of all supplemental
indentures, financing statements, continuation statements or other
instruments of further assurance as is necessary to maintain the Lien of
the Holding Pledge Agreement and reciting with respect to the security
interests in the Pledged Collateral the details of such action or referring
to prior Opinions of Counsel in which such details are given, (B) stating
that, based on relevant laws as in effect on the date of such Opinion of
Counsel, all financing statements and continuation statements have been
executed and filed that are necessary as of such date and during the
succeeding 12 months fully to preserve and protect, to the extent such
protection and preservation are possible by filing, the rights of the
Holders of Senior Notes and the Collateral Agent and the Trustee hereunder
and under the Holding Pledge Agreement with respect to the security
interests in the Pledged Collateral, or (ii) stating that, in the opinion
of such counsel, no such action is necessary to maintain such Lien and
assignment.
(c) The Company shall otherwise comply with the provisions of TIA
Sec.314(b).
SECTION 10.03. RELEASE OF COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03,
Pledged Collateral may be released from the Lien and security interest
created by the Holding Pledge Agreement at any time or from time to time in
accordance with the provisions of the Holding Pledge Agreement or as
provided hereby. In addition, upon the request of the Company pursuant to
an Officers' Certificate certifying that all conditions precedent hereunder
have been met and stating whether or not such release is in connection with
an Asset Sale and (at the sole cost and expense of the Company) the
Collateral Agent shall release (i) Pledged Collateral that is sold,
conveyed or disposed of in compliance with the provisions of this
Indenture; provided, that if such sale, conveyance or disposition
constitutes an Asset Sale, the Company shall apply the Net Proceeds in
accordance with Section 4.10 hereof. Upon receipt of such Officers'
Certificate the Collateral Agent shall execute, deliver or acknowledge any
necessary or proper instruments of termination, satisfaction or release to
evidence the release of any Pledged Collateral permitted to be released
pursuant to this Indenture or the Holding Pledge Agreement.
(b) No Pledged Collateral shall be released from the Lien and security
interest created by the Holding Pledge Agreement pursuant to the provisions
of the Holding Pledge Agreement unless there shall have been delivered to
the Collateral Agent the certificate required by this Section 10.03.
(c) At any time when a Default or Event of Default shall have occurred
and be continuing and the maturity of the Senior Notes shall have been
accelerated (whether by declaration or otherwise) and the Trustee shall
have delivered a notice of acceleration to the Collateral Agent, no release
of Pledged Collateral pursuant to the provisions of the Holding Pledge
Agreement shall be effective as against the Holders of Senior Notes.
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(d) The release of any Pledged Collateral from the terms of this
Indenture and the Holding Pledge Agreement shall not be deemed to impair
the security under this Indenture in contravention of the provisions hereof
if and to the extent the Pledged Collateral is released pursuant to the
terms of the Holding Pledge Agreement. To the extent applicable, the
Company shall cause TIA Sec. 313(c), relating to reports, and TIA Sec. 314(b),
relating to the release of property or securities from the Lien and
security interest of the Holding Pledge Agreement and relating to the
substitution therefor of any property or securities to be subjected to the
Lien and security interest of the Holding Pledge Agreement, to be complied
with. The Trustee shall comply (to the extent required) with TIA
Sec. 313(b)(1) and 313(d). Any certificate or opinion required by TIA
Sec. 314(d) may be made by an Officer of the Company except in cases where TIA
Sec. 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer,
appraiser or other expert selected or approved by the Trustee and the
Collateral Agent in the exercise of reasonable care.
SECTION 10.04. CERTIFICATES OF THE COMPANY.
(a) The Company shall furnish to the Trustee and the Collateral Agent,
prior to each proposed release of Pledged Collateral pursuant to the
Holding Pledge Agreement or the Escrow and Disbursement Agreement, (i) all
documents required by TIA Sec.314(c) and (d) and (ii) an Opinion of Counsel,
which may be rendered by internal counsel to the Company, to the effect
that such accompanying documents constitute all documents required by TIA
Sec.314(d). The Trustee may, to the extent permitted by Sections 7.01 and
7.02 hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such documents and such
Opinion of Counsel.
SECTION 10.05. CERTIFICATES OF THE TRUSTEE.
In the event that the Company wishes to release Pledged Collateral in
accordance with the Holding Pledge Agreement and has delivered the
certificates and documents required by the Holding Pledge Agreement and
Sections 10.03 and 10.04 hereof as well as all documentation required by
TIA Sec.314(d) in connection with such release and the Trustee shall direct
the Collateral Agent to effectuate such release.
SECTION 10.06. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER
THE HOLDING PLEDGE AGREEMENT.
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee
may, in its sole discretion and without the consent of the Holders of
Senior Notes, direct, on behalf of the Holders of Senior Notes, the
Collateral Agent to, take all actions it deems necessary or appropriate in
order to (a) enforce any of the terms of the Holding Pledge Agreement and
(b) collect and receive any and all amounts payable in respect of the
Obligations of the Company hereunder. The Trustee shall have power to
institute and maintain such suits and proceedings as it may deem expedient
to prevent any impairment of the Pledged Collateral by any acts that may be
unlawful or in violation of the Holding Pledge Agreement or this Indenture,
and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Holders of
Senior Notes in the Pledged Collateral (including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance
with any legislative or other governmental enactment, rule or order that
may be unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders of
Senior Notes or of the Trustee).
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SECTION 10.07. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
HOLDING PLEDGE AGREEMENT.
The Trustee is authorized to receive any funds for the benefit of the
Holders of Senior Notes distributed under the Holding Pledge Agreement, and
to make further distributions of such funds to the Holders of Senior Notes
according to the provisions of this Indenture.
SECTION 10.08. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Company under this
Indenture and the Senior Notes, or upon Legal Defeasance, the Trustee
shall, at the written request of the Company set forth in an Officers'
Certificate, deliver a certificate to the Collateral Agent stating that
such Obligations have been paid in full, and instruct the Collateral Agent
to release the Liens pursuant to this Indenture and the Holding Pledge
Agreement.
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ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA Sec.318(c), the imposed duties shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company 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), tele-
copier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
BPC Holding Corporation
101 Oakley Street
Evansville, Indiana 47706
Telecopy: (812) 421-9604
Attention: Martin R. Imbler
With a copy to:
O'Sullivan, Graev & Karabell, LLP
30 Rockefeller Plaza
41st Floor
New York, New York 10112
Attention: Lawrence G. Graev, Esq.
If to the Trustee:
First Trust of New York, National Association
100 Wall Street, Suite 1600
New York, New York 10005
Telecopier No.: (212) 809-5459
Attention: Corporate Trust Administration
The Company 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 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.
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Any notice or communication to a Holder shall be mailed by first
class mail 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 Sec. 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 mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF SENIOR NOTES WITH OTHER HOLDERS
OF SENIOR NOTES.
Holders may communicate pursuant to TIA Sec. 312(b) with other Holders
with respect to their rights under this Indenture or the Senior Notes. The
Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Sec. 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company 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 11.05 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 11.05 hereof) stating that, in the opinion
of such counsel, all such conditions precedent and covenants
have been satisfied.
SECTION 11.05. 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 Sec. 314(a)(4)) shall comply with the
provisions of TIA Sec. 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 11.06. 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 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Senior Notes, this Indenture or the
Collateral Documents (including the Holding Pledge Agreement) and Escrow
and Disbursement Agreement or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Senior Notes
by accepting a Senior Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Senior
Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the SEC that such a wavier is
against public policy.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE COLLATERAL DOCUMENTS AND THE SENIOR NOTES.
SECTION 11.09. 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 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Senior Notes
shall bind its successors and assigns. All agreements of the Trustee in
this Indenture shall bind its successors and assigns.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Senior Notes shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.12. 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 11.13. 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 June 18, 1996 BPC HOLDING CORPORATION
ISSUER
By: /s/ Martin R. Imbler
--------------------------------
Name: Martin R. Imbler
Title: President
Attest:
/s/ James M. Kratochvil (SEAL)
- ---------------------------
Dated as of June 18, 1996 FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION
TRUSTEE
By: /s/ Alfia Monastra
--------------------------------
Name: Alfia Monastra
Title: Assistant Vice President
Attest:
/s/ Geovanni Barris
- ---------------------------
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Exhibit 4.4
EXECUTION COPY
================================================================================
- --------------------------------------------------------------------------------
PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
by and among
BPC HOLDING CORPORATION
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
as Trustee
and
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
as Escrow Agent
Dated: June 18, 1996
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
THIS PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT (this "Agreement"),
---------
dated as of June 18, 1996, is by and among BPC HOLDING CORPORATION (the
"Company"), FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as trustee under the
-------
Indenture referred to below (the "Trustee"), and FIRST TRUST OF NEW YORK,
-------
NATIONAL ASSOCIATION in its capacity as collateral agent for the Trustee and the
Holders of the Notes hereinafter described (the "Escrow Agent").
------------
RECITALS
A. The Notes. Pursuant to that certain Indenture (the "Indenture")
--------- ---------
dated as of June 18, 1996 by and between the Company and the Trustee, the
Company will issue $105,000,000 in aggregate principal amount of 12 1/2%
Senior Secured Notes due 2006 (collectively, the "Notes"). Immediately
-----
after receipt of payment for the Notes (the "Deposit Time"), the Company
------------
will deposit $36,500,000 of the net proceeds from the sale of the Notes
(the "Escrow Proceeds") into a segregated cash collateral trust account
---------------
with the Escrow Agent at its office at 101 Wall Street, Suite 1600, in New
York, New York, Account No. 96025210, in the name of First Trust of New
York, National Association, as Escrow Agent, "Collateral Account for BPC
Holding Corporation" (the "Escrow Account"). The Escrow Account and all
--------------
balances and investments from time to time therein shall be under the sole
control and dominion of the Escrow Agent for the benefit of the Holders of
the Notes. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Indenture.
B. Purpose. The parties hereto desire to set forth their agreement
-------
with regard to the administration of the Escrow Account, the creation of a
security interest in the Collateral (as defined herein) and the conditions
upon which funds will be released from the Escrow Account and the
conditions upon which the security interest and Lien described herein will
be released.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Security Interest.
-----------------
1.1 Pledge and Assignment. The Company hereby irrevocably
---------------------
pledges, assigns and sets over to the Trustee, and grants to the Trustee,
for the benefit of the Holders of the Notes, a first priority continuing
security interest in all of the Company's right, title and interest to all
of the following, whether now owned or existing or hereafter acquired or
created (collectively, the "Collateral"):
----------
1.1.1 the Escrow Account;
1.1.2 all funds from time to time held in the Escrow
Account, including, without limitation, the Escrow Proceeds and
all certificates and instruments, if any, from time to time,
representing or evidencing the Escrow Account or the Escrow
Proceeds;
1.1.3 all Allowable Investments (as defined herein), whether
the same shall constitute certificated securities, uncertificated
securities, investment property, instruments, general intangibles
or otherwise held by or registered in the name of the
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<PAGE>
Escrow Agent or the Trustee and all certificates and instruments, if
any, from time to time representing or evidencing the Allowable
Investments;
1.1.4 all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter
delivered to or otherwise possessed by the Trustee or the Escrow
Agent for or on behalf of the Company in substitution for or in
addition to any or all of the then existing Collateral;
1.1.5 all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
then existing Collateral; and
1.1.6 all proceeds of the foregoing including, without
limitation, cash proceeds.
The Company and the Trustee hereby appoint the Escrow Agent to act as the
Trustee's agent, on behalf of the Holders of the Notes, for purposes of
perfecting the foregoing pledge, assignment and security interest in the
Collateral, and the Escrow Agent hereby accepts such appointment. Subject
to the provisions of Section 7.07 of the Indenture, for so long as the
foregoing pledge, assignment and security interest remains in effect, the
Escrow Agent hereby waives any right of setoff or banker's lien that it, in
its individual capacity, may have with respect to any or all of the
Collateral.
1.2 Secured Obligations. This Agreement secures the due and
-------------------
punctual payment and performance of all obligations and indebtedness of the
Company, whether now or hereafter existing, under the Notes and the
Indenture including, without limitation, interest accrued thereon after the
commencement of a bankruptcy, reorganization or similar proceeding
involving the Company to the extent permitted by applicable law
(collectively, the "Secured Obligations").
-------------------
1.3 Delivery of Collateral. All certificates or instruments, if
----------------------
any, representing or evidencing the Collateral shall be held by or on
behalf of the Escrow Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignments in blank, all in form and substance
reasonably satisfactory to the Trustee and the Escrow Agent. All
securities in uncertificated or book-entry form, if any, representing or
evidencing the Collateral shall be registered in the name of the Trustee or
any of its nominees by book-entry or as otherwise appropriate so as to
properly identify the interest of the Trustee therein. In addition, the
Trustee shall have the right, at any time following the occurrence of an
Event of Default, and only for so long as such Event of Default is
continuing, to transfer to or to register in the name of the Trustee or any
of its nominees any or all other Collateral. Except as otherwise provided
herein, all Collateral shall be deposited and held in the Escrow Account.
The Trustee shall have the right at any time to exchange certificates or
instruments representing or evidencing all or any portion of the Collateral
for certificates or instruments of smaller or larger denominations in the
same aggregate amount.
1.4 Further Assurances. Prior to, contemporaneously herewith,
------------------
and at any time and from time to time hereafter, the Company will, at the
Company's expense, execute and deliver to the Trustee or the Escrow Agent
such other instruments and documents, and take all further action as it
deems necessary or advisable or as the Trustee or the Escrow Agent may
reasonably request including an Opinion of Counsel, upon which the Trustee
or the Escrow Agent, as the case may be, may conclusively rely, to confirm
or perfect the security interest of the Trustee granted or purported to be
granted hereby or to enable the Trustee to exercise and enforce its rights
and remedies hereunder with respect to any Collateral and the Company will
take all necessary action to preserve and protect the
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<PAGE>
security interest created hereby as a first priority, perfected lien and
encumbrance upon the Collateral. The Company will pay all costs incurred
in connection with any of the foregoing.
1.5 Maintaining the Escrow Account. So long as this Agreement
------------------------------
is in full force and effect:
1.5.1 the Company shall establish and maintain the
Escrow Account with the Escrow Agent in New York, New York, and
the Escrow Account shall at all times remain under the exclusive
dominion and control of the Escrow Agent for the benefit of the
Holders of the Notes; and
1.5.2 it shall be a term and condition of the Escrow
Account, notwithstanding any term or condition to the contrary in
any other agreement relating to the Escrow Account and except as
otherwise provided by the provisions of Article 3 of this
Agreement, that no amount (including, without limitation,
interest on or other proceeds of the Escrow Account or on any
Allowable Investments held therein) shall be paid or released to
or for the account of, or withdrawn by or for the account of, the
Company or any other person or entity other than the Trustee or
its designated agent from the Escrow Account.
1.6 Transfers and Other Liens. Until termination of this
-------------------------
Agreement pursuant to Section 8, the Company agrees that it will not (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral or (ii) create or
permit to exist any Lien upon or with respect to any of the Collateral,
except for the security interest under this Agreement.
1.7 Attorneys-in-Fact. In addition to all of the powers granted
-----------------
to the Trustee pursuant to Article 6 of the Indenture, the Company hereby
irrevocably appoints each of the Trustee and the Escrow Agent as the
Company's attorney-in-fact, coupled with an interest, with full authority
in the place and stead of the Company and in the name of the Company or
otherwise, from time to time in the Trustee's or the Escrow Agent's
discretion to, so long as any Event of Default has occurred and is
continuing, take any action and to execute any instrument which the Trustee
or the Escrow Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, to receive,
endorse and collect all instruments made payable to the Company
representing any interest payment, dividend or other distribution in
respect of the Collateral or any part thereof and to give full discharge
for the same, and the expenses of the Trustee incurred in connection
therewith shall be payable by the Company.
1.8 Trustee May Perform. Without limiting the authority granted
-------------------
under Section 1.7 and except with respect to the failure of the Company to
deliver investment instructions, which shall be governed by the second
paragraph of Section 2.1 hereof, if the Company fails to perform any
agreement contained herein, the Trustee or the Escrow Agent may, but shall
not be obligated to, itself perform, or cause performance of, such
agreement, and the expenses of the Trustee or the Escrow Agent incurred in
connection therewith shall be payable by the Company. In the event that
the Trustee or the Escrow Agent perform pursuant to this Section 1.8, the
Company shall indemnify the Trustee or the Escrow Agent, as the case may
be, in the manner provided in Section 7.07 of the Indenture.
1.9 Escrow Account Statement. Each month, the Escrow Agent
------------------------
shall deliver to the Company and the Trustee a statement signed by the
Escrow Agent in a form satisfactory to the Company
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<PAGE>
and the Trustee setting forth with reasonable particularity the balance of
funds then in the Escrow Account and the manner in which such funds are
invested. The parties hereto irrevocably instruct the Escrow Agent that on
the first date upon which the balance in the Escrow account is reduced to
zero, the Escrow Agent shall deliver to the Company and to the Trustee a
notice that the balance in the Escrow Account has been reduced to zero.
2. Investment and Liquidation of Funds in Escrow Account. Funds
-----------------------------------------------------
deposited in the Escrow Account shall be invested and reinvested by the
Escrow Agent on the following terms and conditions:
2.1 Allowable Investments. Subject to the provisions of
---------------------
Articles 2 and 3, funds held by the Escrow Agent in the Escrow Account may,
at the written direction of the Company, be invested and reinvested in the
following ("Allowable Investments"):
---------------------
(a) 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 ("Government Securities") having a maturity
---------------------
date on or before the date on which the payments of interest on
the Notes to which such Government Securities are pledged to
secure occur; (b) any certificate of deposit maturing not more
than 270 days after the date of acquisition issued by, or time
deposit of, an Eligible Institution, (c) commercial paper
maturing not more than 270 days after the date of acquisition of
an issuer (other than an Affiliate of the Company) with a rating,
at the time as of which any investment therein is made, of "A-1"
(or higher) according to S&P or "P-1" (or higher) according to
Moody's or carrying an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments, (d) any bankers
acceptances or money market deposit accounts issued by an
Eligible Institution and (e) any fund including, without
limitation, a fund of the Escrow Agent or an affiliate of the
Escrow Agent, investing exclusively in investments of the type
described in clauses (a) through (d) above; provided, however,
that such Allowable Investment has a maturity date not later than
the dates on which the payments of interest on the Notes to which
such Allowable Investments are pledged to secure occur; provided,
further, that such funds shall initially be invested in
Government Securities.
If the Company fails to give written investment instructions to
the Escrow Agent by 12:00 noon (New York time) on any Business Day on which
there is uninvested cash and/or maturing Allowable Investments in the
Escrow Account, the Trustee is hereby authorized and directed to direct the
Escrow Agent to, and the Escrow Agent shall, invest any such cash or the
proceeds of any maturing Allowable Investments in Allowable Investments
maturing on the next Business Day. The Company's failure to give such
investment instructions shall not constitute a default or an event of
default hereunder.
2.2 Interest. All interest earned on funds invested in
--------
Allowable Investments shall be held in the Escrow Account and reinvested in
accordance with the terms hereof and will be subject to the security
interest granted hereunder to the Trustee.
2.3 Limitation of Trustee's and Escrow Agent's Liability. In no
----------------------------------------------------
event shall the Trustee or the Escrow Agent have any liability to the
Company or any other Person for investing the funds from time to time in
the Escrow Account in accordance with the provisions of this Article 2,
regardless of whether greater income or a higher yield could have been
obtained had the Escrow Agent invested such funds in different Allowable
Investments, or for any loss (including breakage costs or loss
-4-
<PAGE>
of principal) associated with the sale or liquidation of Allowable
Investments in accordance with the terms of this Agreement, in each case
other than with respect to gross negligence or willful misconduct of the
Escrow Agent.
2.4 Liquidation of Funds. In liquidating any Allowable
--------------------
Investments in accordance with Article 3 of this Agreement, the Company
shall direct the Trustee or the Escrow Agent as to which Allowable
Investments shall be liquidated.
3. Interest Payments.
-----------------
3.1 Not later than five (5) Business Days prior to the date of
any of the first six scheduled interest payments due on the Notes, the
Company shall, in writing, direct the Escrow Agent to transfer from the
Escrow Account to the Paying Agent funds necessary to provide for payment
in full or any portion of the next scheduled interest payment on the Notes
or, if the Company does not intend to utilize the funds in the Escrow
Account for such payment of interest, then the Company shall comply with
Section 3.2 below. Upon receipt of such written request, the Escrow Agent
will take any action necessary to provide for the payment of such interest
payment on the Notes directly to the Holders of Notes from proceeds of the
Collateral in the Escrow Account. Concurrently with any release of funds
to the Paying Agent pursuant to this Section 3.1, the Company will deliver
to the Trustee a certificate substantially in the form of Exhibit A hereto.
---------
3.2 If the Company makes any interest payment or portion of an
interest payment from a source of funds other than the Escrow Account
("Company Funds"), the Company may, after payment in full of such interest
-------------
payment, direct the Trustee in writing to direct the Escrow Agent to
release to the Company or at the direction of the Company an amount of
funds from the Escrow Account less than or equal to the amount of Company
Funds so expended. Upon receipt of the certificate described in the
following sentence, the Trustee will direct the Escrow Agent to pay over to
the Company the requested amount. Concurrently with any release of funds
to the Company pursuant to this Section 3.2, the Company will deliver to
the Trustee a certificate substantially in the form of Exhibit A hereto.
---------
3.3 If at any time, the amount of Collateral exceeds 125% of the
amount sufficient, in the opinion of a nationally recognized firm of
independent public accountants selected by the Company and furnished to the
Trustee and Escrow Agent, to provide for payment in full of the first six
scheduled interest payments due on the Notes (or, in the event an interest
payment or payments have been made, such pro rata portion of such interest
payments then remaining unpaid as is equal to the percentage of such
interest payments then remaining, up to and including the sixth scheduled
interest payment), the Company may direct the Trustee in writing to release
any such overfunding to it. Upon receipt of the certificate described in
the following sentence, the Trustee will direct the Escrow Agent to pay the
Company any such overfunded amount. Concurrently with any release of funds
to the Company pursuant to this Section 3.3, the Company will deliver to
the Trustee a certificate substantially in the form of Exhibit A hereto.
---------
3.4 Upon payment in full of the first six scheduled interest
payments on the Notes, the security interest in the Collateral evidenced by
this Agreement will terminate and be of no further force and effect.
Furthermore, upon the release of any Collateral from the Escrow Account in
accordance with the terms of this Agreement, whether upon release of
Collateral to Holders as payment of interest, to the Company or otherwise,
the security interest evidenced by this Agreement in the Collateral so
released will terminate and be of no further force and effect.
-5-
<PAGE>
4. Representations and Warranties. The Company hereby represents
------------------------------
and warrants that:
4.1 The execution, delivery and performance by the Company of
this Agreement are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation
or of the certificate of incorporation of the Company or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Company or result in the creation or imposition of any Lien on any assets
of the Company, except for the security interests granted under this
Agreement.
4.2 The Company is the record and beneficial owner of the
Collateral, free and clear of any Lien or claims of any person or entity
(except for the security interests granted under this Agreement). No
financing statement covering the Collateral is on file in any public office
other than the financing statements filed pursuant to this Agreement.
4.3 This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or general principles of equity and
commercial reasonableness.
4.4 Upon the filing of financing statements required by the
Uniform Commercial Code (the "UCC"), the pledge of the Collateral pursuant
---
to this Agreement creates a valid and perfected first priority security
interest in and to the Collateral, securing the payment of the Secured
Obligations for the benefit of the Trustee and the ratable benefit of the
Holders of Notes, enforceable as such against all creditors of the Company
and any persons purporting to purchase any of the Collateral from the
Company other than as permitted by the Indenture.
4.5 No consent of any other Person and no consent,
authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required either (1)
for the pledge by the Company of the Collateral pursuant to this Agreement
or for the execution, delivery or performance of this Agreement by the
Company (except for any filings necessary to perfect Liens on the
Collateral) or (2) for the exercise by the Trustee of the rights provided
for in this Agreement or the remedies in respect of the Collateral pursuant
to this Agreement.
4.6 No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of the
Company, threatened by or against the Company with respect to this
Agreement or any of the transactions contemplated hereby.
4.7 The pledge of the Collateral pursuant to this Agreement is
not prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System).
5. Covenants
---------
The Company covenants and agrees with the Escrow Agent, the
Trustee and the Holders of Notes from and after the date of this Agreement
until the earlier of payment in full in cash of (A) each of the first six
scheduled interest payments due on the Notes under the terms of the
Indenture or (B) all obligations (including, but not limited to all
Obligations) due and owing under the Indenture and the
-6-
<PAGE>
Notes in the event such obligations (including, but not limited to all
Obligations) become due and payable prior to the payment of the first six
scheduled interest payments on the Notes:
(i) The Company agrees that it will not (a) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or (b) create or permit to exist any Lien upon or with
respect to any of the Collateral (except for the lien created pursuant
to this Agreement) and, except as otherwise provided in this
Agreement, at all times will be the sole beneficial owner of the
Collateral.
(ii) The Company agrees that it will not (a) enter into any
agreement or understanding that purports to or may restrict or inhibit
the Trustee's rights or remedies hereunder, including, without
limitation, the Trustee's right to sell or otherwise dispose of the
Collateral in accordance with the terms of this Agreement or (b) fail
to pay or discharge any tax, assessment or levy of any nature not
later than five days prior to the date of any proposed sale under any
judgement, writ or warrant of attachment with regard to the
Collateral.
6. Remedies upon Default. If any Event of Default shall have
---------------------
occurred and be continuing:
(i) The Trustee may, without notice to the Company except as
required by law and at any time or from time to time, direct the
Escrow Agent to liquidate all Allowable Investments and transfer all
funds in the Escrow Account to the Paying Agent to apply such funds in
accordance with Section 3.03 of the Indenture.
(ii) The Escrow Agent and/or the Trustee may also exercise in
respect of the Collateral, in addition to the other rights and
remedies provided for herein or otherwise available to it, all the
rights and remedies of a secured party on default under the Uniform
Commercial Code in effect at that time in the State of New York (the
"Code") (whether or not the Code applies to the affected Collateral),
----
and may also, without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Trustee's or the Escrow Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Trustee may deem commercially reasonable. The
Company agrees that, to the extent notice of sale shall be required by
law, at least ten days' notice to the Company of the time and place of
any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Trustee and the Escrow
Agent shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. The Trustee or the Escrow Agent
may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(iii) Any cash held by the Escrow Agent as Collateral and all
net cash proceeds received by the Trustee or the Escrow Agent in
respect of any sale or liquidation of, collection from, or other
realization upon all or any part of the Collateral may, in the
discretion of the Trustee, be held by the Trustee or the Escrow Agent
as collateral for, and/or then or at any time thereafter be applied
(after payment of any costs and expenses incurred in connection with
any sale, liquidation or disposition of or realization upon the
Collateral and the payment of any amounts payable to the Trustee or
the Escrow Agent) in whole or in part by the Trustee or the Escrow
Agent for the ratable benefit of the Holders of the Notes against, all
or any part of the Secured Obligations in such order as the Trustee
shall elect. Any surplus of such cash or cash proceeds
-7-
<PAGE>
held by the Trustee or the Escrow Agent and remaining after payment in
full of all the Secured Obligations and the costs and expenses
incurred by and amounts payable to the Trustee or the Escrow Agent
hereunder or under the Indenture shall be paid over to the Company or
to whomsoever shall be lawfully entitled to receive such surplus.
7. Indemnity and Authority of the Escrow Agent.
-------------------------------------------
7.1 The Escrow Agent shall have and be entitled to exercise
all powers hereunder that are specifically granted to the Escrow Agent
by the terms hereof, together with such powers as are reasonably
incident thereto. The Escrow Agent may perform any of its duties
hereunder or in connection with the Escrow Account by or through
agents or employees and shall be entitled to retain counsel of its
choice and to act in reliance upon the advice of such counsel
concerning all such matters. Neither the Escrow Agent nor any
director, officer, employee, attorney or agent of the Escrow Agent
shall be responsible for the validity, effectiveness or sufficiency
hereof or of any document or security furnished pursuant hereto. The
Escrow Agent and its directors, officers, employees, attorneys and
agents shall be entitled to rely on any communication, instrument or
document believed by it or them to be genuine and correct and to have
been signed or sent by the proper person or persons. The Company
agrees to indemnify and hold harmless the Escrow Agent, the Holders of
Notes and any other Person from and against any and all costs,
expenses (including the reasonable fees and disbursements of counsel
(including the reasonably allocated costs of inside counsel)), claims
and liabilities incurred by the Escrow Agent, the Holders of Notes or
such Person hereunder, unless such claim or liability shall be due to
willful misconduct or gross negligence on the part of the Escrow
Agent, the Holders of Notes or such Person.
7.2 The Company acknowledges that the rights and
responsibilities of the Escrow Agent under this Agreement with respect
to any action taken by the Escrow Agent or the exercise or
non-exercise by the Escrow Agent of any option, right, request,
judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Escrow Agent and
the Holders of Notes, be governed by the Indenture and by such other
agreements with respect thereto as may exist from time to time among
them, but, as between the Escrow Agent and the Company, the Escrow
Agent shall be conclusively presumed to be acting as agent for the
Holders of Notes with full and valid authority so to act or refrain
from acting, and the Company shall not be obligated or entitled to
make any inquiry respecting such authority.
7.3 No provision of this Agreement 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 Agreement 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.
8. Termination.
-----------
8.1 This Agreement shall create a continuing security interest
in and to the Collateral and such security interest shall, unless otherwise
provided in the Indenture or in this Agreement, remain in full force and
effect until the earlier of payment in full in cash of (A) each of the
first six scheduled interest payments due on the Notes under the terms of
the Indenture or (B) all obligations (including, but
-8-
<PAGE>
not limited to, all Obligations) due and owing under the Indenture and the
Notes in the event such obligations become payable prior to the payment of
the first six scheduled interest payments on the Notes. This Agreement
shall be binding upon the Company, its successors and assigns, and shall
inure, together with the rights and remedies of the Trustee hereunder, to
the benefit of the Trustee, the Escrow Agent, the Holders of Notes and
their respective successors, transferees and assigns.
8.2 Subject to the provisions of Section 9.3 hereof, this
Agreement shall terminate upon the earlier of payment in full in cash of
(A) each of the first six scheduled interest payments due on the Notes
under the terms of the Indenture or (B) all obligations (including, but not
limited to, all Obligations) due and owing under the Indenture and the
Notes in the event such obligations (including, but not limited to all
Obligations) become payable prior to the payment of the first six scheduled
interest payments on the Notes. At such time, the Trustee shall, at the
written request of the Company, reassign and redeliver to the Company all
of the Collateral hereunder that has not been sold, disposed of, retained
or applied by the Trustee in accordance with the terms of this Agreement
and the Indenture. Such reassignment and redelivery shall be without
warranty (either express or implied) by or recourse to the Trustee, except
as to the absence of any prior assignments by or encumbrances created by
the Trustee on its interest in the Collateral, and shall be at the expense
of the Company.
9. Miscellaneous.
-------------
9.1 Waiver. Either party hereto may specifically waive any
------
breach of this Agreement by any other party, but no such waiver shall be
deemed to have been given unless such waiver is in writing, signed by the
waiving party, and specifically designates the breach waived, nor shall any
such waiver constitute a continuing waiver of similar or other breaches.
9.2 Invalidity. If, for any reason whatsoever, any one or more
----------
of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases,
such circumstances shall not have the effect of rendering any of the other
provisions of this Agreement inoperative, unenforceable or invalid, and the
inoperative, unenforceable or invalid provision shall be construed as if it
were written so as to effectuate, to the maximum extent possible, the
parties' intent.
9.3 Survival of Provisions. All representations, warranties and
----------------------
covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the termination
of this Agreement; provided, however that the Company's obligations
pursuant to Section 7 hereof shall survive the termination of this
Agreement (including any termination under applicable bankruptcy laws) or
the resignation or removal of the Trustee or the Escrow Agent.
9.4 Assignment. This Agreement shall inure to and be binding
----------
upon the parties and their respective successors and permitted assigns;
provided, however, that the Company may not assign its rights or
- -------- -------
obligations hereunder without the express prior written consent of the
Trustee, acting at the direction of the Holders as provided in the
Indenture.
9.5 Entire Agreement; Amendments. This Agreement and the
----------------------------
Indenture contain the entire agreement among the parties with respect to
the subject matter hereof and supersede any and all prior agreements,
understandings and commitments with respect thereto, whether oral or
written; provided, however, that this Agreement is executed and accepted by
-----------------
the Trustee and the Escrow Agent subject to all terms and conditions of its
acceptance of the trust under the Indenture, as fully as if said terms and
conditions were set forth at length herein. This Agreement may be amended
only by a writing
-9-
<PAGE>
signed by duly authorized representatives of all parties. The Trustee and
the Escrow Agent may execute an amendment to this Agreement only if the
requisite consent of the Holders of the Notes required by Section 9.02 of
the Indenture has been obtained, unless no such consent is required by such
Section 9.02 of the Indenture.
9.6 Notices. All notices and other communications required or
-------
permitted to be given or made under this Agreement to any party hereto
shall be delivered in writing by hand delivery or overnight delivery, or
shall be delivered by facsimile or telephonically with confirmation in
writing not more than twenty-four hours following such telephonic notice.
A notice given in accordance with the preceding sentence shall be deemed to
have been duly given upon the sending thereof, except for notice to the
Trustee or the Escrow Agent, which shall be deemed given only when
received. Notices should be addressed as follows:
To the Company:
BPC Holding Corporation
101 Oakley Street
Evansville, Indiana 47706
Attention: Martin R. Imbler
Facsimile number: (812) 421-9604
Telephone number: (812) 424-2904
With copies to:
Lawrence G. Graev, Esq.
O'Sullivan, Graev & Karabell, LLP
30 Rockefeller Plaza
41st Floor
New York, New York 10112
Facsimile number: (212) 408-2420
Telephone number: (212) 408-2400
To the Trustee:
First Trust of New York, National Association
101 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporate Trust Administration (Reference - BPC
Holding)
Facsimile number: (212) 809-5459
Telephone number: (212) 361-2501
To the Escrow Agent:
First Trust of New York, National Association
101 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporate Trust Administration (Reference - BPC
Holding)
Facsimile number: (212) 809-5459
Telephone number: (212) 361-2501
-10-
<PAGE>
or at such other address, facsimile number or phone number as the specified
entity most recently may have designated in writing in accordance with this
paragraph to the other parties.
9.7 Expenses. The Company will upon demand pay to the Trustee
--------
and the Escrow Agent such fees set forth in the letter dated June 6, 1996,
from the Trustee and Escrow Agent to the Company and as may be agreed upon
from time to time in writing and the amount of any reasonable fees,
expenses and disbursements of its counsel, retained by the Trustee and
Escrow Agent that the Trustee and Escrow Agent may incur in connection with
(a) the administration of this Agreement, (b) the custody or preservation
of, or the sale of, collection from, or other realization upon, any of the
Collateral, (c) the exercise or enforcement of any of the rights of the
Trustee and Escrow Agent and the Holders of Notes hereunder or (d) the
failure by the Company to perform or observe any of the provisions hereof,
in each case other than any such expenses that arise from the gross
negligence or willful misconduct of the Trustee or Escrow Agent .
9.8 Security Interest Absolute. All rights of the Trustee and
--------------------------
the Holders of Notes and security interests hereunder, and all obligations
of the Company hereunder, shall be absolute and unconditional irrespective
of (a) any lack of validity or enforceability of the Indenture or any other
agreement or instrument relating thereto; (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of or any consent to
any departure from the Indenture; (c) any exchange, surrender, release or
non-perfection of any Liens on any other collateral for all or any of the
Secured Obligations; or (d) to the extent permitted by applicable law, any
other circumstance which might otherwise constitute a defense available to,
or a discharge of, the Company in respect of the Secured Obligations or of
this Agreement.
9.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this
Agreement.
9.10 Limitation by Law. All rights, remedies and powers provided
-----------------
herein may be exercised only to the extent that they will not render this
Agreement not entitled to be recorded, registered or filed under provisions
of any applicable law.
9.11 Rights of Holders of Notes. No Holder of Notes shall have
--------------------------
any independent rights hereunder other than those rights granted to
individual Holders of Notes pursuant to Section 6.06 of the Indenture;
provided that nothing in this subsection shall limit any rights granted to
- --------
the Trustee under the Notes or the Indenture.
9.12 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
----------------------------------------------------
DAMAGES.
- -------
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE COMPANY, THE TRUSTEE AND THE HOLDERS OF NOTES IN CONNECTION
WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF
NEW YORK.
-11-
<PAGE>
(ii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY
AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF NOTES, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH (AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE COMPANY OR
ITS PROPERTY, AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE TRUSTEE. THE COMPANY AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS,
SETOFFS OR CROSS CLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE
ON SUCH PROPERTY OR TO ENFORCE A JUDGEMENT OR OTHER COURT ORDER IN FAVOR OF
THE TRUSTEE, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH,
IF NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR
ASSERTED. THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE TRUSTEE HAS COMMENCED A PROCEEDING
DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE COMPANY, THE TRUSTEE AND THE ESCROW AGENT EACH WAIVE
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NEITHER THE TRUSTEE, THE ESCROW
AGENT NOR ANY HOLDER OF NOTES SHALL HAVE ANY LIABILITY TO THE COMPANY
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY
THE COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO,
THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT
THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER OF NOTES, AS THE CASE MAY BE,
THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE
TRUSTEE OR SUCH HOLDER OF NOTES, AS THE CASE MAY BE, CONSTITUTING BAD
FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS OF
NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY
HOLDER OF NOTES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT
TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR
LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY WAIVES THE POSTING OF
ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER OF NOTES IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE
SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED
IN FAVOR OF THE TRUSTEE OR ANY HOLDER OF NOTES,
-12-
<PAGE>
OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR
PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR ANY OTHER AGREEMENT
OR DOCUMENT BETWEEN THE COMPANY ON THE ONE HAND AND THE TRUSTEE AND/OR THE
HOLDERS OF NOTES ON THE OTHER HAND.
-13-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Pledge, Escrow and Disbursement Agreement as of the day
first written above.
COMPANY: BPC HOLDING CORPORATION
By /s/ Martin R. Imbler
-------------------------------------------
Name: Martin R. Imbler
Title: President
TRUSTEE: FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION
By /s/ Alfia Monastra
--------------------------------------------
Name Alfia Monastra
------------------------------------------
Title Assistant Vice President
-----------------------------------------
ESCROW AGENT: FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION
By /s/ Alfia Monastra
--------------------------------------------
Name Alfia Monastra
------------------------------------------
Title Assistant Vice President
-----------------------------------------
-14-
Exhibit 4.5
EXECUTION COPY
HOLDING PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into
as of June 18, 1996 by BPC HOLDING CORPORATION, a Delaware corporation
("BPC"), having its principal office at 101 Oakley Street, Evansville,
Indiana 47706, in favor of FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
having an office at 100 Wall Street, New York, New York 10005, as
collateral agent (the "Collateral Agent") for the holders (the "Holders")
of BPC's 12 1/2% Senior Secured Notes due 2006. Capitalized terms used and
not defined herein shall have the meanings given to such terms in the
Indenture referred to below.
W I T N E S S E T H:
WHEREAS, BPC is the legal and beneficial owner of (i) all of the
issued and outstanding shares of capital stock set forth on Schedule I
hereto (the "Pledged Shares") of Berry Plastics Corporation (the "Issuer");
and
WHEREAS, BPC and First Trust of New York, National Association,
as trustee, have entered into that certain indenture dated as of June 18,
1996 (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Indenture"), pursuant to which BPC issued $105
million in aggregate principal amount of 12 1/2% Senior Secured Notes due 2006
(together with any notes issued in replacement thereof or in exchange or
substitution therefor or in addition thereto, the "Notes"); and
WHEREAS, the terms of the Indenture require that BPC (i) pledge
to the Collateral Agent for the ratable benefit of the Holders of Notes,
and grant to the Collateral Agent for the ratable benefit of the Holders of
Notes a security interest in, the Pledged Collateral (as defined herein)
and (ii) execute and deliver this Agreement in order to secure the payment
and performance by BPC of all of the Obligations of BPC under the Indenture
and the Notes (the "Obligations").
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and in order to
induce the Holders of Notes to purchase the Notes, BPC hereby agrees with
the Collateral Agent for its benefit and the ratable benefit of the Holders
of Notes as follows:
SECTION 1. Pledge and Creation of Security Interest. BPC hereby
----------------------------------------
pledges to the Collateral Agent for its benefit and for the ratable benefit
of the Holders of Notes, and grants to the Collateral Agent for the ratable
benefit of the Holders of Notes, a continuing first priority security
interest in all of its right, title and interest in the following (the
"Pledged Collateral"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares, and, subject to the provisions of Section 6 all products
and proceeds of any of the Pledged Shares, including, without
<PAGE>
limitation, all dividends, cash, options, warrants, rights, instruments,
subscriptions and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
or all of the Pledged Shares or any of the foregoing; and
(b) all additional shares of, and all securities convertible into
and all warrants, options or other rights to purchase, Capital Stock of,
or other Equity Interests in, the Issuer from time to time acquired by
BPC in any manner, and the certificates representing such additional
shares and Equity Interests (any such additional shares and Equity
Interests and other items shall constitute part of the Pledged Shares
under and as defined in this Agreement), and all products and proceeds
of any of the foregoing, including, without limitation, subject to the
provisions of Section 6, all dividends, cash, options, warrants, rights,
instruments, subscriptions, and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing.
SECTION 2. Security for Obligations. This Agreement secures the
------------------------
prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of all Obligations of BPC under the
Indenture and the Notes (including, without limitation, interest and any
other Obligations accruing after the date of any filing by BPC of any
petition in bankruptcy or the commencement of any bankruptcy, insolvency or
similar proceeding with respect to BPC).
SECTION 3. Delivery of Pledged Collateral. BPC hereby agrees that
------------------------------
all certificates or instruments representing or evidencing the Pledged
Collateral shall be immediately delivered to and held at all times by the
Collateral Agent pursuant hereto in the State of New York and shall be in
suitable form for transfer by delivery, or issued in the name of BPC and
accompanied by instruments of transfer or assignment duly executed in blank
and undated, and in either case having attached thereto all requisite
federal or state stock transfer tax stamps, all in form and substance
satisfactory to create a first priority security interest in the Pledged
Collateral.
SECTION 4. Representations and Warranties. BPC hereby makes all
------------------------------
representations and warranties applicable to BPC contained in the
Indenture. BPC further represents and warrants that:
(a) The execution, delivery and performance by BPC of this
Agreement are within BPC's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene, or constitute
a default under, any provision of applicable law or regulation or of the
certificate of incorporation or bylaws of BPC or of any agreement,
judgment, injunction, order, decree or other instrument binding upon
BPC, or result in the creation or imposition of any Lien on any assets
of BPC, other than the Lien contemplated hereby.
(b) The Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
(c) The Pledged Shares constitute all of the authorized, issued and
outstanding Equity Interests of the Issuer and constitute all of the
shares of Equity Interests of the Issuer beneficially owned by BPC.
<PAGE>
(d) BPC is the legal, record and beneficial owner of the Pledged
Collateral, free and clear of any Lien or claims of any Person except
for the security interest created by this Agreement.
(e) BPC has full power and authority to enter into this Agreement
and has the right to vote, pledge and grant a security interest in the
Pledged Collateral as provided by this Agreement.
(f) This Agreement has been duly executed and delivered by BPC and
constitutes a legal, valid and binding obligation of BPC, enforceable
against BPC in accordance with its terms.
(g) Upon the delivery to the Collateral Agent of the Pledged
Collateral and (as to certain proceeds therefrom, if any) the filing of
Uniform Commercial Code (the "UCC") financing statements, the pledge of
the Pledged Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in the Pledged Collateral,
securing the payment of the Obligations for the benefit of the
Collateral Agent and the Holders of Notes, and enforceable as such
against all creditors of BPC and any Persons purporting to purchase any
of the Pledged Collateral from BPC.
(h) No consent of any other Person and no consent, authorization,
approval, or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required either (i) for the
pledge by BPC of the Pledged Collateral pursuant to this Agreement or
for the execution, delivery or performance of this Agreement by BPC or
(ii) for the exercise by the Collateral Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be required
in connection with such disposition by laws affecting the offering and
sale of securities).
(i) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the best
knowledge of BPC, threatened by or against BPC or against any of its
properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.
(j) The pledge of the Pledged Collateral pursuant to this Agreement
is not prohibited by any applicable law or governmental regulation,
release, interpretation or opinion of the Board of Governors of the
Federal Reserve System or other regulatory agency (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System).
(k) All information set forth herein relating to the Pledged
Collateral is accurate and complete in all respects.
