-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kk+s1MwqjZlN/0JXo2gAjRq+A58OLu8xokwdqTIPQXXRL0JIUpLld0dzB3HWsJvF IXklHUp/LAI258+CXdYZvg== 0000950117-98-001013.txt : 19980514 0000950117-98-001013.hdr.sgml : 19980514 ACCESSION NUMBER: 0000950117-98-001013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONTINENTAL CAN CO INC /DE/ CENTRAL INDEX KEY: 0000103392 STANDARD INDUSTRIAL CLASSIFICATION: METAL CANS [3411] IRS NUMBER: 112228114 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06690 FILM NUMBER: 98617656 BUSINESS ADDRESS: STREET 1: ONE AERIAL WAY CITY: SYOSSET STATE: NY ZIP: 11791 BUSINESS PHONE: 5168224940 MAIL ADDRESS: STREET 1: ONE AERIAL WAY CITY: SYOSSET STATE: NY ZIP: 11791 FORMER COMPANY: FORMER CONFORMED NAME: LOCKWOOD KESSLER & BARTLETT INC DATE OF NAME CHANGE: 19710815 10-Q 1 CONTINENTAL CAN COMPANY, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended MARCH 31, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 1-6690 CONTINENTAL CAN COMPANY, INC. (Exact name of registrant as specified in its charter) DELAWARE 11-2228114 (State of Incorporation) (I.R.S. Employer Identification No.) 301 Merritt 7 Corporate Park, Norwalk, CT 06856 (Address of principal executive offices) Zip Code (203) 750-5900 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X YES NO The number of shares outstanding of the registrant's Common Stock ($.25 par value) as of May 8, 1998 is 3,388,547. FORM 10-Q PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Consolidated Balance Sheets as of March 31, 1998 and 1997 and December 31, 1997 Consolidated Statements of Earnings for the Three Months Ended March 31, 1998 and 1997 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997 Notes to Consolidated Financial Statements 2 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1998 AND 1997 AND DECEMBER 31, 1997 (UNAUDITED) (In thousands)
MARCH 31, DEC. 31, MARCH 31, 1998 1997 1997 ------------ ------------ -------------- ASSETS: Current Assets: Cash and cash equivalents $ 9,543 $ 5,486 $ 22,705 Investment securities 21,685 20,385 15,274 Accounts Receivable: Trade accounts 68,710 62,883 63,700 Other 8,086 6,958 8,201 Less allowance for doubtful accounts (5,448) (5,549) (4,430) ------------ ------------ -------------- Accounts receivable, net 71,348 64,292 67,471 Inventories 89,513 79,113 89,679 Prepaid expenses and other current assets 4,679 4,788 6,247 ------------ ------------ -------------- TOTAL CURRENT ASSETS 196,768 174,064 201,376 ------------ ------------ -------------- Property, plant and equipment, at cost: Land, building and improvements 46,462 46,405 47,748 Manufacturing machinery and equipment 213,897 212,300 208,795 Furniture, fixtures and equipment 8,612 8,683 8,757 Construction in progress 8,775 8,114 10,907 ------------ ------------ -------------- 277,746 275,502 276,207 Less accumulated depreciation and amortization 133,669 131,050 130,947 ------------ ------------ -------------- Net property, plant and equipment 144,077 144,452 145,260 Goodwill, net of accumulated amortization 29,865 28,975 29,588 Other assets, net of accumulated amortization 25,889 27,915 24,589 ------------ ------------ -------------- TOTAL ASSETS $ 396,599 $ 375,406 $ 400,813 ============ ============ ==============
See accompanying notes to consolidated financial statements. 3 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED) MARCH 31, 1998 AND 1997 AND DECEMBER 31, 1997 (UNAUDITED) (In thousands except share data)
MARCH 31, DEC. 31 MARCH 31, 1998 1997 1997 ------------- ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities: Short term borrowings $ 20,064 $ 11,778 $ 14,289 Accounts payable - trade 48,651 43,532 47,221 Accrued liabilities: Employee compensation and benefits 17,850 17,330 18,961 Other accrued expenses 15,707 15,154 15,983 Current installments of long term debt and obligations under capital leases 15,855 8,513 11,111 Income taxes payable 874 757 1,298 Other current liabilities 14,089 7,952 14,624 ------------- ------------ ------------ TOTAL CURRENT LIABILITIES 133,090 105,016 123,487 Long term debt, excluding current installments 137,736 144,942 151,513 Obligations under capital leases, excluding current installments 10,502 11,476 14,082 Deferred income taxes 4,747 4,725 3,603 Other 24,501 26,408 30,667 ------------- ------------ ------------ TOTAL LIABILITIES 310,576 292,567 323,352 Minority interest 14,729 14,057 12,093 STOCKHOLDERS' EQUITY: Capital stock: First preferred stock, cumulative $25 par value. Authorized 250,000 shares; no shares issued. - - - Second preferred stock, 4% non-cumulative, $100 par value. Authorized 1,535 shares; no shares issued. - - - Common stock, $.25 par value. Authorized 20,000,000 shares; Outstanding 3,387,213 shares in 1998, 3,217,355 shares in Dec., 1997 and 3,205,835 shares in March, 1997. 