SECTION 5. Further Assurance. BPC will at all times cause the
-----------------
security interests granted pursuant to this Agreement to constitute valid
perfected first priority security interests in the Pledged Collateral,
enforceable as such against all creditors of BPC and (except as otherwise
specifically provided herein) any Persons purporting to purchase any
Pledged Collateral from BPC. BPC will, promptly upon request by the
Collateral Agent, execute and deliver or cause to be executed and
delivered, or use its best efforts to procure, all stock powers, proxies,
tax stamps, assignments, instruments and other documents, all in form and
substance satisfactory to the Collateral Agent, deliver any instruments to
the Collateral Agent and take any other actions that are necessary or, in
the reasonable opinion of the Collateral Agent,
<PAGE>
desirable to perfect, continue the perfection of, or protect the first
priority of the Collateral Agent's security interest in, the Pledged
Collateral, to protect the Pledged Collateral against the rights, claims,
or interests of third persons, to enable the Collateral Agent to exercise
or enforce its rights and remedies hereunder, or otherwise to effect the
purposes of this Agreement. BPC also hereby authorizes the Collateral
Agent to file any financing or continuation statements with respect to the
Pledged Collateral without the signature of BPC to the extent permitted by
applicable law. BPC will pay all costs incurred in connection with any of
the foregoing.
SECTION 6. Voting Rights; Dividends; Etc.
-----------------------------
(a) So long as no Default or Event of Default shall have occurred
and be continuing, BPC shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Shares or any part
thereof for any purpose not inconsistent with the terms of this
Agreement or the Indenture; provided, however, that BPC shall not
exercise or shall refrain from exercising any such right if such action
would be inconsistent with or violate any provisions of this Agreement
or the Indenture.
(b) So long as no Default or Event of Default shall have occurred
and be continuing, and subject to the other terms and conditions of the
Indenture, BPC shall be entitled to receive, and to utilize (subject to
the provisions of the Indenture) free and clear of the Lien of this
Agreement, all regular and ordinary cash dividends and other
distributions paid from time to time in respect of the Pledged Shares.
(c) Any and all (i) dividends, other distributions, interest and
principal payments paid or payable in the form of instruments and/or
other property (other than cash dividends permitted under Section 6(b)
hereof) received, receivable or otherwise distributed in respect of, or
in exchange for, any Pledged Collateral, (ii) dividends and other
distributions paid or payable in cash in respect of any Pledged Shares
in connection with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus, and (iii) cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any Pledged Collateral, shall in
each case be forthwith delivered to the Collateral Agent to hold as
Pledged Collateral and shall, if received by BPC, be received in trust
for the benefit of the Collateral Agent and the Holders of Notes, be
segregated from the other property and funds of BPC and be forthwith
delivered to the Collateral Agent as Pledged Collateral in the same form
as so received (with any necessary endorsements).
(d) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to BPC all such proxies and other instruments as
BPC may reasonably request in writing for the purpose of enabling BPC to
exercise the voting and other rights that it is entitled to exercise
pursuant to Sections 6(a) and 6(b) above.
(e) Upon the acceleration of the maturity of the Notes or the
failure to pay all obligations under the Notes on or before December 15,
2006, (i) all rights of BPC to exercise the voting and other consensual
rights that it would otherwise be entitled to exercise pursuant to Sec-
tion 6(a) shall cease, and all such rights shall thereupon become vested
in the Collateral Agent, which, to the extent permitted by law, shall
thereupon have the sole right to exercise such voting and other
consensual rights, and (ii) all dividends and other distributions
payable in respect of the Pledged Collateral shall
<PAGE>
be paid to the Collateral Agent and BPC's right to receive such cash
payments pursuant to Section 6(b) hereof shall immediately cease.
(f) Upon the occurrence and during the continuance of a Default or
an Event of Default, BPC shall execute and deliver (or cause to be
executed and delivered) to the Collateral Agent all such proxies,
dividend and interest payment orders and other instruments as are
necessary or desirable to enable the Collateral Agent to exercise the
voting and other rights that it is entitled to exercise pursuant to
Section 6(e) above.
(g) All payments of interest, principal or premium and all
dividends and other distributions that are received by BPC contrary to
the provisions of this Section 6 shall be received in trust for the
benefit of the Collateral Agent and the Holders, shall be segregated
from the other property or funds of BPC and shall be forthwith delivered
to the Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsements).
SECTION 7. Covenants. BPC hereby covenants and agrees with the
---------
Collateral Agent and the Holders of Notes that it will comply with all of
the obligations, requirements and restrictions applicable to BPC contained
in the Indenture. BPC further covenants and agrees, from and after the
date of this Agreement and until the Obligations have been paid in full, as
follows:
(a) BPC agrees that it will not (i) sell, assign, transfer, convey
or otherwise dispose of, or grant any option or warrant with respect to,
any of the Pledged Collateral without the prior written consent of the
Collateral Agent acting in accordance with the directions of the Holders in
accordance with the Indenture, (ii) create or permit to exist any Lien upon
or with respect to any of the Pledged Collateral, except for the security
interest granted under this Agreement, and at all times will be the sole
beneficial owner of the Pledged Collateral, (iii) enter into any agreement
or understanding that purports to or that may restrict or inhibit the
Collateral Agent's rights or remedies hereunder, including, without
limitation, the Collateral Agent's right to sell or otherwise dispose of
the Pledged Collateral, (iv) take any action, or permit the taking of any
action by the Issuer, with respect to the Pledged Collateral the taking of
which would result in a violation of the Indenture or this Agreement,
including, without limitation, the issuance by the Issuer of any additional
Equity Interests or promissory notes or the incurrence by the Issuer of any
Indebtedness to Persons other than BPC (except as permitted by the
Indenture), (v) permit the Issuer to merge or consolidate with or into
another person or entity or sell or transfer all or substantially all of
its assets to another person or entity, unless (x) BPC shall have delivered
to the Collateral Agent an Opinion of Counsel substantially in the form of
Exhibit A hereto and a certificate executed by the President and Chief
- ---------
Financial Officer of BPC substantially in the form of Exhibit B hereto and
---------
(y) all outstanding capital stock of the surviving entity in such merger or
consolidation or of the entity to whom such sale or transfer was made,
together with any promissory notes issued by such entity in favor of BPC
are, upon such merger or consolidation, pledged hereunder to and deposited
with the Collateral Agent, or (vi) fail to pay or discharge any tax,
assessment or levy of any nature not later than five days prior to the date
of any proposed sale under any judgement, writ or warrant of attachment
with regard to the Pledged Collateral.
(b) BPC agrees that immediately upon becoming the beneficial owner
of any additional shares of Capital Stock, or Equity Interests of the
Issuer (including as a result of the merger or consolidation of the Issuer
with or into another entity) it will pledge and deliver to the Collateral
Agent for its benefit
<PAGE>
and the ratable benefit of the Holders and grant to the Collateral Agent
for its benefit and the ratable benefit of the Holders, a continuing first
priority security interest in such shares or Equity Interests (as well as
instruments of transfer or assignment duly executed in blank and undated
and any necessary stock transfer tax stamps, all in form and substance
satisfactory to create a first priority security interest in the Pledged
Collateral). BPC further agrees that it will promptly deliver to the
Collateral Agent a certificate executed by a principal executive officer of
BPC describing such additional shares or Equity Interests and certifying
that the same have been duly pledged and delivered to the Collateral Agent
hereunder.
SECTION 8. Power of Attorney. In addition to all of the powers
-----------------
granted to the Collateral Agent pursuant to Section 10.06 of the Indenture,
BPC hereby appoints and constitutes the Collateral Agent as BPC's
attorney-in-fact to exercise all of the following powers upon and at any
time after the occurrence of an Event of Default for so long as such Event
of Default is continuing: (i) collection of proceeds of any Pledged
Collateral; (ii) conveyance of any item of Pledged Collateral to any
purchaser thereof; (iii) giving of any notices or recording of any Liens
under Section 5 hereof; (iv) making of any payments (upon receipt of funds
thereof) or taking any acts under Section 9 hereof and (v) paying or
discharging taxes or Liens levied or placed upon or threatened against the
Pledged Collateral, in the amounts necessary to discharge the same, and
such payments made by the Collateral Agent to become the obligations of BPC
to the Collateral Agent, due and payable immediately without demand. The
Collateral Agent's authority hereunder shall include, without limitation,
the authority to endorse and negotiate, for the Collateral Agent's own
account, any checks or instruments in the name of BPC, execute and give
receipt for any certificate of ownership or any document, transfer title to
any item of Pledged Collateral, sign BPC's name on all financing statements
or any other documents deemed necessary or appropriate to preserve, protect
or perfect the security interest in the Pledged Collateral and to file the
same, prepare, file and sign BPC's name on any notice of Lien, and prepare,
file and sign BPC's name on a proof of claim in bankruptcy or similar
document against any customer of BPC, and to take any other actions arising
from or incident to the powers granted to the Collateral Agent in this
Agreement. This power of attorney is coupled with an interest and is
irrevocable by BPC.
SECTION 9. Collateral Agent May Perform. Subject to Section 7.01(e)
----------------------------
of the Indenture, if BPC fails to perform any agreement contained herein,
the Collateral Agent may itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Collateral Agent incurred in
connection therewith shall be payable by BPC under Section 14 hereof.
SECTION 10. No Assumption of Duties; Reasonable Care. The rights and
----------------------------------------
powers granted to the Collateral Agent hereunder are being granted in order
to preserve and protect the Collateral Agent's and the Holders' of Notes
security interest in and to the Pledged Collateral granted hereby and shall
not be interpreted to, and shall not, impose any duties on the Collateral
Agent in connection therewith. The Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the
Pledged Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which the Collateral Agent accords
its own property, it being understood that the Collateral Agent shall not
have any responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Pledged Collateral, whether or not the Collateral Agent has
or is deemed to have knowledge of such matters, or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Pledged Collateral.
<PAGE>
SECTION 11. Subsequent Changes Affecting Collateral. BPC represents
---------------------------------------
to the Collateral Agent and the Holders of Notes that BPC has made its own
arrangements for keeping informed of changes or potential changes affecting
the Pledged Collateral (including, but not limited to, rights to convert,
rights to subscribe, payment of dividends, payments of interest and/or
principal, reorganization or other exchanges, tender offers and voting
rights), and BPC agrees that the Collateral Agent and the Holders of Notes
shall have no responsibility or liability for informing BPC of any such
changes or potential changes or for taking any action or omitting to take
any action with respect thereto. BPC covenants that it will not, without
the prior written consent of the Collateral Agent, vote to enable, or take
any other action to permit, the Issuer to issue any capital stock or other
securities or to sell or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral or create or permit to exist any
Lien upon or with respect to any of the Pledged Collateral, except for the
security interests granted under this Agreement. BPC will defend the
right, title and interest of the Collateral Agent and the Holders of Notes
in and to the Pledged Collateral against the claims and demands of all
Persons.
SECTION 12. Remedies Upon Default.
---------------------
(a) If any Default or Event of Default shall have occurred and
be continuing, the Collateral Agent and the Holders of Notes shall have,
in addition to all other rights given by law or by this Agreement or the
Indenture, all of the rights and remedies with respect to the Pledged
Collateral of a secured party under the UCC as in effect in the State of
New York at that time. The Collateral Agent may, without notice and at
its option, transfer or register, and BPC shall register or cause to be
registered upon request therefor by the Collateral Agent, the Pledged
Collateral or any part thereof on the books of the Issuer into the name
of the Collateral Agent or the Collateral Agent's nominee(s), with or
without any indication that such Pledged Collateral is subject to the
security interest hereunder. In addition, with respect to any Pledged
Collateral that shall then be in or shall thereafter come into the
possession or custody of the Collateral Agent, the Collateral Agent may
sell or cause the same to be sold at any broker's board or at public or
private sale, in one or more sales or lots, at such price or prices as
the Collateral Agent may deem best, for cash or on credit or for future
delivery, without assumption of any credit risk. The purchaser of any
or all Pledged Collateral so sold shall thereafter hold the same
absolutely, free from any claim, encumbrance or right of any kind
whatsoever. Unless any of the Pledged Collateral threatens to decline
speedily in value or is or becomes of a type sold on a recognized
market, the Collateral Agent will give BPC reasonable notice of the time
and place of any public sale thereof, or of the time after which any
private sale or other intended disposition is to be made. Any sale of
the Pledged Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies, commercial finance
companies, or other financial institutions disposing of property similar
to the Pledged Collateral shall be deemed to be commercially reasonable.
Any requirements of reasonable notice shall be met if such notice is
mailed to BPC as provided below in Section 18.1, at least ten days
before the time of the sale or disposition. Any other requirement of
notice, demand or advertisement for sale is, to the extent permitted by
law, waived. The Collateral Agent or any Holder of Notes may, in its
own name or in the name of a designee or nominee, buy any of the Pledged
Collateral at any public sale and, if permitted by applicable law, at
any private sale. All expenses (including court costs and reasonable
attorneys' fees and disbursements) of, or incident to, the enforcement
of any of the provisions hereof shall be recoverable from the proceeds
of the sale or other disposition of the Pledged Collateral.
<PAGE>
(b) If the Collateral Agent shall determine to exercise its
right to sell any or all of the Pledged Shares pursuant to Section 12(a)
above, and if in the opinion of counsel for the Collateral Agent it is
necessary, or if in the opinion of the Collateral Agent it is advisable,
to have the Pledged Shares or that portion thereof to be sold,
registered under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), BPC will cause the Issuer to (i) execute
and deliver, and cause its directors and officers to execute and
deliver, all at the Issuer's expense, all such instruments and
documents, and to do or cause to be done all such other acts and things
as may be necessary or, in the opinion of the Collateral Agent,
advisable to register such Pledged Shares under the provisions of the
Securities Act, (ii) cause the registration statement relating thereto
to become effective and to remain effective for a period of 180 days
from the date of the first public offering of such Pledged Shares, or
that portion thereof to be sold and (iii) make all amendments thereto
and/or to the related prospectus that, in the opinion of the Collateral
Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. BPC agrees to
cause the Issuer to comply with the provisions of the securities or
"Blue Sky" laws of any jurisdiction that the Collateral Agent shall
designate for the sale of the Pledged Shares and to make available to
the Issuer's security holders, as soon as practicable, an earnings
statement (which need not be audited) that will satisfy the provisions
of Section 11(a) of the Securities Act. BPC will cause such Issuer to
furnish to the Collateral Agent such number of copies as the Collateral
Agent may reasonably request of each preliminary and final prospectus,
to notify the Collateral Agent promptly of the happening of any event as
a result of which any then effective prospectus includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of then existing circumstances, and to cause the
Collateral Agent to be furnished with such number of copies as the
Collateral Agent may request of such supplement to or amendment of such
prospectus. BPC will cause the Issuer, to the extent permitted by law,
to indemnify, defend and hold harmless the Collateral Agent and the
Holders of Notes from and against all losses, liabilities, expenses or
claims (including reasonable legal expenses and the reasonable costs of
investigation) that the Collateral Agent or the Holders of Notes may
incur under the Securities Act or otherwise, insofar as such losses,
liabilities, expenses or claims arise out of or are based upon any
alleged untrue statement of a material fact contained in such
registration statement (or any amendment thereto) or in any preliminary
or final prospectus (or any amendment or supplement thereto), or arise
out of or are based upon any alleged omission to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, except to the extent that any such losses,
liabilities, expenses or claims arise solely out of or are based upon
any such alleged untrue statement made or such alleged omission to state
a material fact included or excluded on the written direction of the
Collateral Agent. BPC will cause the Issuer to bear all costs and
expenses of carrying out its obligations hereunder.
(c) In view of the fact that federal and state securities laws
may impose certain restrictions on the method by which a sale of the
Pledged Collateral may be effected after a Default or an Event of
Default, BPC agrees that upon the occurrence or existence of any Default
or Event of Default, the Collateral Agent may, from time to time,
attempt to sell all or any part of the Pledged Collateral by means of a
private placement, restricting the prospective purchasers to those who
will represent and agree that they are purchasing for investment only
and not for distribution. In so doing, the Collateral Agent may solicit
offers to buy the Pledged Collateral, or any part of it, for cash, from
a limited number of investors who might be interested in purchasing the
Pledged Collateral. BPC
<PAGE>
acknowledges and agrees that any such private sale may result in prices
and terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner.
The Collateral Agent shall be under no obligation to delay a sale of any
of the Pledged Collateral for the period of time necessary to permit the
Issuer to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if the Issuer
agrees to do so.
(d) BPC further agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Collateral pursuant to this
Section 12 valid and binding and in compliance with any and all other
applicable requirements of law. BPC further agrees that a breach of any
of the covenants contained in this Section 12 will cause irreparable
injury to the Collateral Agent and the Holders of Notes, that the
Collateral Agent and the Holders of Notes have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 12 shall be specifically enforceable
against BPC, and BPC hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for
a defense that no Default or Event of Default has occurred under the
Indenture.
SECTION 13. Irrevocable Authorization and Instruction to the Issuer.
-------------------------------------------------------
BPC hereby authorizes and instructs the Issuer to comply with any
instruction received by the Issuer from the Collateral Agent that (i)
states that a Default or an Event of Default has occurred and (ii) is
otherwise in accordance with the terms of this Agreement, without any other
or further instructions from BPC, and BPC agrees that the Issuer shall be
fully protected in so complying.
SECTION 14. Fees and Expenses. BPC will upon demand pay to the
-----------------
Collateral Agent such fees set forth in the letter dated June 6, 1996, from
the Trustee and Collateral Agent to BPC and as may be agreed upon from time
to time in writing and the amount of any reasonable fees and disbursements
of its counsel, of any investment banking firm, business broker or other
selling agent and of any other experts and agents retained by the
Collateral Agent) that the Collateral Agent may incur in connection with
(i) the administration of this Agreement, (ii) the custody or preservation
of, or the sale of, collection from, or other realization upon, any of the
Pledged Collateral, (iii) the exercise or enforcement of any of the rights
of the Collateral Agent and the Holders of Notes hereunder or (iv) the
failure by BPC to perform or observe any of the provisions hereof, in each
case other than any such expenses that arise from the gross negligence or
willful misconduct of the Trustee or Collateral Agent.
SECTION 15. Note Interest Absolute. All rights of the Collateral
----------------------
Agent and the Holders of Notes and the security interests created
hereunder, and all obligations of BPC hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment
or waiver of or any consent to any departure from the Indenture;
<PAGE>
(c) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, BPC in respect of the
Obligations or of this Agreement.
SECTION 16. Application of Proceeds. Upon the occurrence and during
-----------------------
the continuance of a Default or an Event of Default, the proceeds of any
sale of, or other realization upon, all or any part of the Pledged
Collateral and any cash held shall be applied by the Collateral Agent in
the following order of priorities:
first, to payment of the expenses of such sale or other realization,
-----
including reasonable compensation to agents and counsel for the Collateral
Agent, and all expenses, liabilities and advances incurred or made by the
Collateral Agent in connection therewith, and any other unreimbursed fees
and expenses for which the Collateral Agent is to be reimbursed pursuant to
Section 14 hereof;
second, to the Trustee for the payment of all sums due and owing to
------
it pursuant to Section 7.07 of the Indenture;
third, to the ratable payment (based on the principal amount of Notes
-----
deemed by the Indenture to be outstanding at the time of distribution) of
accrued and unpaid interest and Liquidated Damages, if any, on such
outstanding Notes;
fourth, to the ratable payment (based on the principal amount of
------
Notes deemed by the Indenture to be outstanding at the time of
distribution) of unpaid principal of such outstanding Notes;
fifth, to the ratable payment (based on the principal amount of Notes
-----
deemed by the Indenture to be outstanding at the time of distribution) of
all other Obligations, until all Obligations shall have been paid in full;
and
sixth, to payment to BPC or its successors or assigns, or as a court
-----
of competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
SECTION 17. Uncertificated Securities. Notwithstanding anything to
-------------------------
the contrary contained herein, if any Pledged Shares (whether now owned or
hereafter acquired) are uncertificated Pledged Shares, BPC shall promptly
notify the Collateral Agent, and shall promptly take all actions required
to perfect the security interest of the Collateral Agent under applicable
law (including, in any event, under Sections 8-313 and 8-321 of the New
York Uniform Commercial Code). BPC further agrees to take such actions as
the Collateral Agent deems necessary or desirable to effect the foregoing
and to permit the Collateral Agent to exercise any of its rights and
remedies hereunder, and agrees to provide an Opinion of Counsel
satisfactory to the Pledgee with respect to any such pledge of
uncertificated Pledged Shares promptly upon request of the Collateral
Agent.
SECTION 18. Miscellaneous Provisions.
------------------------
<PAGE>
Section 18.1 Notices. All notices, approvals, consents or
-------
other communications required or desired to be given hereunder shall be in
the form and manner as set forth in Section 11.02 of the Indenture, and
delivered to the addresses set forth in such Section, or, in the case of
the Collateral Agent, to: First Trust of New York, National Association,
100 Wall Street, Suite 1600, New York, New York 10005, Attention: Corporate
Trust Administration, Telecopy No. (212) 809-5459.
Section 18.2 Certificate and Opinion as to Conditions
----------------------------------------
Precedent. Upon any request or application by BPC to the Collateral Agent
- ---------
to take any action or omit to take any action under this Agreement, BPC
shall deliver to the Collateral Agent an Officer's Certificate and/or an
Opinion of Counsel in accordance with the requirements of Section 10.03,
10.04 and 10.05 of the Indenture.
Section 18.3 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Agreement may not be used to interpret another pledge, security or
debt agreement of BPC, the Issuer or any subsidiary thereof. No such
pledge, security or debt agreement may be used to interpret this Agreement.
Section 18.4 Severability. The provisions of this Agreement
------------
are severable, and if any clause or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity
or unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause
or provision in any other jurisdiction or any other clause or provision of
this Agreement in any jurisdiction.
Section 18.5 No Recourse Against Others. No director,
--------------------------
officer, employee, stockholder or affiliate, as such, of BPC or the Issuer
shall have any liability for any obligations of BPC under this Agreement or
for any claim based on, in respect of or by reason of such obligations or
their creation. Each Holder of Notes, by accepting a Note, waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
Section 18.6 Headings. The headings of the Articles and
--------
Sections of this Agreement have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
Section 18.7 Counterpart Originals. This Agreement may be
---------------------
signed in two or more counterparts. Each signed copy shall be an original,
but all of them together represent one and the same agreement. Each
counterpart may be executed and delivered by telecopy, if such delivery is
promptly followed by the original manually signed copy sent by overnight
courier.
Section 18.8 Benefits of Agreement. Nothing in this
---------------------
Agreement, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Holders of Notes,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 18.9 Amendments, Waivers and Consents. Any amendment
--------------------------------
or waiver of any provision of this Agreement and any consent to any
departure by BPC from any provision of this Agreement shall be effective
only if made or given in compliance with all of the terms and provisions of
the Indenture necessary for amendments or waivers of, or consents to any
departure by BPC from any provision of the Indenture, as applicable, and
neither the Collateral Agent or the Trustee nor any Holder of Notes shall
be deemed, by any act, delay, indulgence, omission or otherwise, to have
waived any right
<PAGE>
or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof.
Failure of the Collateral Agent or any Holder of Notes to exercise, or
delay in exercising, any right, power or privilege hereunder shall not
operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver
by the Collateral Agent or any Holder of Notes of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right
or remedy that the Collateral Agent or such Holder of Notes would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any rights or remedies provided by law.
Section 18.10 Interpretation of Agreement. Time is of the
---------------------------
essence in each provision of this Agreement of which time is an element.
All terms not defined herein or in the Indenture shall have the meaning set
forth in the applicable UCC, except where the context otherwise requires.
To the extent a term or provision of this Agreement conflicts with the
Indenture and is not dealt with herein with more specificity, the Indenture
shall control with respect to the subject matter of such term or provision.
Acceptance of or acquiescence in a course of performance rendered under
this Agreement shall not be relevant to determine the meaning of this
Agreement even though the accepting or acquiescing party had knowledge of
the nature of the performance and opportunity for objection.
Section 18.11 Continuing Security Interest; Transfer of Notes.
-----------------------------------------------
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (i) remain in full force and effect until the payment
in full of all the Obligations and all the fees and expenses owing to the
Collateral Agent, (ii) be binding upon BPC, its successors and assigns, and
(iii) inure, together with the rights and remedies of the Collateral Agent
hereunder, to the benefit of the Collateral Agent, the Holders of Notes and
their respective successors, transferees and assigns.
Section 18.12 Reinstatement. This Agreement shall continue to be
-------------
effective or be reinstated if at any time any amount received by the
Collateral Agent or any Holder of Notes in respect of the Obligations is
rescinded or must otherwise be restored or returned by the Collateral Agent
or any Holder of Notes upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of BPC or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for BPC or
any substantial part of its assets, or otherwise, all as though such
payments had not been made.
Section 18.13 Survival of Provisions. All representations,
----------------------
warranties and covenants of BPC contained herein shall survive the
execution and delivery of this Agreement, and shall terminate only upon the
full and final payment and performance by BPC of the Obligations; except
that the obligations of BPC pursuant to Sections 14 and 18.15 of this
Agreement shall survive the termination or discharge of this Agreement
(including any discharge pursuant to Bankruptcy Law) or the resignation or
removal of the Collateral Agent.
Section 18.14 Waivers. BPC waives presentment and demand for
-------
payment of any of the Obligations, protest and notice of dishonor or
default with respect to any of the Obligations, and all other notices to
which BPC might otherwise be entitled, except as otherwise expressly
provided herein or in the Indenture.
<PAGE>
Section 18.15 Authority of the Collateral Agent.
---------------------------------
(a) The Collateral Agent shall have and be entitled to exercise
all powers hereunder that are specifically granted to the Collateral
Agent by the terms hereof, together with such powers as are reasonably
incident thereto. The Collateral Agent may perform any of its duties
hereunder or in connection with the Pledged Collateral by or through
agents or employees and shall be entitled to retain counsel of its
choice and to act in reliance upon the advice of such counsel concerning
all such matters. Neither the Collateral Agent nor any director,
officer, employee, attorney or agent of the Collateral Agent shall be
responsible for the validity, effectiveness or sufficiency hereof or of
any document or security furnished pursuant hereto. The Collateral
Agent and its directors, officers, employees, attorneys and agents shall
be entitled to rely on any communication, instrument or document
believed by it or them to be genuine and correct and to have been signed
or sent by the proper person or persons. BPC agrees to indemnify and
hold harmless the Collateral Agent, the Holders of Notes and any other
Person from and against any and all costs, expenses (including the
reasonable fees and disbursements of counsel (including, the allocated
costs of inside counsel)), claims and liabilities incurred by the
Collateral Agent, the Holders of Notes or such Person hereunder, unless
such claim or liability shall be due to willful misconduct or gross
negligence on the part of the Collateral Agent, the Holders of Notes or
such Person.
(b) BPC acknowledges that the rights and responsibilities of
the Collateral Agent under this Agreement with respect to any action
taken by the Collateral Agent or the exercise or non-exercise by the
Collateral Agent of any option, right, request, judgment or other right
or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Collateral Agent and the Holders of
Notes, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as
between the Collateral Agent and BPC, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Holders of Notes
with full and valid authority so to act or refrain from acting, and BPC
shall not be obligated or entitled to make any inquiry respecting such
authority.
(c) No provision of this Indenture shall require the Collateral
Agent to expend or risk its own funds or incur any liability. The
Collateral Agent 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 Collateral Agent security
and indemnity satisfactory to it against any loss, liability or expense.
Section 18.16 Resignation or Removal of the Collateral Agent.
----------------------------------------------
Until such time as the Obligations shall have been paid in full, the
Collateral Agent may at any time, by giving written notice to BPC and
Holders of Notes, resign and be discharged of the responsibilities hereby
created, such resignation to become effective upon (i) the appointment of a
successor Collateral Agent and (ii) the acceptance of such appointment by
such successor Collateral Agent. As promptly as practicable after the
giving of any such notice, the Holders of Notes shall appoint a successor
Collateral Agent, which successor Collateral Agent shall be reasonably
acceptable to BPC. If no successor Collateral Agent shall be appointed and
shall have accepted such appointment within 60 days after the Collateral
Agent gives the aforesaid notice of resignation, the Collateral Agent may
apply to any court of competent jurisdiction to appoint a successor
Collateral Agent to act until such time, if any, as a successor shall have
been
<PAGE>
appointed as provided in this Section 18.16. Any successor so appointed by
such court shall immediately and without further act be superseded by any
successor Collateral Agent appointed by the Holders of a majority of the
then outstanding Notes, as provided in this Section 18.16. Simultaneously
with its replacement as Collateral Agent hereunder, the Collateral Agent so
replaced shall deliver to its successor all documents, instruments,
certificates and other items of whatever kind (including, without
limitation, the certificates and instruments evidencing the Pledged
Collateral and all instruments of transfer or assignment) held by it
pursuant to the terms hereof. The Collateral Agent that has resigned shall
be entitled to fees, costs and expenses to the extent incurred or arising,
or relating to events occurring, before its resignation or removal.
Section 18.17 Release; Termination of Agreement.
---------------------------------
(a) Subject to the provisions of Section 18.12 hereof, this
Agreement shall terminate (i) upon full and final payment and
performance of the Obligations (and upon receipt by the Collateral Agent
of BPC's written certification that all such Obligations have been
satisfied) and payment in full of all fees and expenses owing by BPC to
the Collateral Agent or (ii) on the day after the first anniversary of
the Legal Defeasance of all of the Obligations pursuant to Section 8.02
of the Indenture (other than those surviving Obligations specified
therein). At such time, the Collateral Agent shall, at the request of
BPC, reassign and redeliver to BPC all of the Pledged Collateral
hereunder that has not been sold, disposed of, retained or applied by
the Collateral Agent in accordance with the terms hereof. Such
reassignment and redelivery shall be without warranty by or recourse to
the Collateral Agent, except as to the absence of any prior assignments
by the Collateral Agent of its interest in the Pledged Collateral, and
shall be at the expense of BPC.
(b) BPC agrees that it will not, except as permitted by the
Indenture, sell or dispose of, or grant any option or warrant with
respect to, any of the Pledged Collateral; provided, however, that if
BPC shall sell any of the Pledged Collateral in accordance with the
terms of the Indenture, including the requirement that BPC apply the Net
Proceeds of such sale in accordance with Section 4.10 of the Indenture,
the Collateral Agent shall, at the request of BPC and subject to
requirements of Section 10.03, 10.04 and 10.05 of the Indenture, release
the Pledged Collateral subject to such sale free and clear of the Lien
and security interest under this Agreement.
Section 18.18 Final Expression. This Agreement, together with
----------------
any other agreement executed in connection herewith, is intended by the
parties as a final expression of their Agreement and is intended as a
complete and exclusive statement of the terms and conditions thereof.
Section 18.19 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
-------------------------------------------------
OF JURY TRIAL; WAIVER OF DAMAGES.
- --------------------------------
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN BPC, THE COLLATERAL AGENT AND THE HOLDERS OF NOTES IN CONNECTION
WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
<PAGE>
OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF
NEW YORK.
(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN
PARAGRAPH (vi) BELOW, BPC, THE COLLATERAL AGENT AND THE HOLDERS OF NOTES
AGREE THAT ALL DISPUTES BETWEEN OR AMONG THEM ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL
COURTS LOCATED IN NEW YORK, NEW YORK, BUT BPC, THE COLLATERAL AGENT AND THE
HOLDERS OF NOTES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. BPC WAIVES IN
ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) BPC AGREES THAT THE COLLATERAL AGENT SHALL, IN ITS OWN
NAME OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF NOTES, HAVE THE RIGHT,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST BPC OR ITS
PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH TO
ENABLE THE COLLATERAL AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE COLLATERAL AGENT.
BPC AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY
PROCEEDING BROUGHT BY THE COLLATERAL AGENT TO REALIZE ON SUCH PROPERTY, OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE COLLATERAL
AGENT. BPC WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH THE COLLATERAL AGENT HAS COMMENCED A PROCEEDING DESCRIBED IN
THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iv) BPC, THE COLLATERAL AGENT AND THE HOLDERS OF NOTES EACH
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED
WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM
IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(v) BPC HEREBY IRREVOCABLY DESIGNATES CT CORPORATION AS THE
DESIGNEE, APPOINTEE AND AGENT OF BPC TO RECEIVE, FOR AND ON BEHALF OF BPC,
SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT. IT IS UNDERSTOOD THAT NOTICE AND A COPY OF SUCH PROCESS SERVED
ON SUCH AGENT, WILL BE FORWARDED PROMPTLY TO BPC, BUT THE FAILURE OF BPC TO
RECEIVE SUCH NOTICE AND COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF
SUCH PROCESS. BPC FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
<PAGE>
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO BPC AT ITS ADDRESS SET FORTH IN SECTION 11.02 OF
THE INDENTURE, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) BUSINESS DAYS
AFTER SUCH MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL
AGENT OR ANY HOLDER OF NOTES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BPC IN
ANY OTHER JURISDICTION.
(vii) BPC HEREBY AGREES THAT NEITHER THE COLLATERAL AGENT NOR
ANY HOLDER OF NOTES SHALL HAVE ANY LIABILITY TO BPC (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY BPC IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND
THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL
AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE COLLATERAL
AGENT OR SUCH HOLDER OF NOTES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE
THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE COLLATERAL AGENT OR SUCH
HOLDER OF NOTES, AS THE CASE MAY BE, CONSTITUTING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.
(viii) BPC WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY THE COLLATERAL AGENT OR ANY HOLDER OF NOTES OF ITS
RIGHTS DURING THE CONTINUANCE OF A DEFAULT OR AN EVENT OF DEFAULT TO
REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR
LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. BPC WAIVES
THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT OR ANY
HOLDER OF NOTES IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO
OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER
SECURITY FOR THE OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF THE COLLATERAL AGENT OR ANY HOLDER OF NOTES, OR TO
ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY
OR PERMANENT INJUNCTION THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT
BETWEEN BPC, THE COLLATERAL AGENT AND THE HOLDERS OF NOTES.
<PAGE>
Section 18.20 Acknowledgments. BPC hereby acknowledges that:
---------------
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement;
(b) neither the Collateral Agent nor any Holder of Notes has
any fiduciary relationship to BPC, and the relationship between the
Collateral Agent and the Holders of Notes, on the one hand, and BPC, on
the other hand, is solely that of a secured party and a creditor; and
(c) no joint venture exists among the Holders of Notes or among
BPC and the Holders of Notes.
<PAGE>
[Pledge Agreement Signature Page]
IN WITNESS WHEREOF, BPC and the Collateral Agent have each caused this
Agreement to be duly executed and delivered as of the date first above written.
PLEDGOR:
BPC HOLDING CORPORATION
By: /s/ Martin R. Imbler
--------------------------------------
Name: Martin R. Imbler
Title: President
COLLATERAL AGENT:
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
By: /s/ Alfia Monastra
--------------------------------------
Name: Alfia Monastra
Title: Assistant Vice President
Exhibit 4.6
EXECUTION COPY
================================================================================
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of June 18, 1996
by and among
BPC Holding Corporation
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and
---------
entered into as of June 18, 1996, by and among BPC Holding Corporation, a
Delaware corporation (the "Company"), and Donaldson, Lufkin & Jenrette
-------
Securities Corporation (the "Initial Purchaser"), who has agreed to
-----------------
purchase the Company's 12 1/2% Series A Senior Secured Notes due 2006 (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 12, 1996, (the "Purchase Agreement"), by and among the Company and
------------------
the Initial Purchaser. In order to induce the Initial Purchaser to
purchase the Series A Notes, the Company has 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
Purchaser set forth in Section 3 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.
------------
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.
------------
-1-
<PAGE>
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 Purchaser
--------------
proposes to sell the Series A Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, and to certain
"accredited investors," as such term is defined in Rule 501(a)(1), (2),
(3), (5) or (7) of Regulation D 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
---------
and First Trust of New York, National Association, as trustee (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 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
----------------------
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.
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<PAGE>
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-
------------------------
Dealer Transfer Restricted Securities.
Series B Notes: The Company's 12 1/2% Series B Senior Secured Notes due
--------------
2006 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.
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.
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 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 its best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time,
but in no event later than 90 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
-3-
<PAGE>
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 shall use its best efforts to cause the Exchange
Offer Registration Statement to be effective continuously, and shall keep
the Exchange Offer referred to 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 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 shall use its 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 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.
The Company shall use its 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 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 is 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
-4-
<PAGE>
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 shall
(x) cause to be filed, on or prior to 30 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 30 days after the
date on which the Company receives the notice specified in clause (ii)
above (and in any event within 180 days after the Closing Date), 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 its 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 becomes obligated to file such Shelf Registration Statement. If,
after the Company has filed an Exchange Offer Registration Statement which
satisfies the requirements of Section 3(a) above, the Company is 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
shall use its 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 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
-5-
<PAGE>
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 hereby agrees 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 on each
interest payment date to the Global Note Holder either (i) in the form of
additional Series B Notes, (ii) in cash, or (iii) in a combination of
additional Series B Notes and cash provided, however, that in the event the
Company elects to pay Liquidated Damages pursuant to clause (iii), cash and
Series B Notes shall be distributed to all Holders equally on a pro rata
basis; provided, further, however, that the Company may pay cash solely to
the extent necessary to prevent the issuance of Notes in denominations less
than $1,000. If payable in cash, all accrued liquidated damages shall be
paid by wire transfer of immediately available funds or by federal funds
check and to Holders of Certificated Securities by mailing checks to their
registered addresses on each Damages Payment Date. All obligations of the
Company 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 shall comply with all applicable provisions of
Section 6(c) below, shall use its 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
-6-
<PAGE>
counsel to the Company there is a substantial question as to whether the
Exchange Offer is permitted by applicable federal law, the Company hereby
agrees to seek a no-action letter or other favorable decision from the
Commission allowing the Company to Consummate an Exchange Offer for such
Series A Notes. The Company hereby agrees to pursue the issuance of such a
decision to the Commission staff level. In connection with the foregoing,
the Company hereby agrees 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 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 (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 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 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 shall provide a supplemental letter to the
Commission (A) stating that the Company is 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 has 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
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 shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect
-7-
<PAGE>
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 pursuant to Section 4(b) hereof), and pursuant thereto the Company
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
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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 shall:
(i) use its 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 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 its 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;
(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
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<PAGE>
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 shall use its best efforts to obtain the withdrawal or lifting
of such order at the earliest possible time;
(iv) furnish to the Initial Purchaser, 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 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 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 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 cause the Company's
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
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<PAGE>
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 hereby
consents 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 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 shall:
(A) furnish (or in the case of paragraphs (2) and (3), use its
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 by (x) the President or any Vice President and (y) a
principal financial or accounting officer of the Company,
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 hereunder, 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 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, representatives of the
independent public accountants for the Company and have considered
the matters required to be stated therein and the statements
contained therein, although such counsel has not independently
verified the accuracy, completeness or fairness of such
statements; and that such counsel advises that,
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<PAGE>
on the basis of the foregoing (relying as to materiality to a
large extent upon facts provided to such counsel by officers and
other representatives of the Company and without independent check
or verification), 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. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in 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 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 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 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,
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<PAGE>
however, that the Company 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 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 its 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 its 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;
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<PAGE>
(xviii) otherwise use its 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);
(xviii) 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 may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its 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
(xix) 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 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 Purchaser 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 Holders of Transfer
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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 (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 internal expenses
(including, without limitation, all salaries and expenses of its officers
and employees performing legal or accounting duties), the expenses of any
annual audit and the fees and expenses of any Person, including special
experts, retained by the Company.
(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 will reimburse
the Initial Purchaser 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 agrees 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 by any of the Holders expressly for use therein;
provided, however, that the Company 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
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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 with Section 6 of this Agreement.
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, 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 of its 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
the Company was not otherwise aware of such action or claim). In such
event, the Company shall retain counsel reasonably satisfactory to the
Indemnified Holders to represent the Indemnified Holders and any others the
Company 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 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 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 agrees 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 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 its
directors, officers, and any person controlling (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) the Company, 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 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 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, and the Company, 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.
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(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 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, 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, 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 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, 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 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 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 con-
tribute 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 hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in
which the Company is not subject to Section 13 or 15(d)
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<PAGE>
of the Securities Exchange Act, to make available, upon request of any
Holder of Transfer Restricted 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 agrees 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. The Company will not, 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 securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. The Company 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
-17-
<PAGE>
consent of Holders of all outstanding Transfer Restricted Securities and
(iii) in the case of all other 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:
BPC Holding Corporation
101 Oakley Street
P.O. Box 959
Evansville, Indiana 47706-0959
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: Lawrence G. Graev, 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.
-18-
<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.
-19-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
BPC HOLDING CORPORATION
By: /s/ Martin R. Imbler
-------------------------------------------------
Name: Martin R. Imbler
Title: President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Glenn Tongue
-----------------------------------
Name: Glenn Tongue
Title: Managing Director
Exhibit 10.22
EXECUTION COPY
================================================================================
PURCHASE AGREEMENT
$105,000,000
12 1/2% Senior Secured Notes due 2006
of
BPC Holding Corporation
June 12, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
================================================================================
<PAGE>
BPC HOLDING CORPORATION
$105,000,000
12 1/2% Senior Secured Notes due 2006 of
BPC Holding Corporation
PURCHASE AGREEMENT
June 12, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
BPC Holding Corporation, a Delaware corporation (the "COMPANY"),
and Berry Plastics Corporation, a Delaware corporation ("BERRY"), agree
with you as follows:
1. ISSUANCE OF SECURITIES. The Company proposes to issue and
-----------------------
sell to Donaldson, Lufkin & Jenrette Securities Corporation (the "INITIAL
PURCHASER") $105,000,000 in aggregate principal amount of 12 1/2% Senior
Secured Notes due 2006 (the "SENIOR NOTES"). The Senior Notes are to be
issued pursuant to the provisions of an indenture (the "INDENTURE") to be
dated June 18, 1996, between the Company and First Trust of New York,
National Association, as trustee (the "TRUSTEE"). Capitalized terms used
but not defined herein shall have the meanings given to such terms in the
Indenture.
The Senior Notes will be offered and sold to you pursuant to an
exemption from the registration requirements under the Securities Act of
1933, as amended (the "ACT"). The Company has prepared a preliminary
offering memorandum, dated May 31, 1996 (the "PRELIMINARY OFFERING
MEMORANDUM") and a final offering memorandum, dated June 12, 1996 (the
"OFFERING MEMORANDUM"), relating to the Company and the Senior Notes.
Upon original issuance thereof, and until such time as the same
is no longer required under the applicable requirements of the Act, the
Senior Notes (and all securities issued in exchange therefor or in
substitution thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
<PAGE>
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, OR (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 OR (c) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY, OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE."
You have advised the Company that you will make offers (the
"EXEMPT RESALES") of the Senior Notes purchased by you hereunder on the
terms set forth in the Offering Memorandum, as amended or supplemented,
solely to (i) persons (each, a "144A PURCHASER") whom you reasonably
believe to be "qualified institutional buyers" as defined in Rule 144A
under the Act ("QIBS") and (ii) a limited number of other institutional
"accredited investors," as defined in Rule 501(a) (1), (2), (3) or (7)
under the Act, that make certain representations and agreements to the
Company (each, an "ACCREDITED INVESTOR") (such persons specified in clauses
(i) and (ii) being referred to herein as the "ELIGIBLE PURCHASERS").
Holders (including subsequent transferees) of the Senior Notes
will have the registration rights set forth in the registration rights
agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing
Date (as defined herein), in substantially the form of Exhibit A hereto,
---------
for so long as such Senior Notes constitute "TRANSFER RESTRICTED
SECURITIES" (as defined in the Registration Rights Agreement). Pursuant to
the Registration Rights Agreement, the Company will agree to file with the
Securities and Exchange Commission (the "COMMISSION") within 45 days of the
Closing Date and under the circumstances set forth therein, (i) a
registration statement under the Act (the "EXCHANGE OFFER REGISTRATION
STATEMENT") relating to the Company's 12 1/2% Series B Senior Secured Notes
due 2006 (the "SERIES B NOTES" and, together with the Senior Notes, the
"NOTES") to be offered in exchange for the Senior Notes (such offer to
exchange being referred to as the "REGISTERED EXCHANGE OFFER") and
(ii) under the circumstances set forth in the Registration Rights
Agreement, a shelf registration statement pursuant to Rule 415 under the
Act (the "SHELF REGISTRATION STATEMENT") relating to the resale by certain
holders of the Senior Notes, and to use its best efforts to cause such
Registration Statements to be declared effective within 90 days of the
Closing Date. This Agreement, the Indenture, the Registration Rights
Agreement, the Escrow and Disbursement Agreement and the Holding Pledge
Agreement are hereinafter referred to collectively as the "OPERATIVE
DOCUMENTS." As used in this Purchase Agreement (this "AGREEMENT"), the
term "SUBSIDIARY" shall mean any subsidiary of the Company.
<PAGE>
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
-------------------------------
representations and warranties contained in this Agreement, and subject to
the terms and conditions contained herein, the Company agrees to issue and
sell to you, and you agree to purchase from the Company, $105,000,000 in
aggregate principal amount of Senior Notes at a purchase price equal to
$1,000 per Senior Note (the "PURCHASE PRICE").
3. DELIVERY AND PAYMENT. Delivery to you of and payment for
--------------------
the Senior Notes shall be made at 9:00 A.M., New York City time, on June
18, 1996 (the "CLOSING DATE") at the offices of O'Sullivan Graev &
Karabell, LLP, 30 Rockefeller Plaza, New York, New York 10112, or such
other time or place as you shall reasonably designate.
One or more Senior Notes in definitive form, registered in the
name of Cede & Co., as nominee of The Depository Trust Company ("DTC"),
having an aggregate amount corresponding to the aggregate amount of the
Senior Notes sold pursuant to Exempt Resales to QIBs and Accredited
Investors (collectively, the "GLOBAL NOTE"), shall be delivered by the
Company to the Initial Purchaser (or as the Initial Purchaser directs),
against payment by the Initial Purchaser of the purchase price therefor, by
wire transfer of immediately available funds to such account or accounts as
the Company shall specify, provided that the Company shall give at least
two business days' prior written notice to the Initial Purchaser of the
information required to effect such wire transfers. The Global Note shall
be made available to the Initial Purchaser for inspection not later than
9:30 A.M. on the business day immediately preceding the Closing Date.
4. AGREEMENTS OF THE COMPANY. The Company hereby agrees with
-------------------------
you as follows:
(a) To advise you promptly and, if requested by you, confirm
such advice in writing, (i) of the issuance by any state securities
commission of any stop order suspending the qualification or exemption
from qualification of any Senior Notes for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by
the Commission or any state securities commission or other regulatory
authority, and (ii) of the happening of any event which makes any
statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or which requires the
making of any additions to or changes in the Preliminary Offering
Memorandum or the Offering Memorandum in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The Company shall use its reasonable best efforts to
prevent the issuance of any stop order or order suspending the
qualification or exemption of the Senior Notes under any state
securities or Blue Sky laws, and, if at any time any state securities
commission issues an order suspending the qualification or exemption
of the Senior Notes, the Company shall use every reasonable effort to
obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) To furnish to you without charge as many copies of the
Preliminary Offering Memorandum and Offering Memorandum, and any
amendments or supplements thereto, as you may reasonably request. The
Company consents to the use of the Preliminary Offering Memorandum and
the Offering Memorandum, and any amendments and supplements thereto,
required pursuant to this Agreement by you in connection with the
Exempt Resales.
(c) Not to amend or supplement the Offering Memorandum prior to
the Closing Date unless you shall previously have been advised of, and
shall not have reasonably objected to, such amendment or supplement
within a reasonable time, but in any event not longer than five
business days after being furnished a copy of such amendment or
supplement. The Company shall
<PAGE>
promptly prepare, upon any reasonable request by you, any amendment or
supplement to the Offering Memorandum that may be necessary or
advisable in connection with Exempt Resales.
(d) If, in connection with any Exempt Resales or market making
transactions after the date of this Agreement and prior to the
consummation of the Registered Exchange Offer, any event shall occur
that, in the judgment of the Company or in the judgment of counsel to
you, makes any statement of a material fact in the Offering Memorandum
untrue or that requires the making of any additions to or changes in
the Offering Memorandum in order to make the statements in the
Offering Memorandum, in the light of the circumstances at the time
that the Offering Memorandum is delivered to prospective Eligible
Purchasers, not misleading, or if it is necessary to amend or
supplement the Offering Memorandum to comply with all applicable laws,
the Company shall promptly notify you of such event and prepare an
appropriate amendment or supplement to the Offering Memorandum so that
(i) the statements in the Offering Memorandum as amended or
supplemented will, in the light of the circumstances at the time that
the Offering Memorandum is delivered to prospective Eligible
Purchasers, not be misleading and (ii) the Offering Memorandum will
comply with applicable law.
(e) To cooperate with you and your counsel in connection with
the qualification of the Senior Notes for offer and sale by you and by
dealers under the state securities or Blue Sky laws of such
jurisdictions as you may request (provided, however, that the Company
shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not now so qualified or to take any action
that would subject it to general consent to service of process in any
jurisdiction in which it is not now so subject). The Company will
continue such qualification in effect so long as required by law for
distribution of the Senior Notes and will file such consents to
service of process or other documents as may be necessary in order to
effect such qualification.
(f) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all
costs, expenses, fees and taxes incident to and in connection with:
(i) the preparation, printing, filing and distribution of the
Preliminary Offering Memorandum and the Offering Memorandum
(including, without limitation, financial statements and exhibits) and
all amendments and supplements thereto, (ii) the preparation, printing
(including, without limitation, word processing and duplication costs)
and delivery of this Agreement, the Indenture, the Registration Rights
Agreement, the Transaction Documents (as defined herein), the Escrow
and Disbursement Agreement and the Holding Pledge Agreement, all
preliminary and final Blue Sky Memoranda and all other agreements,
memoranda, correspondence and other documents printed and delivered in
connection herewith and with the Exempt Resales, (iii) the issuance
and delivery by the Company of the Notes, (iv) the qualification of
the Notes for offer and sale under the securities or Blue Sky laws of
the several states (including, without limitation, the reasonable fees
and disbursements of your counsel relating to such registration or
qualification), (v) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and
supplements thereto, as may be reasonably requested for use in
connection with the Exempt Resales, (vi) the preparation of
certificates for the Notes (including, without limitation, printing
and engraving thereof), (vii) the fees, disbursements and expenses of
the Company's counsel and accountants, (viii) all expenses and listing
fees in connection with the application for quotation of the Senior
Notes in the National Association of Securities Dealers, Inc.
Automated Quotation System - PORTAL ("PORTAL"), (ix) the rating of the
Notes by rating agencies, if any, (x) all fees and expenses (including
fees and expenses of counsel) of the Company in connection with
approval of the Notes by DTC for "book-entry" transfer, (xi) all fees
and expenses related to filing, recording or otherwise creating and
perfecting all necessary security interests pursuant to the
<PAGE>
Escrow and Disbursement Agreement and the Holding Pledge Agreement, as
applicable, and (xii) the performance by the Company of its other
obligations under this Agreement and the Operative Documents.
(g) To use the proceeds from the sale of the Senior Notes in the
manner described in the Offering Memorandum under the caption "USE OF
PROCEEDS."
(h) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders
of the Senior Notes.
(i) Prior to the Closing Date, to furnish to you, as soon as
they have been prepared, a copy of any unaudited interim consolidated
financial statements of the Company for any period subsequent to the
period covered by the financial statements appearing in the Offering
Memorandum.
(j) To use its best efforts to do and perform all things
required to be done and performed under this agreement by it prior to
or after the Closing Date and to satisfy all conditions precedent on
its part to the delivery of the Senior Notes.
(k) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Senior Notes in a manner
that would require the registration under the Act of the sale to you
or the Eligible Purchasers of Senior Notes.
(l) For so long as any of the Notes remain outstanding and
during any period in which the Company is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), to make available to any Eligible Purchaser or
beneficial owner of Senior Notes in connection with any sale thereof
and any prospective purchaser of such Senior Notes from such Eligible
Purchaser or beneficial owner, the information required by Rule
144A(d)(4) under the Act.
(m) To comply with its agreements in the Registration Rights
Agreement, and all agreements set forth in the representation letters
of the Company to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
(n) To cause the Registered Exchange Offer to be made in the
appropriate form, as contemplated by the Registration Rights
Agreement, to permit registration of the Series B Notes to be offered
in exchange for the Senior Notes and to comply with all applicable
federal and state securities laws in connection with the Registered
Exchange Offer.
(o) To use its best efforts to effect the inclusion of the
Senior Notes in PORTAL.
(p) For so long as any of the Notes are outstanding, to deliver
without charge to the Initial Purchaser, promptly upon their becoming
available, copies of (i) all reports or other publicly available
information that the Company shall mail or otherwise make available to
its holders and (ii) all reports, financial statements and proxy or
information statements filed by the Company with the Commission or any
national securities exchange and such other publicly available
information concerning the Company or its subsidiaries, including
without limitation, press releases.
<PAGE>
(q) Neither the Company nor any of its Subsidiaries will take,
directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Notes. Except as permitted by the Act, the
Company will not distribute any preliminary offering memorandum,
offering memorandum or other offering material in connection with the
offering and sale of the Notes.
(r) Upon the closing of the offering of the Senior Notes, to use
a portion of the net proceeds of the offering of the Senior Notes to
purchase and pledge to the Trustee for the benefit of holders of the
Notes the Marketable Securities in such amount as will be sufficient
upon receipt of scheduled interest and principal payments of such
securities, in the opinion of a nationally recognized firm of public
accountants selected by the Company, to provide for payment in full of
the first six scheduled interest payments due on the Notes. The
Company will take all actions necessary to pledge, assign and set over
to the Trustee, for the benefit of holders of the Notes, and
irrevocably grant to the Trustee for the benefit of the holders of the
Notes a first priority security interest in all of its right, title
and interest in such Marketable Securities held by the Trustee or on
its behalf, in order to secure the obligations of the Company to pay
interest on the Notes and, in certain circumstances, the obligations
of the Company to pay principal on the Notes.
(s) To use its best efforts to do and perform all things
necessary to perfect, to the extent permitted by law, a first priority
security interest in favor of the Trustee for the benefit of the
holders of the Notes, in the Collateral.
(t) To comply with the agreements in the Indenture, the
Registration Rights Agreement, the Transaction Documents, the Escrow
and Disbursement Agreement, the Holding Pledge Agreement and each
other Operative Document.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
---------------------------------------------
represents and warrants to you that:
(a) The Preliminary Offering Memorandum, and the Offering
Memorandum (and each supplement and amendment thereto) have been
prepared in connection with the Exempt Resales. The Preliminary
Offering Memorandum and the Offering Memorandum do not, and any
supplement or amendment thereto will not contain any untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the representations and warranties contained in this paragraph (a)
shall not apply to statements in or omissions from the Preliminary
Offering Memorandum or Offering Memorandum (or any supplement or
amendment to them) made in reliance upon and in conformity with
information relating to you furnished to the Company in writing by you
expressly for use therein. The Company acknowledges for all purposes
under this Agreement that the statements set forth in the last
paragraph on the cover page, the stabilization legend, and the third
and fifth paragraphs under the caption "Plan of Distribution" in the
Offering Memorandum (or any amendment or supplement) constitute the
only written information furnished to the Company by you expressly for
use in the Offering Memorandum (or any amendment or supplement
thereto).
(b) Each of the Company and the Subsidiaries is a duly organized
and validly existing corporation in good standing under the laws of
its jurisdiction of incorporation, has the requisite corporate power
and authority to own, lease and operate its properties and to conduct
its business
<PAGE>
as it is currently being conducted and described in the Offering
Memorandum, and is duly qualified as a foreign corporation and is in
good standing in each jurisdiction where the ownership, leasing or
operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not,
singly or in the aggregate, have a material adverse effect on the
properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of the Company and the Subsidiaries
taken as a whole (a "MATERIAL ADVERSE EFFECT").
(c) The Company has all necessary corporate power and authority
to execute and deliver this Agreement, the Notes, the Indenture, the
Registration Rights Agreement, the Escrow and Disbursement Agreement
and the Holding Pledge Agreement, and to perform its obligations under
this Agreement, the Indenture, the Registration Rights Agreement, the
Escrow and Disbursement Agreement and the Holding Pledge Agreement and
to authorize, issue, sell and deliver the Notes as contemplated by
this Agreement.
(d) This Agreement has been duly authorized and validly executed
and delivered by the Company and constitutes a legal, valid and
binding agreement of the Company, enforceable against it in accordance
with its terms (assuming the due execution and delivery hereof by
you), subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws in effect from
time to time with respect to creditors' rights generally and to
principles of equity, whether at law or in equity and except as rights
to indemnity and contribution thereunder may be limited by federal and
state securities laws and public policy considerations underlying such
laws.
(e) The issuance and sale of the Senior Notes has been duly
authorized by the Company, and all legally required corporate
proceedings by the Company in connection with the issuance and sale of
the Senior Notes have been taken; each of the Senior Notes, when
issued and delivered to and paid for by the Initial Purchaser in
accordance with this Agreement (assuming the due authentication
thereof by the Trustee), will be a legal, valid and binding obligation
of the Company entitled to the benefits provided by the Indenture,
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws in effect from time to time with respect
to creditors' rights generally and to principles of equity, whether at
law or in equity and except as rights to indemnity and contribution
thereunder may be limited by federal and state securities laws and
public policy considerations underlying such laws.
(f) The Company has all requisite power to authorize and issue
the Series B Notes; the issuance of the Series B Notes has been duly
authorized by the Company and all legally required corporate
proceedings by the Company in connection with the issuance of the
Series B Notes have been taken; each of the Series B Notes, when and
if issued and delivered in accordance with the terms of the
Registration Rights Agreement and the Indenture, will be validly
executed, issued and delivered and (assuming the due authentication
thereof by the Trustee) will be a legal, valid and binding obligation
of the Company entitled to the benefits provided by the Indenture,
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws in effect from time to time with respect
to creditors' rights generally and to principles of equity, whether at
law or in equity and except as rights to indemnity and contribution
thereunder may be limited by federal and state securities laws and
public policy considerations underlying such laws.
<PAGE>
(g) The Indenture has been duly authorized by the Company and,
on the Closing Date, will have been duly executed by the Company and
will conform to the description thereof in the Offering Memorandum.
When the Indenture has been duly executed and delivered, the Indenture
will be a valid and legally binding agreement of the Company,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws in effect from time to
time with respect to creditors' rights generally and to principles of
equity, whether at law or in equity and except as rights to indemnity
and contribution thereunder may be limited by federal and state
securities laws and public policy considerations underlying such laws.
(h) The Registration Rights Agreement has been duly authorized
by the Company and, on the Closing Date, will have been duly executed
by the Company and will conform to the description thereof in the
Offering Memorandum. When the Registration Rights Agreement has been
duly executed and delivered, the Registration Rights Agreement will be
a valid and legally binding agreement of the Company, enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws in effect from time to time with respect
to creditors' rights generally and to principles of equity, whether at
law or in equity and except as rights to indemnity and contribution
thereunder may be limited by federal and state securities laws and
public policy considerations underlying such laws.
(i) The Escrow and Disbursement Agreement has been duly
authorized by the Company and, on the Closing Date, will have been
duly executed by the Company and will conform to the description
thereof in the Offering Memorandum. When the Escrow and Disbursement
Agreement has been duly executed and delivered, the Escrow and
Disbursement Agreement will be a valid and legally binding agreement
of the Company, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws in effect from time to
time with respect to creditors' rights generally and to principles of
equity, whether at law or in equity and except as rights to indemnity
and contribution thereunder may be limited by federal and state
securities laws and public policy considerations underlying such laws.
(j) The Holding Pledge Agreement has been duly authorized by the
Company and, on the Closing Date, will have been duly executed by the
Company and will conform to the description thereof in the Offering
Memorandum. When the Holding Pledge Agreement has been duly executed
and delivered, the Holding Pledge Agreement will be a valid and
legally binding agreement of the Company, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws in effect from time to time with respect to creditors'
rights generally and to principles of equity, whether at law or in
equity and except as rights to indemnity and contribution thereunder
may be limited by federal and state securities laws and public policy
considerations underlying such laws.
(k) The Company has all requisite corporate power and authority
to enter into the all agreements in connection with the Transaction
(as defined in the Offering Memorandum), including but not limited to
the Preferred Stock and Warrant Purchase Agreement, the Common Stock
Purchase and Recapitalization Agreement, the Stockholders Agreement
and the Agreement and Plan of Merger (collectively, the "TRANSACTION
DOCUMENTS"). When each of the Transaction Documents has been duly
executed and delivered, each such Transaction Document will be a valid
and legally binding agreement of the Company, enforceable against it
in accordance with
<PAGE>
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws in effect from
time to time with respect to creditors' rights generally and to
principles of equity, whether at law or in equity and except as rights
to indemnity and contribution thereunder may be limited by federal and
state securities laws and public policy considerations underlying such
laws.
(l) The Preferred Stock and each class of Common Stock set forth
in the Agreement and Plan of Merger has been duly and validly
authorized for issuance and sale to the respective purchasers of such
classes of stock by the Company. The description of the Preferred
Stock and the Common Stock in the Offering Memorandum is accurate in
all material respects.
(m) The entities listed on Schedule A hereto are, and on the
Closing Date will be, the only Subsidiaries, direct or indirect, of
the Company. All of the issued and outstanding shares of capital
stock of, or other ownership interests in, each Subsidiary have been
duly and validly authorized and issued. All of the shares of capital
stock of, or other ownership interests in, each Subsidiary are owned,
directly or through Subsidiaries, by the Company. All such shares of
capital stock are fully paid and nonassessable, and are owned free and
clear of any security interest, mortgage, pledge, claim, lien or
encumbrance (each, a "LIEN"). There are no outstanding subscriptions,
rights, warrants, options, calls, convertible securities, commitments
of sale or Liens related to or entitling any person to purchase or
otherwise to acquire any shares of the capital stock of, or other
ownership interest in, any Subsidiary.
(n) Except as set forth on Schedule B hereto, neither the
Company nor any of the Subsidiaries is in violation of its respective
charter or bylaws or in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or any indenture, mortgage, deed of
trust or other contract, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them
is bound, or to which any of the property or assets of the Company or
any of the Subsidiaries is subject. To the knowledge of the Company
and the Subsidiaries, there exists no condition which, with notice,
the passage of time or otherwise, would constitute a default under any
such document or instrument.
(o) The execution and delivery of this Agreement, the Indenture,
the Registration Rights Agreement, the Transaction Documents, the
Escrow and Disbursement Agreement and the Holding Pledge Agreement,
the issuance and sale of the Notes, the performance of this Agreement,
the Indenture, the Registration Rights Agreement, the Transaction
Documents, the Escrow and Disbursement Agreement and the Holding
Pledge Agreement, compliance by the Company with the provisions hereof
and thereof and of the Notes, the consummation of each of the
transactions contemplated hereby and thereby, in each case, as
applicable, will not result in a breach or violation of any of the
respective charters or bylaws of the Company or any of the
Subsidiaries or any of the terms or provisions of, or constitute a
default or cause an acceleration of any obligation under, or result in
the imposition or creation of (or the obligation to create or impose)
a Lien with respect to, any bond, note, debenture or other evidence of
indebtedness or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which it or any of them is bound, or to
which any properties of the Company or any of the Subsidiaries is or
may be subject (other than as set forth on Schedule C hereto, which
default shall be waived on or before the Closing Date), or contravene
any order of any court or governmental agency or body having
jurisdiction over the Company, or any of the Subsidiaries or any of
their properties, or violate or conflict with any
<PAGE>
statute, rule or regulation or administrative or court decree
applicable to the Company or any of the Subsidiaries, or any of their
respective properties.
(p) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, pending
against or affecting the Company or any of the Subsidiaries, or any of
their respective properties, which is required to be disclosed and is
not so disclosed, in the Preliminary Offering Memorandum or Offering
Memorandum, or which would result, singly or in the aggregate, in a
Material Adverse Effect or which would materially and adversely affect
the consummation of this Agreement or the transactions contemplated
hereby, and to the best knowledge of the Company and the Subsidiaries,
no such proceedings are contemplated or threatened.
(q) To the knowledge of the Company and the Subsidiaries, no
action has been taken and no statute, rule or regulation or order has
been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Notes, prevents or suspends the use
of any Preliminary Offering Memorandum or Offering Memorandum or
suspends the sale of the Notes, in any jurisdiction referred to in
Section 4(e) hereof; no injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction has been
issued with respect to the Company or any of the Subsidiaries which
would prevent or suspend the issuance or sale of the Notes, or the use
of any Preliminary Offering Memorandum or Offering Memorandum in any
jurisdiction referred to in Section 4(e) hereof; no action, suit or
proceeding is pending against or, to the best knowledge of the
Subsidiaries threatened against or affecting the Company or any of the
Subsidiaries before any court or arbitrator or any governmental body,
agency or official, domestic or foreign, which, if adversely
determined, would materially interfere with or adversely affect the
issuance of the Notes, or in any manner draw into question the
validity of this Agreement, the Indenture, the Registration Rights
Agreement, the Transaction Documents, the Escrow and Disbursement
Agreement and the Holding Pledge Agreement or the Notes; and every
request of the Commission or any securities authority or agency of any
jurisdiction for additional information (to be included in the
Preliminary Offering Memorandum or Offering Memorandum or otherwise)
has been complied with.
(r) Except as set forth in the Offering Memorandum, the Company
and the Subsidiaries are in compliance with all applicable existing
federal, state and local laws and regulations relating to protection
of human health or the environment or imposing liability or standards
of conduct concerning any Hazardous Material ("ENVIRONMENTAL LAWS"),
except where the failure to comply would not have a Material Adverse
Effect. The term "Hazardous Material" means (a) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (b) any "hazardous
waste" as defined by the Resource Conservation and Recovery Act, as
amended, (c) any petroleum or petroleum product, (d) any
polychlorinated biphenyl and (e) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material, waste or substance.
(s) Neither the Company nor any of the Subsidiaries has violated
any federal, state or local law relating to discrimination in the
hiring, promotion or pay of employees or any applicable wage or hour
laws, nor any provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA") or the rules and regulations promulgated
thereunder, nor has the Company or any of the Subsidiaries engaged in
any unfair labor practice, which in each case would result, singly or
in the aggregate, in a Material Adverse Effect. There is (i) no
significant unfair labor practice complaint pending against the
Company or any of the Subsidiaries or, to the best knowledge of the
Company and the Subsidiaries, threatened against any of them before
the
<PAGE>
National Labor Relations Board or any state or local Labor relations
board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement
is so pending against the Company or any of the Subsidiaries or, to
the best knowledge of the Company and the Subsidiaries, threatened
against any of them, (ii) no significant strike, labor dispute,
slowdown or stoppage pending against the Company, or any of the
Subsidiaries or, to the best knowledge of the Company and the
Subsidiaries, threatened against the Company or any of the
Subsidiaries and (iii) to the best knowledge of the Company and the
Subsidiaries, no union representation question exists with respect to
the employees of the Company or any of the Subsidiaries and no union
organizing activities are taking place, except (with respect to any
matter specified in clause (i), (ii) or (iii) above, singly or in the
aggregate) such as could not have a Material Adverse Effect.
(t) Except (i) as would not result, singly or in the aggregate,
in a Material Adverse Effect, and (ii) for the liens created pursuant
to (A) the Revolving Credit Facility (as defined in the Offering
Memorandum), (B) the Nevada Bonds and the Iowa Bonds (as defined in
the Offering Memorandum), (C) the Escrow and Disbursement Agreement
and (D) the Holding Pledge Agreement, the Company and each of the
Subsidiaries has good and marketable title, free and clear of all
Liens (except Liens for taxes not yet due and payable), to all
property and assets reflected in the Company's consolidated financial
statements at and for the year ended December 30, 1995.
(u) The firms of accountants that have certified or shall
certify the applicable financial statements and supporting schedules
of the Company and the Subsidiaries as part of the Offering Memorandum
are independent public accountants, as required by the Act and the
Exchange Act. The consolidated historical and pro forma financial
statements, together with related schedules and notes, set forth in
the Offering Memorandum comply as to form in all material respects
with the requirements of the Act. Such historical financial
statements fairly present in all material respects the financial
position of the Company and the Subsidiaries at the respective dates
indicated and the results of operations and cash flows for the
respective periods indicated, in accordance with generally accepted
accounting principles in the United States ("GAAP") consistently
applied throughout such periods (other than as set forth on Schedule D
hereto). Such pro forma financial statements have been prepared on a
basis consistent with such historical statements, except for the pro
forma adjustments specified therein, and give effect to assumptions
made on a reasonable basis. The other financial and statistical
information and data included in the Offering Memorandum, historical
and pro forma, are, in all material respects, prepared on a basis
consistent with such financial statements and the books and records of
the Company and the Subsidiaries, as the case may be.
(v) Subsequent to the respective dates as of which information
is given in the Offering Memorandum and up to the Closing Date (except
as disclosed in the Offering Memorandum), neither the Company nor any
of the Subsidiaries has incurred any liabilities or obligations,
direct or contingent, which are material, individually or in the
aggregate, to the Company or any Subsidiary, nor entered into any
transaction not in the ordinary course of business and there has not
been, singly or in the aggregate, any material adverse change, or any
development which may reasonably be expected to involve a material
adverse change, in the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the
Company or any Subsidiary (each, a "MATERIAL ADVERSE CHANGE").
(w) All tax returns required to be filed by the Company or any
of the Subsidiaries in any jurisdiction have been filed, other than
those filings being contested in good faith, and all
<PAGE>
material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due or claimed to be due from such
entities have been paid, other than those being contested in good
faith and for which adequate reserves have been provided or those
currently payable without penalty or interest.
(x) No authorization, approval or consent or order of, or filing
with, any court or governmental body or agency is necessary in
connection with the Transaction or the transactions contemplated by
this Agreement, except such as may be required by the NASD, the TIA or
the Act, or have been obtained and made under Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), or
state securities or Blue Sky laws or regulations. No consents or
waivers from any person under any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument are required
to consummate the Transaction, the transactions contemplated by this
Agreement, the Transaction Documents, the Notes, the Indenture, the
Registration Rights Agreement, the Escrow and Disbursement Agreement
and the Holding Pledge Agreement or the Offering Memorandum, except
for such consents or waivers which have been, or will be, obtained
prior to the Closing Date.
(y) Neither the Company nor any of the Subsidiaries does
business with the Government of Cuba or with any person or any
affiliate located in Cuba.
(z) (i) Each of the Company and the Subsidiaries has all
certificates, consents, exemptions, orders, permits, licenses,
authorizations, or other approvals (each, an "AUTHORIZATION") of and
from, and has made all declarations and filings with, all federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, necessary or
required to own, lease, license and use its properties and assets and
to engage in the business currently conducted by it, except as such
are described in the Offering Memorandum or to the extent that the
failure to obtain or file would not, singly or in the aggregate, have
a Material Adverse Effect, (ii) all such Authorizations are valid and
in full force and effect and (iii) the Company and the Subsidiaries
are in compliance in all material respects with the terms and
conditions of all such Authorizations that have been obtained thereby
and with the rules and regulations of the regulatory authorities and
governing bodies having jurisdiction with respect thereto. Neither
the Company nor any Subsidiary believes that any governmental body or
agency is considering limiting, suspending or revoking any such
material license, certificate, permit, authorization, approval,
franchise or right.
(aa) Neither the Company nor any of the Subsidiaries is (a) an
"investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as
amended, or (b) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(ab) No holder of any security of the Company or any of the
Subsidiaries has or will have any right to require the registration of
such security by virtue of any transaction contemplated by this
Agreement.
(ac) There are no contracts, agreements or understandings between
the Company or any of the Subsidiaries and any person (other than the
Initial Purchaser) that would give rise to a valid claim against the
Company, the Subsidiaries or the Initial Purchaser for a brokerage
commission, finder's fee or like payment in connection with the
issuance, purchase and sale of the Notes.
<PAGE>
(ad) The Company and the Subsidiaries possess all material
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "INTELLECTUAL
PROPERTY") presently employed by them in connection with the
businesses now operated by them, and, except as set forth in the
Offering Memorandum, neither the Company nor any Subsidiary has
received any notice of infringement of or conflict with asserted
rights of others with respect to the foregoing.
(ae) The Company and the Subsidiaries each maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization
and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(af) The present fair saleable value of the assets of each of the
Company and the Subsidiaries exceeds the amount that will be required
to be paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of each such person as
they become absolute and matured. The assets of each of the Company
and the Subsidiaries do not constitute unreasonably small capital to
carry out their businesses as conducted or as proposed to be
conducted. Neither the Company or the Subsidiaries intends to, nor
does it believe that it will, incur debts beyond its ability to pay
such debts as they mature. Upon the issuance of the Senior Notes, the
present fair saleable value of the assets of each of the Company and
the Subsidiaries will exceed the amount that will be required to be
paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of such person as they become
absolute and matured. The assets of each of the Company and the
Subsidiaries, upon the issuance of the Senior Notes, will not
constitute unreasonably small capital to carry out their businesses as
now conducted, including the capital needs of each of the Company and
the Subsidiaries, taking into account the projected capital
requirements and capital availability of each of the Company and the
Subsidiaries.
(ag) None of the Company, the Subsidiaries or any agent thereof
acting on the behalf of any of them has taken, and none of them will
take, any action that might cause this Agreement, any of the Operative
Documents, any of the Transaction Documents, the consummation of the
Transaction, the purchase of Marketable Securities pursuant to the
Escrow and Disbursement Agreement or the issuance or sale of the Notes
to violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R.
Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12
C.F.R. Part 224) of the Board of Governors of the Federal Reserve
System.
(ah) The Company and each Subsidiary maintains insurance covering
their properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are adequate in
accordance with customary industry practice to protect the Company and
the Subsidiaries and their businesses. Neither the Company nor any
Subsidiary has received notice from any insurer or agent of such
insurer that substantial capital improvements or other expenditures
will have to be made in order to continue such insurance. All such
insurance is outstanding and duly in force on the date hereof and will
be outstanding and duly in force on the Closing Date.
<PAGE>
(ai) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the
meaning of Rule 144A under the Act) as securities of the Company that
are listed on a national securities exchange registered under Section
6 of the Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
(aj) After the Closing Date, the Company will be the sole
beneficial owner of the Marketable Securities and no Lien will exist
upon any such Marketable Securities (and no right or option to acquire
the same will exist in favor of any other person or entity), except
for the pledge and security interest in favor of the Trustee to be
created or provided for in the Escrow and Disbursement Agreement,
which pledge and security interest constitute a first priority
perfected pledge and security interest in and to all of the Marketable
Securities.
(ak) Subject to the terms and conditions of this Agreement, the
security interest granted by the Company under the Holding Pledge
Agreement will constitute a valid and perfected security interest in
(i) all of the Company's right title and interest in the outstanding
capital stock of Berry (the "COLLATERAL") and (ii) all distributions
or allocations of distributable cash, property, securities or other
assets from the Collateral together with all substitutes and
replacements for and proceeds of the foregoing, subject to no equal or
prior security interest of any other creditor of the Company. No
registration, recording or filing with any federal governmental body
or agency or any governmental body or agency in the State of Indiana,
State of Delaware or any other jurisdiction is required for the
perfection of such security interest.
(al) Subject to the terms and conditions of this Agreement, the
execution by the Company of the Holding Pledge Agreement and delivery
to the Trustee of the Collateral pursuant thereto, shall cause the
Trustee, for the ratable benefit of the holders of Notes, to have, as
security for the payment of the obligations under the Indenture and
the Notes, a valid, duly perfected security interest (as to the
creation of which no consent is required by a third party or such
consents have been obtained) in the Collateral and the actions
described in this section (al) are the only actions, recordings and
filings necessary to establish the validity of such security interest
in the Collateral. From and after the date hereof, the liens or
security interests created by the Collateral will be duly perfected,
creating a first priority interest in the Trustee for the ratable
benefit of the holders of the Notes in the Collateral over all other
liens and security interests in respect of the Collateral, whether now
existing or hereafter created.
(am) The Holding Pledge Agreement will secure the obligations of
the Company under the Notes and the Indenture.
(an) Assuming (i) that your representations and warranties in
Section 6 are true, (ii) that the representations of the Accredited
Investors set forth in the certificates of such Accredited Investors
in the form set forth in Annex A to the Offering Memorandum are true,
(iii) compliance by you with your covenants set forth in Section 8 and
(iv) that each of the Eligible Purchasers is a QIB or an Accredited
Investor, the purchase and resale of the Senior Notes pursuant hereto
(including pursuant to the Exempt Resales) is exempt from the
registration requirements of the Act. No form of general solicitation
or general advertising was used by the Company or any of its
representatives (other than you, as to whom the Company makes no
representation) in connection with the offer and sale of the Senior
Notes, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising. No securities of the same
<PAGE>
class as the Senior Notes have been issued and sold by the Company
within the six-month period immediately prior to the date hereof.
(ao) Set forth on Schedule E hereto is a list of each employee
pension or benefit plan with respect to which the Company or any
corporation considered an affiliate of the Company within the meaning
of Section 407(d)(7) of ERISA (an "AFFILIATE") is a party in interest
or disqualified person. The execution and delivery of this Agreement,
the other Operative Documents and the sale of the Senior Notes to be
purchased by the Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975
of the Code. The representation made by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of, and
compliance with, the representations and covenants made or deemed made
by the Eligible Purchasers as set forth in the Offering Memorandum
under the Section entitled "Notice to Investors."
(ap) Each of the Preliminary Offering Memorandum and the Offering
Memorandum as of their respective dates, and each amendment or
supplement thereto, as of its date, contains the information specified
in, and meets the requirements of Rule 144A(d)(4) of the Act.
(aq) Except as disclosed in the Offering Memorandum, there are no
business relationships or related party transactions required to be
disclosed therein pursuant to Item 404 of Regulation S-K of the
Commission (assuming for purposes of this paragraph 5(aq) that
Regulation S-K is applicable to the Offering Memorandum).
6. INITIAL PURCHASER'S REPRESENTATIONS AND WARRANTIES. The
--------------------------------------------------
Initial Purchaser represents and warrants to the Company that:
(a) The Initial Purchaser is either a QIB or an Accredited
Investor, in either case with such knowledge and experience in
financial and business matters as are necessary in order to evaluate
the merits and risks of an investment in the Senior Notes.
(b) The Initial Purchaser (i) is not acquiring the Senior Notes
with a view to any distribution thereof or with any present intention
of offering or selling any of the Senior Notes in a transaction that
would violate the Act or the securities laws of any State of the
United States or any other applicable jurisdiction and (ii) will be
reoffering and reselling the Senior Notes only to QIBs in reliance on
the exemption from the registration requirements of the Act provided
by Rule 144A and to a limited number of Accredited Investors that
execute and deliver a letter containing certain representations and
agreements in the form attached as Annex A to the Offering Memorandum.
The Initial Purchaser also understands that the Company and, for
purposes of the opinions to be delivered to you pursuant to
Sections 8(f) and 8(g) hereof, each of O'Sullivan, Graev & Karabell,
LLP and Latham & Watkins, will rely upon the accuracy and truth of the
foregoing representations and you hereby consent to such reliance.
The Initial Purchaser further agrees that, in connection with the
Exempt Resales, the Initial Purchaser will solicit offers to buy the
Senior Notes only from, and will offer to sell the Senior Notes only
to, the Eligible Purchasers. You further agree that you will offer to
sell the Senior Notes only to, and will solicit offers to buy the
Senior Notes only from, persons who in purchasing such Senior Notes
will be deemed to have represented and agreed (1) if such Eligible
Purchaser is a QIB, that they are purchasing the Senior Notes for
their own account or an account
<PAGE>
with respect to which they exercise sole investment discretion and
that they or such accounts are QIBs, (2) that such Senior Notes will
not have been registered under the Act and may be resold, pledged or
otherwise transferred, only (A) (I) to a person who the seller
reasonably believes is a "qualified institutional buyer" within the
meaning of Rule 144A under the Act in a transaction meeting the
requirements of Rule 144A, or in accordance with Rule 144 under the
Act, or pursuant to another exemption from the registration
requirements of the Act (and based upon an opinion of counsel if the
Company so requests) or (II) to the Company and (B) in each case, in
accordance with any applicable securities laws of any State of the
United States or any other applicable jurisdiction, (3) that the
holder will, and each subsequent holder is required to, notify any
purchaser from it of the security evidenced thereby of the resale
restrictions set forth in (2) above.
7. INDEMNIFICATION.
---------------
(a) The Company and Berry (the "INDEMNIFYING PARTIES") agree to
indemnify and hold harmless (i) the Initial Purchaser, (ii) each
person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) the Initial Purchaser (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 the
Initial Purchaser or any controlling person (any person referred to in
clause (i), (ii), or (iii) may hereinafter be referred to as an
"INDEMNIFIED PERSON") 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 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 Person)
directly or indirectly (a) 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 the Preliminary Offering
Memorandum (or any amendment or supplement thereto) or the Offering
Memorandum (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 in the
light of the circumstances under which they were made 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 the Initial Purchaser
furnished in writing to the Company by the Initial Purchaser expressly
for use in the Preliminary Offering Memorandum (or any amendment or
supplement thereto) or the Offering Memorandum (or any amendment or
supplement thereto) provided, however, that the foregoing indemnity
shall not inure to the benefit of the Initial Purchaser from whom the
person asserting any such losses, claims, damages, liabilities,
judgments, actions or expenses purchased Notes, or any controlling
person of the Initial Purchaser, if a copy of the Preliminary Offering
Memorandum or Offering Memorandum (including any amendment or
supplement thereto delivered to the Initial Purchaser prior to the
date such Preliminary Offering Memorandum or Offering Memorandum was
sent or given to such purchaser) was not sent or given by or on behalf
of the Initial Purchaser to such person at or prior to the written
confirmation of the sale of Notes to such person, and if the
Preliminary Offering Memorandum or Offering Memorandum (including any
amendment or supplement thereto delivered to the Initial Purchaser
prior to the date such Preliminary Offering Memorandum or Offering
Memorandum was sent or given to such purchaser) cured the defect
giving rise to such losses, claims, damages, liabilities, judgments,
actions or expenses. The Indemnifying Parties shall notify you
promptly of the institution, threat or assertion of any claim,
<PAGE>
proceeding (including any governmental investigation) or litigation in
connection with the matters addressed by this Agreement which involves
the Indemnifying Parties or an Indemnified Person.
(b) In case any action or proceeding (including any governmental
investigation) shall be brought or asserted against any of the
Indemnified Persons with respect to which indemnity may be sought
against the Indemnifying Parties, such person (or the entity
controlled by such controlling person) shall promptly notify the
Company, in writing (provided, that the failure to give such notice
shall not relieve the Indemnifying Parties of their obligations
pursuant to this Agreement unless such failure to notify has
materially prejudiced the ability of the Indemnifying Parties to
defend any such claim) and the Indemnifying Parties shall assume the
defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Parties and payment of all reasonable
fees and expenses. Such Indemnified Person shall have the right to
employ its own counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at
the Indemnified Party's expense unless (i) the employment of such
counsel has been specifically authorized in writing by the Company,
(ii) the Indemnifying Parties have not assumed the defense and
employed counsel reasonably satisfactory to such Indemnified Party
within a reasonable time after notice of commencement of such action
or proceeding or (iii) the named parties to any such action or
proceeding (including any impleaded parties) include both an
Indemnified Party and any Indemnifying Party and any such Indemnified
Party shall have been advised by such counsel that there may be one or
more legal defenses available to it which are different from or
additional to those available to the Indemnifying Parties (in which
case the Indemnifying Parties shall not have the right to assume the
defense of such action on behalf of the Indemnified Parties, it being
understood, however, that the Indemnifying Parties shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for such
Indemnified Persons, which firm shall be designated by the Initial
Purchaser). The Indemnifying Parties shall be liable for any
settlement of any such action or proceeding effected with the
Indemnifying Parties' prior written consent, which consent will not be
unreasonably withheld, and the Indemnifying Parties agree to indemnify
and hold harmless any Indemnified Person 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 Indemnifying Parties.
If at any time the Indemnified Person shall have requested the
Indemnifying Parties to reimburse the Indemnified Person for fees and
expenses of counsel as contemplated by the second sentence of this
paragraph in connection with any such action or proceeding, the
Indemnifying Parties agree that they shall be liable for any
settlement of any proceeding effected without their written consent so
long as they receive written notice of such settlement if (i) such
settlement is entered into more than ninety business days after
receipt by such Indemnifying Parties of the aforesaid request and (ii)
such Indemnifying Parties shall not have reimbursed the Indemnified
Party in accordance with such request prior to the date of such
settlement. The Indemnifying Parties shall not, without the prior
written consent of each Indemnified Person, which will not be
unreasonably withheld, settle or compromise or consent to the entry of
a judgment in or otherwise seek to terminate any pending or threatened
action, claim, litigation proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or
not any Indemnified Person is a party thereto), unless such
settlement, compromise, consent or termination includes an
unconditional release of each Indemnified Person from all liability
arising out of such action, claim, litigation or proceeding.
(c) The Initial Purchaser agrees to indemnify and hold harmless
the Company, its directors and officers, any person controlling
(within the meaning of Section 15 of the Act or
<PAGE>
Section 20 of the Exchange Act) the Company, and the officers,
directors, partners, employees, representatives and agents of each
such person to the same extent as the foregoing indemnity from the
Indemnifying Parties to each of the Indemnified Persons, but only with
respect to claims and actions based on information relating to the
Initial Purchaser furnished in writing by the Initial Purchaser
expressly for use in the Preliminary Offering Memorandum or Offering
Memorandum.
(d) If the indemnification provided for in this Section 7 is
unavailable to a party entitled to indemnification pursuant to Section
7(b) or (c) in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities, expenses and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received
by the indemnifying party (or parties, as applicable) on the one hand
and the indemnified party (or parties, as applicable) on the other
hand from the offering of the Notes or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
indemnifying party (or parties, as applicable) and the indemnified
party (or parties, as applicable), as well as any other relevant
equitable considerations. The relative benefits received by the
Company, on the one hand, and the Initial Purchaser, on the other
hand, shall be deemed to be in the same proportion as the total
proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by
the Initial Purchaser, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault of the
Company, on the one hand, and the Initial Purchaser, 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 related to
information supplied by the Company, on the one hand, or the Initial
Purchaser, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The indemnity and contribution
obligations of the Company set forth herein shall be in addition to
any liability or obligation the Company may otherwise have to any
Indemnified Person.
The Company and the Initial Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in this paragraph 7(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
liabilities, expenses or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 7(d), the Initial Purchaser (and its related Indemnified
Persons) shall not be required to contribute, in the aggregate, any
amount in excess of the amount by which the total discount received by
the Initial Purchaser applicable to the Notes purchased by the Initial
Purchaser exceeds the amount of any damages which the Initial
Purchaser 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.
<PAGE>
8. CONDITIONS OF THE INITIAL PURCHASER'S OBLIGATIONS. The
-------------------------------------------------
obligations of the Initial Purchaser to purchase the Senior Notes under
this Agreement are subject to the satisfaction of each of the following
conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects (other than those representations and warranties that are
qualified by a reference to materiality, which shall be true and
correct in all respects) on the Closing Date with the same force and
effect as if made on and as of the date hereof and the Closing Date,
respectively. The Company shall have performed or complied in all
material respects with all of their obligations and agreements herein
contained (other than those obligations and agreements that are
qualified by a reference to materiality, which shall be performed or
complied with in all respects) and required to be performed or
complied with by them at or prior to the Closing Date.
(b) No stop order suspending the sale of the Senior Notes in any
jurisdiction referred to in Section 4(e) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(c) (i) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the
issuance of the Senior Notes; (ii) no injunction, restraining order or
order of any nature by a federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance of the Senior Notes; and (iii) on the Closing
Date no action, suit or proceeding shall be pending against or
affecting or, to the knowledge of the Company, threatened against, the
Company or any Subsidiary before any court or arbitrator or any
governmental body, agency or official which, if adversely determined,
would prohibit the issuance of the Senior Notes except as disclosed in
the Offering Memorandum.
(d) (i) Since the date hereof or since the dates as of which
information is given in the Preliminary Offering Memorandum or
Offering Memorandum, there shall not have been any Material Adverse
Change, (ii) since the date of the latest balance sheet included in
the Preliminary Offering Memorandum or Offering Memorandum, there
shall not have been any material change in the capital stock or long-
term debt, or material increase in short-term debt, of the Company or
any of the Subsidiaries and (iii) the Company and the Subsidiaries
shall have no liability or obligation, direct or contingent, that is
material to the Company and the Subsidiaries taken as a whole and is
required to be disclosed on a balance sheet in accordance with GAAP
and is not disclosed on the latest balance sheet included in the
Offering Memorandum.
(e) You shall have received certificates, dated the Closing
Date, signed by (i) the President or any Vice President or any other
executive officer and (ii) a principal financial or accounting officer
of the Company confirming, as of the Closing Date, the matters set
forth in paragraphs (a), (b), (c) and (d) of this Section 8.