843 804 801 ------------- ------------ ------------ 843 804 801 Additional paid-in capital 46,780 44,226 44,060 Retained earnings 30,546 29,168 22,262 ------------- ------------ ------------ 78,169 74,198 67,123 Cumulative foreign currency translation adjustment (6,875) (5,416) (1,755) ------------- ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 71,294 68,782 65,368 ------------- ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 396,599 $ 375,406 $ 400,813 ============= ============ ============
See accompanying notes to consolidated financial statements. 4 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) (In thousands, except per share data)
1998 1997 -------------- --------------- NET SALES $123,516 $122,610 Cost of sales 104,583 102,762 Gross profit -------------- --------------- 18,933 19,848 Selling, general and administrative expenses 13,268 14,076 -------------- --------------- OPERATING INCOME 5,665 5,772 Other income (expense): Interest expense, net (3,843) (4,015) Foreign currency exchange gain 56 28 Other - net - 34 -------------- --------------- Net other expense (3,787) (3,953) Income before provision for income taxes and minority interest 1,878 1,819 (Recovery) provision for income taxes (94) 473 -------------- --------------- Income before minority interest 1,972 1,346 Minority Interest 594 266 -------------- --------------- NET INCOME $ 1,378 $ 1,080 ============== =============== NET EARNINGS PER COMMON SHARE - BASIC $ 0.42 $ 0.34 ============== =============== NET EARNINGS PER COMMON SHARE - DILUTED $ 0.39 $ 0.33 ============== ===============
See accompanying notes to consolidated financial statements. 5 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) (In thousands)
1998 1997 ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,378 $ 1,080 Depreciation and amortization 5,106 5,142 Minority interest 594 266 Other adjustments (7,317) 7,197 ------------- ------------ NET CASH (USED IN) PROVIDED BY OPERATING (239) 13,685 ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (6,622) (3,326) Other (543) (13,989) ------------- ------------ NET CASH USED IN INVESTING ACTIVITIES (7,165) (17,315) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds of long term debt 328 5,615 Net proceeds from short term borrowings 8,788 5,903 Other 2,593 64 ------------- ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 11,709 11,582 Effect of exchange rate changes on cash (248) (267) ------------- ------------ Increase in cash and cash equivalents 4,057 7,685 Cash and cash equivalents at beginning of period 5,486 15,020 ------------- ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,543 $ 22,705 ============= ============
See accompanying notes to consolidated financial statements. 6 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998 (1) Accounting Policies and Other Matters (a) Pending Sale of Continental Can Company, Inc. In January 1998, Suiza Foods Corporation signed a definitive agreement to acquire the Company for stock and assumption of debt in a purchase transaction. The transaction is expected to be completed during the second quarter of 1998. Any impact of the transaction on the consolidated financial statements of the Company has not yet been determined. (b) Basis of Presentation Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's 1997 Annual Report on Form 10-K. (c) Adjustments The results for the interim period reported herein have not been audited, however, in the opinion of management, all adjustments necessary for a fair presentation of the interim period statements have been made. (d) Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 1998 and 1997.