(f) On the Closing Date, you shall have received an opinion
(satisfactory to you and your counsel), dated the Closing Date, of
O'Sullivan Graev & Karabell, LLP, counsel for the Company, to the
effect that:
(i) The Company and each of the Subsidiaries is a duly
organized and validly existing corporation in good standing
under the laws of its jurisdiction of
<PAGE>
incorporation, has the requisite corporate power and
authority to own, lease and operate its properties and to
conduct its business as it is currently being conducted and
described in the Offering Memorandum, and is duly qualified
as a foreign corporation and is in good standing in each
jurisdiction listed on a schedule attached to the opinion;
(ii) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, the Senior
Notes, the Indenture, the Registration Rights Agreement, the
Transaction Documents, the Escrow and Disbursement Agreement
and the Holding Pledge Agreement, as applicable, and to
perform its obligations under this Agreement, the Indenture,
the Registration Rights Agreement, the Transaction
Documents, the Escrow and Disbursement Agreement and the
Holding Pledge Agreement, as applicable, and to authorize,
issue, sell and deliver the Senior Notes, as contemplated by
this Agreement;
(iii) Each of this Agreement, the Senior Notes, the
Registration Rights Agreement, the Indenture, the
Transaction Documents, the Escrow and Disbursement Agreement
and the Holding Pledge Agreement has been duly authorized,
executed and delivered by the Company;
(iv) When authenticated in accordance with the terms
of the Indenture and delivered to and paid for by you in
accordance with the terms of this Agreement, the Senior
Notes will constitute valid and legally binding obligations
of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of
the Indenture, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of
whether enforcement is sought at law or in equity);
(v) The Indenture, assuming due authorization,
execution and delivery thereof by the Trustee, constitutes a
valid and legally binding agreement of the Company,
enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is
sought at law or in equity);
(vi) The Notes, the Indenture, the Registration Rights
Agreement, the Transaction Documents, the Escrow and
Disbursement Agreement and the Holding Pledge Agreement
conform to the descriptions thereof contained in the
Offering Memorandum in all material respects;
(vii) Upon the consummation of the Transaction, the
authorized, issued and outstanding capital stock of the
Company will be as set forth in the Offering Memorandum
under the caption "Capitalization." Upon the consummation
of the Transaction, all of the outstanding shares of capital
stock of the Company will have been duly authorized, validly
issued, and are fully paid and nonassessable and were not
issued in violation of any preemptive rights or similar
rights under the Delaware General Corporation Law, or, to
the best of such counsel's knowledge, otherwise;
<PAGE>
(viii) Each of the Preferred Stock and Warrant
Purchase Agreement and the Common Stock Purchase Agreement
constitute a valid and legally binding agreement of the
Company, enforceable against it in accordance with their
respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors' rights and remedies
generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law);
(ix) All of the issued and outstanding shares of
capital stock of, or other ownership interests in, each
Subsidiary have been duly and validly authorized and issued
and are fully paid and nonassessable. All of the shares of
capital stock of, or other ownership interests in, each
Subsidiary are owned, directly or through Subsidiaries, by
the Company;
(x) To the best knowledge of such counsel, there are
no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or Liens
related to or entitling any person to purchase or otherwise
to acquire any shares of the capital stock of, or other
ownership interest in, any Subsidiary;
(xi) Neither the Company nor any of the Subsidiaries
is (a) an "investment company" or a company "controlled" by
an investment company within the meaning of the Investment
Company Act of 1940, as amended, or (b) a "holding company"
or a "subsidiary company" of a holding company or an
"affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended;
(xii) The descriptions in the Offering Memorandum of
statutes, legal and governmental proceedings, and contracts
and other documents are accurate in all material respects;
it being understood that such counsel need express no
opinion as to the financial statements, notes or schedules
or other financial data included therein;
(xiii) To the knowledge of such counsel: (a) no action
has been taken and no statute, rule or regulation or order
has been enacted, adopted or issued by any governmental
agency or body which prevents the issuance of the Senior
Notes, and such counsel has received no notice which
suspends the sale of the Senior Notes; (b) no injunction,
restraining order or order of any nature by a federal or
state court of competent jurisdiction has been issued with
respect to the Company or any of the Subsidiaries which
would prevent or suspend the issuance or sale of the Senior
Notes, and such counsel has not received notice which
prevents or suspends the use of the Offering Memorandum in
any jurisdiction referred to in Section 4(e) hereof; and (c)
no action, suit or proceeding is pending against or
threatened against or affecting the Company or any of the
Subsidiaries before any court or arbitrator or any
governmental body, agency or official, domestic or foreign,
which, if adversely determined, would prevent the issuance
of the Senior Notes;
(xiv) Except as may be required under state securities
or "Blue Sky" laws or regulations or by the NASD as to which
such counsel expresses no opinion,
<PAGE>
no authorization, approval, consent or order of, or filing
with, any court or governmental body or agency is required
for the consummation of the transactions contemplated by
this Agreement, except such as have been obtained and made
under the Act and the HSR Act; no consents or waivers from
any person under any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument
that is listed on a schedule to the opinion are required to
consummate the transactions contemplated by this Agreement,
the Operative Documents or the Transaction Documents, except
for any consent or waiver which has been obtained on or
prior to the Closing Date;
(xv) On the Closing Date, the Offering Memorandum
(except for financial statements, the notes thereto and
related schedules and other financial data included therein,
as to which no opinion need be expressed) complied as to
form in all material respects with Rule 144A(d)(4) of the
Act;
(xvi) To the best knowledge of such counsel, neither
the Company nor any of the Subsidiaries is in violation of
its respective charter or bylaws or in default in the
performance of any obligation, agreement or condition
contained in any agreement or instrument listed on a
schedule to the opinion; to the best knowledge of such
counsel, there exists no condition which, with notice, the
passage of time or otherwise, would constitute a default
under any such document or instrument;
(xvii) The execution and delivery of this Agreement,
the Operative Documents and the Transaction Documents, the
issuance and sale of the Senior Notes, the performance of
this Agreement, the Operative Documents and the Transaction
Documents, compliance by the Company with the provisions
hereof and thereof and of the Senior Notes, the consummation
of the transactions contemplated hereby and thereby and of
the Transaction and the payments described in the Offering
Memorandum under the caption "Use of Proceeds," in each
case, as applicable, will not result in a breach or
violation of any of the respective charters or bylaws of the
Company or any of the Subsidiaries or any of the terms or
provisions of, or constitute a default or cause an
acceleration of any obligation under, or result in the
imposition or creation of (or the obligation to create or
impose) a Lien with respect to, any agreement or instrument
listed on a schedule to the opinion, or, to the knowledge of
such counsel, contravene any order of any court or govern-
mental agency or body having jurisdiction over the Company
or any of the Subsidiaries or any of their properties, or
violate any statute, rule or regulation or administrative or
court decree applicable to the Company or any of the
Subsidiaries, or any of their respective properties;
(xviii) The Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding agreement of the
Company, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, and to general
equitable principles (regardless of whether considered in a
proceeding in equity or at law) and, to the extent the
Registration Rights Agreement provides for rights of
indemnification and contribution, subject to the limitations
of applicable law;
<PAGE>
(xix) Each of the Transaction Documents have been
duly authorized, executed and delivered by the Company and
constitute valid and legally binding agreements of the
Company, enforceable against it in accordance with their
respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally,
and to general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity
or at law) and, to the extent such Transaction Documents
provide for rights of indemnification and contribution
subject to the limitations of applicable law;
(xx) The Escrow and Disbursement Agreement has been
duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding agreement of the
Company, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, and to general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and, to the extent the Escrow and Disbursement
Agreement provides for rights of indemnification and
contribution subject to the limitations of applicable law;
(xxi) The Holding Pledge Agreement has been duly
authorized, executed and delivered by the Company and
constitutes a valid and legally binding agreement of the
Company, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, and to general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and, to the extent the Holding Pledge Agreement
provides for rights of indemnification and contribution,
subject to the limitations of applicable law;
(xxii) The provisions of the Escrow and Disbursement
Agreement are effective to create valid security interests
in favor of the Trustee for the benefit of the holders of
the Notes in that portion of the collateral described in the
Escrow and Disbursement Agreement that is subject to Article
9 of the Uniform Commercial Code of the State of New York
(such collateral, the "NOTE COLLATERAL" and such statute the
"NEW YORK UCC") as security for the payment of the Secured
Obligations (as defined in the Escrow and Disbursement
Agreement) to the extent set forth in the Escrow and
Disbursement Agreement;
(xxiii) To the extent that acct no. ______ (the
"ESCROW ACCOUNT") is a "deposit account" (as defined in
Section 9-105(1)(e) of the New York UCC) that (a) is duly
established and maintained in the name of "First Trust of
New York, National Association, as Collateral Agent, for the
benefit of BPC Holding Corporation Note Holders" with First
Trust of New York, National Association, in its capacity as
collateral agent for the Trustee and the holders of the
Notes (the "COLLATERAL AGENT"), in New York, New York, (b)
remains at all times subject to the sole dominion and
control of the Trustee, and (c) is not evidenced at any time
by an indispensable instrument, the provisions of the Escrow
and Disbursement Agreement, together with such dominion and
control, are effective under the laws of the State of New
York to create in favor of the Trustee, for the
<PAGE>
benefit of the Trustee and the holders of the Notes, a
security interest in, and a lien on, such deposit account to
secure the Secured Obligations to the extent set forth in
the Escrow and Disbursement Agreement. Such security
interest and lien will be prior to the interest of a
judgment lien creditor subsequently attaching or levying
against the Escrow Account or a bankruptcy trustee claiming
the rights of a hypothetical lien creditor pursuant to
Section 544 of the Bankruptcy Code;
(xxiv) The ___ financing statements naming the
Company as debtor and the Trustee as secured party, together
with all schedules and exhibits thereto to be filed in each
of the Filing Offices (together, the "FINANCING
STATEMENTS"), are in appropriate form for filing with the
appropriate jurisdictions (collectively, the "FILING
OFFICES"). Upon the proper filing of the Financing
Statements in the Filing Offices, the security interest in
favor of the Trustee in the Collateral described in the
Financing Statements will be perfected to the extent a
security interest in such Collateral can be perfected by
filing a financing statement under the provisions of the New
York UCC or the other applicable UCCs (to the extent the UCC
as in effect in a jurisdiction in which the opinion given is
not admitted to practice, the opinion given may rely
exclusively on the CCH Secured Transactions Guide, or
similar publication by service); as applicable;
(xxv) The provisions of the Escrow and Disbursement
Agreement, together with (i) delivery to the Collateral
Agent in the State of New York of the certificates or
instruments representing those Allowable Investments (as
defined in the Escrow and Disbursement Agreement) that
constitute "certificated securities" (as defined in Section
8-102 of the New York U.C.C.) or "negotiable instruments"
(as defined in Section 3-104 of the New York U.C.C.) and
related executed blank instruments of transfer, and (ii)
registration in the name of the Collateral Agent, as
pledgee, of those Allowable Investments that constitute
"uncertificated securities" (as defined in Article 8 of the
New York U.C.C.) are sufficient to create in favor of the
Collateral Agent a valid and perfected security interest in
all right, title and interest of the Company in such
Allowable Investments to the extent such creation and
perfection are governed by the New York U.C.C. Upon such
delivery or registration and assuming that the Collateral
Agent acquires its security interest in those Allowable
Investments that constitute "securities" (as defined in
Section 8-102 of the New York U.C.C.) in good faith without
knowledge of adverse claims, the Collateral Agent will
acquire its security interest in those Allowable Investments
that constitute securities free of adverse claims (including
other consensual security interests). The security interest
in that portion of the Allowable Investments which consist
of Government Securities (as defined in the Escrow and
Disbursement Agreement) will be a valid, perfected security
interest (with priority over (i) other consensual security
interests, (ii) interests of judgment lien creditors
subsequently attaching or levying against such collateral or
(iii) the interests of a bankruptcy trustee claiming the
rights of a hypothetical lien creditor pursuant to Section
544 of the Bankruptcy Code). If such Government Securities
are registered in the name of the Collateral Agent on the
records of the Federal Reserve Bank of New York. No
governmental filings or recordings are required in order to
perfect (or maintain the perfection or priority of) the
security interests created in Allowable Investments that
constitute securities (including Government Securities) or
negotiable instruments.
<PAGE>
(xxvi) When the Senior Notes are issued and
delivered pursuant to the Purchase Agreement, such Senior
Notes will not be of the same class (within the meaning of
Rule 144A under the Act) as securities of the Company that
are listed on a national securities exchange registered
under Section 6 of the Exchange Act or that are quoted in a
United States automated inter-dealer quotation system;
(xxvii) The provisions of the Holding Pledge
Agreement, together with delivery to the Collateral Agent in
the State of New York of the certificates representing the
shares identified on Schedule I to the Holding Pledge
Agreement ( the "Pledged Shares") and blank stock powers
with respect thereto signed by the Company, are sufficient
to create in favor of the Collateral Agent a valid and
perfected security interest under the New York U.C.C. in all
right, title and interest of the Company in the Pledged
Shares. Upon such delivery and assuming that the Collateral
Agent acquires its security interest in the Pledged Shares
without knowledge of any adverse claims, the Collateral
Agent will acquire its security interest in the Pledged
Shares free of adverse claims (including other consensual
security interests). No governmental filings or recordings
are required in order to perfect (or maintain the perfection
or priority of) the security interests created in the
Pledged Shares.
(xxviii) No registration under the Act of the Senior
Notes is required for the sale of the Senior Notes to you as
contemplated hereby or for the Exempt Resales (assuming,
without independent investigation, (i) that the Eligible
Purchasers who buy the Senior Notes in the Exempt Resales
are QIBs or Accredited Investors, (ii) the accuracy of your
representations and those of the Company regarding the
absence of general solicitation in connection with the
Exempt Resales contained herein and (iii) the accuracy of
the representations made by each Accredited Investor who
purchases Senior Notes pursuant to an Exempt Resale as set
forth in the letters of representation executed by such
Accredited Investors in the form of Annex A to the Offering
Memorandum);
(xxix) Prior to the Exchange Offer or the
effectiveness of the Shelf Registration Statement, the
Indenture is not required to be qualified under the TIA;
(xxx) Each of the Preliminary Offering Memorandum
and the Offering Memorandum as of their respective dates,
and each amendment or supplement thereto, as of its date,
contained the information specified in, and meets the
requirements of Rule 144A(d)(4) of the Act.
The opinions set forth in paragraphs (vii), (ix) and (x)
will be based solely on a review of stock records and other
specified corporate record books of the Company and its
Subsidiaries and applicable law.
The opinion of O'Sullivan Graev & Karabell, LLP shall be
rendered to you at the request of the Company and shall so state
therein.
In giving their opinion required by this subsection 8(f),
O'Sullivan Graev & Karabell shall additionally state that such
counsel has participated in conferences with officers and other
representatives of the Company, representatives of the
independent
<PAGE>
public accountants for the Company, your representatives and your
counsel in connection with the preparation of the Preliminary
Offering Memorandum or Offering Memorandum, although such counsel
has not independently verified the accuracy, completeness or
fairness of such statements (except as indicated above); and such
counsel advises you that, on the basis of the foregoing, no facts
came to such counsel's attention that caused such counsel to
believe that the Preliminary Offering Memorandum (as amended or
supplemented, if applicable), at the time such Preliminary
Offering Memorandum or any post-effective amendment became
effective, 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 the
Offering Memorandum (as amended or supplemented), as of its date
and the Closing Date, 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 or belief with respect to the financial statements and
schedules and other financial and statistical data included in
the Preliminary Offering Memorandum or Offering Memorandum or any
supplement or amendment thereto).
(g) You shall have received an opinion, dated the Closing Date,
of Latham & Watkins, counsel for the Initial Purchaser, in form and
substance reasonably satisfactory to you.
(h) You shall have received letters on and as of the date hereof
as well as on and as of the Closing Date (in the latter case
constituting an affirmation of the statements set forth in the
former), in form and substance satisfactory to you, from Ernst &
Young, LLP, independent auditors, with respect to the financial
statements and certain financial information contained in the Offering
Memorandum relating to the Company and the Subsidiaries.
(i) Latham & Watkins shall have been furnished with such
documents and opinions, in addition to those set forth above, as they
may reasonably require for the purpose of enabling them to review or
pass upon the matters referred to in this Section 8 and in order to
evidence the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions
herein contained.
(j) On or before the Closing Date, the Company shall have
consummated the Transaction in the manner set forth in the Offering
Memorandum and shall have provided evidence of such consummation in
form satisfactory to you and your counsel.
(k) Prior to the Closing Date, the Company shall have furnished
to you such further information, certificates and documents as you may
reasonably request.
(l) The Company and the Trustee shall have entered into the
Indenture and you shall have received counterparts, conformed as
executed, thereof.
(m) The Initial Purchaser shall have received a solvency
opinion, dated the Closing Date, of Houlihan Lokey Howard & Zukin
substantially in the form previously approved by the Initial
Purchaser, and such opinion shall be addressed to the Trustee.
(n) The Offering Memorandum shall have been printed and copies
distributed to you not later than 9:00 A.M., New York City time, on
June 14, 1996, or at such later date and time as you may approve in
writing.
<PAGE>
All opinions, certificates, letters and other documents required
by this Section 8 to be delivered by the Company will be in compliance with
the provisions hereof only if they are reasonably satisfactory in form and
substance to you. The Company will furnish the Initial Purchaser with such
conformed copies of such opinions, certificates, letters and other
documents as it shall reasonably request.
9. Effective Date of Agreement and Termination.
-------------------------------------------
(a) This Agreement shall become effective upon the execution and
delivery of this Agreement by the parties hereto.
(b) This Agreement may be terminated at any time on or prior to
the Closing Date by you by notice to the Company if any of the following
has occurred: (i) subsequent to the date of the Offering Memorandum or of
this Agreement, any Material Adverse Change which, in the judgment of the
Initial Purchaser, materially impairs the investment quality of the Senior
Notes; (ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or material adverse change in the
financial markets of the United States or elsewhere, or any other
substantial national or international calamity or emergency if the effect
of such outbreak, escalation, calamity, crisis or emergency would, in the
judgment of the Initial Purchaser, make it impracticable or inadvisable to
market the Senior Notes or to enforce contracts for the sale of the Senior
Notes; (iii) any suspension or limitation of trading generally in
securities on the New York Stock Exchange, the American Stock Exchange or
in the over-the-counter markets or any setting of minimum prices for
trading on such exchange or markets; (iv) any declaration of a general
banking moratorium by either federal or New York authorities; (v) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs that, in the judgment of the
Initial Purchaser, has a material adverse effect on the financial markets
in the United States and would, in the judgment of the Initial Purchaser,
make it impracticable or inadvisable to market the Senior Notes or to
enforce contracts for the sale of the Senior Notes; or (vi) the enactment,
publication, decree, or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority
which, in your judgment, materially and adversely affect, or will
materially and adversely affect, the business or operations of the Company.
(c) The indemnities and contribution provisions and other
agreements, representations and warranties of the Company, its officers and
directors and of the Initial Purchaser set forth in or made pursuant to
this Agreement shall remain operative and in full force and effect, and
will survive delivery of and payment for the Senior Notes, regardless of
(i) any investigation, or statement as to the results thereof, made by or
on behalf of the Initial Purchaser or by or on behalf of the Company, the
officers or directors of the Company or any controlling person of the
Company, (ii) acceptance of the Senior Notes and payment for them hereunder
and (iii) termination of this Agreement.
(d) If this Agreement shall be terminated by the Initial
Purchaser pursuant to clause (i) of paragraph (b) of this Section 9 or
because of the failure or refusal on the part of the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, the
Company agrees to reimburse you for all out-of-pocket expenses (including
the fees and disbursements of counsel) incurred by you. Notwithstanding
any termination of this Agreement, the Company shall be liable for all
expenses which it has agreed to pay pursuant to Section 4(f) hereof.
(e) Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Initial Purchaser, any Indemnified Person referred to herein and their
respective successors and assigns, all as and to the extent provided in
this Agreement, and no other person shall acquire or have any right under
or by virtue of this Agreement.
<PAGE>
The terms "successors and assigns" shall not include a purchaser of any of
the Notes from the Initial Purchaser merely because of such purchase.
10. NOTICES. Notices given pursuant to any provision of this
-------
Agreement shall be addressed as follows: (a) if to the Company, to BPC
Holding Corporation, 101 Oakley Street, P.O. Box 959, Evansville, Indiana
47706-0959, Attention: James M. Kratochvil, with a copy to O'Sullivan Graev
& Karabell, LLP, 30 Rockefeller Plaza, New York, New York 10112, Attention:
Lawrence G. Graev, and (b) if to the Initial Purchaser, to 277 Park Avenue,
New York, New York 10172, Attention: Glenn Tongue, with a copy to Latham &
Watkins, 885 Third Avenue, New York, New York 10022, Attention: Raymond Y.
Lin, or in any case to such other address as the person to be notified may
have requested in writing.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS
APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW
YORK.
12. SUCCESSORS. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto and their respective successors and the
officers and directors and other persons referred to in Section 5, and no
other person will have any right or obligation hereunder.
<PAGE>
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument. Please confirm that the
foregoing correctly sets forth the agreement among the Company and you.
Very truly yours,
BPC HOLDING CORPORATION
By: /s/ Roberto Buaron
--------------------------------------
Name: Roberto Buaron
Title: Chairman of the Board
BERRY PLASTICS CORPORATION
(WITH RESPECT TO SECTION 7 HEREOF)
By: /s/ Roberto Buaron
--------------------------------------
Name: Roberto Buaron
Title: Chairman of the Board
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Thomas G. McGonagle
---------------------------------------
Name: Thomas G. McGonagle
Title: Senior Vice President
Exhibit 10.23
-----------------------------------------------------------------
BPC HOLDING CORPORATION
-------------------------------
STOCKHOLDERS AGREEMENT
------------------------------
Dated as of June 18, 1996
----------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
Section Page
- ------- ----
ARTICLE I
DEFINED TERMS
1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Additional Terms . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3. Purchase Agreement Defined Terms, etc. . . . . . . . . . . . . . 5
ARTICLE II
BOARD OF DIRECTORS APPROVAL AND INFORMATION RIGHTS
2.1. Board of Directors and Approval Rights . . . . . . . . . . . . . 6
2.2. Conflicting Agreements . . . . . . . . . . . . . . . . . . . . 12
2.3. Actions Consistent with Agreement . . . . . . . . . . . . . . . 12
2.4. Covenants of the Company . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
REGISTRATION RIGHTS
3.1. Demand Registration Rights . . . . . . . . . . . . . . . . . . 16
3.2. Company Registration . . . . . . . . . . . . . . . . . . . . . 18
3.3. Obligations of the Company . . . . . . . . . . . . . . . . . . 19
3.4. Furnish Information . . . . . . . . . . . . . . . . . . . . . . 20
3.5. Expenses of Demand Registration . . . . . . . . . . . . . . . . 21
3.6. Expenses of Company Registration . . . . . . . . . . . . . . . 21
3.7. Underwriting Requirements; "Piggyback" Registrations Rights on
Company Registrations, etc . . . . . . . . . . . . . . . . . 21
3.8. Delay of Registration . . . . . . . . . . . . . . . . . . . . . 22
3.9. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 22
3.10. Reports Under the '34 Act . . . . . . . . . . . . . . . . . . . 25
3.11. Form S-3 Registration . . . . . . . . . . . . . . . . . . . . . 25
3.12. Limitations on Subsequent Registration Rights . . . . . . . . . 27
3.13. "Market Stand-Off" Agreement . . . . . . . . . . . . . . . . . 27
3.14. Termination of Registration Rights . . . . . . . . . . . . . . 28
ARTICLE IV
SALE OF THE COMPANY
4.1. Sale of the Company. . . . . . . . . . . . . . . . . . . . . . 28
4.2. Conditions of Sale. . . . . . . . . . . . . . . . . . . . . . . 30
4.3. Consideration Allocation. . . . . . . . . . . . . . . . . . . . 32
ARTICLE V
PREEMPTIVE RIGHTS; NEW SECURITIES
-i-
<PAGE>
Section Page
- ------- ----
5.1. Preemptive Rights, etc . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
TERMINATION
ARTICLE VII
MISCELLANEOUS
7.1. Transfer Restrictions, Tag-Along Rights, etc . . . . . . . . . 34
7.2. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 37
7.3. Amendment and Modification; Waiver of Compliance; Conflicts . . 37
7.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.5. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 38
7.6. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.8. Recapitalizations, Exchanges, Etc., Affecting the Common Stock or
other Securities; New Issuances . . . . . . . . . . . . . . . 39
7.9. Share Certificates, Restrictive Endorsement, Replacement
Certificates, etc. . . . . . . . . . . . . . . . . . . . . . 39
7.10. Consent to Jury Trial . . . . . . . . . . . . . . . . . . . . . 40
7.11. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.12. Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . 41
7.13. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.14. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 41
7.15. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . 41
7.16. No Strict Construction . . . . . . . . . . . . . . . . . . . . 41
7.17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 41
SCHEDULES
Schedule I Addresses
-ii-
<PAGE>
STOCKHOLDERS AGREEMENT
----------------------
This STOCKHOLDERS AGREEMENT, dated as of June 18, 1996 (as amended or
otherwise modified from time to time, this "Agreement"), among BPC HOLDING
---------
CORPORATION, a Delaware corporation (the "Company"), ATLANTIC EQUITY
-------
PARTNERS INTERNATIONAL II, L.P., a Delaware limited partnership
("International"), CVCA (defined below), The CIT GROUP/EQUITY INVESTMENTS,
-------------
INC., a New Jersey corporation ("CITEI") and BPC EQUITY, LLC, a Delaware
-----
limited liability company ("Aetna" and, together with CITEI, being,
-----
collectively, the "Institutional Holders" and, individually, an
---------------------
"Institutional Holder"), and each of those other parties listed on the
--------------------
signature pages to this Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to a Stock Purchase and Recapitalization Agreement,
dated as of June 12, 1996 (as amended or otherwise modified from time to
time, the "Purchase Agreement"), among the Company, International, CVCA,
------------------
the Institutional Holders and certain other parties including those listed
on the signature pages hereto (International, CVCA, the Institutional
Holders and such other parties being, individually, a "Stockholder" and,
-----------
collectively, "Stockholders") and certain transactions contemplated in
------------
connection therewith, the Stockholders will purchase or otherwise receive
Securities of the type, series, classes and amounts as set forth on the
Schedules to the Purchase Agreement; and
WHEREAS, as a condition precedent to issuing and purchasing the
Securities pursuant to the Purchase Agreement, and the consummation of the
other transactions contemplated in connection therewith, the Company and
the Stockholders, respectively (and with respect to certain provisions
thereof, the holders of Preferred Interests), have agreed to enter into
this Agreement for the purpose of, among other things, (i) establishing the
composition of the Company's Board of Directors, (ii) granting certain
rights regarding the management of the Company and (iii) establishing
certain rights regarding the Common Stock and other securities of the
Company;
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, and for other good and valuable
consideration the parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
DEFINED TERMS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings:
"Berry" means Berry Plastics Corporation, a Delaware corporation.
-----
"Board of Directors" means the Board of Directors of the Company, as
------------------
duly constituted in accordance with this Agreement, or any committee
thereof duly constituted in accordance with this Agreement, the By-Laws and
applicable law and duly authorized to make the relevant determination or
take the relevant action.
"Conversion Event" is defined in the Amended and Restated Certificate
----------------
of Incorporation.
"Core Business" means the manufacturing and marketing of plastic
-------------
products, including, without limitation, plastic packaging products such as
aerosol overcaps, rigid open-top containers and drink cups.
"CVCA" means Chase Venture Capital Associates, L.P., a California
----
limited partnership, solely in its capacity as a Holder of Securities.
"Event of Non-Compliance" means any material breach or default by the
-----------------------
Company of any of its material obligations under this Agreement, the
Purchase Agreement, any Related Document or any Other Financing Document.
"FACL" means First Atlantic Capital, Ltd., a Delaware corporation.
----
"Form S-3" means such form under the '33 Act as in effect on the date
--------
hereof or any registration form under the '33 Act subsequently adopted by
the SEC which permits inclusion or incorporation of substantial information
by reference to other documents filed by the Company with the SEC.
"Holder" means any Stockholder or Permitted Transferee who becomes a
------
party to or bound by the provisions of this Agreement in accordance with
the terms hereof.
"Preferred Interest" means any Interest of any Person in any Preferred
------------------
Stock, Warrants or Warrant Stock acquired under or in connection with the
Preferred Stock Purchase Agreement, including any capital stock or
Interests issued in respect of the foregoing in connection with a dividend,
distribution, stock split, subdivision, combination, reclassification or
similar event in respect of any such Preferred Stock, Warrant or Warrant
Stock.
-2-
<PAGE>
"Preferred Stock Control Event" means the occurrence of any event
-----------------------------
described in Section 3(c) of Part B of the Amended and Restated Certificate
of Incorporation which would permit the holders of the Preferred Stock to
elect a majority of the members of the Board of Directors.
"Qualified Public Offering" means a public offering of shares of the
-------------------------
Company's Common Stock in a firm commitment underwriting effected by the
Company pursuant to a registration statement (a "Registration Statement")
----------------------
under the '33 Act (other than a Registration Statement on Form S-8 or
successor form used for employee benefits) which results in gross proceeds
of at least $20,000,000.
"Register", "registered", and "registration" means a registration
-------- ---------- ------------
effected by preparing and filing a Registration Statement or similar
document in compliance with the '33 Act, and the declaration or ordering of
effectiveness of such Registration Statement or document.
"Related Person" means, (i) with respect to International, (x) any
--------------
Person which is controlled by Roberto Buaron or (y) any partner,
shareholder or similar equity holder of International or such Person
described in clause (i)(x) above which receives Securities from
-------------
International or such Person in connection with a wind-up, liquidation or
similar distribution of or by International or such Person, (ii) with
respect to Aetna, (x) any wholly-owned Subsidiary of Aetna Life and
Casualty Company, a Connecticut corporation, (iii) with respect to any
other Holder, (x) any Person which is controlled by (or, in the case of
Aetna, which controls) such Holder or (y) any partner, shareholder or
similar equity holder of such Holder or such Person described in
clause (iii)(x) above which receives Securities from such Holder or such
- ---------------
Person in connection with a windup, liquidation or similar distribution of
or by such Holder or such Person and (iv) for purposes of Section 7.1
-----------
hereof, with respect to any holder of Preferred Stock, (x) any Person which
is controlled by such holder or (y) any partner, shareholder or similar
equity holder of such holder or such Person described in clause (iv)(x)
--------------
above which receives securities from such holder or such Person in
connection with a windup, liquidation or similar distribution of or by such
holder or such Person. For purposes hereof, "control" and its derivatives
shall mean, with respect to any Person, the power to direct and control the
management or policies of such Person, whether through the beneficial
ownership of voting securities or Interests, by contract or agreement or
otherwise.
"Restricted Securities" means (i) any Securities purchased or
---------------------
otherwise acquired by any Holder, and (ii) any capital stock issued or
issuable directly or indirectly with respect to the Securities referred to
in clause (i) above by way of stock dividend or stock split or in
----------
connection with a combination of capital stock, recapitalization, merger,
consolidation or other reorganization. As to any particular capital stock
constituting Restricted Securities, such capital stock will cease to be
-3-
<PAGE>
Restricted Securities when they have been (x) effectively registered under
the '33 Act and disposed of in accordance with the Registration Statement
covering them or (y) sold to the public through a broker, dealer or market
maker pursuant to Rule 144 (or any similar provision then in force) under
the '33 Act ("Rule 144").
--------
"Sale of the Company" means the sale of the Company to one or more
-------------------
Persons that are not Affiliates of any Holder or the Company in a single or
series of related transactions pursuant to which the acquiring Person or
Persons acquire (i) all of the capital stock of the Company (whether by way
of sale, transfer, merger, consolidation or otherwise) or (ii) all or
substantially all of the assets of the Company and its Subsidiaries, taken
as a whole.
"SEC" means the Securities and Exchange Commission.
---
"Securities" means any (i) Common Stock purchased under the Purchase
----------
Agreement, (ii) New Securities acquired pursuant to Article V hereof in
---------
respect of such Common Stock and (iii) other capital stock or Interests
issued in connection with a dividend, distribution, stock split,
subdivision, combination, reclassification or similar event in respect of
any such Common Stock described in clauses (i) and (ii) above.
----------- ----
"Senior Bank Agreement" means the Loan and Security Agreement, dated
---------------------
April 21, 1994, by and between Fleet Capital Corporation (as successor to
Barclays Business Credit, Inc.) and Berry.
"Senior Subordinated Notes" means the unsecured promissory notes of
-------------------------
Berry in the original aggregate principal amount of $100,000,000 issued
pursuant to, and governed by, the Indenture, dated as of April 21, 1994, by
and among Berry, the Company, Berry Iowa Corporation, Berry - CPI Plastics
Corp. and United States Trust Company of New York, as trustee.
"Voting Holder" means a Holder who holds Voting Stock or retains, by
-------------
proxy or otherwise, the power to vote Voting Stock.
"Voting Stock" means capital stock of the Company of any class or
------------
series, the Holders of which are then, in the absence of contingencies or
contractual arrangements (such as this Agreement), entitled to vote for the
election of directors to the Company's Board of Directors.
"Warrant Stock" has the meaning provided in the Preferred Stock
-------------
Purchase Agreement.
-4-
<PAGE>
Section 1.2. Additional Terms. The following terms shall have the
----------------
meanings indicated or referred to in the following Sections of this
Agreement:
Term Section
- ---- -------
Aetna Preamble
--------
Agreement Preamble
--------
Annual Budget 2.4(a)(v)
Approved Sale 4.1(d)
Benefitting Party Article VI
----------
CITEI Preamble
--------
Company Preamble
--------
Demand Date 4.1(d)
Disposition 7.1(b)
Initial Registration 3.1(a)
Initiating Holder 3.1(b)
Institutional Holder and
Institutional Holders Preamble
--------
International Preamble
--------
Investment Bank 4.1(b)
New Securities 5.1(b)
Permitted Transfer 7.1(a)
Permitted Transferee 7.1(a)
Preferred Stock Holder 7.1(b)
Purchase Agreement 1st Recital
-----------
Qualified Holder 2.4(a)
Registration Statement Definition of Qualified Public Offering
Request for Sale 4.1(a)
Rule 144 Definition of Restricted Securities
Stockholder and Stockholders 1st recital
-----------
Tag-Along Purchase Offer 7.1(b)
Tag-Along Sale 7.1(b)
Tag-Along Seller 7.1(b)
Tag-Along Securities 7.1(b)
Violation 3.9(a)
Warrant Holder 7.1(b)
Section 1.3. Purchase Agreement Defined Terms, etc. Unless otherwise
--------------------------------------
defined, terms used herein shall have the meanings provided in the Purchase
Agreement. Section 1.3 of the Purchase Agreement shall apply to this
-----------
Agreement as if set forth in full herein, except that all references to the
Purchase Agreement contained in such Section shall, as appropriate and as
the context requires, be deemed to mean this Agreement.
ARTICLE II
BOARD OF DIRECTORS APPROVAL AND INFORMATION RIGHTS
Section 2.1. Board of Directors and Approval Rights. The parties
--------------------------------------
hereto covenant and agree as follows:
-5-
<PAGE>
(a) From and after the Closing and until the provisions of this
Section 2.1 terminate, in whole or in part, pursuant to Article VI hereof
- ----------- ----------
or as otherwise expressly provided in this Section 2.1, each Holder shall
-----------
vote all of such Holder's Voting Stock and shall take all other necessary
or desirable actions within the Holder's control (in its capacity as a
stockholder, and including, without limitation, attendance at meetings in
Person or by proxy for purposes of obtaining a quorum and execution of
written consents in lieu of meetings), and the Company shall take all
necessary and desirable actions within its control (including, without
limitation, calling special meetings of its shareholders and its Board of
Directors), so that:
(i) until the occurrence of a Conversion Event, the number of
directors constituting the Company's Board of Directors shall be
seven; provided, however, that (x) in the event the holders of
-------- -------
Preferred Stock have the right, pursuant to Section 3(c) of Part B of
the Amended and Restated Certificate of Incorporation, to designate
and cause to be elected up to two of their representatives to the
Company's Board of Directors, the number of directors constituting the
Company's Board of Directors shall be increased by the number of such
representatives actually elected, plus an equal number of additional
----
directors to be designated by International pursuant to the proviso to
Section 2.1(a)(ii)(A) below and (y) upon the occurrence of a Preferred
Stock Control Event, the number of directors constituting the
Company's Board of Directors shall be increased by a number which,
when taken together with the other representatives of the holders of
the Preferred Stock who are then members of the Company's Board of
Directors (if any), would result in a majority of the members of the
Company's Board of Directors being representatives of the holders of
Preferred Stock;
(ii)
(A) three members of the Board of Directors shall be
representatives designated by International; provided, however,
-------- -------
that in the event (but only in the event) the Company's Board of
Directors is increased by the holders of Preferred Stock as
contemplated by clause (x) of the proviso to Section 2.1(a)(i)
----------
above, International shall have the right to designate and cause
to be elected to the Company's Board of Directors such additional
number of representatives as shall equal the number of
representatives actually elected by the holders of Preferred
Stock;
(B) two members of the Board of Directors shall be
representatives designated by CVCA;
(C) one member of the Board of Directors shall be a
representative designated by a majority-in-interest of the
Institutional Holders; and
-6-
<PAGE>
(D) so long as no Conversion Event of the type described in
clause (i) of the definition thereof has occurred, one member of
the Board of Directors shall be Roberto Buaron or his designee;
provided, however, that upon the occurrence of and following a
-------- -------
Conversion Event, (1) the number of representatives to the Board of
Directors that may be designated by CVCA hereunder (and not pursuant
to the Amended and Restated Certificate of Incorporation as a result
of its holding Preferred Stock) shall be increased by one and (2) if
the Conversion Event is of the type described in clause (ii) or (iii)
of the definition thereof, the number of representatives to the Board
of Directors that may be designated by International pursuant to
clause (ii)(A) above shall be decreased by one.
--------------
(iii) the removal from the Board of Directors (with or without
cause) of any representative designated by International, CVCA or a
majority-in-interest of the Institutional Holders shall be only at the
written request of International, CVCA or a majority-in-interest of
the Institutional Holders, respectively, and under no other
circumstances;
(iv) in the event that any representative designated hereunder
by International, CVCA or a majority-in-interest of the Institutional
Holders for any reason ceases to serve as a member of the Board of
Directors during his or her term of office, the resulting vacancy on
the Board of Directors shall be filled by a representative designated
by International, CVCA or a majority-in-interest of the Institutional
Holders, as the case may be, that such director represented;
(v) until the occurrence of a Conversion Event, none of the
following actions shall be approved or undertaken by the Company or
any of its Subsidiaries without the affirmative vote of the holders of
a majority of the Voting Stock held by CVCA and the Institutional
Holders; and, after the occurrence of a Conversion Event, none of the
following actions shall be approved or undertaken by the Company or
any of its Subsidiaries without the affirmative vote of each of (A)
International and (B) holders of a majority of the Voting Stock held
by CVCA and the Institutional Holders (in each case subject to the
additional approval or affirmative vote of the holders of Preferred
Stock to the extent required under the Amended and Restated
Certificate of Incorporation):
(1) any merger or consolidation (in either case pursuant to
which shareholders of the Company receive consideration, directly
or indirectly, from another Person upon the consummation of such
merger or consolidation) or liquidation of the Company or any
sale or series of sales of the assets of the Company or
-7-
<PAGE>
any of its Subsidiaries (whether by way of transfer, assignment,
dividend, distribution, merger, consolidation or otherwise other
than sales of inventory in the ordinary course of business)
pursuant to which the Company or any of its Subsidiaries receives
consideration in excess of $30,000,000 in the aggregate for all
such sales during any 12-month period;
(2) any acquisition of another business or series of
acquisitions of other businesses (whether by way of purchase,
transfer, assignment, merger, consolidation or otherwise)
pursuant to which the Company or any of its Subsidiaries pays,
distributes or contributes consideration (which shall include all
assumed funded indebtedness) in excess of $30,000,000 in the
aggregate for all such acquisitions during any 12-month period;
provided, however, that the restrictions set forth in this
-------- -------
paragraph (2) shall not apply to capital expenditures for
-------------
property, plant, machinery and equipment;
(3) any Investments by the Company or any of its
Subsidiaries in any Person that is not a Subsidiary of the
Company and pursuant to which the Company or any of its
Subsidiaries pays, distributes or contributes capital or other
consideration in excess of $20,000,000 in the aggregate for all
such Investments during any 12-month period;
(4) any incurrence of funded indebtedness by the Company or
any of its Subsidiaries which, when aggregated with all such
indebtedness incurred since the date hereof, exceeds $22,000,000
in aggregate principal amount other than the following:
(A) any indebtedness evidenced by the Senior
Subordinated Notes or the Senior Secured Notes;
(B) any indebtedness presently outstanding or
hereafter incurred under the Senior Bank Agreement up to a
maximum of $28,000,000 aggregate principal amount;
(C) indebtedness incurred or assumed in connection
with (x) acquisitions permitted under Section 2.1(a)(v)(2)
--------------------
above, and (y) acquisitions that are not permitted under
such Section but that have been approved by an affirmative
vote of a majority of the Voting Stock held by CVCA and the
Institutional Holders and, if required hereunder, by
International; and
(D) any refinancing, restructuring, replacement,
exchange or similar modification of
-8-
<PAGE>
the indebtedness created (x) in accordance with clause (C)
----------
above up to a maximum aggregate principal amount not to
exceed the aggregate principal amount of such indebtedness
outstanding immediately prior to such refinancing,
restructuring, replacement, etc. and (y) under the Senior
Bank Agreement up to a maximum of $28,000,000 aggregate
principal amount;
(5) any issuance of capital stock of the Company or any of
its Subsidiaries providing, when aggregated with all such
issuances since the date hereof, aggregate gross proceeds to the
Company and its Subsidiaries in excess of $20,000,000; provided,
--------
however, for purposes of this, and only this, Section
------- -------
2.1(a)(v)(5), gross proceeds shall be deemed to be, with respect
------------
to any issuance of capital stock with a liquidation preference,
the higher of the gross proceeds of such issuance and the amount
of the liquidation preference of such capital stock;
(6) any amendment or modification to the Company's Amended
and Restated Certificate of Incorporation or By-Laws;
(7) any increase in, or the payment of, any dividends or
distributions on capital stock other than (x) increases in, or
payments of, dividends on Preferred Stock as provided for in the
Amended and Restated Certificate of Incorporation or (y)
distributions of Warrant Stock as provided for in the Warrants;
or any redemption or repurchase of any capital stock other than
as provided for by the Amended and Restated Certificate of
Incorporation; provided, however, that the Company may purchase
-------- -------
capital stock of the Company held by (A) any employees of the
Company or any of its Subsidiaries at a price not to exceed the
fair market value thereof (as determined in good faith by the
Board of Directors) and (B) any SBIC Holder in connection with a
Regulatory Violation or a Regulatory Problem;
(8) the commencement of any bankruptcy, insolvency or
similar proceeding in respect of the Company or any of its
Subsidiaries;
(9) the engagement by the Company or any of its
Subsidiaries in any business, activities or operations
substantially unrelated to the Core Business, except to the
extent all such unrelated businesses, activities or operations do
not have aggregate revenues exceeding 20% of the aggregate
revenues of the Company and its Subsidiaries, taken as a whole;
-9-
<PAGE>
(10) any transactions between the Company or any of its
Subsidiaries, on the one hand, and FACL or any of its Affiliates,
on the other; provided, however, that the following payments
-------- -------
shall be permitted: (w) management fees in an amount not to
exceed $750,000 per annum in the aggregate, plus out-of-pocket
expenses may be paid by the Company and/or any Subsidiary to FACL
or one of its Affiliates, (x) upon the consummation of the
Closing, a closing fee not to exceed $1,250,000 in the aggregate,
plus out-of-pocket expenses, may be paid to FACL or one of its
Affiliates; (y) subsequent to the Closing Date, in the event the
Company or any of its Subsidiaries consummates any transaction of
the type described in clauses (v)(2) or (v)(3) above (including
-------------- ------
any transaction of such type which does not require the approval
of International or CVCA pursuant to such clauses), a
transactional fee may be paid to FACL or one of its Affiliates in
respect of such acquisition; provided, however, that such
-------- -------
transactional fee does not exceed the lesser of 1% of the total
acquisition value or $1,250,000 for any such acquisition and (z)
out-of-pocket expenses incurred in connection with any
transaction involving the Company or any of its Subsidiaries
(whether or not such transaction is consummated) may be paid to
FACL or one of its Affiliates; or
(11) any material change in the tax or accounting methods
or principles used or applied by the Company or any of its
Subsidiaries other than changes in methods or principles required
by the Financial Accounting Standards Board; and
(vi) the Company shall, and shall cause each of its Subsidiaries
to, perform and observe all its covenants, obligations and agreements
under and in respect of Section 6.2 of the Purchase Agreement which
remain in force and effect thereunder.
(b) For purposes of Section 2.1(a)(v) above, all non-cash payments,
-----------------
contributions or other consideration shall be valued at the market value
therefor, which shall be the last quoted or available market price, if such
payment, contribution or other consideration is in the form of marketable
securities, and otherwise shall be the fair market value therefor as
determined by the Board of Directors acting in good faith.
(c) The Holders shall take all necessary and appropriate actions to
provide that at least one director designated by International and one
director designated by CVCA are members of any and all committees of the
Board of Directors.
(d) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the
Board and any committee thereof. So long as
-10-
<PAGE>
any director designated by International, CVCA or by the holders of
Preferred Stock serves on the Board and for three years thereafter, the
Company shall maintain directors indemnity insurance coverage reasonably
satisfactory to each director designated by International, CVCA, the
Institutional Holders or by the holders of Preferred Stock. No directors
shall be provided any cash or other compensation of any kind unless
approved by a majority of the directors designated by International, CVCA
and the Institutional Holders.
(e) The Amended and Restated Certificate of Incorporation and By-Laws
shall provide for indemnification and reimbursement of directors and
officers to the fullest extent permitted by the Delaware General
Corporation Law.
(f) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this Section 2.1, the election of an
-----------
individual to such directorship shall be accomplished in accordance with
the By-Laws and applicable law.
(g) If the rights of International under Section 2.1(a) are
--------------
terminated pursuant to the second sentence of Article VI and International
----------
is otherwise unable to designate and cause to be elected at least one
representative to the Company Board of Directors, each Holder shall vote
all of such Holder's Voting Stock and shall take all other necessary or
desirable actions within the Holder's control (in its capacity as a
stockholder, and including, without limitation, attendance at meetings in
Person or by proxy for purposes of obtaining a quorum and execution of
written consents in lieu of meetings) to elect one representative
designated by International to the Company's Board of Directors.
Section 2.2. Conflicting Agreements. Each Holder hereby represents
----------------------
and warrants that it has not granted and is not a party to any proxy,
voting trust or other agreement which is inconsistent with or conflicts
with the provisions of this Agreement, and no Holder shall grant any proxy
or become party to any voting trust or other agreement which is
inconsistent with or conflicts with the provisions of this Agreement. No
Holder shall act, for any reason, as a member of a group or in concert or
enter into any agreement or arrangement with any other Person or Persons in
connection with the acquisition, disposition or voting of Common Stock in
any manner which is inconsistent with the provisions of this Agreement.
Section 2.3. Actions Consistent with Agreement. The Company shall
---------------------------------
not circumvent this Agreement by taking any action through a Subsidiary or
Affiliate that would be prohibited under this Agreement. The Holders will
take all action necessary to give effect to this Stockholders Agreement.
-11-
<PAGE>
Section 2.4. Covenants of the Company.
------------------------
(a) Delivery of Financial Statements, etc. The Company shall deliver
-------------------------------------
(x) to each of International, CVCA, the Institutional Holders and each
Permitted Transferee holding beneficially and of record in excess of 10% of
the Common Stock on a fully-diluted basis (each a "Qualified Holder") all
----------------
financial statements and information set forth in this Section, and (y) to
each other Qualified Holder, only the financial information described in
clauses (i) and (ii) below:
- ----------- ----
(i) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Company, consolidated statements of
income, cash flow and shareholders' equity of the Company and its
Subsidiaries for such fiscal year, and consolidated balance sheets of
the Company and its Subsidiaries as of the end of such fiscal year,
all prepared in accordance with GAAP, consistently applied, and
accompanied by (A) an opinion of Ernst & Young, LLP or another
independent accounting firm of recognized national standing, (B) a
certificate of the Company's chief financial officer certifying that,
in the course of the preparation of the Company's audited financial
statements, nothing came to the attention of the Company that caused
it to believe that there was an Event of Non-Compliance in existence
or that there was any other default by the Company or any Subsidiary
in the fulfillment of or compliance with any of the terms, covenants,
provisions or conditions of any other material agreement to which the
Company or any Subsidiary is a party or, if the Company has reason to
believe any Event of Non-Compliance or other default by the Company or
any Subsidiary exists, a certificate specifying the nature and period
of existence thereof and what actions the Company and its Subsidiaries
have taken and propose to take with respect thereto, and (C) a copy of
Ernst & Young's (or such other accounting firm's) annual management
letter to the Board of Directors;
(ii) as soon as available, but in any event within 45 days after
the end of each of the first three (3) fiscal quarters of each fiscal
year of the Company, unaudited consolidated statements of income, cash
flow and shareholders' equity of the Company and its Subsidiaries for
such fiscal quarter, and consolidated balance sheets of the Company
and its Subsidiaries as of the end of such fiscal quarter, setting
forth, in each case, comparisons to the Annual Budget and to the
corresponding period in the preceding fiscal year, prepared in
accordance with GAAP, consistently applied, and certified by the
Company's chief financial officer;
(iii) as soon as available, but in any event within 30 days
after the end of each fiscal month of the Company, unaudited
consolidated statements of income, cash flow and shareholders' equity
of the Company and its Subsidiaries for
-12-
<PAGE>
such fiscal month, and consolidated balance sheets of the Company and
its Subsidiaries as of the end of such fiscal month, setting forth, in
each case, comparisons to the Annual Budget and to the corresponding
period in the preceding fiscal year, prepared in accordance with GAAP,
consistently applied, and certified by the Company's chief financial
officer;
(iv) accompanying the financial statements referred to in
clauses (ii) and (iii) above, a certificate of the Company's chief
------------ -----
financial officer stating that there is no Event of Non-Compliance in
existence and that neither the Company nor any of its Subsidiaries is
in default under any of its other material agreements or, if any Event
of Non-Compliance or any such default exists, specifying the nature
and period of existence thereof and what actions the Company and its
Subsidiaries have taken and propose to take with respect thereto;
(v) as soon as practicable and in any event no later than
30 days after the close of each fiscal year of the Company, a budget
for the immediately succeeding fiscal year, which shall be prepared in
reasonable detail, which budget shall display (segregated on a monthly
and quarterly basis) anticipated statements of income and cash flows
and balance sheets for the Company and its Subsidiaries for such
immediately succeeding fiscal year (the "Annual Budget"); and,
-------------
promptly upon preparation thereof, all other significant budgets
(including strategic plans) prepared by the Company or any of its
Subsidiaries; and within 30 days after any monthly period in which
there is a material adverse deviation from the Annual Budget, a
certificate from the Company's chief financial officer explaining the
deviation and what actions the Company has taken and proposes to take
with respect thereto;
(vi) promptly (but in any event within five business days) after
the discovery or receipt of notice of any Event of Non-Compliance, any
default under any material agreement to which the Company or any of
its Subsidiaries is a party or any other material adverse change,
event or circumstance affecting the Company or any Subsidiary
(including, without limitation, the filing of any material litigation
against the Company or any Subsidiary or the existence of any dispute
with any Person which involves a reasonable likelihood of material
litigation being commenced), a certificate of the Company's chief
financial officer specifying the nature and period of existence
thereof and what actions the Company and its Subsidiaries have taken
and propose to take with respect thereto;
(vii) within ten days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general
written communications which the Company or any of its Subsidiaries
sends to its security
-13-
<PAGE>
holders and copies of all Registration Statements and all
regular, special or periodic reports which it files, or any of
its officers or directors files with respect to the Company or
any of its Subsidiaries, with the SEC or with any securities
exchange on which any of its securities are then listed, and
copies of all press releases and other statements made available
generally by the Company to the public concerning material
developments in the Company's and its Subsidiaries' businesses;
and
(viii) with reasonable promptness, such other information
and financial data concerning the Company and its Subsidiaries as
any Qualified Holder may reasonably request.
Each of the financial statements referred to in clauses (i), (ii) and (iii)
----------- ---- -----
above shall be true and correct in all material respects as of the dates
and for the periods stated therein, subject in the case of the unaudited
financial statements to changes resulting from normal year-end adjustments
(none of which would, alone or in the aggregate, be materially adverse to
the financial condition, operating results, assets, operations or business
of the Company and its Subsidiaries taken as a whole).
Notwithstanding the foregoing, the provisions of this Section 2.4
-----------
shall cease to be effective so long as the Company (x) is subject to the
periodic reporting requirements of the '34 Act and continues to comply with
such requirements and (y) promptly provides to each Qualified Holder
otherwise entitled to receive information pursuant to this Section 2.4 such
-----------
reports and other material filed by the Company with the SEC pursuant to
the periodic reporting requirements of the '34 Act; provided, however, that
-------- -------
so long as this Agreement remains in effect, the Company shall continue to
deliver to each Qualified Holder, the information specified in clauses
-------
(iv), (v), (vi), (vii) and (viii) above.
- ---- --- ---- ----- ------
Except as otherwise required by law or judicial order or decree or by
any governmental agency or authority, each Person entitled to receive
information regarding the Company and its Subsidiaries under clause (a),
----------
(b) or (c) of this Section 2.4 shall maintain the confidentiality of all
- --- --- -----------
non-public information obtained by it hereunder which the Company has
reasonably designated as proprietary or confidential in nature; provided,
--------
however, that each such Person may disclose such information in connection
- -------
with the sale or transfer of any of its Securities to a Permitted
Transferee (or potential Permitted Transferee) if such Permitted Transferee
(or potential Permitted Transferee) agrees in writing to be bound by the
provisions hereof.
For purposes of this Section 2.4, the term "Qualified Holder" shall
-----------
include any partner or other equity holder of a Qualified Holder who
received Securities pursuant to a distribution from or a liquidation of
such Qualified Holder,
-14-
<PAGE>
provided such partner of a Qualified Holder agrees in writing to be bound
by the provisions hereof.
(b) Inspection. Upon reasonable notice, the Company shall permit
----------
each Qualified Holder, at such Qualified Holder's expense, to visit and
inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with
its officers and independent accountants, all at such reasonable times
during normal business hours and without disruption to the normal day-to-
day operations of the Company and its Subsidiaries as may be requested by
the Qualified Holder; provided, however, that the Company shall not be
-------- -------
obligated pursuant to this Section 2.4(b) to provide access to any
--------------
information which it reasonably considers to be a trade secret or similar
confidential information. The presentation of an executed copy of this
Agreement by any Qualified Holder to the Company's independent accountants
shall constitute the Company's permission to its independent accountants to
participate in discussions with such Qualified Holder.
(c) Observer Rights. The Company shall give CITEI (so long as CITEI
---------------
holds Common Stock (or other Securities convertible, exercisable or
exchangeable into Common Stock) representing at least 4.6% of the then
outstanding Common Stock) written notice of each meeting of the Company's
Board of Directors at the same time and in the same manner as notice is
given to the directors (which notice shall be confirmed in writing to
CITEI), and the Company shall permit a representative of CITEI to attend as
an observer all meetings of its Board of Directors. Each representative
shall be entitled to receive all written materials and other information
(including, without limitation, copies of meeting minutes) given to
directors in connection with such meetings at the same time such materials
and information are given to the members of the Board of Directors. If the
Company takes any action by written consent in lieu of a meeting of its
Board of Directors, the Company shall promptly give written notice thereof
to each such representative after the effective date of such consent
describing the nature and substance of such action.
(d) Frequency of Meetings. The Company agrees to hold a meeting of
---------------------
the Board of Directors at least three times per calendar year and not less
frequently than once per one hundred eighty days.
ARTICLE III
REGISTRATION RIGHTS
Section 3.1. Demand Registration Rights.
--------------------------
(a) Demands for Registration. If the Company shall receive (i) in
------------------------
the case of International or CVCA at any time subsequent to the earlier of
(x) the fifth anniversary of the Closing Date
-15-
<PAGE>
and (y) six months after the effective date of the first Registration
Statement for a public offering of equity securities of the Company (the
"Initial Registration"), or (ii) in the case of a majority-in-interest of
--------------------
the Institutional Holders, at any time subsequent to the earlier of (x) the
sixth anniversary of the Closing Date and (y) six months after the
effective date of the Initial Registration, a written request from
International, CVCA or a majority-in-interest of the Institutional Holders
that the Company file a Registration Statement under the '33 Act covering
the registration of such Holder's Common Stock, then the Company shall:
(i) within 20 days of the receipt thereof, give written notice
of such request to all Holders; and
(ii) use its best efforts to effect as soon as practicable, and
in any event within 90 days of the receipt of such request, the
registration under the '33 Act of all Common Stock which the Holders
request to be registered, subject to the limitations of Section
-------
3.1(b).
------
(b) "Piggyback" Registration Rights. If the Holder initiating the
-------------------------------
registration request hereunder (the "Initiating Holder") intends to
-----------------
distribute the Common Stock covered by its request by means of an
underwriting, such Holder shall so advise the Company as a part of its
request made pursuant to Section 3.1(a) and the Company shall include such
--------------
information in the written notice referred to in Section 3.1(a). The
--------------
underwriter for such underwriting will be selected by the Company and shall
be reasonably acceptable to the Initiating Holder (or, if more than one
Initiating Holder, a majority-in-interest of the Initiating Holders). In
such event, each other Holder which is a party or subject to this Agreement
shall have the right to include its Common Stock in such registration which
right shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Common Stock in the
underwriting to the extent provided herein. All Holders proposing to
distribute their Securities through such underwriting shall (together with
the Company as provided in Section 3.3(e)) enter into an underwriting
--------------
agreement, custody agreement and power of attorney, if required, in
customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section 3.1, if
-----------
the underwriter advises the Initiating Holders in writing that market
factors require a limitation of the number of shares to be underwritten,
then the Company shall so advise all Holders of Common Stock which would
otherwise be underwritten pursuant hereto, and the number of shares of
Common Stock that may be included in the underwriting shall be allocated to
all Holders (including all Initiating Holders), in proportion (as nearly as
practicable) to the number of shares of the Company owned by each Holder;
provided, however, that the number of shares of Common Stock to be included
- -------- -------
in such underwriting shall not be reduced unless all other securities are
first entirely excluded from the underwriting.
-16-
<PAGE>
(c) Deferral of Demand Registration. Notwithstanding the foregoing,
-------------------------------
if the Company shall furnish to Holders requesting a registration pursuant
to this Section 3.1, a certificate signed by the chief executive officer of
-----------
the Company stating that in the good faith judgment of the Board of
Directors, it would be materially detrimental to the Company and its
stockholders for such registration to be effected and it is therefore
desirable to defer the filing of such Registration Statement, the Company
shall have the right to defer taking action with respect to such filing for
a period of not more than 120 days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize
-------- -------
this right more than once in any 12-month period.
(d) Number of Demands. In addition, the Company shall not be
-----------------
obligated to effect, or to take any action to effect:
(i) more than three registrations pursuant to this Section 3.1
-----------
at the request of International or CVCA, provided, such registrations
--------
have become effective; or
(ii) more than one registration pursuant to this Section 3.1 at
-----------
the request of a majority-in-interest of the Institutional Holders,
provided, such registration has become effective; or
--------
(iii) any registration pursuant to this Section 3.1 during the
-----------
period starting with the date 30 days prior to the Company's good
faith estimate of the date of filing of, and ending on a date 180 days
after the effective date of, a registration subject to Section 3.2
-----------
hereof; provided, that the Company is actively employing in good faith
--------
all reasonable efforts to cause such Registration Statement to become
effective.
Section 3.2. Company Registration. If (but without any obligation to
--------------------
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for itself or for stockholders other
than the Holders) any of its stock or other equity securities (other than a
registration on any form which does not include substantially the same
information as would be required to be included in a Registration Statement
covering the sale of Common Stock or a registration in which the only
Common Stock being registered is Common Stock issuable upon conversion of
debt securities which are also being registered), the Company shall, at
such time, promptly give each Holder written notice of such registration.
Upon the written request of each Holder given within 20 days after mailing
of such notice by the Company in accordance with Section 7.4 hereof, the
-----------
Company shall, subject to the provisions of Section 3.7, cause to be
-----------
registered under the '33 Act all of the Common Stock that each such Holder
has requested to be registered.
Section 3.3. Obligations of the Company. Whenever required under
--------------------------
this Article III to effect the registration of any
-----------
-17-
<PAGE>
Securities, the Company shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a Registration Statement with
respect to such Securities and use its best efforts to cause such
Registration Statement to become effective, and, upon the request of
the Holders of a majority of the Securities registered thereunder,
keep such Registration Statement effective for a period of up to 120
days or until the distribution contemplated in the Registration
Statement has been completed; provided, however, that (i) such 120-day
-------- -------
period shall be extended for a period of time equal to the period the
Holder refrains from selling any Securities included in such
registration at the request of the underwriter; and (ii) in the case
of any registration of Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such 120-day period shall be
extended, if necessary, to keep the Registration Statement effective
until all such Securities are sold; provided, that Rule 415 (or any
--------
similar provision then in force) under the '33 Act, permits an
offering on a continuous or delayed basis; and provided, further,
-------- -------
however, that applicable rules under the '33 Act governing the
-------
obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (i) includes any prospectus
required by Section 10(a)(3) of the '33 Act or (ii) reflects facts or
events representing a material or fundamental change in the
information set forth in the Registration Statement, the incorporation
by reference of information required to be included in clause (i) and
----------
(ii) above of this second proviso to be contained in periodic reports
----
filed pursuant to Section 13 or 15(d) of the 1934 Act in the
Registration Statement;
(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to
comply with the provisions of the '33 Act with respect to the
disposition of all Securities covered by such Registration Statement;
(c) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the '33 Act, and such other documents as they may
reasonably request in order to facilitate the disposition of
Securities owned by them;
(d) use its best efforts to register and qualify the Securities
covered by such Registration Statement under such other Securities or
Blue Sky Laws of such jurisdictions as shall be reasonably requested
by the Holders; provided, however, that the Company shall not be
-------- -------
required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in
any such states or jurisdictions;
-18-
<PAGE>
(e) in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering.
Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement, as well as a
custody agreement and power of attorney in usual and customary form,
if required;
(f) notify each Holder of Securities covered by such
Registration Statement at any time when a prospectus relating thereto
is required to be delivered under the '33 Act of the occurrence of any
event as a result of which the prospectus included in such
Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing;
(g) cause all such Securities registered pursuant to this
Section to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and
(h) provide a transfer agent and registrar for all Securities
registered pursuant to this Section and a CUSIP number for all such
Securities, in each case not later than the effective date of such
registration.
Section 3.4. Furnish Information. It shall be a condition precedent
-------------------
to the obligations of the Company to take any action pursuant to this
Article III with respect to the Securities of any selling Holder that such
- -----------
Holder shall furnish to the Company such information regarding itself, the
Securities held by it, and the intended method of disposition of such
Securities as shall be required to effect the registration of such Holder's
Securities.
Section 3.5. Expenses of Demand Registration. All expenses other
-------------------------------
than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 3.1, including
-----------
(without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company and the fees and disbursements of one counsel for the selling
Holders shall be borne by the Company; provided, however, that the Company
-------- -------
shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 3.1 if the registration request is
-----------
subsequently withdrawn at the request of the Holders of a majority-in-
interest of the Securities to be registered (in which case all
participating Holders shall bear such expenses), unless the Initiating
Holders agree to forfeit their right to one demand registration pursuant to
Section 3.1; provided, further, however, that if at the time of such
- ----------- -------- ------- -------
withdrawal, the Holders have learned of a material adverse change in the
condition, business or prospects of the Company from that known to the
Holders at the
-19-
<PAGE>
time of their request and have withdrawn the request to initiate such
registration with reasonable promptness following disclosure by the Company
of such material adverse change, then the Holders shall not be required to
pay any of such expenses and shall retain their rights pursuant to
Section 3.1.
- -----------
Section 3.6. Expenses of Company Registration. The Company shall
--------------------------------
bear and pay all expenses incurred in connection with any registration,
filing or qualification of Securities with respect to the registrations
pursuant to Section 3.2, including (without limitation) all registration,
-----------
filing, and qualification fees, printers and accounting fees relating or
apportionable thereto, the fees and disbursements of counsel for the
Company and the fees and disbursements of one counsel for the selling
Holders selected by them, but excluding underwriting discounts and
commissions relating to Securities of such Holders.
Section 3.7. Underwriting Requirements; "Piggyback" Registrations
----------------------------------------------------
Rights on Company Registrations, etc. In connection with any offering
- ------------------------------------
involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 3.2 to include any of the
-----------
Holders' Securities in such underwriting unless they accept the terms of
the underwriting as agreed upon between the Company and the underwriters
selected by it (or by other Persons entitled to select the underwriters),
and then only in such quantity as the underwriters determine in their sole
but reasonable discretion will not jeopardize the success of the offering
by the Company. If the total amount of securities, including Securities of
the Holders, requested by stockholders to be included in such offering
exceeds the amount of securities sold other than by the Company that the
underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in
the offering only that number of Securities which the underwriters
determine in their reasonable discretion will not jeopardize the success of
the offering (the Securities so included to be apportioned pro rata among
--- ----
all selling Holders (including all Initiating Holders) according to the
total amount of Securities entitled to be included therein owned by each
selling Holder or in such other proportions as shall be mutually agreed
upon by such Holders). For purposes of the parenthetical in the
immediately preceding sentence concerning apportionment, for any selling
Holder which is a partnership or corporation, the partners, retired
partners and stockholders of such selling Holder, or the estates and family
members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing Persons shall be deemed to be a single
"selling Holder", and any pro-rata reduction with respect to such "selling
Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included or
comprising such selling Holder.
Section 3.8. Delay of Registration. No Holder shall have any right
---------------------
to obtain or seek an injunction restraining or
-20-
<PAGE>
otherwise delaying any such registration as the result of any controversy
that might arise with respect to the interpretation or implementation of
this Article III.
-----------
Section 3.9. Indemnification. In the event any Securities of any
---------------
Holder are included in a Registration Statement under this Article III:
-----------
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the '33
Act) for such Holder and each Person, if any, who controls such Holder
or underwriter within the meaning of the '33 Act or the '34 Act,
against any losses, claims, damages, or liabilities (joint or several)
to which they may become subject under the '33 Act or the '34 Act,
insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i)
---------
any untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or
alleged violation by the Company of the '33 Act, the '34 Act, or any
rule or regulation promulgated under the '33 Act or the '34 Act; and
the Company will pay to each such Holder, underwriter or controlling
Person, as incurred, any reasonable legal or other expenses reasonably
incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however,
-------- -------
that the indemnity agreement contained in this Section 3.9(a) shall
--------------
not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder,
underwriter or controlling Person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the Registration Statement, each
Person, if any, who controls the Company within the meaning of the '33
Act, any underwriter, any other Holder selling Securities in such
Registration Statement and any controlling Person of any such
underwriter or other Holder, against any losses, claims, damages or
liabilities to which any of the foregoing
-21-
<PAGE>
Persons may become subject, under the '33 Act or the '34 Act insofar
as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by
such Holder expressly for use in connection with such registration;
and each such Holder will pay any legal or other expenses reasonably
incurred by any Person intended to be indemnified pursuant to this
Section 3.9(b), in connection with investigating or defending any such
--------------
loss, claim, damage, liability or action; provided, however, that the
-------- -------
indemnity agreement contained in this Section 3.9(b) shall not apply
--------------
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld;
provided, further, however, that, in no event shall any indemnity
-------- ------- -------
under this Section 3.9(b) exceed the net proceeds from the offering
--------------
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 3.9 of notice of the commencement of any action (including any
-----------
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 3.9, deliver to the indemnifying party a written notice
-----------
of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel consented to by such
indemnified party and any other indemnifying parties similarly
noticed, which consent shall not be unreasonably withheld or delayed;
provided, however, that an indemnified party (together with all other
-------- -------
indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the
reasonable fees and expenses to be paid by the indemnifying party, if,
in the reasonable opinion of counsel for the indemnified party,
representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying
party of any liability to the indemnified party under this Section
-------
3.9, but the omission so to deliver written notice to the indemnifying
---
party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 3.9.
-----------
-22-
<PAGE>
(d) If the indemnification provided for in this Section 3.9 is
-----------
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage
or expense referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party hereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of
such loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party
on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such
loss, liability, claim, damage or expense as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access
to information, and opportunity to correct or prevent such statement
or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the
underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this
Section 3.9 shall survive the completion of any offering of Securities
-----------
in a Registration Statement under this Article III, and otherwise.
-----------
Section 3.10. Reports Under the '34 Act. With a view to making
-------------------------
available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell
Securities of the Company to the public without registration or pursuant to
a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times subsequent to the
90th day following the effective date of the Initial Registration;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the '33 Act and the '34 Act;
and
(c) furnish to any Holder, so long as the Holder owns any Common
Stock, forthwith upon request (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144 (at
any time after the
-23-
<PAGE>
date specified in clause (a) above), the '33 Act and the '34 Act (at
----------
any time after it has become subject to such reporting requirements),
or that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy
of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC which permits the selling
of any of its Securities without registration or pursuant to such
form.
Section 3.11. Form S-3 Registration. In the event the Company
---------------------
receives from any Holders (other than Management Shareholders) a written
request or requests that the Company effect a registration on Form S-3 and
any related qualification or compliance with respect to all or a part of
the Common Stock owned by such Holders (other than Management
Shareholders), the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as
would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Common Stock as are specified in
such request, together with all or such portion of the Common Stock of
any other Holder or Holders joining in such request as are specified
in a written request given within 15 days after receipt of such
written notice from the Company; provided, however, that the Company
-------- -------
shall not be obligated to effect any such registration, qualification
or compliance, pursuant to this Section 3.11: (i) if Form S-3 is not
------------
available for such offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Common
Stock (including such other securities, if any) at an aggregate price
to the public (net of any underwriters' discounts or commissions) of
less than $1,000,000; (iii) if the Company shall furnish to the
Holders a certificate signed by the chief financial officer of the
Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be materially detrimental to the
Company and its stockholders for such Form S-3 Registration to be
effected at such time, in which event the Company shall have the right
to defer the filing of the Form S-3 Registration Statement for a
period of not more than 120 days after receipt of the request of the
Holder or Holders under this Section 3.11; provided, however, that the
------------ -------- -------
Company shall not utilize this right more than once in any 12-month
period; (iv) if the Company has, within the 12-month period preceding
the date of such request, already effected two
-24-
<PAGE>
registrations on Form S-3 for the Holders pursuant to this Section
-------
3.11; or (v) in any particular jurisdiction in which the Company would
----
be required to qualify to do business or to execute a general consent
to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
Registration Statement on Form S-3 covering the Common Stock (and
other Securities, if any) so requested to be registered as soon as
practicable after receipt of the request or requests of the Holders.
All expenses incurred in connection with a registration requested
pursuant to this Section 3.11, including (without limitation) all
------------
registration, filing, qualification, printer's and accounting fees and
the reasonable fees and disbursements of one counsel for the selling
Holder or Holders and counsel for the Company, but excluding any
underwriters' discounts or commissions shall be borne by the Company.
Section 3.12. Limitations on Subsequent Registration Rights. From
---------------------------------------------
and after the date of this Agreement, the Company shall not, without the
prior written consent of the Holders of a majority of the Common Stock held
by International, CVCA and the Institutional Holder, enter into any
agreement with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 3.1 hereof, unless
-----------
under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that
the inclusion of its securities will not reduce the amount of the
Securities of the Holders which is included or (b) to make a demand
registration which could result in a Registration Statement being declared
effective prior to the earlier of either of the dates set forth in Section
-------
3.1(a) or within 180 days of the effective date of any registration
- ------
effected pursuant to Section 3.1.
-----------
Section 3.13. "Market Stand-Off" Agreement. Each Holder hereby
----------------------------
agrees that, during the period of duration specified by the Company and an
underwriter of Common Stock or other securities of the Company, following
the effective date of a Registration Statement of the Company filed under
the '33 Act, it shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any Securities of the Company held by it at
any time during such period except Common Stock included in such
registration; provided, however, that:
-------- -------
(a) all officers and directors of the Company and all other
Persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements; and
-25-
<PAGE>
(b) such market stand-off time period shall not exceed a period
of 194 consecutive days in the aggregate, of which (i) a period of no
more than 14 consecutive days may precede such effective date and (ii)
a period of no more than 180 consecutive days may succeed such
effective date.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Securities of each Holder
(and the shares or securities of every other Person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 3.13 shall not apply to a registration relating solely to employee
- ------------
benefit plans on Form S-l or Form S-8 or similar forms which may be
promulgated in the future, or a registration relating solely to a Rule 145
(or any similar provision then in force) under the '33 Act transaction on
Form S-4 or similar forms which may be promulgated in the future.
Section 3.14. Termination of Registration Rights. The right of any
----------------------------------
Holder to request registration or inclusion in any registration pursuant to
Article III shall terminate on the closing of the first Company-initiated
- -----------
registered public offering of Common Stock of the Company if all shares of
Securities held by such Holder may immediately be sold under Rule 144
during any 90-day period, or on such date after the closing of the first
Company-initiated registered public offering of Common Stock of the Company
as all shares of Securities held by such Holder or entitled to be held upon
conversion by such Holder may immediately be sold under Rule 144 during any
90-day period; provided, however, that the provisions of this Section 3.14
-------- ------- ------------
shall not apply to any Holder who owns more than two percent (2%) of the
Company's outstanding Common Stock until such time as such Holder owns less
than two percent (2%) of the outstanding Common Stock of the Company.
ARTICLE IV
SALE OF THE COMPANY
Section 4.1. Sale of the Company.
-------------------
(a) The Company and its Board of Directors shall solicit a Sale of
the Company if (i) the Company receives a written notice directing the
Board of Directors to solicit a Sale of the Company from (x) International
or CVCA at any time subsequent to the fifth anniversary of this Agreement
or (y) a majority-in-interest of the Institutional Holders at any time
subsequent to the sixth anniversary of this Agreement, or (ii) at any time
after the occurrence of a Preferred Stock Control Event, the Board of
Directors delivers a written notice to each Qualified Holder of the Board's
intent to solicit a Sale of the Company (any such written notice described
in clause (i) or (ii) above being herein
---------- ----
-26-
<PAGE>
referred to as a "Request for Sale"). Upon receipt of any Request for Sale
----------------
pursuant to clause (i) above, the Company shall promptly notify each
Qualified Holder of its receipt thereof. The Holder (or, in the case of
the Institutional Holders, the majority-in-interest thereof) requesting the
Sale of the Company shall be referred to as the "Requesting Holder". (For
-----------------
purposes of this Article IV, in the event a majority-in-interest of the
----------
Institutional Holders makes a Request for Sale, such majority-in-interest
(x) shall be deemed to be the "Requesting Holder" and (y) shall designate a
representative from among such Holders to act as the "Requesting Holder" on
their behalf to effect the terms and provisions of this Article IV).
----------
(b) After receipt by the Company and the Qualified Holders of a
Request for Sale, the Requesting Holder and one or more representatives of
the Board of Directors shall promptly meet for the purpose of mutually
agreeing upon a nationally-recognized investment banking firm (an
"Investment Bank") which shall coordinate and supervise the Sale of the
---------------
Company; provided, however, that in the event the Board of Directors has
-------- -------
initiated the solicitation of the Sale of the Company pursuant to clause
------
(ii) of Section 4.1(a) above, the Board of Directors shall, notwithstanding
- ---- --------------
any terms or provisions of this Article IV to the contrary, be obligated to
----------
follow the applicable procedures set forth in this Article but shall
reserve for itself those rights which would otherwise have been exercisable
by the Requesting Holder. In the event such Requesting Holder and the
representatives of the Board of Directors are unable to mutually agree upon
an Investment Bank within fifteen days following receipt by the Company of
a Request for Sale, such Investment Bank shall be chosen by the Board of
Directors, subject to the one-time right of the Requesting Holder to reject
the firm chosen by the Board of Directors. The Board of Directors' second
choice will be binding. Once selected, the Company and the Board of
Directors shall instruct the Investment Bank promptly to take all necessary
actions and steps to solicit offers for a Sale of the Company from Persons
who are not Affiliates of the Company, any of the Holders or holders of
Preferred Stock, and to present to the Board of Directors and all Qualified
Holders, all bona fide offers (in the reasonable judgment of the Investment
Bank) received as part of the solicitation for the Sale of the Company.
The reasonable fees and expenses of the Investment Bank selected hereunder
shall be borne by the Company.
(c) In furtherance of the Sale of the Company, the Board of Directors
shall, and shall direct the management employees of the Company to,
cooperate with the Investment Bank and all potential purchasers in all
commercially reasonable respects (subject to the last sentence of this
clause (c)), including, without limitation, (i) cooperating in the
- ----------
preparation of materials to be distributed to potential purchasers, which
materials shall include appropriate and customary descriptions and
financial information concerning the Company, its Subsidiaries and their
respective businesses, (ii) permitting customary "due diligence" reviews of
the Company, its Subsidiaries and their respective
-27-
<PAGE>
books, businesses and assets, and (iii) upon reasonable notice, making
appropriate employees and independent accountants available at reasonable
times and intervals, without disruption to the normal day-to-day operations
of the Company, to answer questions of potential purchasers and their
advisors. In connection with the Sale of the Company, customary
confidentiality agreements shall be obtained from all potential purchasers,
and the Company shall not be obligated to disclose proprietary information
which the Board of Directors reasonably determines in good faith should not
be disclosed to any such potential purchaser.
(d) After bona fide offers have been received for a Sale of the
Company, subject to the provisions of Section 4.2, the Requesting Holder
-----------
may demand (the date on which such demand is made being the "Demand Date")
-----------
that the Company, the Holders and all holders of Preferred Interests effect
a Sale of the Company on terms offered by one of the proposed purchasers.
In the event there is more than one bona fide offer for the Company and the
Board of Directors and the Requesting Holder are unable to agree within 10
business days following the Demand Date upon which offer to choose, such
Requesting Holder and the Board shall promptly, but in any event within 12
business days following the Demand Date, engage the Investment Bank chosen
pursuant to clause (b) above to recommend one of the offers for the Company
----------
based upon, among other things, relative value to the Company's
stockholders (from a financial point of view) and the relative likelihood
of consummating a Sale of the Company with the various prospective
purchasers. The recommendation of such Investment Bank shall be deemed to
be the offer mutually selected by the Board of Directors and the Requesting
Holder. (The offer which is mutually selected, or deemed to be mutually
accepted, by the Board of Directors and the Requesting Holder is herein
referred to as the "Approved Sale".) Subject to the provisions of
-------------
Section 4.2, if the Approved Sale is structured as (i) a merger,
- -----------
consolidation or sale of assets, each Holder and each holder of Preferred
Interests shall vote or execute a written consent in favor of such merger,
consolidation or sale, as may be required, and shall waive any dissenters'
rights, appraisal rights or similar rights in connection with such
transaction or (ii) a sale of stock, each Holder and each holder of
Preferred Interests shall agree to sell all of its Securities and Preferred
Interests, as the case may be, as well as all Interests in or to acquire
other securities of the Company or any of its Subsidiaries, on the terms
and conditions of the Approved Sale. Subject to the provisions of Section
-------
4.2, the Company, each Holder and each holder of Preferred Interests shall
- ---
take all necessary or desirable actions in connection with the consummation
of the Approved Sale as reasonably requested by the Company, or the
Requesting Holder.
Section 4.2. Conditions of Sale. Subject to Section 4.3, the
------------------ -----------
obligations of the Holders and the holders of Preferred Interests with
respect to the Approved Sale of the Company are subject to the satisfaction
of the following conditions:
-28-
<PAGE>
(i) upon the consummation of the Approved Sale, each Holder and each holder
of Preferred Interests shall receive the same form of consideration and,
after payment to the holders of Preferred Stock of a per share price of not
less than the Liquidation Preference (as defined in the Amended and
Restated Certificate of Incorporation) of each such share, plus all accrued
and unpaid dividends thereon through the date of purchase, and satisfaction
of any other applicable liquidation (or similar) preferences required with
respect to the Common Stock pursuant to the Amended and Restated
Certificate of Incorporation, the same per share amount of consideration;
(ii) if any holders of a class of Common Stock (including Warrant Stock) or
Preferred Stock are given an option as to the form and amount of
consideration to be received, each holder of such class of Common Stock or
Preferred Stock shall be given the same option; (iii) each holder of then
currently exercisable rights to acquire shares of any class of the
Company's capital stock (including Warrant Stock) shall be given an
opportunity to either (A) exercise such rights prior to the consummation of
the Approved Sale or (B) receive in exchange for such rights consideration
equal to the amount determined by multiplying (1) the same amount of
consideration per share of the applicable class of capital stock received
by holders thereof in connection with the Approved Sale less the exercise
price per share of such class of capital stock of such rights to acquire
such class of capital stock by (2) the number of shares of such class of
capital stock represented by such rights; (iv) no holder of any class of
capital stock (including Warrant Stock) shall be obligated to make any out-
of-pocket expenditure prior to the consummation of the Approved Sale
(excluding modest expenditures for its own postage, copies, etc., and the
fees and expenses of its own counsel retained by it) and no such holder
shall be obligated to pay more than its or his pro rata share (based upon
--- ----
the number of shares of capital stock (including Warrant Stock) held) of
reasonable expenses incurred in connection with such Approved Sale to the
extent such costs are incurred for the benefit of all such holders and are
not otherwise paid by the Company or the acquiring party (including the
reasonable costs of one counsel chosen by the Company on behalf of such
holders), it being understood that costs incurred by or on behalf of any
such holder for its or his sole benefit will not be considered costs of the
transaction hereunder; provided that any such holder's liability for its or
--------
his pro rata share of such allocated expenses shall be capped at the total
--- ----
purchase price received in cash by such holder for its or his capital stock
(including Warrant Stock); and (v) in the event that any holders of capital
stock (including Warrant Stock) are required to provide any representations
or indemnities in connection with the Approved Sale (other than
representations and indemnities concerning such holder's title to its or
his capital stock and such holder's authority, power and right to enter
into and consummate such purchase or merger agreement without violating any
other agreement or legal requirement), then such holder shall not be liable
for more than its or his pro rata share (based upon the number of shares of
--- ----
capital stock held) of any liability for misrepresentation or indemnity and
such liability shall not
-29-
<PAGE>
exceed the total purchase price received by such holder for its or his
capital stock; provided that the portion of such holder's liability
--------
attributable to any non-cash purchase price received shall be satisfied
solely out of such non-cash property.
Section 4.3. Consideration Allocation. In any Sale of the Company,
------------------------
the consideration therefrom will be allocated among the holders of the
Company's capital stock (including Interests in capital stock on an as-if-
converted basis) so that each such Person receives the aggregate
consideration that it or he would have received if such consideration had
been distributed by the Company pursuant to the Amended and Restated
Certificate of Incorporation in a complete liquidation.
ARTICLE V
PREEMPTIVE RIGHTS; NEW SECURITIES
Section 5.1. Preemptive Rights, etc.
----------------------
(a) The Company hereby grants to each Qualified Holder the right to
purchase shares of any New Securities which the Company may, from time to
time, propose to issue and sell. Such right shall allow each Qualified
Holder to purchase, at the issue price, a pro rata portion of the New
--- ----
Securities proposed to be issued, determined with reference to the
aggregate number of outstanding shares of Common Stock such Qualified
Holder would hold before the proposed issuance of New Securities, but in
any event sufficient to maintain such Qualified Holder's fully-diluted
percentage ownership of the Company immediately prior to the issuance of
such New Securities. In the event a Qualified Holder does not purchase any
or all of its pro rata portion of New Securities, the remaining Qualified
--- ----
Holders shall have the right to purchase such unpurchased New Securities or
respective pro rata portion until all of the New Securities are purchased
--- ----
or until no other Qualified Holder desires to purchase any more New
Securities. The right of first refusal granted hereunder shall terminate
if unexercised within 30 days after receipt of the notice described in
clause (c) below.
- ----------
(b) "New Securities" shall mean (x) any issuance of capital stock or
--------------
options or rights to acquire capital stock of the Company; or (y) any
promissory note or debt instrument of the Company which is exchangeable or
convertible into capital stock of the Company or which is issued together
with any rights, options or warrants to purchase or acquire capital stock,
and Securities of any type whatsoever that are, or may become, exchangeable
or convertible into capital stock; provided, however, that the term "New
-------- -------
Securities" shall not include (i) any shares of Warrant Stock issued upon
exercise of, or pursuant to, the Warrant (ii) capital stock (including
warrants, options or other rights to purchase capital stock, or that are
convertible into or exchangeable for capital stock of the Company) issued
in connection with any borrowings or the incurrence of any
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<PAGE>
indebtedness by the Company or any of its Subsidiaries; provided, that all
--------
such capital stock, warrants, options or other rights shall not, in the
aggregate, exceed 5% of the Company's Common Stock on a fully diluted
basis; (iii) Class B Common Stock issued to employees, officers or
directors pursuant to stock incentive plans so long as the aggregate number
of shares of Class B Common Stock, at any time outstanding, issued pursuant
to (or outstanding under) any such plans does not exceed 12% of the
Company's capital stock on a fully diluted basis; (iv) Common Stock issued
by the Company pursuant to the acquisition of another corporation or entity
by the Company by merger, purchase of all or substantially all of the
assets or other reorganization whereby the Company shall become the owner
of more than 50% of the voting equity of such corporation or entity; (v)
shares of Common Stock issued to an SBIC Holder upon exchange of Common
Stock of such SBIC Holder as a result of a Regulatory Problem; (vi)
securities issued and sold by the Company in connection with a Qualified
Public Offering; (vii) securities issued and sold by the Company in
connection with an Approved Sale; or (viii) securities issued and sold by
the Company in connection with a pro rata stock dividend, stock split,
--- ----
combination, exchange, etc. with respect to any classes of Common Stock.
(c) In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Qualified Holder not less than 30 (or
greater than 45) days' written notice of its intention, describing the
class and number of shares of Common Stock it intends to issue as New
Securities, the purchase price therefor (which shall be payable solely in
cash) and the terms upon which the Company proposes to issue the same.
Each Qualified Holder shall have 30 days from the date such notice is given
to determine whether to purchase all or any portion of the its pro rata
--- ----
share of such New Securities by giving written notice to the Company and
stating therein the number of New Securities to be purchased. Any
Qualified Holder electing to so purchase its pro rata shares of such New
--- ----
Securities will complete such purchase at the time of, and subject to the
terms and conditions of, the issuance giving rise to the rights under this
Section 5.1.
- -----------
ARTICLE VI
TERMINATION
The provisions of Articles II, IV and V and Section 7.1 shall
----------- -- - -----------
terminate in full on the date on which any of the following events first
occurs: (i) the later of (x) five years from the date hereof if a
Qualified Public Offering occurs prior to the fifth anniversary of the date
hereof and (y) the occurrence of a Qualified Public Offering subsequent to
such fifth anniversary, (ii) twenty years from the date of this Agreement
and (iii) a Sale of the Company. (For purposes of this Article VI, each of
----------
International, CVCA and, collectively, the Institutional Holders (such
Institutional Holders being treated for purposes of this
-31-
<PAGE>
Article as if they were a single Holder) are herein referred to as a
"Benefitting Party".) All rights of any Benefitting Party under Section
----------------- -------
2.1(a), and the obligation of any other Holder or the Company to take
- ------
action to support or enforce such rights as required by Article II, shall
----------
cease (and no longer be in force or effect) as to such Benefitting Party
(but only as to such Benefitting Party) in the event that, at any time, (A)
the percentage determined by dividing (1) the sum of (x) the aggregate
number of shares of Common Stock held, beneficially and of record with full
power to vote, directly or indirectly, by such Benefitting Party and its
Related Persons of the type described in clauses (i)(x) or (ii)(x), as
-------------- -------
applicable, of the definition thereof which are Holders and (y) all other
shares of Common Stock which such Benefitting Party has, directly or
indirectly, the power to vote, by way of voting agreement, proxy or
otherwise, for the election of directors to the Board of Directors by
--
(2) the number of shares of Common Stock then outstanding on a fully
diluted basis (determined as though there were only a single class of
Common Stock) at any time is less than (B) one-third of the percentage
------------
determined by dividing (1) the number of shares of Common Stock so held by
such Benefitting Party immediately following the transactions contemplated
by the Purchase Agreement by (2) the number of shares of Common Stock
--
outstanding on a fully diluted basis (determined as though there were only
a single class of Common Stock) immediately following such transactions.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Transfer Restrictions, Tag-Along Rights, etc.
--------------------------------------------
(a) No Holder shall transfer, sell or otherwise dispose of all or any
portion of its economic or voting interest in any securities or other
Interests except that any such Holder may (i) transfer or sell up to 10% of
the Securities or other Interests held by it or him on the Closing Date or
(ii) transfer or sell any securities or other Interests held by such Holder
to any Related Person. Any transfer permitted under clause (i) or (ii)
---------- ----
above is herein referred to as a "Permitted Transfer", and any transferee
------------------
of Securities or other Interests pursuant to a Permitted Transfer is herein
referred to as a "Permitted Transferee". No transfer of securities or
--------------------
other Interests by a Holder will be recognized on the books of the Company
unless the transferee executes an agreement to be bound by the provisions
of this Agreement.
(b) If at any time after the Closing, any of International, CVCA or
any Institutional Holder (each, a "Tag-Along Seller") desires (and is
----------------
permitted) to sell, transfer or otherwise dispose of any Securities
beneficially owned by such Person (a "Disposition") to any transferee (the
-----------
"Proposed Purchaser"), in a single transaction or a series of related
------------------
transactions which
-32-
<PAGE>
would not constitute a Permitted Transfer (such transaction or series of
related transactions being a "Tag-Along Sale"), such Tag-Along Seller
--------------
shall, prior to consummating any such Disposition, require the Proposed
Purchaser to provide not less than 15 days prior written notice of such
proposed Tag-Along Sale and to offer in such notice (the "Tag-Along
---------
Purchase Offer") to purchase from (i) each holder of Warrants or Warrant
- --------------
Stock (each such holder being a "Warrant Holder") a "pro rata portion" of
-------------- --- ----
the amount of Warrants or Warrant Stock which such Warrant Holder desires
to include in such proposed Tag-Along Sale and (ii) each holder of
Preferred Stock (each such holder being a "Preferred Stock Holder") a "pro
---------------------- ---
rata portion" of the amount of Preferred Stock held by such Preferred Stock
- ----
Holder, which purchase of Preferred Stock shall be in addition to any
Securities, Warrants or Warrant Stock being included in the proposed Tag-
Along Sale (all such Warrants, Warrant Stock or Preferred Stock, as the
case may be, subject to a proposed Tag-Along Purchase Offer are herein
collectively referred to as "Tag-Along Securities"). Within 10 days of
--------------------
receiving such Tag-Along Purchase Offer, each Warrant Holder or Preferred
Stock Holder electing to participate in such proposed Tag-Along Sale shall
provide written notice of such election to the Proposed Purchaser and the
Tag-Along Seller, together with the number and type of shares of Tag-Along
Securities such Warrant Holder or Preferred Stock Holder, as the case may
be, desires to include in such proposed Tag-Along Sale (which number of
shares, in the case of a Warrant Holder, may be in excess of the number of
shares of Securities proposed to be sold or otherwise disposed of in such
proposed Tag-Along Sale). To the extent one or more Warrant Holders elect
to participate in a proposed Tag-Along Sale pursuant to this clause (b),
----------
the number of shares of Securities that the Tag-Along Seller may sell in
such transaction shall be correspondingly reduced; provided, however, that
-------- -------
there shall be no such reduction in the event any Preferred Stock Holder
elects to participate in a proposed Tag-Along Sale pursuant to this clause
------
(b).