1998 1997 ---- ---- (In thousands) Income Shares Income Shares Numerator Denominator Numerator Denominator --------- ----------- --------- ----------- Basic EPS: Net income $1,378 3,297 $1,080 3,204 Effect of dilutive options and warrants 218 54 --- -- Diluted EPS: Net income and assumed conversions $1,378 3,515 $1,080 3,258
7 (2) Reclassifications Certain 1997 balances have been reclassified to conform to the 1998 presentation. (3) Inventories Inventories consist principally of packaging materials. The components of inventory were as follows: (000's omitted)
March 31, December 31, March 31, 1998 1997 1997 ------------ --------------- --------------- (in thousands) Finished goods $37,027 $ 37,426 $46,336 Work in process 6,759 5,665 10,665 Raw materials and supplies 49,305 39,600 35,731 ----------- ----------- ---------- 93,091 82,691 92,732 LIFO reserve (3,578) (3,578) (3,053) ----------- ----------- ----------- $89,513 $ 79,113 $89,679 =========== ========== ==========
(4) Subsequent Events On April 28, 1998, the Company purchased 33% of the equity in Ferembal S.A. (Ferembal) for $19,923,000 (119.5 million FF) pursuant to stock purchase agreements executed in December 1997 and January 1998. The purchase increases the Company's ownership of Ferembal to 97%. The acquisition of these shares will be accounted for as a purchase with the excess of the fair value of the assets acquired allocated to goodwill. The funds for the purchase were borrowed by the Company from Suiza Foods Corporation pursuant to a promissory note due December 31, 1998 with annual interest of 10% payable monthly. The note is secured by all of the Company's equity in Ferembal. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales during the first quarter of 1998 increased 1% to $123,516,00 as compared to $122,610,000 in the first quarter of 1997. Net sales would have increased approximately 5% but for foreign currency translation rate differences of about $4.6 million and resin price decreases of about $700,000 which reduced reported sales. Gross profit decreased 5% in the first quarter of 1998, as compared to the prior year period. Gross profit as a percentage of sales decreased to 15.3% in the first quarter of 1998 as compared to 16.2% in the same period of 1997. The decline in gross profit despite higher sales primarily reflected a lower margin product mix at Ferembal and Plastic Containers, Inc.(PCI). 8 Selling, general and administrative expense was reduced to $13.3 million in 1998 compared to $14.1 million in the first quarter of 1997; as a percentage of net sales such expense also decreased to 10.7% in 1998 as compared to 11.5% in 1997. As a result, operating income amounted to $5,665,000 in the first quarter of 1998 as compared to $5,772,000 in the first quarter of 1997. Operating profit as a percentage of sales amounted to 4.6% and 4.7% in 1998 and 1997, respectively. Net interest expense decreased to $3,843,000 in the first quarter of 1998 as compared to $4,015,000 in the same period of 1997. This decrease resulted primarily from foreign currency translation rate differences. Recovery of income taxes amounted to $94,000 in the first quarter of 1998. Provision for taxes amounted to $473,000 in the first quarter of 1997. Minority interest during each period reflects the interests of other shareholders in some of the Company's subsidiaries. The increase in 1998 in minority interest primarily reflects the conversion of a convertible bond in April 1997 by a minority shareholder of Ferembal. Net income amounted to $1,378,000 ($.39 per common share - diluted) in the first quarter of 1998. Net income amounted to $1,080,000 ($.33 per common share - diluted) in the first quarter of 1997. FINANCIAL CONDITION CAPITAL REQUIREMENTS The Company acquired $6.6 million of capital assets during the first quarter of 1998 consisting primarily of packaging equipment. These assets were acquired for cash. Similar types of assets are expected to be acquired for the remainder of 1998. Total capital spending in 1998 is expected to amount to approximately $25 million. In April 1998 the Company purchased 33% of the equity in Ferembal from the minority holders for approximately $19.9 million. The funds for the purchase were borrowed by the Company. As a result of the purchase the Company's ownership interest in Ferembal was increased to 97%. See Note 4. LIQUIDITY The Company's liquidity position declined slightly during the first quarter of 1998. Working capital decreased to approximately $63.7 million, and the current ratio amounted to 1.48 at March 31, 1998 compared to 1.66 at December 31, 1997. 