- ---
For purposes of this Section 7.1(b), "pro rata portion" shall mean,
-------------- --- ----
(i) in the case of each Warrant Holder electing to participate in any such
Disposition, a fraction the numerator of which is the total number of
shares of Securities proposed to be sold in such Disposition by the Tag-
Along Seller (without regard to any reduction resulting from the operation
of this clause (b)) and the denominator of which is the total number of
----------
shares of Common Stock (determined on a fully-diluted, as-if-converted
basis) owned by International, CVCA, each Institutional Holder and each
Warrant Holder immediately prior to such Disposition; and (ii) in the case
of each Preferred Stock Holder seeking to participate in such Disposition,
a percentage of the total amount of Preferred Stock held by such Preferred
Stock Holder equal to the percentage determined by dividing (x) the number
of shares of Common Stock (determined on a fully diluted, as-if-converted
basis) the Tag-Along Seller will be permitted to sell in the proposed Tag-
Along Sale (after giving effect to all reductions occurring as a result of
the operation of this clause (b)) by (y) the sum of the total number of
----------
shares of Common Stock (determined
-33-
<PAGE>
on a fully-diluted, as-if-converted basis) owned by International, CVCA and
each Institutional Holder immediately prior to such proposed Tag-Along
Sale.
No holder of Tag-Along Securities exercising its rights hereunder
shall be required to make any representations or warranties except as to
(x) its title to the Tag-Along Securities to be sold by it, (y) such
holder's power and authority to effect such transfer and (z) such matters
pertaining to compliance with securities law as the Proposed Purchaser may
reasonably require; provided, however, that, in the event the Proposed
-------- -------
Purchaser requires that additional or other reasonable and customary
representations or warranties be made as a condition to consummating a
proposed Tag-Along Sale which representations or warranties are also to be
made by the Tag-Along Sellers and such holder of Tag-Along Securities
decides, in its sole discretion, not to make such additional or other
representations or warranties, such holder shall forfeit its rights
hereunder to participate in such Tag-Along Sale. Each such holder of Tag-
Along Securities shall have 20 days from the receipt of the Tag-Along
Purchase Offer in which to accept such offer. Any term or provision of
this Section to the contrary notwithstanding:
(1) The provisions of this clause (b) shall not apply to (A) any
----------
bona fide public offering of shares of Common Stock sold pursuant to
an effective Registration Statement under the '33 Act, (B) any
Permitted Transfer or (C) any sale of shares of Common Stock effected
pursuant to and in accordance with an open-market sale under Rule 144.
(2) The Preferred Stockholders shall have no rights to
participate in any Tag-Along Sale by any Tag-Along Seller pursuant to
this Section unless, after giving effect to such Tag-Along Sale,
International, CVCA and the Institutional Holders shall have,
collectively, transferred or sold in excess of 50% of the aggregate
amount of Securities or other Interests held by International, CVCA
and the Institutional Holders immediately following the Closing.
(3) Any sale or transfer of Tag-Along Securities by a Warrant
Holder or Preferred Stock Holder pursuant to this Section shall be on
the same terms and conditions as the proposed Tag-Along Sale by the
Tag-Along Seller, except that any Preferred Stock included in a Tag-
Along Sale shall be purchased by the Proposed Purchaser at a per share
price of not less than the Liquidation Preference (as defined in the
Amended and Restated Certificate of Incorporation) of each such share,
plus all accrued and unpaid dividends thereon through the date of such
purchase.
Section 7.2. Successors and Assigns. Except as otherwise provided
----------------------
herein, all of the terms and provisions of this Agreement shall be binding
upon, shall inure to the benefit of and shall be enforceable by the
respective successors and assigns of the parties hereto, including
Permitted Transferees. No
-34-
<PAGE>
Holder may assign any of its rights hereunder except as permitted in
Section 7.1. The Company may not assign any of its rights hereunder to any
- -----------
Person. If any transferee of any Holder shall acquire any Common Stock, in
any manner, whether by operation of law or otherwise, such shares shall be
held subject to all of the terms of this Agreement, and by taking and
holding such shares such Person shall be entitled to receive the benefits
of and be conclusively deemed to have agreed to be bound by and to comply
with all of the terms and provisions of this Agreement.
Section 7.3. Amendment and Modification; Waiver of Compliance;
-------------------------------------------------
Conflicts.
- ---------
(a) This Agreement may be amended or modified only by a written
instrument duly executed by (i) Holders holding in the aggregate a
majority-in-interest of the Common Stock then outstanding, (ii) each of
International and CVCA, (iii) with respect to any amendment or modification
to this Agreement which would adversely affect the rights of any holder of
Preferred Interests hereunder, at least two-thirds of the holders of
Preferred Interests and (iv) with respect to any amendment or modification
to this Agreement which would adversely affect the rights of any
Institutional Holder hereunder while not similarly adversely affecting the
rights of International or CVCA, a majority-in-interest of the
Institutional Holders.
(b) Except as otherwise provided in this Agreement, any failure of
any of the parties to comply with any obligation, covenant, agreement or
condition herein may be waived by the party entitled to the benefits
thereof only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
(c) In addition to the provisions of Section 7.3(b), any failure of
--------------
the Company to comply with any obligation, covenant, agreement or condition
herein may be waived by a written instrument duly executed by the other
parties hereto, but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other failure.
Section 7.4. Notices. Any notice, request, claim, demand, document
-------
and other communication hereunder to any party shall be effective upon
receipt (or refusal of receipt) and shall be in writing and delivered
personally or sent by telex or telecopy (with such telex or telecopy
confirmed promptly in writing sent by first class mail), or first class
mail, or other similar means of communication, as follows:
(i) If to International, CVCA, any Institutional Holder, the
Company or any holder of Preferred Interests
-35-
<PAGE>
addressed to such Person at the address set forth opposite its name on
Schedule I hereto; or
----------
(ii) If to a Holder other than International, CVCA or any
Institutional Holder, to the address of such Holder set forth in the
stock records of the Company;
or, in each case, to such other address or telex or telecopy number as such
party may designate in writing to each Holder and the Company by written
notice given in the manner specified herein.
All such communications shall be deemed to have been given, delivered
or made when so delivered by hand or sent by telex (answer back received)
or telecopy (confirmation of transmission received), or five business days
after being so mailed.
Section 7.5. Entire Agreement. This Agreement contains the entire
----------------
agreement among the parties hereto with respect to its subject matter and
supersedes all prior oral and written agreements and memoranda and
undertakings among the parties hereto with regard to such subject matter.
The Company represents to the Holders that the rights granted to the
holders hereunder do not in any way conflict with and are not inconsistent
with the rights granted or obligations accepted under any other agreement
(including the Amended and Restated Certificate of Incorporation) to which
the Company is a party.
Section 7.6. Inspection. For so long as this Agreement shall be in
----------
effect, this Agreement shall be made available for inspection by any party
hereto at the principal executive offices of the Company.
Section 7.7. Headings. The section and paragraph headings contained
--------
in this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
Section 7.8. Recapitalizations, Exchanges, Etc., Affecting the Common
--------------------------------------------------------
Stock or other Securities; New Issuances. The provisions of this Agreement
- ----------------------------------------
shall apply, to the full extent set forth herein with respect to the Common
Stock and to any and all other Securities of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets,
or otherwise) which may be issued in respect of, in exchange for, or in
substitution of, such Securities and shall be appropriately adjusted for
any stock dividends, splits, reverse splits, combinations,
reclassifications, recapitalizations, reorganizations and the like
occurring after the date hereof.
Section 7.9. Share Certificates, Restrictive Endorsement, Replacement
--------------------------------------------------------
Certificates, etc. (a) Each certificate representing Securities now or
- -----------------
hereafter held by a Holder shall be stamped with a legend in substantially
the following form:
-36-
<PAGE>
"The securities represented by this Certificate are subject to a
Stockholders Agreement, dated as of June 18, 1996, a copy of which is
on file at the offices of the Company and will be furnished to any
prospective purchasers upon request. Such Stockholders Agreement
provides, among other things, for certain restrictions on the sale,
transfer, pledge, hypothecation or other disposition of the securities
represented by this Certificate, and that under certain circumstances
the holder hereof may be required to sell the securities represented
by this Certificate. By acceptance of this Certificate, each holder
hereof agrees to be bound by the provisions of such Stockholders
Agreement. The securities represented by this Certificate have not
been registered under the Securities Act of 1933, as amended, or any
state securities law and may not be transferred, sold or otherwise
disposed of in the absence of such registration or an exemption
therefrom under such Act."
Each Holder agrees that he will deliver all certificates for Securities
owned by him to the Company for the purpose of affixing such legend
thereto.
(b) Upon receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of any certificate
representing Securities and of a bond or other indemnity reasonably
satisfactory to the Company, and upon reimbursement to the Company of all
reasonable expenses incident thereto, and upon surrender of such
certificate, if mutilated, the Company will make and deliver a new
certificate of like tenor in lieu of such lost, stolen, destroyed or
mutilated certificate.
Section 7.10. Consent to Jury Trial. EACH OF THE PARTIES TO THIS
---------------------
AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY OF THE OTHER TRANSACTION DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE PURCHASE
AGREEMENT. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. Each
party hereto acknowledges that this waiver is a material inducement to
enter into a business relationship, that each has already relied on this
waiver in entering into this Agreement, and that each will continue to rely
on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal
counsel and that it knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS
OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE NOTES. In the
event of litigation, this
-37-
<PAGE>
Agreement may be filed as a written consent to a trial by the court.
Section 7.11. Litigation. ALL JUDICIAL PROCEEDINGS BROUGHT BY THE
----------
COMPANY OR THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK
AND EACH PARTY HERETO, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT THE
COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS
AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT,
SUCH OTHER TRANSACTION DOCUMENT OR SUCH OBLIGATION. The Company and each
party hereto hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail,
return receipt requested, to such Person at its address provided on the
signature pages hereto, such service being hereby acknowledged by such
Person to be sufficient for personal jurisdiction in any action against
such Person in any such court and to be otherwise effective and binding
service in every respect. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of
the Company or any party hereto to bring proceedings against the other in
the courts of any other jurisdiction.
Section 7.12. Equitable Relief. The parties hereto agree and declare
----------------
that legal remedies may be inadequate to enforce the provisions of this
Agreement and that equitable relief, including specific performance and
injunctive relief, may be used to enforce the provisions of this Agreement.
Section 7.13. Governing Law. This Agreement shall be governed and
-------------
construed in accordance with the law of the State of New York without
giving effect to the provisions, policies or principles thereof with
respect to conflict or choice of law.
Section 7.14. Binding Effect. In the event that any part of this
--------------
Agreement shall be held to be invalid or unenforceable, the remaining parts
hereof shall nevertheless continue to be valid and enforceable as though
the invalid portions were not a part hereof.
Section 7.15. Attorneys' Fees. In any action or proceeding brought
---------------
to enforce any provisions of this Agreement, or where any provision hereof
is validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to any other available
remedy.
Section 7.16. No Strict Construction. The language used in this
----------------------
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be
applied against any Person.
-38-
<PAGE>
Section 7.17. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-39-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Stockholders
Agreement to be duly executed as of the date first above written.
BPC HOLDING CORPORATION
By /s/ Roberto Buaron
-------------------------------------------
Name: Roberto Buaron
Title: Chairman
HOLDERS:
-------
ATLANTIC EQUITY PARTNERS INTERNATIONAL II,
L.P.
By Atlantic Equity Associates International
II, L.P., its General Partner
By Buaron Holdings Ltd., its Managing
General Partner
By /s/ Roberto Buaron
----------------------------------------
Name: Roberto Buaron
Title: President
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
By Chase Capital Partners, its General
Partner
By /s/ Donald J. Hofmann
----------------------------------------
Name: Donald J. Hofmann
Title: Partner
<PAGE>
THE CIT GROUP/EQUITY INVESTMENTS, INC.
By /s/ Paul J. Laud
-------------------------------------------
Name: Paul J. Laud
Title: President
BPC EQUITY, LLC
By Aetna Life Insurance Company, its Member
By /s/ Allan J. Vartelas
----------------------------------------
Name: Allan J. Vartelas
Title: Assistant Vice
President
/s/ R. Brent Beeler
---------------------------------------------
R. Rent Beelen
/s/ Douglas E. Bell
---------------------------------------------
Douglas E. Bell
/s/ Ira G. Boots
---------------------------------------------
Ira G. Boots
/s/ Martin R. Imbler
---------------------------------------------
Martin R. Imbler
/s/ James M. Kratochvil
---------------------------------------------
James M. Kratochvil
Exhibit 10.24
WARRANT
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE CONDITIONS SPECIFIED IN THAT CERTAIN PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT DATED AS OF JUNE 12, 1996 (THE "PURCHASE AGREEMENT"), BY
------------------
AND AMONG BPC HOLDING CORPORATION, A DELAWARE CORPORATION ("HOLDING"), BPC
-------
MERGERCO, INC., A DELAWARE CORPORATION (THE "ISSUER"), CHASE VENTURE
------
CAPITAL ASSOCIATES, L.P. AND THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY, AS SUCH PURCHASE AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN
EFFECT FROM TIME TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED. A COPY OF THE PURCHASE AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY
THE PROVISIONS OF THE PURCHASE AGREEMENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, AND ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM.
No. of Stock Units: 5,623 Warrant No. 1
WARRANT
to Purchase Class B Common Stock of
BPC MERGERCO, INC.
THIS IS TO CERTIFY THAT CHASE VENTURE CAPITAL ASSOCIATES, L.P.,
or its registered assigns, is entitled to purchase in whole or in part from
time to time from BPC Mergerco, Inc., a Delaware corporation (the
"Issuer"), at any time on and after the Effective Date (as hereinafter
------
defined), but not later than 5:00 p.m., New York time, on June 18, 2006
(the "Expiration Date"), 5,623 Stock Units (as hereinafter defined and
---------------
subject to adjustment as provided herein) at a purchase price of $0.01 per
Stock Unit (the "Exercise Price"), subject to the terms and conditions
--------------
provided herein and in the Purchase Agreement (as hereinafter defined).
This Warrant is issued pursuant to the Preferred Stock and
Warrant Purchase Agreement dated as of June 12, 1996 (as
<PAGE>
modified and supplemented and in effect from time to time, the "Purchase
--------
Agreement") between the Issuer, Holding, Chase Venture Capital Associates,
- ---------
L.P. and The Northwestern Mutual Life Insurance Company.
SECTION 1. Certain Definitions. (a) Each capitalized term used
-------------------
herein without definition shall have the meaning assigned thereto (or
incorporated by reference) in the Purchase Agreement and in the Exhibits
thereto.
(b) As used herein, the following terms shall have the following
meanings (all terms defined in this Section 1 or in other provisions of
this Warrant in the singular to have the same meanings when used in the
plural and vice versa):
"Affiliate" means, with respect to any specified Person, any
---------
other Person which, directly or indirectly, controls, is under common
control with, or is owned or controlled by, such specified Person. For
purposes of this definition, (i) "control" means, with respect to any
specified Person, either (x) the beneficial ownership of more than
30 percent of any class of equity securities or (y) the power to direct the
management or policies of the specified Person through the ownership of
voting securities, by contract, voting agreement or otherwise and (ii) the
terms "controlling", "control with" and "controlled by", etc., shall have
meanings correlative to the foregoing.
"Board" shall mean the Board of Directors of the Issuer.
-----
"Business Day" shall mean any day on which commercial banks are
------------
not authorized or required to close in New York City.
"Class B Common Stock" means, the Issuer's Class B Voting Common
--------------------
Stock, $.01 par value per share, or any other common stock or other
securities receivable thereon, or into which the Class B Common Stock is
convertible or exchangeable, as a result of any recapitalization,
reclassification, merger or consolidation of, or deposition of assets by,
the Issuer.
"Common Stock" shall mean the Common Stock of the Issuer, of any
------------
class or series whatsoever, or any other common stock or other securities
receivable thereon, or into which the Common Stock is convertible or
exchangeable, as a result of any recapitalization, reclassification, merger
or consolidation of, or disposition of assets by, the Issuer.
"Current Market Price", shall mean, with respect to a share of
--------------------
Common Stock as of any date (a) for a period of 30 Business Days after the
date of the IPO, the offering price of such Common Stock or (b) in any
other case (i) the fair market value per share of such Common Stock, as
reasonably determined in good faith by the Board, using an appropriate
valuation method, assuming an arms-length sale to an independent party of
all of the Common Stock of the Issuer, without giving regard to the lack
<PAGE>
of liquidity of such Common Stock due to any restrictions contained in the
Stockholders Agreement, the Stock Purchase Agreement, the Purchase
Agreement or otherwise or any discount for minority interests and assuming
the conversion or exchange of all securities then outstanding which are
convertible into or exchangeable for such Common Stock and the exercise of
all rights and warrants (including the Warrants) then outstanding and
exercisable to purchase shares of such Common Stock or securities
convertible into or exchangeable for shares of such Common Stock, or (ii)
if there shall be a public market for such Common Stock, the average of the
daily market prices for each day during the 30 consecutive trading days
commencing 45 Business Days before such date as of which such a price can
be established in the manner set forth below. The market price for each
such Business Day shall be the last sale price on such day as reported in
the Consolidated Last Sale Reporting System or as quoted in the National
Association of Securities Dealers Automated Quotation System, or if such
last sale price is not available, the average of the closing bid and asked
prices as reported in either such system, or in any other case the higher
bid price quoted for such day as reported by The Wall Street Journal and
the National Quotation Bureau pink sheets.
"Effective Date" shall mean the date set forth on the signature
--------------
page of this Warrant.
"Exercise Notice" shall have the meaning assigned to such term in
---------------
Section 2 hereof.
"Exercise Price" shall have the meaning assigned to such term in
--------------
the first paragraph of this Warrant.
"Expiration Date" shall have the meaning assigned to such term in
---------------
the first paragraph of this Warrant.
"Holder" shall mean the registered holder of this Warrant.
------
"include" and "including" shall be construed as if followed by
------- ---------
the phrase ", without being limited to,".
"Independent Financial Expert" shall mean an investment banking
----------------------------
firm of recognized national standing chosen by the Issuer which is not an
Affiliate of Atlantic Equity Partners International II, L.P. or an
Affiliate or a Stockholder of the Issuer and which is satisfactory to the
holders of a majority in interest of the Warrants and the Warrant Stock.
"IPO" shall mean the Issuer's first firm commitment underwritten
---
public offering involving the sale of Common Stock of the Issuer, pursuant
to an effective registration statement under the Securities Act.
"Issuer" shall have the meaning assigned to such term in the
------
first paragraph of this Warrant and shall mean BPC Holding
<PAGE>
Corporation after the Merger (as defined in the Purchase Agreement).
"Person" means any individual, corporation, general or limited
------
partnership, joint venture, association, limited liability company, joint
stock company, trust, business trust, bank, trust company, estate
(including any beneficiaries thereof), unincorporated organization,
cooperative, association or governmental branch, authority, agency or
political subdivision thereof.
"Purchase Agreement" shall have the meaning assigned to such term
------------------
in the second paragraph of this Warrant.
"Regulation Y" shall mean Regulation Y promulgated by the Board
------------
of Governors of the Federal Reserve System (12 C.F.R. Sec.225), or any
successor regulation.
"Securities Act" shall mean the Securities Act of 1933, as
--------------
amended, and the rules and regulations promulgated thereunder.
"Stockholder" shall mean any Person who directly or indirectly
-----------
owns any shares of Common Stock (including Warrant Stock).
"Stock Unit" shall mean one share of Class B Common Stock, as
----------
such Class B Common Stock is constituted on the date hereof, and thereafter
shall mean such number of shares (including any fractional shares) of
Class B Common Stock and other securities, cash or other property as shall
result from the adjustments specified in Section 4 hereof.
"Warrant Holder" shall mean any Person who acquires Warrants or
--------------
Warrant Stock pursuant to the provisions of the Purchase Agreement,
including any transferees of Warrants or Warrant Stock.
"Warrant Stock" shall mean all shares of Class B Common Stock
-------------
issuable from time to time upon exercise of the Warrants.
"Warrants" shall mean the warrants originally issued by the
--------
Issuer pursuant to the Purchase Agreement (of which this Warrant is one),
evidencing rights to purchase up to the aggregate amount of Stock Units set
forth therein, and all Warrants issued upon transfer, division, or
combination of, or in substitution for, such Warrants.
SECTION 2. Exercise of Warrant. On and after the Effective Date
-------------------
and until 5:00 p.m., New York time, on the Expiration Date, the Holder may
exercise this Warrant, on one or more occasions, on any Business Day, in
whole or in part, by delivering to the Issuer, at its office maintained for
such purpose pursuant to Section 5.01 hereof, (a) a written notice of the
Holder's election to exercise this Warrant, which notice shall specify the
number of Stock Units to be purchased (the
<PAGE>
"Exercise Notice"), (b) payment of the Exercise Price (payable as set forth
---------------
below) for the number of Stock Units as to which this Warrant is being
exercised, and (c) this Warrant. The Exercise Price shall be payable (a)
in cash or by certified or official bank check payable to the order of the
Issuer or by wire transfer of immediately available funds to the account of
the Issuer or (b) by delivery of this Warrant Certificate to the Issuer for
cancellation in accordance with the following formula: in exchange for
each share of Class B Common Stock issuable on exercise of each Warrant
represented by this Warrant Certificate that is being exercised, such
holder shall receive such number of shares of Class B Common Stock as is
equal to the product of (i) the number of shares of Class B Common Stock
issuable upon exercise of the Warrants being exercised at such time
multiplied by (ii) a fraction, the numerator of which is the Current Market
Price per share of Class B Common Stock at such time minus the Exercise
Price per share of Class B Common Stock at such time, and the denominator
of which is the Current Market Price per share of Class B Common Stock at
such time.
Upon receipt thereof, the Issuer shall, as promptly as
practicable and in any event within 5 Business Days thereafter, execute or
cause to be executed and deliver or cause to be delivered to the Holder a
stock certificate or certificates representing the aggregate number of
shares of Warrant Stock and other securities issuable upon such exercise
and any other property to which such Holder is entitled.
The stock certificate or certificates for Warrant Stock so
delivered shall be in such denominations as may be specified in the
Exercise Notice and shall be registered in the name of the Holder or such
other name or names as shall be designated in such Exercise Notice. Such
stock certificate or certificates shall be deemed to have been issued and
the Holder or any other Person so designated to be named therein shall be
deemed to have become a holder of record of such shares, including, to the
extent permitted by law and to the extent such shares represent voting
stock of the Issuer, the right to vote such shares or to consent or to
receive notice as a Stockholder, as of the date on which the last of the
Exercise Notice, payment of the Exercise Price and this Warrant is received
by the Issuer as aforesaid. If this Warrant shall have been exercised only
in part, the Issuer shall, at the time of delivery of the certificate or
certificates representing Warrant Stock and other securities, execute and
deliver to the Holder a new Warrant evidencing the rights of the Holder to
purchase the unpurchased Stock Units called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant, or, at
the request of the Holder, appropriate notation may be made on this Warrant
and the same returned to the Holder.
All shares of Class B Common Stock issuable upon the exercise of
this Warrant shall, upon payment therefor in accordance herewith, be duly
and validly issued, fully paid and
<PAGE>
nonassessable and free and clear of any liens, charges or other
encumbrances of any nature.
The Issuer shall not be required to issue a fractional share of
Class B Common Stock upon exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase upon such
exercise, the Issuer shall pay (at the time this Warrant is exercised for
all shares of Class B Common Stock remaining subject hereto) a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per share of Class B Common Stock on
the date of exercise.
SECTION 3. Transfer, Division and Combination. (a)
----------------------------------
Notwithstanding anything herein to the contrary, no holder of Warrants
subject to the provisions of Regulation Y shall transfer any Warrants or
shares of Warrant Stock held by it, if, as a result of such transfer or the
right to effect such transfer, such holder would be deemed under Regulation
Y to have the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the Issuer (and, for purposes
of this restriction, a reasoned opinion of counsel to such holder (which is
based on facts and circumstances deemed appropriate by such counsel) to the
effect that such holder does not exercise such a controlling influence
shall be conclusive). For the purposes of this Section 3(a), a holder of
Warrants will not be deemed to be subject to Regulation Y to the
extent such holder is entitled to hold the Warrants pursuant to 12 C.F.R.
Sec. 225.22(c)(4).
(b) Subject to the foregoing, this Warrant and all rights
hereunder are transferable (subject to any restrictive legends hereon), in
whole or in part, upon surrender of this Warrant to the Issuer, together
with a written assignment of this Warrant duly executed by the Holder
hereof or such holder's agent or attorney. Such written assignment shall
be in the form of the Assignment Form attached as Annex B hereto. Upon
such surrender the Issuer shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denominations
specified in such instrument of assignment, and the original Warrant shall
promptly be canceled.
(c) This Warrant may be exchanged for other Warrants of the same
series upon presentation to the Issuer, together with a written notice
specifying the denominations in which new Warrants are to be issued, signed
by the Holder hereof. The Issuer shall execute and deliver a new Warrant
or Warrants to the holder in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. The Issuer shall pay
all expenses, taxes (including transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of the Warrants,
including any transfer or exchange thereof.
(d) The Issuer shall maintain books for the registration and
transfer of the Warrants, and shall allow each
<PAGE>
holder of Warrants to inspect such books at such reasonable times as such
holder shall request.
SECTION 4. Adjustments.
-----------
(a) Dividends, Distributions and Purchases.
--------------------------------------
(i) If at any time the Issuer shall pay any dividend or
make any other distribution to holders of its Common Stock of any
cash, evidence of indebtedness or other property of any nature
whatsoever (other than as provided in subsections (b), (c)(i)(A)
and (d)(i)(A) hereof), the Issuer shall at the same time pay or
distribute to each holder of Warrants (whether or not such holder
exercises such Warrants) the cash, evidence of indebtedness or
other property such holder would have been entitled to receive if
such holder had exercised such Warrants immediately prior to the
record date for such dividend or distribution;
(ii) If at any time the Issuer shall propose to purchase or
redeem any shares of its Common Stock (other than shares of Class
B or Class C Common Stock validly repurchased or redeemed, solely
as permitted by the terms of the Senior Secured Note Indenture,
pursuant to any management equity subscription, stockholders or
stock option agreement) for cash, evidence of indebtedness or
other property of any nature whatsoever, the Issuer shall deliver
to each holder of Warrants which are by their terms then
exercisable for shares of Warrant Stock a notice of such proposed
purchase or redemption, and each such holder shall, at its
option, have the right to require the Issuer to at the same time
purchase or redeem Warrants and shares of Warrant Stock owned by
such holder, in the same proportion as the number of shares of
Common Stock to be so purchased or redeemed bears to the total
number of shares of Common Stock outstanding at such time, on the
same terms and conditions as the proposed purchase or redemption
of such other Common Stock and for the same consideration per
Warrant or share of Warrant Stock, as the case may be, as is paid
to the holders of such other Common Stock for each share of
Common Stock so redeemed or purchased, minus, in the case of
Warrants, the exercise price of the Warrants to be so purchased
or redeemed.
(b) Subdivisions and Combinations. If at any time the Issuer
-----------------------------
shall
(i) take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend or other
distribution of Common Stock;
<PAGE>
(ii) subdivide or reclassify its outstanding shares of
Common Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then immediately after the occurrence of any such event the number of
shares of Warrant Stock comprising a Stock Unit shall be adjusted so as to
equal the number of shares of Warrant Stock which such holder would have
been entitled to receive if such holder had exercised the Warrant
immediately prior to the occurrence of such event.
(c) Issuance of Common Stock. In case at any time the Issuer
------------------------
(i)(A) shall take a record of the holders of its Common Stock for the
purpose of entitling them to subscribe for or purchase shares of any class
or series of Common Stock or (B) shall otherwise sell or issue any such
securities and (ii) the consideration per share of Common Stock to be paid
upon such issuance or subscription is less than the Current Market Price
per share of Common Stock on such record date, then the number of shares of
Warrant Stock comprising a Stock Unit shall be adjusted to be that number
determined by multiplying the number of shares of Warrant Stock comprising
a Stock Unit immediately prior to such record date by a fraction (not to be
less than one) (i) the numerator of which shall be equal to the product of
(A) the number of shares of Common Stock outstanding after giving effect to
such issuance, distribution, subscription or purchase and (B) the Current
Market Price per share of Common Stock determined immediately before such
record date and (ii) the denominator of which shall be equal to the sum of
(A) the product of (1) the number of shares of Common Stock outstanding
immediately before such record date and (2) the Current Market Price per
share of Common Stock determined immediately before such record date and
(B) the aggregate consideration to be received by the Issuer for the total
number of shares of Common Stock to be issued, distributed, subscribed for
or purchased. Aggregate consideration for purposes of the preceding clause
(B) shall be determined as follows: In case any shares of Common Stock
shall be issued or sold for cash, the consideration received therefor shall
be deemed to be the amount payable to the Issuer therefor. In case any
shares of Common Stock shall be issued or sold for a consideration other
than cash payable to the Issuer, the consideration received therefor shall
be deemed to be the fair value of such consideration as determined by the
Board. In case any shares of Common Stock shall be issued in connection
with any merger of another corporation into the Issuer, the amount of
consideration therefor shall be deemed to be the fair value as determined
by the Board of such portion of the assets of such merged corporation as
the Board shall determine to be attributable to such shares of Common
Stock.
(d) Issuance of other Securities, Rights or Obligations. In
---------------------------------------------------
case at any time the Issuer (i)(A) shall take a
<PAGE>
record of the holders of its Common Stock for the purpose of entitling them
to subscribe for or purchase options to purchase or rights to subscribe for
Common Stock or securities directly or indirectly convertible into or
exchangeable for Common Stock (or options or rights with respect to such
securities) or (B) shall otherwise issue or sell any such options, rights
or securities and (ii) the consideration per share for which Common Stock
is deliverable upon exercise of such options or rights or conversion or
exchange of such securities (determined by dividing (x) the total amount
received or receivable by the Issuer in consideration of the issuance of or
subscription for such options, rights or securities, plus the minimum
aggregate amount of premiums (if any) payable to the Issuer upon such
exercise, conversion or exchange, by (y) the total maximum number of shares
of Common Stock necessary to effect the exercise, conversion or exchange of
all such options, rights or securities) shall be less than the Current
Market Price per share of Common Stock on such record date or sale or
issuance date, as the case may be, then the number of shares of Warrant
Stock comprising a Stock Unit shall be adjusted to be that number
determined by multiplying the number of shares of Warrant Stock comprising
a Stock Unit immediately prior to such date by a fraction (not to be less
than one) (i) the numerator of which shall be equal to the product of (A)
the total maximum number of shares of Common Stock outstanding after giving
effect to the assumed exercise or conversion of all such options, rights or
securities and (B) the Current Market Price per share of Common Stock
determined immediately before such date and (ii) the denominator of which
shall be equal to the sum of (A) the product of (1) the number of shares of
Common Stock outstanding immediately before such date and (2) the Current
Market Price per share of the Common Stock determined immediately before
such date and (B) the aggregate consideration per share (determined as set
forth in subsection (ii)(x) and (y) above) for which Common Stock is
deliverable upon exercise conversion or exchange of such options, rights or
securities. Aggregate consideration for purposes of the preceding clause
(B) shall be determined as follows: In case any options, rights or
convertible or exchangeable securities (or options or rights with respect
thereto) shall be issued or sold, or exercisable, convertible or
exchangeable for cash, the consideration received therefor shall be deemed
to be the amount payable to the Issuer (determined as set forth in
subsection (ii)(x) and (y) above) therefor. In case any such options,
rights or securities shall be issued or sold, or exercisable, convertible
or exchangeable for a consideration other than cash payable to the Issuer,
the consideration received therefor (determined as set forth in subsection
(ii)(x) and (y) above) shall be deemed to be the fair value of such
consideration as determined by the Board, after deduction therefrom of any
expenses incurred or any underwriting commissions or concessions or
discounts paid or allowed by the Issuer in connection therewith. In case
any such options, rights or securities shall be issued or sold, or
exercisable, convertible or exchangeable in connection with any merger of
another corporation into the Issuer, the amount of consideration therefor
shall be deemed to
<PAGE>
be the fair value as determined by the Board of such portion of the assets
of such merged corporation as the Board shall determine to be attributable
to such options, rights or securities.
The Current Market Price per share of Common Stock shall be
determined as set forth in Section 5.05 hereof.
(e) Superseding Adjustment. If, at any time after any
----------------------
adjustment in the number of shares of Warrant Stock comprising a Stock Unit
shall have been made on the basis of the issuance of any options or rights,
or convertible or exchangeable securities (or options or rights with
respect to such securities) pursuant to subsection (d) hereof:
(i) the options or rights shall expire prior to exercise or
the right to convert or exchange any such securities shall
terminate; or
(ii) the consideration per share for which shares of Common
Stock are issuable pursuant to the terms of such options or
rights or convertible or exchangeable securities shall be
increased or decreased, other than under or by reason of
provisions designed to protect against dilution;
such previous adjustment shall be rescinded and annulled. Thereupon, a
recomputation shall be made of the effect of such options or rights or
convertible or exchangeable securities with respect to shares of Common
Stock on the basis of
(A) treating the number of shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the
previous exercise, conversion or exchange of such
options, rights or securities as having been issued on
the date or dates of such exercise, conversion or
exchange and for the consideration actually received
and receivable therefore, and
(B) treating any such options, rights or securities which
then remain outstanding as having been granted or
issued immediately after the time of such increase or
decrease for the consideration per share for which
shares of Common Stock are issuable upon exercise,
conversion or exchange of such options, rights or
securities.
To the extent called for by the foregoing provisions of this Section 4(e)
on the basis aforesaid, a new adjustment in the number of shares of Warrant
Stock comprising a Stock Unit shall be made, determined using the Current
Market Price used at the time of the original determination, which new
adjustment shall
<PAGE>
supersede the previous adjustment so rescinded and annulled. If the
exercise, conversion or exchange price provided for in any such option,
right or security shall decrease at any time under or by reason of
provisions designed to protect against dilution, then in the case of the
delivery of shares of Common Stock upon the exercise, conversion or
exchange of any such option, right or security, the Stock Unit purchasable
upon the exercise of a Warrant shall forthwith be adjusted in the manner
which would have obtained had the adjustment made upon issuance of such
option, right or security been made upon the basis of the issuance of (and
the aggregate consideration received for) the shares of Common Stock
delivered as aforesaid.
(f) Other Provisions Applicable to Adjustments under this
-----------------------------------------------------
Section. The following provisions shall be applicable to the making of
- -------
adjustments of the number of shares of Warrant Stock comprising a Stock
Unit:
(i) The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Issuer
shall be deemed to be an issuance thereof for purposes of this
Section.
(ii) In computing adjustments under this Section,
fractional interests in Common Stock shall be taken into account
to the nearest one-thousandth of a share.
(iii) If the Issuer shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution thereof, legally
abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment
shall be required by reason of the taking of such record and any
such adjustment previously made in respect thereof shall be
rescinded and annulled.
(g) Merger, Consolidation or Disposition of Assets. If the
----------------------------------------------
Issuer shall merge or consolidate with another corporation, or shall sell,
transfer or otherwise dispose of all or substantially all of its assets to
another corporation and pursuant to the terms of such merger, consolidation
or disposition of assets, cash, shares of common stock or other securities
of the successor or acquiring corporation, or property of any nature is to
be received by or distributed to the holders of Common Stock of the Issuer,
then each holder of Warrants which are by their terms then exercisable
shall, at such holder's election, have the right to receive (whether or not
such holder exercises such Warrants) the amount it would have been entitled
to receive if such holder had exercised such Warrants immediately prior to
the occurrence of such merger, consolidation or disposition of assets, net
of the exercise price of such Warrants. In case of any such merger,
consolidation or disposition of assets in which the foregoing election is
not
<PAGE>
made, the successor or acquiring corporation (and any affiliate thereof
issuing securities) shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of this Warrant to
be performed and observed by the Issuer and all of the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board and reasonably
acceptable to the holders of a majority in interest of the Warrants) in
order to provide for adjustments of Stock Units which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section.
The foregoing provisions shall similarly apply to successive mergers,
consolidations and dispositions of assets.
(h) Other Action Affecting Common Stock. If at any time or from
-----------------------------------
time to time the Issuer shall take any action affecting its Common Stock,
other than an action described in any of the foregoing subsections of this
Section or an action taken in the ordinary course of the Issuer's business
and consistent with past practice, then, unless in the reasonable opinion
of the Board such action will not have a material adverse effect upon the
rights of the holders of the Warrants, the number of shares of Warrant
Stock comprising a Stock Unit shall be adjusted in such manner and at such
time as the Board shall in good faith determine to be equitable in the
circumstances, but no such adjustment shall decrease the number of shares
of Warrant Stock comprising a Stock Unit.
(i) Notice of Adjustments. Whenever the number of shares of
---------------------
Warrant Stock comprising a Stock Unit shall be adjusted pursuant to this
Agreement, the Issuer shall forthwith obtain a certificate signed by a firm
of independent accountants of recognized national standing selected by the
Issuer, setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated and
specifying the number of shares of Warrant Stock comprising a Stock Unit,
after giving effect to such adjustment or change. The Issuer shall promptly
cause a signed copy of such certificate to be delivered to each holder of
Warrants. The Issuer shall keep at its office copies of all such
certificates and cause the same to be available for inspection at said
office during normal business hours by any holder of Warrants or any
prospective purchaser of Warrants designated by the registered holder
hereof.
(j) Notice of Certain Corporate Action. If the Issuer shall
----------------------------------
propose (i) to pay any dividend to the holders of its Common Stock or to
make any other distribution to the holders of its Common Stock; (ii) to
offer to the holders of its Common Stock rights to subscribe for or to
purchase any additional shares of Common Stock (or options or rights with
respect thereto); (iii) to effect any reclassification of its Common Stock;
(iv) to otherwise issue any Common Stock or other securities; (v) to effect
any capital reorganization; (vi) to effect any consolidation, merger or
sale, transfer or other disposition of all or substantially all of its
assets; or (vii) to effect the liquidation, dissolution or winding up of
the
<PAGE>
Issuer, then, in each such case, the Issuer shall give to each holder of
Warrants a notice of such proposed action, which shall specify the date on
which a record is to be taken for the purposes of such dividend,
distribution or rights offer, or the date on which such reclassification,
issuance, reorganization, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution or winding up is to take place and
the date of participation therein by the holders of Common Stock, if any
such date is to be fixed, and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such
action on the Common Stock, and the number of shares of Warrant Stock which
will comprise a Stock Unit after giving effect to any adjustment which will
be required as a result of such action. Such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 20 days
prior to the record date for determining holders of the Common Stock for
purposes of such action, and in the case of any other such action, at least
20 days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of Common Stock, whichever shall be
the earlier.
(k) No Adjustment Necessary. Anything to the contrary herein
-----------------------
notwithstanding, no adjustment to the number of shares of Warrant Stock
comprising a Stock Unit shall be made as a result of, or in connection
with, the issuance of shares of Common Stock, or options or warrants to
purchase shares of Common Stock, to management at fair market value (as
determined by the Board in its reasonable judgment) in an amount up to 12%
of the outstanding shares of Common Stock on the Closing Date, on a fully
diluted basis.
SECTION 5. Miscellaneous.
-------------
5.01 Office of Issuer. So long as any of the Warrants remains
----------------
outstanding, the Issuer shall maintain an office in the continental United
States of America where the Warrants may be presented for exercise,
transfer, division or combination as in this Warrant provided. Such office
shall be at c/o 101 Oakley Street, Evansville, Indiana 47710, unless and
until the Issuer shall designate and maintain some other office for such
purposes and give notice thereof to all Warrant Holders.
5.02 Notices Generally. Any notices and other communications
-----------------
pursuant to the provisions hereof shall be sent in accordance with the
provisions of Section 8.6 of the Purchase Agreement.
5.03 Governing Law. The corporate law of the State of Delaware
-------------
shall govern all issues concerning the relative rights of the Issuer and
its Stockholders. All other issues hereunder shall be governed by and
construed in accordance with the procedural and substantive laws of the
State of New York without regard for its conflicts of laws rules. The
Issuer agrees that it may be served with process in State of New York and
any action
<PAGE>
for breach of this Warrant may be prosecuted against it in the courts of
that State.
5.04 Limitation of Liability. No provision hereof, in the
-----------------------
absence of affirmative action by the Holder to purchase shares of Class B
Common Stock, and no mere enumeration herein of the rights or privileges of
the Holder, shall give rise to any liability of the Holder for the Exercise
Price or as a Stockholder of the Issuer, whether such liability is asserted
by the Issuer, by any creditor of the Issuer or any other Person.
5.05 Determination of Current Market Price per share of Common
---------------------------------------------------------
Stock. The Current Market Price per share of Common Stock shall in each
- -----
instance initially be determined by the Issuer in accordance with the
provisions of the definition of Current Market Price in Section 1 hereof.
The Issuer shall notify the Holders of such determination. If the holders
of a majority in interest of the Warrants disagree with the determination
of the Issuer, the Issuer shall appoint an Independent Financial Expert to
determine the Current Market Price per share of Common Stock and the
determination of the Independent Financial Expert shall govern for purposes
of determining the adjustment pursuant to this Section. The Issuer shall
notify each holder of Warrants of the final determination of the Current
Market Price per share of Common Stock. The Issuer shall pay the fees and
expenses of the Independent Financial Expert.
5.06 Registration Rights. The holders of this Warrant shall be
-------------------
entitled to the benefit of the provisions of Article 6A and Article 6C of
the Purchase Agreement with regard to the registration for sale of the
Warrant Stock.
<PAGE>
IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.
Dated: June 18, 1996
BPC MERGERCO, INC.
By: /s/ Martin R. Imbler
--------------------------------
Name: Martin R. Imbler
Title: President
Exhibit 10.25
WARRANT
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE CONDITIONS SPECIFIED IN THAT CERTAIN PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT DATED AS OF JUNE 12, 1996 (THE "PURCHASE AGREEMENT"), BY
------------------
AND AMONG BPC HOLDING CORPORATION, A DELAWARE CORPORATION ("HOLDING"), BPC
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MERGERCO, INC., A DELAWARE CORPORATION (THE "ISSUER"), CHASE VENTURE
------
CAPITAL ASSOCIATES, L.P. AND THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY, AS SUCH PURCHASE AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN
EFFECT FROM TIME TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED. A COPY OF THE PURCHASE AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY
THE PROVISIONS OF THE PURCHASE AGREEMENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, AND ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM.
No. of Stock Units: 17,837 Warrant No. 2
WARRANT
to Purchase Class B Common Stock of
BPC MERGERCO, INC.
THIS IS TO CERTIFY THAT CHASE VENTURE CAPITAL ASSOCIATES, L.P.,
or its registered assigns, is entitled to purchase in whole or in part from
time to time from BPC Mergerco, Inc., a Delaware corporation (the
"Issuer"), at any time on and after the Effective Date (as hereinafter
------
defined), but not later than 5:00 p.m., New York time, on June 18, 2006
(the "Expiration Date"), 17,837 Stock Units (as hereinafter defined and
---------------
subject to adjustment as provided herein) at a purchase price of $0.01 per
Stock Unit (the "Exercise Price"), subject to the terms and conditions
--------------
provided herein and in the Purchase Agreement (as hereinafter defined).
This Warrant is issued pursuant to the Preferred Stock and
Warrant Purchase Agreement dated as of June 12, 1996 (as
<PAGE>
modified and supplemented and in effect from time to time, the "Purchase
--------
Agreement") between the Issuer, Holding, Chase Venture Capital Associates,
- ---------
L.P. and The Northwestern Mutual Life Insurance Company.
SECTION 1. Certain Definitions. (a) Each capitalized term used
-------------------
herein without definition shall have the meaning assigned thereto (or
incorporated by reference) in the Purchase Agreement and in the Exhibits
thereto.
(b) As used herein, the following terms shall have the following
meanings (all terms defined in this Section 1 or in other provisions of
this Warrant in the singular to have the same meanings when used in the
plural and vice versa):
"Affiliate" means, with respect to any specified Person, any
---------
other Person which, directly or indirectly, controls, is under common
control with, or is owned or controlled by, such specified Person. For
purposes of this definition, (i) "control" means, with respect to any
specified Person, either (x) the beneficial ownership of more than
30 percent of any class of equity securities or (y) the power to direct the
management or policies of the specified Person through the ownership of
voting securities, by contract, voting agreement or otherwise and (ii) the
terms "controlling", "control with" and "controlled by", etc., shall have
meanings correlative to the foregoing.
"Board" shall mean the Board of Directors of the Issuer.
-----
"Business Day" shall mean any day on which commercial banks are
------------
not authorized or required to close in New York City.
"Class B Common Stock" means, the Issuer's Class B Non-Voting
--------------------
Common Stock, $.01 par value per share, or any other common stock or other
securities receivable thereon, or into which the Class B Common Stock is
convertible or exchangeable, as a result of any recapitalization,
reclassification, merger or consolidation of, or deposition of assets by,
the Issuer.
"Common Stock" shall mean the Common Stock of the Issuer, of any
------------
class or series whatsoever, or any other common stock or other securities
receivable thereon, or into which the Common Stock is convertible or
exchangeable, as a result of any recapitalization, reclassification, merger
or consolidation of, or disposition of assets by, the Issuer.
"Current Market Price", shall mean, with respect to a share of
--------------------
Common Stock as of any date (a) for a period of 30 Business Days after the
date of the IPO, the offering price of such Common Stock or (b) in any
other case (i) the fair market value per share of such Common Stock, as
reasonably determined in good faith by the Board, using an appropriate
valuation method, assuming an arms-length sale to an independent party of
all of the Common Stock of the Issuer, without giving regard to the lack
<PAGE>
of liquidity of such Common Stock due to any restrictions contained in the
Stockholders Agreement, the Stock Purchase Agreement, the Purchase
Agreement or otherwise or any discount for minority interests and assuming
the conversion or exchange of all securities then outstanding which are
convertible into or exchangeable for such Common Stock and the exercise of
all rights and warrants (including the Warrants) then outstanding and
exercisable to purchase shares of such Common Stock or securities
convertible into or exchangeable for shares of such Common Stock, or (ii)
if there shall be a public market for such Common Stock, the average of the
daily market prices for each day during the 30 consecutive trading days
commencing 45 Business Days before such date as of which such a price can
be established in the manner set forth below. The market price for each
such Business Day shall be the last sale price on such day as reported in
the Consolidated Last Sale Reporting System or as quoted in the National
Association of Securities Dealers Automated Quotation System, or if such
last sale price is not available, the average of the closing bid and asked
prices as reported in either such system, or in any other case the higher
bid price quoted for such day as reported by The Wall Street Journal and
the National Quotation Bureau pink sheets.
"Effective Date" shall mean the date set forth on the signature
--------------
page of this Warrant.
"Exercise Notice" shall have the meaning assigned to such term in
---------------
Section 2 hereof.
"Exercise Price" shall have the meaning assigned to such term in
--------------
the first paragraph of this Warrant.
"Expiration Date" shall have the meaning assigned to such term in
---------------
the first paragraph of this Warrant.
"Holder" shall mean the registered holder of this Warrant.
------
"include" and "including" shall be construed as if followed by
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the phrase ", without being limited to,".
"Independent Financial Expert" shall mean an investment banking
----------------------------
firm of recognized national standing chosen by the Issuer which is not an
Affiliate of Atlantic Equity Partners International II, L.P. or an
Affiliate or a Stockholder of the Issuer and which is satisfactory to the
holders of a majority in interest of the Warrants and the Warrant Stock.
"IPO" shall mean the Issuer's first firm commitment underwritten
---
public offering involving the sale of Common Stock of the Issuer, pursuant
to an effective registration statement under the Securities Act.
"Issuer" shall have the meaning assigned to such term in the
------
first paragraph of this Warrant and shall mean BPC Holding
<PAGE>
Corporation after the Merger (as defined in the Purchase Agreement).
"Person" means any individual, corporation, general or limited
------
partnership, joint venture, association, limited liability company, joint
stock company, trust, business trust, bank, trust company, estate
(including any beneficiaries thereof), unincorporated organization,
cooperative, association or governmental branch, authority, agency or
political subdivision thereof.
"Purchase Agreement" shall have the meaning assigned to such term
------------------
in the second paragraph of this Warrant.
"Regulation Y" shall mean Regulation Y promulgated by the Board
------------
of Governors of the Federal Reserve System (12 C.F.R. Sec.225), or any
successor regulation.
"Securities Act" shall mean the Securities Act of 1933, as
--------------
amended, and the rules and regulations promulgated thereunder.
"Stockholder" shall mean any Person who directly or indirectly
-----------
owns any shares of Common Stock (including Warrant Stock).
"Stock Unit" shall mean one share of Class B Common Stock, as
----------
such Class B Common Stock is constituted on the date hereof, and thereafter
shall mean such number of shares (including any fractional shares) of
Class B Common Stock and other securities, cash or other property as shall
result from the adjustments specified in Section 4 hereof.
"Warrant Holder" shall mean any Person who acquires Warrants or
--------------
Warrant Stock pursuant to the provisions of the Purchase Agreement,
including any transferees of Warrants or Warrant Stock.
"Warrant Stock" shall mean all shares of Class B Common Stock
-------------
issuable from time to time upon exercise of the Warrants.
"Warrants" shall mean the warrants originally issued by the
--------
Issuer pursuant to the Purchase Agreement (of which this Warrant is one),
evidencing rights to purchase up to the aggregate amount of Stock Units set
forth therein, and all Warrants issued upon transfer, division, or
combination of, or in substitution for, such Warrants.
SECTION 2. Exercise of Warrant. On and after the Effective Date
-------------------
and until 5:00 p.m., New York time, on the Expiration Date, the Holder may
exercise this Warrant, on one or more occasions, on any Business Day, in
whole or in part, by delivering to the Issuer, at its office maintained for
such purpose pursuant to Section 5.01 hereof, (a) a written notice of the
Holder's election to exercise this Warrant, which notice shall specify the
number of Stock Units to be purchased (the
<PAGE>
"Exercise Notice"), (b) payment of the Exercise Price (payable as set forth
---------------
below) for the number of Stock Units as to which this Warrant is being
exercised, and (c) this Warrant. The Exercise Price shall be payable (a)
in cash or by certified or official bank check payable to the order of the
Issuer or by wire transfer of immediately available funds to the account of
the Issuer or (b) by delivery of this Warrant Certificate to the Issuer for
cancellation in accordance with the following formula: in exchange for
each share of Class B Common Stock issuable on exercise of each Warrant
represented by this Warrant Certificate that is being exercised, such
holder shall receive such number of shares of Class B Common Stock as is
equal to the product of (i) the number of shares of Class B Common Stock
issuable upon exercise of the Warrants being exercised at such time
multiplied by (ii) a fraction, the numerator of which is the Current Market
Price per share of Class B Common Stock at such time minus the Exercise
Price per share of Class B Common Stock at such time, and the denominator
of which is the Current Market Price per share of Class B Common Stock at
such time.
Upon receipt thereof, the Issuer shall, as promptly as
practicable and in any event within 5 Business Days thereafter, execute or
cause to be executed and deliver or cause to be delivered to the Holder a
stock certificate or certificates representing the aggregate number of
shares of Warrant Stock and other securities issuable upon such exercise
and any other property to which such Holder is entitled.
The stock certificate or certificates for Warrant Stock so
delivered shall be in such denominations as may be specified in the
Exercise Notice and shall be registered in the name of the Holder or such
other name or names as shall be designated in such Exercise Notice. Such
stock certificate or certificates shall be deemed to have been issued and
the Holder or any other Person so designated to be named therein shall be
deemed to have become a holder of record of such shares, including, to the
extent permitted by law and to the extent such shares represent voting
stock of the Issuer, the right to vote such shares or to consent or to
receive notice as a Stockholder, as of the date on which the last of the
Exercise Notice, payment of the Exercise Price and this Warrant is received
by the Issuer as aforesaid. If this Warrant shall have been exercised only
in part, the Issuer shall, at the time of delivery of the certificate or
certificates representing Warrant Stock and other securities, execute and
deliver to the Holder a new Warrant evidencing the rights of the Holder to
purchase the unpurchased Stock Units called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant, or, at
the request of the Holder, appropriate notation may be made on this Warrant
and the same returned to the Holder.
All shares of Class B Common Stock issuable upon the exercise of
this Warrant shall, upon payment therefor in accordance herewith, be duly
and validly issued, fully paid and
<PAGE>
nonassessable and free and clear of any liens, charges or other
encumbrances of any nature.
The Issuer shall not be required to issue a fractional share of
Class B Common Stock upon exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase upon such
exercise, the Issuer shall pay (at the time this Warrant is exercised for
all shares of Class B Common Stock remaining subject hereto) a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per share of Class B Common Stock on
the date of exercise.
SECTION 3. Transfer, Division and Combination. (a)
----------------------------------
Notwithstanding anything herein to the contrary, no holder of Warrants
subject to the provisions of Regulation Y shall transfer any Warrants or
shares of Warrant Stock held by it, if, as a result of such transfer or the
right to effect such transfer, such holder would be deemed under Regulation
Y to have the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the Issuer (and, for purposes
of this restriction, a reasoned opinion of counsel to such holder (which is
based on facts and circumstances deemed appropriate by such counsel) to the
effect that such holder does not exercise such a controlling influence
shall be conclusive). For the purposes of this Section 3(a), a holder of
Warrants will not be deemed to be subject to Regulation Y to the
extent such holder is entitled to hold the Warrants pursuant to 12 C.F.R.
Sec. 225.22(c)(4).
(b) Subject to the foregoing, this Warrant and all rights
hereunder are transferable (subject to any restrictive legends hereon), in
whole or in part, upon surrender of this Warrant to the Issuer, together
with a written assignment of this Warrant duly executed by the Holder
hereof or such holder's agent or attorney. Such written assignment shall
be in the form of the Assignment Form attached as Annex B hereto. Upon
such surrender the Issuer shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denominations
specified in such instrument of assignment, and the original Warrant shall
promptly be canceled.
(c) This Warrant may be exchanged for other Warrants of the same
series upon presentation to the Issuer, together with a written notice
specifying the denominations in which new Warrants are to be issued, signed
by the Holder hereof. The Issuer shall execute and deliver a new Warrant
or Warrants to the holder in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. The Issuer shall pay
all expenses, taxes (including transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of the Warrants,
including any transfer or exchange thereof.
(d) The Issuer shall maintain books for the registration and
transfer of the Warrants, and shall allow each
<PAGE>
holder of Warrants to inspect such books at such reasonable times as such
holder shall request.
SECTION 4. Adjustments.
-----------
(a) Dividends, Distributions and Purchases.
--------------------------------------
(i) If at any time the Issuer shall pay any dividend or
make any other distribution to holders of its Common Stock of any
cash, evidence of indebtedness or other property of any nature
whatsoever (other than as provided in subsections (b), (c)(i)(A)
and (d)(i)(A) hereof), the Issuer shall at the same time pay or
distribute to each holder of Warrants (whether or not such holder
exercises such Warrants) the cash, evidence of indebtedness or
other property such holder would have been entitled to receive if
such holder had exercised such Warrants immediately prior to the
record date for such dividend or distribution;
(ii) If at any time the Issuer shall propose to purchase or
redeem any shares of its Common Stock (other than shares of Class
B or Class C Common Stock validly repurchased or redeemed, solely
as permitted by the terms of the Senior Secured Note Indenture,
pursuant to any management equity subscription, stockholders or
stock option agreement) for cash, evidence of indebtedness or
other property of any nature whatsoever, the Issuer shall deliver
to each holder of Warrants which are by their terms then
exercisable for shares of Warrant Stock a notice of such proposed
purchase or redemption, and each such holder shall, at its
option, have the right to require the Issuer to at the same time
purchase or redeem Warrants and shares of Warrant Stock owned by
such holder, in the same proportion as the number of shares of
Common Stock to be so purchased or redeemed bears to the total
number of shares of Common Stock outstanding at such time, on the
same terms and conditions as the proposed purchase or redemption
of such other Common Stock and for the same consideration per
Warrant or share of Warrant Stock, as the case may be, as is paid
to the holders of such other Common Stock for each share of
Common Stock so redeemed or purchased, minus, in the case of
Warrants, the exercise price of the Warrants to be so purchased
or redeemed.
(b) Subdivisions and Combinations. If at any time the Issuer
-----------------------------
shall
(i) take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend or other
distribution of Common Stock;
<PAGE>
(ii) subdivide or reclassify its outstanding shares of
Common Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then immediately after the occurrence of any such event the number of
shares of Warrant Stock comprising a Stock Unit shall be adjusted so as to
equal the number of shares of Warrant Stock which such holder would have
been entitled to receive if such holder had exercised the Warrant
immediately prior to the occurrence of such event.
(c) Issuance of Common Stock. In case at any time the Issuer
------------------------
(i)(A) shall take a record of the holders of its Common Stock for the
purpose of entitling them to subscribe for or purchase shares of any class
or series of Common Stock or (B) shall otherwise sell or issue any such
securities and (ii) the consideration per share of Common Stock to be paid
upon such issuance or subscription is less than the Current Market Price
per share of Common Stock on such record date, then the number of shares of
Warrant Stock comprising a Stock Unit shall be adjusted to be that number
determined by multiplying the number of shares of Warrant Stock comprising
a Stock Unit immediately prior to such record date by a fraction (not to be
less than one) (i) the numerator of which shall be equal to the product of
(A) the number of shares of Common Stock outstanding after giving effect to
such issuance, distribution, subscription or purchase and (B) the Current
Market Price per share of Common Stock determined immediately before such
record date and (ii) the denominator of which shall be equal to the sum of
(A) the product of (1) the number of shares of Common Stock outstanding
immediately before such record date and (2) the Current Market Price per
share of Common Stock determined immediately before such record date and
(B) the aggregate consideration to be received by the Issuer for the total
number of shares of Common Stock to be issued, distributed, subscribed for
or purchased. Aggregate consideration for purposes of the preceding clause
(B) shall be determined as follows: In case any shares of Common Stock
shall be issued or sold for cash, the consideration received therefor shall
be deemed to be the amount payable to the Issuer therefor. In case any
shares of Common Stock shall be issued or sold for a consideration other
than cash payable to the Issuer, the consideration received therefor shall
be deemed to be the fair value of such consideration as determined by the
Board. In case any shares of Common Stock shall be issued in connection
with any merger of another corporation into the Issuer, the amount of
consideration therefor shall be deemed to be the fair value as determined
by the Board of such portion of the assets of such merged corporation as
the Board shall determine to be attributable to such shares of Common
Stock.
<PAGE>
(d) Issuance of other Securities, Rights or Obligations. In
---------------------------------------------------
case at any time the Issuer (i)(A) shall take a record of the holders of
its Common Stock for the purpose of entitling them to subscribe for or
purchase options to purchase or rights to subscribe for Common Stock or
securities directly or indirectly convertible into or exchangeable for
Common Stock (or options or rights with respect to such securities) or (B)
shall otherwise issue or sell any such options, rights or securities and
(ii) the consideration per share for which Common Stock is deliverable upon
exercise of such options or rights or conversion or exchange of such
securities (determined by dividing (x) the total amount received or
receivable by the Issuer in consideration of the issuance of or
subscription for such options, rights or securities, plus the minimum
aggregate amount of premiums (if any) payable to the Issuer upon such
exercise, conversion or exchange, by (y) the total maximum number of shares
of Common Stock necessary to effect the exercise, conversion or exchange of
all such options, rights or securities) shall be less than the Current
Market Price per share of Common Stock on such record date or sale or
issuance date, as the case may be, then the number of shares of Warrant
Stock comprising a Stock Unit shall be adjusted to be that number
determined by multiplying the number of shares of Warrant Stock comprising
a Stock Unit immediately prior to such date by a fraction (not to be less
than one) (i) the numerator of which shall be equal to the product of (A)
the total maximum number of shares of Common Stock outstanding after giving
effect to the assumed exercise or conversion of all such options, rights or
securities and (B) the Current Market Price per share of Common Stock
determined immediately before such date and (ii) the denominator of which
shall be equal to the sum of (A) the product of (1) the number of shares of
Common Stock outstanding immediately before such date and (2) the Current
Market Price per share of the Common Stock determined immediately before
such date and (B) the aggregate consideration per share (determined as set
forth in subsection (ii)(x) and (y) above) for which Common Stock is
deliverable upon exercise conversion or exchange of such options, rights or
securities. Aggregate consideration for purposes of the preceding clause
(B) shall be determined as follows: In case any options, rights or
convertible or exchangeable securities (or options or rights with respect
thereto) shall be issued or sold, or exercisable, convertible or
exchangeable for cash, the consideration received therefor shall be deemed
to be the amount payable to the Issuer (determined as set forth in
subsection (ii)(x) and (y) above) therefor. In case any such options,
rights or securities shall be issued or sold, or exercisable, convertible
or exchangeable for a consideration other than cash payable to the Issuer,
the consideration received therefor (determined as set forth in subsection
(ii)(x) and (y) above) shall be deemed to be the fair value of such
consideration as determined by the Board, after deduction therefrom of any
expenses incurred or any underwriting commissions or concessions or
discounts paid or allowed by the Issuer in connection therewith. In case
any such options, rights or securities shall be issued or sold, or
exercisable, convertible or exchangeable in
<PAGE>
connection with any merger of another corporation into the Issuer, the
amount of consideration therefor shall be deemed to be the fair value as
determined by the Board of such portion of the assets of such merged
corporation as the Board shall determine to be attributable to such
options, rights or securities.
The Current Market Price per share of Common Stock shall be
determined as set forth in Section 5.05 hereof.
(e) Superseding Adjustment. If, at any time after any
----------------------
adjustment in the number of shares of Warrant Stock comprising a Stock Unit
shall have been made on the basis of the issuance of any options or rights,
or convertible or exchangeable securities (or options or rights with
respect to such securities) pursuant to subsection (d) hereof:
(i) the options or rights shall expire prior to exercise or
the right to convert or exchange any such securities shall
terminate; or
(ii) the consideration per share for which shares of Common
Stock are issuable pursuant to the terms of such options or
rights or convertible or exchangeable securities shall be
increased or decreased, other than under or by reason of
provisions designed to protect against dilution;
such previous adjustment shall be rescinded and annulled. Thereupon, a
recomputation shall be made of the effect of such options or rights or
convertible or exchangeable securities with respect to shares of Common
Stock on the basis of
(A) treating the number of shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the
previous exercise, conversion or exchange of such
options, rights or securities as having been issued on
the date or dates of such exercise, conversion or
exchange and for the consideration actually received
and receivable therefore, and
(B) treating any such options, rights or securities which
then remain outstanding as having been granted or
issued immediately after the time of such increase or
decrease for the consideration per share for which
shares of Common Stock are issuable upon exercise,
conversion or exchange of such options, rights or
securities.
To the extent called for by the foregoing provisions of this Section 4(e)
on the basis aforesaid, a new adjustment in the number of shares of Warrant
Stock comprising a Stock Unit shall
<PAGE>
be made, determined using the Current Market Price used at the time of the
original determination, which new adjustment shall supersede the previous
adjustment so rescinded and annulled. If the exercise, conversion or
exchange price provided for in any such option, right or security shall
decrease at any time under or by reason of provisions designed to protect
against dilution, then in the case of the delivery of shares of Common
Stock upon the exercise, conversion or exchange of any such option, right
or security, the Stock Unit purchasable upon the exercise of a Warrant
shall forthwith be adjusted in the manner which would have obtained had the
adjustment made upon issuance of such option, right or security been made
upon the basis of the issuance of (and the aggregate consideration received
for) the shares of Common Stock delivered as aforesaid.
(f) Other Provisions Applicable to Adjustments under this
-----------------------------------------------------
Section. The following provisions shall be applicable to the making of
- -------
adjustments of the number of shares of Warrant Stock comprising a Stock
Unit:
(i) The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Issuer
shall be deemed to be an issuance thereof for purposes of this
Section.
(ii) In computing adjustments under this Section,
fractional interests in Common Stock shall be taken into account
to the nearest one-thousandth of a share.
(iii) If the Issuer shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution thereof, legally
abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment
shall be required by reason of the taking of such record and any
such adjustment previously made in respect thereof shall be
rescinded and annulled.
(g) Merger, Consolidation or Disposition of Assets. If the
----------------------------------------------
Issuer shall merge or consolidate with another corporation, or shall sell,
transfer or otherwise dispose of all or substantially all of its assets to
another corporation and pursuant to the terms of such merger, consolidation
or disposition of assets, cash, shares of common stock or other securities
of the successor or acquiring corporation, or property of any nature is to
be received by or distributed to the holders of Common Stock of the Issuer,
then each holder of Warrants which are by their terms then exercisable
shall, at such holder's election, have the right to receive (whether or not
such holder exercises such Warrants) the amount it would have been entitled
to receive if such holder had exercised such Warrants immediately prior to
the occurrence of such merger, consolidation or disposition of assets, net
of the exercise price of such
<PAGE>
Warrants. In case of any such merger, consolidation or disposition of
assets in which the foregoing election is not made, the successor or
acquiring corporation (and any affiliate thereof issuing securities) shall
expressly assume the due and punctual observance and performance of each
and every covenant and condition of this Warrant to be performed and
observed by the Issuer and all of the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board and reasonably acceptable to the
holders of a majority in interest of the Warrants) in order to provide for
adjustments of Stock Units which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section. The foregoing
provisions shall similarly apply to successive mergers, consolidations and
dispositions of assets.
(h) Other Action Affecting Common Stock. If at any time or from
-----------------------------------
time to time the Issuer shall take any action affecting its Common Stock,
other than an action described in any of the foregoing subsections of this
Section or an action taken in the ordinary course of the Issuer's business
and consistent with past practice, then, unless in the reasonable opinion
of the Board such action will not have a material adverse effect upon the
rights of the holders of the Warrants, the number of shares of Warrant
Stock comprising a Stock Unit shall be adjusted in such manner and at such
time as the Board shall in good faith determine to be equitable in the
circumstances, but no such adjustment shall decrease the number of shares
of Warrant Stock comprising a Stock Unit.
(i) Notice of Adjustments. Whenever the number of shares of
---------------------
Warrant Stock comprising a Stock Unit shall be adjusted pursuant to this
Agreement, the Issuer shall forthwith obtain a certificate signed by a firm
of independent accountants of recognized national standing selected by the
Issuer, setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated and
specifying the number of shares of Warrant Stock comprising a Stock Unit,
after giving effect to such adjustment or change. The Issuer shall promptly
cause a signed copy of such certificate to be delivered to each holder of
Warrants. The Issuer shall keep at its office copies of all such
certificates and cause the same to be available for inspection at said
office during normal business hours by any holder of Warrants or any
prospective purchaser of Warrants designated by the registered holder
hereof.
(j) Notice of Certain Corporate Action. If the Issuer shall
----------------------------------
propose (i) to pay any dividend to the holders of its Common Stock or to
make any other distribution to the holders of its Common Stock; (ii) to
offer to the holders of its Common Stock rights to subscribe for or to
purchase any additional shares of Common Stock (or options or rights with
respect thereto); (iii) to effect any reclassification of its Common Stock;
(iv) to otherwise issue any Common Stock or other securities; (v) to effect
any capital reorganization; (vi) to effect any consolidation, merger or
sale, transfer or other
<PAGE>
disposition of all or substantially all of its assets; or (vii) to effect
the liquidation, dissolution or winding up of the Issuer, then, in each
such case, the Issuer shall give to each holder of Warrants a notice of
such proposed action, which shall specify the date on which a record is to
be taken for the purposes of such dividend, distribution or rights offer,
or the date on which such reclassification, issuance, reorganization,
consolidation, merger, sale, transfer, disposition, liquidation,
dissolution or winding up is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed,
and shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action on the Common
Stock, and the number of shares of Warrant Stock which will comprise a
Stock Unit after giving effect to any adjustment which will be required as
a result of such action. Such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 20 days prior to the
record date for determining holders of the Common Stock for purposes of
such action, and in the case of any other such action, at least 20 days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of Common Stock, whichever shall be
the earlier.
(k) No Adjustment Necessary. Anything to the contrary herein
-----------------------
notwithstanding, no adjustment to the number of shares of Warrant Stock
comprising a Stock Unit shall be made as a result of, or in connection
with, the issuance of shares of Common Stock, or options or warrants to
purchase shares of Common Stock, to management at fair market value (as
determined by the Board in its reasonable judgment) in an amount up to 12%
of the outstanding shares of Common Stock on the Closing Date, on a fully
diluted basis.
SECTION 5. Miscellaneous.
-------------
5.01 Office of Issuer. So long as any of the Warrants remains
----------------
outstanding, the Issuer shall maintain an office in the continental United
States of America where the Warrants may be presented for exercise,
transfer, division or combination as in this Warrant provided. Such office
shall be at c/o 101 Oakley Street, Evansville, Indiana 47710, unless and
until the Issuer shall designate and maintain some other office for such
purposes and give notice thereof to all Warrant Holders.
5.02 Notices Generally. Any notices and other communications
-----------------
pursuant to the provisions hereof shall be sent in accordance with the
provisions of Section 8.6 of the Purchase Agreement.
5.03 Governing Law. The corporate law of the State of Delaware
-------------
shall govern all issues concerning the relative rights of the Issuer and
its Stockholders. All other issues hereunder shall be governed by and
construed in accordance with the procedural and substantive laws of the
State of New York without
<PAGE>
regard for its conflicts of laws rules. The Issuer agrees that it may be
served with process in State of New York and any action for breach of this
Warrant may be prosecuted against it in the courts of that State.
5.04 Limitation of Liability. No provision hereof, in the
-----------------------
absence of affirmative action by the Holder to purchase shares of Class B
Common Stock, and no mere enumeration herein of the rights or privileges of
the Holder, shall give rise to any liability of the Holder for the Exercise
Price or as a Stockholder of the Issuer, whether such liability is asserted
by the Issuer, by any creditor of the Issuer or any other Person.
5.05 Determination of Current Market Price per share of Common
---------------------------------------------------------
Stock. The Current Market Price per share of Common Stock shall in each
- -----
instance initially be determined by the Issuer in accordance with the
provisions of the definition of Current Market Price in Section 1 hereof.
The Issuer shall notify the Holders of such determination. If the holders
of a majority in interest of the Warrants disagree with the determination
of the Issuer, the Issuer shall appoint an Independent Financial Expert to
determine the Current Market Price per share of Common Stock and the
determination of the Independent Financial Expert shall govern for purposes
of determining the adjustment pursuant to this Section. The Issuer shall
notify each holder of Warrants of the final determination of the Current
Market Price per share of Common Stock. The Issuer shall pay the fees and
expenses of the Independent Financial Expert.
5.06 Registration Rights. The holders of this Warrant shall be
-------------------
entitled to the benefit of the provisions of Article 6A and Article 6C of
the Purchase Agreement with regard to the registration for sale of the
Warrant Stock.
<PAGE>
IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.
Dated: June 18, 1996
BPC MERGERCO, INC.
By: /s/ Martin R. Imbler
--------------------------------
Name: Martin R. Imbler
Title: President
Exhibit 10.26
WARRANT
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE CONDITIONS SPECIFIED IN THAT CERTAIN PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT DATED AS OF JUNE 12, 1996 (THE "PURCHASE AGREEMENT"), BY
------------------
AND AMONG BPC HOLDING CORPORATION, A DELAWARE CORPORATION ("HOLDING"), BPC
-------
MERGERCO, INC., A DELAWARE CORPORATION (THE "ISSUER"), CHASE VENTURE
------
CAPITAL ASSOCIATES, L.P. AND THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY, AS SUCH PURCHASE AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN
EFFECT FROM TIME TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED. A COPY OF THE PURCHASE AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY
THE PROVISIONS OF THE PURCHASE AGREEMENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, AND ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM.
No. of Stock Units: 3,749 Warrant No. 3
WARRANT
to Purchase Class B Common Stock of
BPC MERGERCO, INC.
THIS IS TO CERTIFY THAT THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY, or its registered assigns, is entitled to purchase in whole or in
part from time to time from BPC Mergerco, Inc., a Delaware corporation (the
"Issuer"), at any time on and after the Effective Date (as hereinafter
------
defined), but not later than 5:00 p.m., New York time, on June 18, 2006
(the "Expiration Date"), 3,749 Stock Units (as hereinafter defined and
---------------
subject to adjustment as provided herein) at a purchase price of $0.01 per
Stock Unit (the "Exercise Price"), subject to the terms and conditions
--------------
provided herein and in the Purchase Agreement (as hereinafter defined).
This Warrant is issued pursuant to the Preferred Stock and
Warrant Purchase Agreement dated as of June 12, 1996 (as
<PAGE>
modified and supplemented and in effect from time to time, the "Purchase
--------
Agreement") between the Issuer, Holding, Chase Venture Capital Associates,
- ---------
L.P. and The Northwestern Mutual Life Insurance Company.
SECTION 1. Certain Definitions. (a) Each capitalized term used
-------------------
herein without definition shall have the meaning assigned thereto (or
incorporated by reference) in the Purchase Agreement and in the Exhibits
thereto.
(b) As used herein, the following terms shall have the following
meanings (all terms defined in this Section 1 or in other provisions of
this Warrant in the singular to have the same meanings when used in the
plural and vice versa):
"Affiliate" means, with respect to any specified Person, any
---------
other Person which, directly or indirectly, controls, is under common
control with, or is owned or controlled by, such specified Person. For
purposes of this definition, (i) "control" means, with respect to any
specified Person, either (x) the beneficial ownership of more than
30 percent of any class of equity securities or (y) the power to direct the
management or policies of the specified Person through the ownership of
voting securities, by contract, voting agreement or otherwise and (ii) the
terms "controlling", "control with" and "controlled by", etc., shall have
meanings correlative to the foregoing.
"Board" shall mean the Board of Directors of the Issuer.
-----
"Business Day" shall mean any day on which commercial banks are
------------
not authorized or required to close in New York City.
"Class B Common Stock" means, the Issuer's Class B Voting Common
--------------------
Stock, $.01 par value per share, or any other common stock or other
securities receivable thereon, or into which the Class B Common Stock is
convertible or exchangeable, as a result of any recapitalization,
reclassification, merger or consolidation of, or deposition of assets by,
the Issuer.
"Common Stock" shall mean the Common Stock of the Issuer, of any
------------
class or series whatsoever, or any other common stock or other securities
receivable thereon, or into which the Common Stock is convertible or
exchangeable, as a result of any recapitalization, reclassification, merger
or consolidation of, or disposition of assets by, the Issuer.
"Current Market Price", shall mean, with respect to a share of
--------------------
Common Stock as of any date (a) for a period of 30 Business Days after the
date of the IPO, the offering price of such Common Stock or (b) in any
other case (i) the fair market value per share of such Common Stock, as
reasonably determined in good faith by the Board, using an appropriate
valuation method, assuming an arms-length sale to an independent party of
all of the Common Stock of the Issuer, without giving regard to the lack
<PAGE>
of liquidity of such Common Stock due to any restrictions contained in the
Stockholders Agreement, the Stock Purchase Agreement, the Purchase
Agreement or otherwise or any discount for minority interests and assuming
the conversion or exchange of all securities then outstanding which are
convertible into or exchangeable for such Common Stock and the exercise of
all rights and warrants (including the Warrants) then outstanding and
exercisable to purchase shares of such Common Stock or securities
convertible into or exchangeable for shares of such Common Stock, or (ii)
if there shall be a public market for such Common Stock, the average of the
daily market prices for each day during the 30 consecutive trading days
commencing 45 Business Days before such date as of which such a price can
be established in the manner set forth below. The market price for each
such Business Day shall be the last sale price on such day as reported in
the Consolidated Last Sale Reporting System or as quoted in the National
Association of Securities Dealers Automated Quotation System, or if such
last sale price is not available, the average of the closing bid and asked
prices as reported in either such system, or in any other case the higher
bid price quoted for such day as reported by The Wall Street Journal and
the National Quotation Bureau pink sheets.
"Effective Date" shall mean the date set forth on the signature
--------------
page of this Warrant.
"Exercise Notice" shall have the meaning assigned to such term in
---------------
Section 2 hereof.
"Exercise Price" shall have the meaning assigned to such term in
--------------
the first paragraph of this Warrant.
"Expiration Date" shall have the meaning assigned to such term in
---------------
the first paragraph of this Warrant.
"Holder" shall mean the registered holder of this Warrant.
------
"include" and "including" shall be construed as if followed by
------- ---------
the phrase ", without being limited to,".
"Independent Financial Expert" shall mean an investment banking
----------------------------
firm of recognized national standing chosen by the Issuer which is not an
Affiliate of Atlantic Equity Partners International II, L.P. or an
Affiliate or a Stockholder of the Issuer and which is satisfactory to the
holders of a majority in interest of the Warrants and the Warrant Stock.
"IPO" shall mean the Issuer's first firm commitment underwritten
---
public offering involving the sale of Common Stock of the Issuer, pursuant
to an effective registration statement under the Securities Act.
"Issuer" shall have the meaning assigned to such term in the
------
first paragraph of this Warrant and shall mean BPC Holding
<PAGE>
Corporation after the Merger (as defined in the Purchase Agreement).
"Person" means any individual, corporation, general or limited
------
partnership, joint venture, association, limited liability company, joint
stock company, trust, business trust, bank, trust company, estate
(including any beneficiaries thereof), unincorporated organization,
cooperative, association or governmental branch, authority, agency or
political subdivision thereof.
"Purchase Agreement" shall have the meaning assigned to such term
------------------
in the second paragraph of this Warrant.
"Regulation Y" shall mean Regulation Y promulgated by the Board
------------
of Governors of the Federal Reserve System (12 C.F.R. Sec.225), or any
successor regulation.
"Securities Act" shall mean the Securities Act of 1933, as
--------------
amended, and the rules and regulations promulgated thereunder.
"Stockholder" shall mean any Person who directly or indirectly
-----------
owns any shares of Common Stock (including Warrant Stock).
"Stock Unit" shall mean one share of Class B Common Stock, as
----------
such Class B Common Stock is constituted on the date hereof, and thereafter
shall mean such number of shares (including any fractional shares) of
Class B Common Stock and other securities, cash or other property as shall
result from the adjustments specified in Section 4 hereof.
"Warrant Holder" shall mean any Person who acquires Warrants or
--------------
Warrant Stock pursuant to the provisions of the Purchase Agreement,
including any transferees of Warrants or Warrant Stock.
"Warrant Stock" shall mean all shares of Class B Common Stock
-------------
issuable from time to time upon exercise of the Warrants.
"Warrants" shall mean the warrants originally issued by the
--------
Issuer pursuant to the Purchase Agreement (of which this Warrant is one),
evidencing rights to purchase up to the aggregate amount of Stock Units set
forth therein, and all Warrants issued upon transfer, division, or
combination of, or in substitution for, such Warrants.
SECTION 2. Exercise of Warrant. On and after the Effective Date
-------------------
and until 5:00 p.m., New York time, on the Expiration Date, the Holder may
exercise this Warrant, on one or more occasions, on any Business Day, in
whole or in part, by delivering to the Issuer, at its office maintained for
such purpose pursuant to Section 5.01 hereof, (a) a written notice of the
Holder's election to exercise this Warrant, which notice shall specify the
number of Stock Units to be purchased (the
<PAGE>
"Exercise Notice"), (b) payment of the Exercise Price (payable as set forth
---------------
below) for the number of Stock Units as to which this Warrant is being
exercised, and (c) this Warrant. The Exercise Price shall be payable (a)
in cash or by certified or official bank check payable to the order of the
Issuer or by wire transfer of immediately available funds to the account of
the Issuer or (b) by delivery of this Warrant Certificate to the Issuer for
cancellation in accordance with the following formula: in exchange for
each share of Class B Common Stock issuable on exercise of each Warrant
represented by this Warrant Certificate that is being exercised, such
holder shall receive such number of shares of Class B Common Stock as is
equal to the product of (i) the number of shares of Class B Common Stock
issuable upon exercise of the Warrants being exercised at such time
multiplied by (ii) a fraction, the numerator of which is the Current Market
Price per share of Class B Common Stock at such time minus the Exercise
Price per share of Class B Common Stock at such time, and the denominator
of which is the Current Market Price per share of Class B Common Stock at
such time.
Upon receipt thereof, the Issuer shall, as promptly as
practicable and in any event within 5 Business Days thereafter, execute or
cause to be executed and deliver or cause to be delivered to the Holder a
stock certificate or certificates representing the aggregate number of
shares of Warrant Stock and other securities issuable upon such exercise
and any other property to which such Holder is entitled.
The stock certificate or certificates for Warrant Stock so
delivered shall be in such denominations as may be specified in the
Exercise Notice and shall be registered in the name of the Holder or such
other name or names as shall be designated in such Exercise Notice. Such
stock certificate or certificates shall be deemed to have been issued and
the Holder or any other Person so designated to be named therein shall be
deemed to have become a holder of record of such shares, including, to the
extent permitted by law and to the extent such shares represent voting
stock of the Issuer, the right to vote such shares or to consent or to
receive notice as a Stockholder, as of the date on which the last of the
Exercise Notice, payment of the Exercise Price and this Warrant is received
by the Issuer as aforesaid. If this Warrant shall have been exercised only
in part, the Issuer shall, at the time of delivery of the certificate or
certificates representing Warrant Stock and other securities, execute and
deliver to the Holder a new Warrant evidencing the rights of the Holder to
purchase the unpurchased Stock Units called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant, or, at
the request of the Holder, appropriate notation may be made on this Warrant
and the same returned to the Holder.
All shares of Class B Common Stock issuable upon the exercise of
this Warrant shall, upon payment therefor in accordance herewith, be duly
and validly issued, fully paid and
<PAGE>
nonassessable and free and clear of any liens, charges or other
encumbrances of any nature.
The Issuer shall not be required to issue a fractional share of
Class B Common Stock upon exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase upon such
exercise, the Issuer shall pay (at the time this Warrant is exercised for
all shares of Class B Common Stock remaining subject hereto) a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per share of Class B Common Stock on
the date of exercise.
SECTION 3. Transfer, Division and Combination. (a)
----------------------------------
Notwithstanding anything herein to the contrary, no holder of Warrants
subject to the provisions of Regulation Y shall transfer any Warrants or
shares of Warrant Stock held by it, if, as a result of such transfer or the
right to effect such transfer, such holder would be deemed under Regulation
Y to have the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the Issuer (and, for purposes
of this restriction, a reasoned opinion of counsel to such holder (which is
based on facts and circumstances deemed appropriate by such counsel) to the
effect that such holder does not exercise such a controlling influence
shall be conclusive). For the purposes of this Section 3(a), a holder of
Warrants will not be deemed to be subject to Regulation Y to the
extent such holder is entitled to hold the Warrants pursuant to 12 C.F.R.
Sec. 225.22(c)(4).
(b) Subject to the foregoing, this Warrant and all rights
hereunder are transferable (subject to any restrictive legends hereon), in
whole or in part, upon surrender of this Warrant to the Issuer, together
with a written assignment of this Warrant duly executed by the Holder
hereof or such holder's agent or attorney. Such written assignment shall
be in the form of the Assignment Form attached as Annex B hereto. Upon
such surrender the Issuer shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denominations
specified in such instrument of assignment, and the original Warrant shall
promptly be canceled.
(c) This Warrant may be exchanged for other Warrants of the same
series upon presentation to the Issuer, together with a written notice
specifying the denominations in which new Warrants are to be issued, signed
by the Holder hereof. The Issuer shall execute and deliver a new Warrant
or Warrants to the holder in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. The Issuer shall pay
all expenses, taxes (including transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of the Warrants,
including any transfer or exchange thereof.
(d) The Issuer shall maintain books for the registration and
transfer of the Warrants, and shall allow each
<PAGE>
holder of Warrants to inspect such books at such reasonable times as such
holder shall request.
SECTION 4. Adjustments.
-----------
(a) Dividends, Distributions and Purchases.
--------------------------------------
(i) If at any time the Issuer shall pay any dividend or
make any other distribution to holders of its Common Stock of any
cash, evidence of indebtedness or other property of any nature
whatsoever (other than as provided in subsections (b), (c)(i)(A)
and (d)(i)(A) hereof), the Issuer shall at the same time pay or
distribute to each holder of Warrants (whether or not such holder
exercises such Warrants) the cash, evidence of indebtedness or
other property such holder would have been entitled to receive if
such holder had exercised such Warrants immediately prior to the
record date for such dividend or distribution;
(ii) If at any time the Issuer shall propose to purchase or
redeem any shares of its Common Stock (other than shares of Class
B or Class C Common Stock validly repurchased or redeemed, solely
as permitted by the terms of the Senior Secured Note Indenture,
pursuant to any management equity subscription, stockholders or
stock option agreement) for cash, evidence of indebtedness or
other property of any nature whatsoever, the Issuer shall deliver
to each holder of Warrants which are by their terms then
exercisable for shares of Warrant Stock a notice of such proposed
purchase or redemption, and each such holder shall, at its
option, have the right to require the Issuer to at the same time
purchase or redeem Warrants and shares of Warrant Stock owned by
such holder, in the same proportion as the number of shares of
Common Stock to be so purchased or redeemed bears to the total
number of shares of Common Stock outstanding at such time, on the
same terms and conditions as the proposed purchase or redemption
of such other Common Stock and for the same consideration per
Warrant or share of Warrant Stock, as the case may be, as is paid
to the holders of such other Common Stock for each share of
Common Stock so redeemed or purchased, minus, in the case of
Warrants, the exercise price of the Warrants to be so purchased
or redeemed.
(b) Subdivisions and Combinations. If at any time the Issuer
-----------------------------
shall
(i) take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend or other
distribution of Common Stock;
<PAGE>
(ii) subdivide or reclassify its outstanding shares of
Common Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then immediately after the occurrence of any such event the number of
shares of Warrant Stock comprising a Stock Unit shall be adjusted so as to
equal the number of shares of Warrant Stock which such holder would have
been entitled to receive if such holder had exercised the Warrant
immediately prior to the occurrence of such event.
(c) Issuance of Common Stock. In case at any time the Issuer
------------------------
(i)(A) shall take a record of the holders of its Common Stock for the
purpose of entitling them to subscribe for or purchase shares of any class
or series of Common Stock or (B) shall otherwise sell or issue any such
securities and (ii) the consideration per share of Common Stock to be paid
upon such issuance or subscription is less than the Current Market Price
per share of Common Stock on such record date, then the number of shares of
Warrant Stock comprising a Stock Unit shall be adjusted to be that number
determined by multiplying the number of shares of Warrant Stock comprising
a Stock Unit immediately prior to such record date by a fraction (not to be
less than one) (i) the numerator of which shall be equal to the product of
(A) the number of shares of Common Stock outstanding after giving effect to
such issuance, distribution, subscription or purchase and (B) the Current
Market Price per share of Common Stock determined immediately before such
record date and (ii) the denominator of which shall be equal to the sum of
(A) the product of (1) the number of shares of Common Stock outstanding
immediately before such record date and (2) the Current Market Price per
share of Common Stock determined immediately before such record date and
(B) the aggregate consideration to be received by the Issuer for the total
number of shares of Common Stock to be issued, distributed, subscribed for
or purchased. Aggregate consideration for purposes of the preceding clause
(B) shall be determined as follows: In case any shares of Common Stock
shall be issued or sold for cash, the consideration received therefor shall
be deemed to be the amount payable to the Issuer therefor. In case any
shares of Common Stock shall be issued or sold for a consideration other
than cash payable to the Issuer, the consideration received therefor shall
be deemed to be the fair value of such consideration as determined by the
Board. In case any shares of Common Stock shall be issued in connection
with any merger of another corporation into the Issuer, the amount of
consideration therefor shall be deemed to be the fair value as determined
by the Board of such portion of the assets of such merged corporation as
the Board shall determine to be attributable to such shares of Common
Stock.
(d) Issuance of other Securities, Rights or Obligations. In
---------------------------------------------------
case at any time the Issuer (i)(A) shall take a
<PAGE>
record of the holders of its Common Stock for the purpose of entitling them
to subscribe for or purchase options to purchase or rights to subscribe for
Common Stock or securities directly or indirectly convertible into or
exchangeable for Common Stock (or options or rights with respect to such
securities) or (B) shall otherwise issue or sell any such options, rights
or securities and (ii) the consideration per share for which Common Stock
is deliverable upon exercise of such options or rights or conversion or
exchange of such securities (determined by dividing (x) the total amount
received or receivable by the Issuer in consideration of the issuance of or
subscription for such options, rights or securities, plus the minimum
aggregate amount of premiums (if any) payable to the Issuer upon such
exercise, conversion or exchange, by (y) the total maximum number of shares
of Common Stock necessary to effect the exercise, conversion or exchange of
all such options, rights or securities) shall be less than the Current
Market Price per share of Common Stock on such record date or sale or
issuance date, as the case may be, then the number of shares of Warrant
Stock comprising a Stock Unit shall be adjusted to be that number
determined by multiplying the number of shares of Warrant Stock comprising
a Stock Unit immediately prior to such date by a fraction (not to be less
than one) (i) the numerator of which shall be equal to the product of (A)
the total maximum number of shares of Common Stock outstanding after giving
effect to the assumed exercise or conversion of all such options, rights or
securities and (B) the Current Market Price per share of Common Stock
determined immediately before such date and (ii) the denominator of which
shall be equal to the sum of (A) the product of (1) the number of shares of
Common Stock outstanding immediately before such date and (2) the Current
Market Price per share of the Common Stock determined immediately before
such date and (B) the aggregate consideration per share (determined as set
forth in subsection (ii)(x) and (y) above) for which Common Stock is
deliverable upon exercise conversion or exchange of such options, rights or
securities. Aggregate consideration for purposes of the preceding clause
(B) shall be determined as follows: In case any options, rights or
convertible or exchangeable securities (or options or rights with respect
thereto) shall be issued or sold, or exercisable, convertible or
exchangeable for cash, the consideration received therefor shall be deemed
to be the amount payable to the Issuer (determined as set forth in
subsection (ii)(x) and (y) above) therefor. In case any such options,
rights or securities shall be issued or sold, or exercisable, convertible
or exchangeable for a consideration other than cash payable to the Issuer,
the consideration received therefor (determined as set forth in subsection
(ii)(x) and (y) above) shall be deemed to be the fair value of such
consideration as determined by the Board, after deduction therefrom of any
expenses incurred or any underwriting commissions or concessions or
discounts paid or allowed by the Issuer in connection therewith. In case
any such options, rights or securities shall be issued or sold, or
exercisable, convertible or exchangeable in connection with any merger of
another corporation into the Issuer, the amount of consideration therefor
shall be deemed to
<PAGE>
be the fair value as determined by the Board of such portion of the assets
of such merged corporation as the Board shall determine to be attributable
to such options, rights or securities.
The Current Market Price per share of Common Stock shall be
determined as set forth in Section 5.05 hereof.
(e) Superseding Adjustment. If, at any time after any
----------------------
adjustment in the number of shares of Warrant Stock comprising a Stock Unit
shall have been made on the basis of the issuance of any options or rights,
or convertible or exchangeable securities (or options or rights with
respect to such securities) pursuant to subsection (d) hereof:
(i) the options or rights shall expire prior to exercise or
the right to convert or exchange any such securities shall
terminate; or
(ii) the consideration per share for which shares of Common
Stock are issuable pursuant to the terms of such options or
rights or convertible or exchangeable securities shall be
increased or decreased, other than under or by reason of
provisions designed to protect against dilution;
such previous adjustment shall be rescinded and annulled. Thereupon, a
recomputation shall be made of the effect of such options or rights or
convertible or exchangeable securities with respect to shares of Common
Stock on the basis of
(A) treating the number of shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the
previous exercise, conversion or exchange of such
options, rights or securities as having been issued on
the date or dates of such exercise, conversion or
exchange and for the consideration actually received
and receivable therefore, and
(B) treating any such options, rights or securities which
then remain outstanding as having been granted or
issued immediately after the time of such increase or
decrease for the consideration per share for which
shares of Common Stock are issuable upon exercise,
conversion or exchange of such options, rights or
securities.
To the extent called for by the foregoing provisions of this Section 4(e)
on the basis aforesaid, a new adjustment in the number of shares of Warrant
Stock comprising a Stock Unit shall be made, determined using the Current
Market Price used at the time of the original determination, which new
adjustment shall
<PAGE>
supersede the previous adjustment so rescinded and annulled. If the
exercise, conversion or exchange price provided for in any such option,
right or security shall decrease at any time under or by reason of
provisions designed to protect against dilution, then in the case of the
delivery of shares of Common Stock upon the exercise, conversion or
exchange of any such option, right or security, the Stock Unit purchasable
upon the exercise of a Warrant shall forthwith be adjusted in the manner
which would have obtained had the adjustment made upon issuance of such
option, right or security been made upon the basis of the issuance of (and
the aggregate consideration received for) the shares of Common Stock
delivered as aforesaid.
(f) Other Provisions Applicable to Adjustments under this
-----------------------------------------------------
Section. The following provisions shall be applicable to the making of
- -------
adjustments of the number of shares of Warrant Stock comprising a Stock
Unit:
(i) The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Issuer
shall be deemed to be an issuance thereof for purposes of this
Section.
(ii) In computing adjustments under this Section,
fractional interests in Common Stock shall be taken into account
to the nearest one-thousandth of a share.
(iii) If the Issuer shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution thereof, legally
abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment
shall be required by reason of the taking of such record and any
such adjustment previously made in respect thereof shall be
rescinded and annulled.
(g) Merger, Consolidation or Disposition of Assets. If the
----------------------------------------------
Issuer shall merge or consolidate with another corporation, or shall sell,
transfer or otherwise dispose of all or substantially all of its assets to
another corporation and pursuant to the terms of such merger, consolidation
or disposition of assets, cash, shares of common stock or other securities
of the successor or acquiring corporation, or property of any nature is to
be received by or distributed to the holders of Common Stock of the Issuer,
then each holder of Warrants which are by their terms then exercisable
shall, at such holder's election, have the right to receive (whether or not
such holder exercises such Warrants) the amount it would have been entitled
to receive if such holder had exercised such Warrants immediately prior to
the occurrence of such merger, consolidation or disposition of assets, net
of the exercise price of such Warrants. In case of any such merger,
consolidation or disposition of assets in which the foregoing election is
not
<PAGE>
made, the successor or acquiring corporation (and any affiliate thereof
issuing securities) shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of this Warrant to
be performed and observed by the Issuer and all of the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board and reasonably
acceptable to the holders of a majority in interest of the Warrants) in
order to provide for adjustments of Stock Units which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section.
The foregoing provisions shall similarly apply to successive mergers,
consolidations and dispositions of assets.
(h) Other Action Affecting Common Stock. If at any time or from
-----------------------------------
time to time the Issuer shall take any action affecting its Common Stock,
other than an action described in any of the foregoing subsections of this
Section or an action taken in the ordinary course of the Issuer's business
and consistent with past practice, then, unless in the reasonable opinion
of the Board such action will not have a material adverse effect upon the
rights of the holders of the Warrants, the number of shares of Warrant
Stock comprising a Stock Unit shall be adjusted in such manner and at such
time as the Board shall in good faith determine to be equitable in the
circumstances, but no such adjustment shall decrease the number of shares
of Warrant Stock comprising a Stock Unit.
(i) Notice of Adjustments. Whenever the number of shares of
---------------------
Warrant Stock comprising a Stock Unit shall be adjusted pursuant to this
Agreement, the Issuer shall forthwith obtain a certificate signed by a firm
of independent accountants of recognized national standing selected by the
Issuer, setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated and
specifying the number of shares of Warrant Stock comprising a Stock Unit,
after giving effect to such adjustment or change. The Issuer shall promptly
cause a signed copy of such certificate to be delivered to each holder of
Warrants. The Issuer shall keep at its office copies of all such
certificates and cause the same to be available for inspection at said
office during normal business hours by any holder of Warrants or any
prospective purchaser of Warrants designated by the registered holder
hereof.
(j) Notice of Certain Corporate Action. If the Issuer shall
----------------------------------
propose (i) to pay any dividend to the holders of its Common Stock or to
make any other distribution to the holders of its Common Stock; (ii) to
offer to the holders of its Common Stock rights to subscribe for or to
purchase any additional shares of Common Stock (or options or rights with
respect thereto); (iii) to effect any reclassification of its Common Stock;
(iv) to otherwise issue any Common Stock or other securities; (v) to effect
any capital reorganization; (vi) to effect any consolidation, merger or
sale, transfer or other disposition of all or substantially all of its
assets; or (vii) to effect the liquidation, dissolution or winding up of
the
<PAGE>
Issuer, then, in each such case, the Issuer shall give to each holder of
Warrants a notice of such proposed action, which shall specify the date on
which a record is to be taken for the purposes of such dividend,
distribution or rights offer, or the date on which such reclassification,
issuance, reorganization, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution or winding up is to take place and
the date of participation therein by the holders of Common Stock, if any
such date is to be fixed, and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such
action on the Common Stock, and the number of shares of Warrant Stock which
will comprise a Stock Unit after giving effect to any adjustment which will
be required as a result of such action. Such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 20 days
prior to the record date for determining holders of the Common Stock for
purposes of such action, and in the case of any other such action, at least
20 days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of Common Stock, whichever shall be
the earlier.
(k) No Adjustment Necessary. Anything to the contrary herein
-----------------------
notwithstanding, no adjustment to the number of shares of Warrant Stock
comprising a Stock Unit shall be made as a result of, or in connection
with, the issuance of shares of Common Stock, or options or warrants to
purchase shares of Common Stock, to management at fair market value (as
determined by the Board in its reasonable judgment) in an amount up to 12%
of the outstanding shares of Common Stock on the Closing Date, on a fully
diluted basis.
SECTION 5. Miscellaneous.
-------------
5.01 Office of Issuer. So long as any of the Warrants remains
----------------
outstanding, the Issuer shall maintain an office in the continental United
States of America where the Warrants may be presented for exercise,
transfer, division or combination as in this Warrant provided. Such office
shall be at c/o 101 Oakley Street, Evansville, Indiana 47710, unless and
until the Issuer shall designate and maintain some other office for such
purposes and give notice thereof to all Warrant Holders.
5.02 Notices Generally. Any notices and other communications
-----------------
pursuant to the provisions hereof shall be sent in accordance with the
provisions of Section 8.6 of the Purchase Agreement.
5.03 Governing Law. The corporate law of the State of Delaware
-------------
shall govern all issues concerning the relative rights of the Issuer and
its Stockholders. All other issues hereunder shall be governed by and
construed in accordance with the procedural and substantive laws of the
State of New York without regard for its conflicts of laws rules. The
Issuer agrees that it may be served with process in State of New York and
any action
<PAGE>
for breach of this Warrant may be prosecuted against it in the courts of
that State.
5.04 Limitation of Liability. No provision hereof, in the
-----------------------
absence of affirmative action by the Holder to purchase shares of Class B
Common Stock, and no mere enumeration herein of the rights or privileges of
the Holder, shall give rise to any liability of the Holder for the Exercise
Price or as a Stockholder of the Issuer, whether such liability is asserted
by the Issuer, by any creditor of the Issuer or any other Person.
5.05 Determination of Current Market Price per share of Common
---------------------------------------------------------
Stock. The Current Market Price per share of Common Stock shall in each
- -----
instance initially be determined by the Issuer in accordance with the
provisions of the definition of Current Market Price in Section 1 hereof.
The Issuer shall notify the Holders of such determination. If the holders
of a majority in interest of the Warrants disagree with the determination
of the Issuer, the Issuer shall appoint an Independent Financial Expert to
determine the Current Market Price per share of Common Stock and the
determination of the Independent Financial Expert shall govern for purposes
of determining the adjustment pursuant to this Section. The Issuer shall
notify each holder of Warrants of the final determination of the Current
Market Price per share of Common Stock. The Issuer shall pay the fees and
expenses of the Independent Financial Expert.
5.06 Registration Rights. The holders of this Warrant shall be
-------------------
entitled to the benefit of the provisions of Article 6A and Article 6C of
the Purchase Agreement with regard to the registration for sale of the
Warrant Stock.
<PAGE>
IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.
Dated: June 18, 1996
BPC MERGERCO, INC.
By: /s/ Martin R. Imbler
--------------------------------
Name: Martin R. Imbler
Title: President
Exhibit 10.27
WARRANT
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE CONDITIONS SPECIFIED IN THAT CERTAIN PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT DATED AS OF JUNE 12, 1996 (THE "PURCHASE AGREEMENT"), BY
------------------
AND AMONG BPC HOLDING CORPORATION, A DELAWARE CORPORATION ("HOLDING"), BPC
-------
MERGERCO, INC., A DELAWARE CORPORATION (THE "ISSUER"), CHASE VENTURE
------
CAPITAL ASSOCIATES, L.P. AND THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY, AS SUCH PURCHASE AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN
EFFECT FROM TIME TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED. A COPY OF THE PURCHASE AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY
THE PROVISIONS OF THE PURCHASE AGREEMENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, AND ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM.
No. of Stock Units: 11,891 Warrant No. 4
WARRANT
to Purchase Class B Common Stock of
BPC MERGERCO, INC.
THIS IS TO CERTIFY THAT THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY, or its registered assigns, is entitled to purchase in whole or in
part from time to time from BPC Mergerco, Inc., a Delaware corporation (the
"Issuer"), at any time on and after the Effective Date (as hereinafter
------
defined), but not later than 5:00 p.m., New York time, on June 18, 2006
(the "Expiration Date"), 11,891 Stock Units (as hereinafter defined and
---------------
subject to adjustment as provided herein) at a purchase price of $0.01 per
Stock Unit (the "Exercise Price"), subject to the terms and conditions
--------------
provided herein and in the Purchase Agreement (as hereinafter defined).
This Warrant is issued pursuant to the Preferred Stock and
Warrant Purchase Agreement dated as of June 12, 1996 (as
<PAGE>
modified and supplemented and in effect from time to time, the "Purchase
--------
Agreement") between the Issuer, Holding, Chase Venture Capital Associates,
- ---------
L.P. and The Northwestern Mutual Life Insurance Company.
SECTION 1. Certain Definitions. (a) Each capitalized term used
-------------------
herein without definition shall have the meaning assigned thereto (or
incorporated by reference) in the Purchase Agreement and in the Exhibits
thereto.
(b) As used herein, the following terms shall have the following
meanings (all terms defined in this Section 1 or in other provisions of
this Warrant in the singular to have the same meanings when used in the
plural and vice versa):
"Affiliate" means, with respect to any specified Person, any
---------
other Person which, directly or indirectly, controls, is under common
control with, or is owned or controlled by, such specified Person. For
purposes of this definition, (i) "control" means, with respect to any
specified Person, either (x) the beneficial ownership of more than
30 percent of any class of equity securities or (y) the power to direct the
management or policies of the specified Person through the ownership of
voting securities, by contract, voting agreement or otherwise and (ii) the
terms "controlling", "control with" and "controlled by", etc., shall have
meanings correlative to the foregoing.
"Board" shall mean the Board of Directors of the Issuer.
-----
"Business Day" shall mean any day on which commercial banks are
------------
not authorized or required to close in New York City.
"Class B Common Stock" means, the Issuer's Class B Non-Voting
--------------------
Common Stock, $.01 par value per share, or any other common stock or other
securities receivable thereon, or into which the Class B Common Stock is
convertible or exchangeable, as a result of any recapitalization,
reclassification, merger or consolidation of, or deposition of assets by,
the Issuer.
"Common Stock" shall mean the Common Stock of the Issuer, of any
------------
class or series whatsoever, or any other common stock or other securities
receivable thereon, or into which the Common Stock is convertible or
exchangeable, as a result of any recapitalization, reclassification, merger
or consolidation of, or disposition of assets by, the Issuer.
"Current Market Price", shall mean, with respect to a share of
--------------------
Common Stock as of any date (a) for a period of 30 Business Days after the
date of the IPO, the offering price of such Common Stock or (b) in any
other case (i) the fair market value per share of such Common Stock, as
reasonably determined in good faith by the Board, using an appropriate
valuation method, assuming an arms-length sale to an independent party of
all of the Common Stock of the Issuer, without giving regard to the lack
<PAGE>
of liquidity of such Common Stock due to any restrictions contained in the
Stockholders Agreement, the Stock Purchase Agreement, the Purchase
Agreement or otherwise or any discount for minority interests and assuming
the conversion or exchange of all securities then outstanding which are
convertible into or exchangeable for such Common Stock and the exercise of
all rights and warrants (including the Warrants) then outstanding and
exercisable to purchase shares of such Common Stock or securities
convertible into or exchangeable for shares of such Common Stock, or (ii)
if there shall be a public market for such Common Stock, the average of the
daily market prices for each day during the 30 consecutive trading days
commencing 45 Business Days before such date as of which such a price can
be established in the manner set forth below. The market price for each
such Business Day shall be the last sale price on such day as reported in
the Consolidated Last Sale Reporting System or as quoted in the National
Association of Securities Dealers Automated Quotation System, or if such
last sale price is not available, the average of the closing bid and asked
prices as reported in either such system, or in any other case the higher
bid price quoted for such day as reported by The Wall Street Journal and
the National Quotation Bureau pink sheets.
"Effective Date" shall mean the date set forth on the signature
--------------
page of this Warrant.
"Exercise Notice" shall have the meaning assigned to such term in
---------------
Section 2 hereof.
"Exercise Price" shall have the meaning assigned to such term in
--------------
the first paragraph of this Warrant.
"Expiration Date" shall have the meaning assigned to such term in
---------------
the first paragraph of this Warrant.
"Holder" shall mean the registered holder of this Warrant.
------
"include" and "including" shall be construed as if followed by
------- ---------
the phrase ", without being limited to,".
"Independent Financial Expert" shall mean an investment banking
----------------------------
firm of recognized national standing chosen by the Issuer which is not an
Affiliate of Atlantic Equity Partners International II, L.P. or an
Affiliate or a Stockholder of the Issuer and which is satisfactory to the
holders of a majority in interest of the Warrants and the Warrant Stock.
"IPO" shall mean the Issuer's first firm commitment underwritten
---
public offering involving the sale of Common Stock of the Issuer, pursuant
to an effective registration statement under the Securities Act.
"Issuer" shall have the meaning assigned to such term in the
------
first paragraph of this Warrant and shall mean BPC Holding
<PAGE>
Corporation after the Merger (as defined in the Purchase Agreement).
"Person" means any individual, corporation, general or limited
------
partnership, joint venture, association, limited liability company, joint
stock company, trust, business trust, bank, trust company, estate
(including any beneficiaries thereof), unincorporated organization,
cooperative, association or governmental branch, authority, agency or
political subdivision thereof.
"Purchase Agreement" shall have the meaning assigned to such term
------------------
in the second paragraph of this Warrant.
"Regulation Y" shall mean Regulation Y promulgated by the Board
------------
of Governors of the Federal Reserve System (12 C.F.R. Sec.225), or any
successor regulation.
"Securities Act" shall mean the Securities Act of 1933, as
--------------
amended, and the rules and regulations promulgated thereunder.
"Stockholder" shall mean any Person who directly or indirectly
-----------
owns any shares of Common Stock (including Warrant Stock).
"Stock Unit" shall mean one share of Class B Common Stock, as
----------
such Class B Common Stock is constituted on the date hereof, and thereafter
shall mean such number of shares (including any fractional shares) of
Class B Common Stock and other securities, cash or other property as shall
result from the adjustments specified in Section 4 hereof.
"Warrant Holder" shall mean any Person who acquires Warrants or
--------------
Warrant Stock pursuant to the provisions of the Purchase Agreement,
including any transferees of Warrants or Warrant Stock.
"Warrant Stock" shall mean all shares of Class B Common Stock
-------------
issuable from time to time upon exercise of the Warrants.
"Warrants" shall mean the warrants originally issued by the
--------
Issuer pursuant to the Purchase Agreement (of which this Warrant is one),
evidencing rights to purchase up to the aggregate amount of Stock Units set
forth therein, and all Warrants issued upon transfer, division, or
combination of, or in substitution for, such Warrants.
SECTION 2. Exercise of Warrant. On and after the Effective Date
-------------------
and until 5:00 p.m., New York time, on the Expiration Date, the Holder may
exercise this Warrant, on one or more occasions, on any Business Day, in
whole or in part, by delivering to the Issuer, at its office maintained for
such purpose pursuant to Section 5.01 hereof, (a) a written notice of the
Holder's election to exercise this Warrant, which notice shall specify the
number of Stock Units to be purchased (the
<PAGE>
"Exercise Notice"), (b) payment of the Exercise Price (payable as set forth
---------------
below) for the number of Stock Units as to which this Warrant is being
exercised, and (c) this Warrant. The Exercise Price shall be payable (a)
in cash or by certified or official bank check payable to the order of the
Issuer or by wire transfer of immediately available funds to the account of
the Issuer or (b) by delivery of this Warrant Certificate to the Issuer for
cancellation in accordance with the following formula: in exchange for
each share of Class B Common Stock issuable on exercise of each Warrant
represented by this Warrant Certificate that is being exercised, such
holder shall receive such number of shares of Class B Common Stock as is
equal to the product of (i) the number of shares of Class B Common Stock
issuable upon exercise of the Warrants being exercised at such time
multiplied by (ii) a fraction, the numerator of which is the Current Market
Price per share of Class B Common Stock at such time minus the Exercise
Price per share of Class B Common Stock at such time, and the denominator
of which is the Current Market Price per share of Class B Common Stock at
such time.
Upon receipt thereof, the Issuer shall, as promptly as
practicable and in any event within 5 Business Days thereafter, execute or
cause to be executed and deliver or cause to be delivered to the Holder a
stock certificate or certificates representing the aggregate number of
shares of Warrant Stock and other securities issuable upon such exercise
and any other property to which such Holder is entitled.
The stock certificate or certificates for Warrant Stock so
delivered shall be in such denominations as may be specified in the
Exercise Notice and shall be registered in the name of the Holder or such
other name or names as shall be designated in such Exercise Notice. Such
stock certificate or certificates shall be deemed to have been issued and
the Holder or any other Person so designated to be named therein shall be
deemed to have become a holder of record of such shares, including, to the
extent permitted by law and to the extent such shares represent voting
stock of the Issuer, the right to vote such shares or to consent or to
receive notice as a Stockholder, as of the date on which the last of the
Exercise Notice, payment of the Exercise Price and this Warrant is received
by the Issuer as aforesaid. If this Warrant shall have been exercised only
in part, the Issuer shall, at the time of delivery of the certificate or
certificates representing Warrant Stock and other securities, execute and
deliver to the Holder a new Warrant evidencing the rights of the Holder to
purchase the unpurchased Stock Units called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant, or, at
the request of the Holder, appropriate notation may be made on this Warrant
and the same returned to the Holder.
All shares of Class B Common Stock issuable upon the exercise of
this Warrant shall, upon payment therefor in accordance herewith, be duly
and validly issued, fully paid and
<PAGE>
nonassessable and free and clear of any liens, charges or other
encumbrances of any nature.
The Issuer shall not be required to issue a fractional share of
Class B Common Stock upon exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase upon such
exercise, the Issuer shall pay (at the time this Warrant is exercised for
all shares of Class B Common Stock remaining subject hereto) a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per share of Class B Common Stock on
the date of exercise.
SECTION 3. Transfer, Division and Combination. (a)
----------------------------------
Notwithstanding anything herein to the contrary, no holder of Warrants
subject to the provisions of Regulation Y shall transfer any Warrants or
shares of Warrant Stock held by it, if, as a result of such transfer or the
right to effect such transfer, such holder would be deemed under Regulation
Y to have the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the Issuer (and, for purposes
of this restriction, a reasoned opinion of counsel to such holder (which is
based on facts and circumstances deemed appropriate by such counsel) to the
effect that such holder does not exercise such a controlling influence
shall be conclusive). For the purposes of this Section 3(a), a holder of
Warrants will not be deemed to be subject to Regulation Y to the
extent such holder is entitled to hold the Warrants pursuant to 12 C.F.R.
Sec. 225.22(c)(4).
(b) Subject to the foregoing, this Warrant and all rights
hereunder are transferable (subject to any restrictive legends hereon), in
whole or in part, upon surrender of this Warrant to the Issuer, together
with a written assignment of this Warrant duly executed by the Holder
hereof or such holder's agent or attorney. Such written assignment shall
be in the form of the Assignment Form attached as Annex B hereto. Upon
such surrender the Issuer shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denominations
specified in such instrument of assignment, and the original Warrant shall
promptly be canceled.
(c) This Warrant may be exchanged for other Warrants of the same
series upon presentation to the Issuer, together with a written notice
specifying the denominations in which new Warrants are to be issued, signed
by the Holder hereof. The Issuer shall execute and deliver a new Warrant
or Warrants to the holder in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. The Issuer shall pay
all expenses, taxes (including transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of the Warrants,
including any transfer or exchange thereof.
(d) The Issuer shall maintain books for the registration and
transfer of the Warrants, and shall allow each
<PAGE>
holder of Warrants to inspect such books at such reasonable times as such
holder shall request.
SECTION 4. Adjustments.
-----------
(a) Dividends, Distributions and Purchases.
--------------------------------------
(i) If at any time the Issuer shall pay any dividend or
make any other distribution to holders of its Common Stock of any
cash, evidence of indebtedness or other property of any nature
whatsoever (other than as provided in subsections (b), (c)(i)(A)
and (d)(i)(A) hereof), the Issuer shall at the same time pay or
distribute to each holder of Warrants (whether or not such holder
exercises such Warrants) the cash, evidence of indebtedness or
other property such holder would have been entitled to receive if
such holder had exercised such Warrants immediately prior to the
record date for such dividend or distribution;
(ii) If at any time the Issuer shall propose to purchase or
redeem any shares of its Common Stock (other than shares of Class
B or Class C Common Stock validly repurchased or redeemed, solely
as permitted by the terms of the Senior Secured Note Indenture,
pursuant to any management equity subscription, stockholders or
stock option agreement) for cash, evidence of indebtedness or
other property of any nature whatsoever, the Issuer shall deliver
to each holder of Warrants which are by their terms then
exercisable for shares of Warrant Stock a notice of such proposed
purchase or redemption, and each such holder shall, at its
option, have the right to require the Issuer to at the same time
purchase or redeem Warrants and shares of Warrant Stock owned by
such holder, in the same proportion as the number of shares of
Common Stock to be so purchased or redeemed bears to the total
number of shares of Common Stock outstanding at such time, on the
same terms and conditions as the proposed purchase or redemption
of such other Common Stock and for the same consideration per
Warrant or share of Warrant Stock, as the case may be, as is paid
to the holders of such other Common Stock for each share of
Common Stock so redeemed or purchased, minus, in the case of
Warrants, the exercise price of the Warrants to be so purchased
or redeemed.
(b) Subdivisions and Combinations. If at any time the Issuer
-----------------------------
shall
(i) take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend or other
distribution of Common Stock;
<PAGE>
(ii) subdivide or reclassify its outstanding shares of
Common Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then immediately after the occurrence of any such event the number of
shares of Warrant Stock comprising a Stock Unit shall be adjusted so as to
equal the number of shares of Warrant Stock which such holder would have
been entitled to receive if such holder had exercised the Warrant
immediately prior to the occurrence of such event.
(c) Issuance of Common Stock. In case at any time the Issuer
------------------------
(i)(A) shall take a record of the holders of its Common Stock for the
purpose of entitling them to subscribe for or purchase shares of any class
or series of Common Stock or (B) shall otherwise sell or issue any such
securities and (ii) the consideration per share of Common Stock to be paid
upon such issuance or subscription is less than the Current Market Price
per share of Common Stock on such record date, then the number of shares of
Warrant Stock comprising a Stock Unit shall be adjusted to be that number
determined by multiplying the number of shares of Warrant Stock comprising
a Stock Unit immediately prior to such record date by a fraction (not to be
less than one) (i) the numerator of which shall be equal to the product of
(A) the number of shares of Common Stock outstanding after giving effect to
such issuance, distribution, subscription or purchase and (B) the Current
Market Price per share of Common Stock determined immediately before such
record date and (ii) the denominator of which shall be equal to the sum of
(A) the product of (1) the number of shares of Common Stock outstanding
immediately before such record date and (2) the Current Market Price per
share of Common Stock determined immediately before such record date and
(B) the aggregate consideration to be received by the Issuer for the total
number of shares of Common Stock to be issued, distributed, subscribed for
or purchased. Aggregate consideration for purposes of the preceding clause
(B) shall be determined as follows: In case any shares of Common Stock
shall be issued or sold for cash, the consideration received therefor shall
be deemed to be the amount payable to the Issuer therefor. In case any
shares of Common Stock shall be issued or sold for a consideration other
than cash payable to the Issuer, the consideration received therefor shall
be deemed to be the fair value of such consideration as determined by the
Board. In case any shares of Common Stock shall be issued in connection
with any merger of another corporation into the Issuer, the amount of
consideration therefor shall be deemed to be the fair value as determined
by the Board of such portion of the assets of such merged corporation as
the Board shall determine to be attributable to such shares of Common
Stock.
(d) Issuance of other Securities, Rights or Obligations. In
---------------------------------------------------
case at any time the Issuer (i)(A) shall take a
<PAGE>
record of the holders of its Common Stock for the purpose of entitling them
to subscribe for or purchase options to purchase or rights to subscribe for
Common Stock or securities directly or indirectly convertible into or
exchangeable for Common Stock (or options or rights with respect to such
securities) or (B) shall otherwise issue or sell any such options, rights
or securities and (ii) the consideration per share for which Common Stock
is deliverable upon exercise of such options or rights or conversion or
exchange of such securities (determined by dividing (x) the total amount
received or receivable by the Issuer in consideration of the issuance of or
subscription for such options, rights or securities, plus the minimum
aggregate amount of premiums (if any) payable to the Issuer upon such
exercise, conversion or exchange, by (y) the total maximum number of shares
of Common Stock necessary to effect the exercise, conversion or exchange of
all such options, rights or securities) shall be less than the Current
Market Price per share of Common Stock on such record date or sale or
issuance date, as the case may be, then the number of shares of Warrant
Stock comprising a Stock Unit shall be adjusted to be that number
determined by multiplying the number of shares of Warrant Stock comprising
a Stock Unit immediately prior to such date by a fraction (not to be less
than one) (i) the numerator of which shall be equal to the product of (A)
the total maximum number of shares of Common Stock outstanding after giving
effect to the assumed exercise or conversion of all such options, rights or
securities and (B) the Current Market Price per share of Common Stock
determined immediately before such date and (ii) the denominator of which
shall be equal to the sum of (A) the product of (1) the number of shares of
Common Stock outstanding immediately before such date and (2) the Current
Market Price per share of the Common Stock determined immediately before
such date and (B) the aggregate consideration per share (determined as set
forth in subsection (ii)(x) and (y) above) for which Common Stock is
deliverable upon exercise conversion or exchange of such options, rights or
securities. Aggregate consideration for purposes of the preceding clause
(B) shall be determined as follows: In case any options, rights or
convertible or exchangeable securities (or options or rights with respect
thereto) shall be issued or sold, or exercisable, convertible or
exchangeable for cash, the consideration received therefor shall be deemed
to be the amount payable to the Issuer (determined as set forth in
subsection (ii)(x) and (y) above) therefor. In case any such options,
rights or securities shall be issued or sold, or exercisable, convertible
or exchangeable for a consideration other than cash payable to the Issuer,
the consideration received therefor (determined as set forth in subsection
(ii)(x) and (y) above) shall be deemed to be the fair value of such
consideration as determined by the Board, after deduction therefrom of any
expenses incurred or any underwriting commissions or concessions or
discounts paid or allowed by the Issuer in connection therewith. In case
any such options, rights or securities shall be issued or sold, or
exercisable, convertible or exchangeable in connection with any merger of
another corporation into the Issuer, the amount of consideration therefor
shall be deemed to
<PAGE>
be the fair value as determined by the Board of such portion of the assets
of such merged corporation as the Board shall determine to be attributable
to such options, rights or securities.
The Current Market Price per share of Common Stock shall be
determined as set forth in Section 5.05 hereof.
(e) Superseding Adjustment. If, at any time after any
----------------------
adjustment in the number of shares of Warrant Stock comprising a Stock Unit
shall have been made on the basis of the issuance of any options or rights,
or convertible or exchangeable securities (or options or rights with
respect to such securities) pursuant to subsection (d) hereof:
(i) the options or rights shall expire prior to exercise or
the right to convert or exchange any such securities shall
terminate; or
(ii) the consideration per share for which shares of Common
Stock are issuable pursuant to the terms of such options or
rights or convertible or exchangeable securities shall be
increased or decreased, other than under or by reason of
provisions designed to protect against dilution;
such previous adjustment shall be rescinded and annulled. Thereupon, a
recomputation shall be made of the effect of such options or rights or
convertible or exchangeable securities with respect to shares of Common
Stock on the basis of
(A) treating the number of shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the
previous exercise, conversion or exchange of such
options, rights or securities as having been issued on
the date or dates of such exercise, conversion or
exchange and for the consideration actually received
and receivable therefore, and
(B) treating any such options, rights or securities which
then remain outstanding as having been granted or
issued immediately after the time of such increase or
decrease for the consideration per share for which
shares of Common Stock are issuable upon exercise,
conversion or exchange of such options, rights or
securities.
To the extent called for by the foregoing provisions of this Section 4(e)
on the basis aforesaid, a new adjustment in the number of shares of Warrant
Stock comprising a Stock Unit shall be made, determined using the Current
Market Price used at the time of the original determination, which new
adjustment shall
<PAGE>
supersede the previous adjustment so rescinded and annulled. If the
exercise, conversion or exchange price provided for in any such option,
right or security shall decrease at any time under or by reason of
provisions designed to protect against dilution, then in the case of the
delivery of shares of Common Stock upon the exercise, conversion or
exchange of any such option, right or security, the Stock Unit purchasable
upon the exercise of a Warrant shall forthwith be adjusted in the manner
which would have obtained had the adjustment made upon issuance of such
option, right or security been made upon the basis of the issuance of (and
the aggregate consideration received for) the shares of Common Stock
delivered as aforesaid.
(f) Other Provisions Applicable to Adjustments under this
-----------------------------------------------------
Section. The following provisions shall be applicable to the making of
- -------
adjustments of the number of shares of Warrant Stock comprising a Stock
Unit:
(i) The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Issuer
shall be deemed to be an issuance thereof for purposes of this
Section.
(ii) In computing adjustments under this Section,
fractional interests in Common Stock shall be taken into account
to the nearest one-thousandth of a share.
(iii) If the Issuer shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution thereof, legally
abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment
shall be required by reason of the taking of such record and any
such adjustment previously made in respect thereof shall be
rescinded and annulled.
(g) Merger, Consolidation or Disposition of Assets. If the
----------------------------------------------
Issuer shall merge or consolidate with another corporation, or shall sell,
transfer or otherwise dispose of all or substantially all of its assets to
another corporation and pursuant to the terms of such merger, consolidation
or disposition of assets, cash, shares of common stock or other securities
of the successor or acquiring corporation, or property of any nature is to
be received by or distributed to the holders of Common Stock of the Issuer,
then each holder of Warrants which are by their terms then exercisable
shall, at such holder's election, have the right to receive (whether or not
such holder exercises such Warrants) the amount it would have been entitled
to receive if such holder had exercised such Warrants immediately prior to
the occurrence of such merger, consolidation or disposition of assets, net
of the exercise price of such Warrants. In case of any such merger,
consolidation or disposition of assets in which the foregoing election is
not
<PAGE>
made, the successor or acquiring corporation (and any affiliate thereof
issuing securities) shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of this Warrant to
be performed and observed by the Issuer and all of the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board and reasonably
acceptable to the holders of a majority in interest of the Warrants) in
order to provide for adjustments of Stock Units which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section.
The foregoing provisions shall similarly apply to successive mergers,
consolidations and dispositions of assets.
(h) Other Action Affecting Common Stock. If at any time or from
-----------------------------------
time to time the Issuer shall take any action affecting its Common Stock,
other than an action described in any of the foregoing subsections of this
Section or an action taken in the ordinary course of the Issuer's business
and consistent with past practice, then, unless in the reasonable opinion
of the Board such action will not have a material adverse effect upon the
rights of the holders of the Warrants, the number of shares of Warrant
Stock comprising a Stock Unit shall be adjusted in such manner and at such
time as the Board shall in good faith determine to be equitable in the
circumstances, but no such adjustment shall decrease the number of shares
of Warrant Stock comprising a Stock Unit.
(i) Notice of Adjustments. Whenever the number of shares of
---------------------
Warrant Stock comprising a Stock Unit shall be adjusted pursuant to this
Agreement, the Issuer shall forthwith obtain a certificate signed by a firm
of independent accountants of recognized national standing selected by the
Issuer, setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated and
specifying the number of shares of Warrant Stock comprising a Stock Unit,
after giving effect to such adjustment or change. The Issuer shall promptly
cause a signed copy of such certificate to be delivered to each holder of
Warrants. The Issuer shall keep at its office copies of all such
certificates and cause the same to be available for inspection at said
office during normal business hours by any holder of Warrants or any
prospective purchaser of Warrants designated by the registered holder
hereof.
(j) Notice of Certain Corporate Action. If the Issuer shall
----------------------------------
propose (i) to pay any dividend to the holders of its Common Stock or to
make any other distribution to the holders of its Common Stock; (ii) to
offer to the holders of its Common Stock rights to subscribe for or to
purchase any additional shares of Common Stock (or options or rights with
respect thereto); (iii) to effect any reclassification of its Common Stock;
(iv) to otherwise issue any Common Stock or other securities; (v) to effect
any capital reorganization; (vi) to effect any consolidation, merger or
sale, transfer or other disposition of all or substantially all of its
assets; or (vii) to effect the liquidation, dissolution or winding up of
the
<PAGE>
Issuer, then, in each such case, the Issuer shall give to each holder of
Warrants a notice of such proposed action, which shall specify the date on
which a record is to be taken for the purposes of such dividend,
distribution or rights offer, or the date on which such reclassification,
issuance, reorganization, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution or winding up is to take place and
the date of participation therein by the holders of Common Stock, if any
such date is to be fixed, and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such
action on the Common Stock, and the number of shares of Warrant Stock which
will comprise a Stock Unit after giving effect to any adjustment which will
be required as a result of such action. Such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 20 days
prior to the record date for determining holders of the Common Stock for
purposes of such action, and in the case of any other such action, at least
20 days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of Common Stock, whichever shall be
the earlier.
(k) No Adjustment Necessary. Anything to the contrary herein
-----------------------
notwithstanding, no adjustment to the number of shares of Warrant Stock
comprising a Stock Unit shall be made as a result of, or in connection
with, the issuance of shares of Common Stock, or options or warrants to
purchase shares of Common Stock, to management at fair market value (as
determined by the Board in its reasonable judgment) in an amount up to 12%
of the outstanding shares of Common Stock on the Closing Date, on a fully
diluted basis.
SECTION 5. Miscellaneous.
-------------
5.01 Office of Issuer. So long as any of the Warrants remains
----------------
outstanding, the Issuer shall maintain an office in the continental United
States of America where the Warrants may be presented for exercise,
transfer, division or combination as in this Warrant provided. Such office
shall be at c/o 101 Oakley Street, Evansville, Indiana 47710, unless and
until the Issuer shall designate and maintain some other office for such
purposes and give notice thereof to all Warrant Holders.
5.02 Notices Generally. Any notices and other communications
-----------------
pursuant to the provisions hereof shall be sent in accordance with the
provisions of Section 8.6 of the Purchase Agreement.
5.03 Governing Law. The corporate law of the State of Delaware
-------------
shall govern all issues concerning the relative rights of the Issuer and
its Stockholders. All other issues hereunder shall be governed by and
construed in accordance with the procedural and substantive laws of the
State of New York without regard for its conflicts of laws rules. The
Issuer agrees that it may be served with process in State of New York and
any action
<PAGE>
for breach of this Warrant may be prosecuted against it in the courts of
that State.
5.04 Limitation of Liability. No provision hereof, in the
-----------------------
absence of affirmative action by the Holder to purchase shares of Class B
Common Stock, and no mere enumeration herein of the rights or privileges of
the Holder, shall give rise to any liability of the Holder for the Exercise
Price or as a Stockholder of the Issuer, whether such liability is asserted
by the Issuer, by any creditor of the Issuer or any other Person.
5.05 Determination of Current Market Price per share of Common
---------------------------------------------------------
Stock. The Current Market Price per share of Common Stock shall in each
- -----
instance initially be determined by the Issuer in accordance with the
provisions of the definition of Current Market Price in Section 1 hereof.
The Issuer shall notify the Holders of such determination. If the holders
of a majority in interest of the Warrants disagree with the determination
of the Issuer, the Issuer shall appoint an Independent Financial Expert to
determine the Current Market Price per share of Common Stock and the
determination of the Independent Financial Expert shall govern for purposes
of determining the adjustment pursuant to this Section. The Issuer shall
notify each holder of Warrants of the final determination of the Current
Market Price per share of Common Stock. The Issuer shall pay the fees and
expenses of the Independent Financial Expert.
5.06 Registration Rights. The holders of this Warrant shall be
-------------------
entitled to the benefit of the provisions of Article 6A and Article 6C of
the Purchase Agreement with regard to the registration for sale of the
Warrant Stock.
<PAGE>
IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.
Dated: June 18, 1996
BPC MERGERCO, INC.
By: /s/ Martin R. Imbler
--------------------------------
Name: Martin R. Imbler
Title: President
Exhibit 12.01
<TABLE><CAPTION>
EXHIBIT 12.01
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Year Ended
--------------------------------------------
December 29, December 26, January 1,
1991 1992 1994
--------------------------------------------
<S> <C> <C> <C>
Income (loss) before income taxes and extraordinary
charge.............................................. $ (4,945,659) $ (1,955,097) $ (1,630,993)
Add:
Interest expense................................. 8,706,251 6,697,735 6,607,564
Portion of rents representative of interest factor 87,333 106,333 235,000
---------- ---------- ----------
Income as adjusted.......................................... 3,847,925 4,848,971 $ 5,211,571
========== ========== ==========
Fixed charges:
Interest incurred:
Amount expensed.................................. $ 8,706,251 $ 6,697,735 $ 6,607,564
Amount capitalized............................... 25,209 71,975 163,293
Portion of rents representative of interest factor... 87,333 106,333 235,000
--------- --------- ---------
Total fixed charges........................................ $ 8,818,793 $ 6,876,043 $ 7,005,857
========= ========= =========
Ratio of earnings to fixed charges......................... (a) (a) (a)
<CAPTION>
---------------------------------
December 31, December 30,
1994 1995
---------------------------------
<S> <C> <C>
Income (loss) before income taxes and extraordinary
charge.............................................. $ 5,828,275 $ 7,011,387
Add:
Interest expense................................. 11,552,075 14,031,273
Portion of rents representative of interest factor 326,358 505,000
---------- ----------
Income as adjusted.......................................... $ 17,706,708 21,547,660
========== ==========
Fixed charges:
Interest incurred:
Amount expensed.................................. $ 11,552,075 $ 14,031,273
Amount capitalized............................... 228,900 350,231
Portion of rents representative of interest factor... 326,358 505,000
---------- ----------
Total fixed charges........................................ $ 12,107,333 $ 14,886,504
========== ==========
Ratio of earnings to fixed charges......................... 1.5 1.4
</TABLE>
- -------------
(a) Earnings were inadequate to cover fixed charges by the amount of
$1,794,286, $2,027,072 and $4,970,868 for fiscal 1993, 1992 and 1991,
respectively.
Exhibit 21
----------
Subsidiaries
------------
Jurisdiction
Name of Incorporation
---- ----------------
Berry Plastics Corporation Delaware
Berry Iowa Corporation Delaware
Berry Tri-Plas Corporation Delaware
Berry Sterling Corporation Delaware
AeroCon, Inc. Delaware
Exhibit 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)______
________________
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States 13-3781471
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
100 Wall Street, New York, NY 10005
(Address of principal executive offices) (Zip Code)
______________
FOR INFORMATION, CONTACT:
Dennis J. Calabrese, President
First Trust of New York, National Association
100 Wall Street, 16th Floor
New York, NY 10005
(212) 361-2506
________________
BPC HOLDING CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 35 - 1814673
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Oakley Street
Evansville, Indiana 47710
________________
<PAGE>
DEBT SECURITIES
(Title of the indenture securities)
Item 1. GENERAL INFORMATION.
Furnish the following information as to the trustee --
(a) Name and address of each examining or supervising
authority to which it is subject.
Name Address
---- -------
Comptroller of the Currency Washington, D.C.
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. AFFILIATIONS WITH THE OBLIGORS.
If any obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. LIST OF EXHIBITS.
1. Articles of Association of First Trust of New York, National
Association, incorporated herein by reference to Exhibit 1 of Form T-1,
Registration No. 33-83774.
2. Certificate of Authority to Commence Business for First
Trust of New York, National Association, incorporated herein by reference
to Exhibit 2 of Form T-1, Registration No. 33-83774.
3. Authorization of First Trust of New York, National
Association, to exercise corporate trust powers, incorporated herein by
reference to Exhibit 3 of Form T-1, Registration No. 33-83774.
4. By-Laws of First Trust of New York, National Association,
incorporated herein by reference to Exhibit 4 of Form T-1, Registration No.
33-83774.
5. Not applicable.
6. Consent of First Trust of New York, National Association,
required by Section 321(b)of the Act, incorporated herein by reference to
Exhibit 6 of Form T-1, Registration No. 33-83774.
-2-
<PAGE>
7. Report of Condition of First Trust of New York, National
Association, as of the close of business on March 31, 1996, published
pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Trust of New York, National Association, a
national banking association organized and existing under the laws of the
United States, has duly caused this statement of eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in The
City of New York, and State of New York, on the 16th day of July, 1996.
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
By: /s/ Alfia Monastra
-------------------------------
Alfia Monastra
Assistant Vice President
-3-
<PAGE>
Exhibit 7
FIRST TRUST OF NEW YORK, N.A.
STATEMENT OF FINANCIAL CONDITION
AS OF 03/31/96
($000'S)
03/31/96
----------
ASSETS
Cash and Due From Depository Institutions $23,596
Federal Reserve Stock 3,600
Fixed Assets 764
Intangible Assets 84,233
Other Assets 9,068
-------
Total Assets $121,261
Liabilities
Other Liabilities 2,553
----------
TOTAL LIABILITIES 2,553
EQUITY
Common and Preferred Stock 1,000
Surplus 120,932
Undivided Profits (3,224)
--------
TOTAL EQUITY CAPITAL 118,708
TOTAL LIABILITIES AND EQUITY CAPITAL $121,261
--------
To the best of the undersigned's determination, as of this date the above
financial information is true and correct.
First Trust of New York, N.A.
By: /s/ Alfia Monastra
------------------
Assistant Vice President
Date: July 16, 1996
-4-