9 During the first quarter of 1998, the Company's operating activities were essentially flat on a cash basis. The Company used $6.6 million for the purchase of packaging equipment and invested $1.3 million in short-term financial assets. The Company's financing activities generated $11.7 million in cash, most of which were borrowings by its European subsidiaries. Cash increased by $4.1 million in the first quarter. At March 31, 1998, the Company had an available credit line under a Revolving Credit Agreement of $2.5 million. In addition, the Company's consolidated subsidiaries had available approximately $70 million in short term credit lines and bank overdraft facilities at March 31, 1998. However, the Company's ability to draw upon these lines for other than its subsidiaries' needs is restricted. The Company expects that cash from operations and its existing banking facilities will be sufficient to meet its operating needs for the remainder of 1998. 10 PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Required 10.1 Promissory Note dated April 27, 1998 Page 12 10.2 Share Pledge Agreement between the Company and Suiza Foods Corporation Page 16 11 Statement re computation of per share earnings See Note 1(d) 27 Financial data schedule
All other items for which provision is made in the applicable regulations of the Securities and Exchange Commission have been omitted as they are not required under the related instructions or they are inapplicable. (b) Reports on Form 8-K No reports on Form 8-K have been filed since December 31, 1997. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CONTINENTAL CAN COMPANY, INC. (REGISTRANT) By: /s/ Abdo Yazgi ---------------------------- Principal Financial Officer and on behalf of registrant DATED: MAY 11, 1998 11 STATEMENT OF DIFFERENCE The section symbol shall be expressed as............................'SS' EX-10 2 EXHIBIT 10.1 Exhibit 10.1 PROMISSORY NOTE $20,000,000 Dallas, Texas April 27, 1998 FOR VALUE RECEIVED, the undersigned, Continental Can Company, Inc., a Delaware corporation ("Maker"), hereby unconditionally promises to pay to the order of Suiza Foods Corporation, a Delaware corporation ("Payee"), at 3811 Turtle Creek Boulevard, Suite 1300, Dallas Texas, 75205, or such other address in Dallas County, Texas, as may be given to Maker by Payee, the principal sum of TWENTY MILLION and No/100 Dollars ($20,000,000.00) or so much thereof as may be advanced by Payee to Maker hereunder, in lawful money of the United States of America, together with interest on the unpaid principal balance from day-to-day remaining, computed from the date of advance until maturity at the rate per annum which shall from day-to-day be equal to the lesser of (a) the Maximum Rate (hereinafter defined) or (b) 10% per annum, calculated on the basis of a year of 360 days, and for the actual number of days elapsed. The term "Maximum Rate," as used herein, shall mean, with respect to the holder hereof, the maximum nonusurious interest rate, if any, that at any time, or from time to time, may be contracted for, taken, reserved, charged, or received on the indebtedness evidenced by this Note under the laws which are presently in effect of the United States and the State of Texas applicable to such holder and such indebtedness or, to the extent permitted by law, under such applicable laws of the United States and the State of Texas which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow. To the extent that Chapter 1D of the Texas Credit Title (Tex. Rev. Civ. Stat. Ann. art. 5069 'SS''SS' 1.01 et seq.) (the "Act"), as the same may be codified as part of the Texas Finance Code, is relevant to any holder of this Note for the purposes of determining the Maximum Rate, each such holder elects to determine such applicable legal rate under the Act pursuant to the applicable "weekly ceiling," from time to time in effect pursuant to the Act, subject to any right such holder may have subsequently, under applicable law, to change the method of determining the Maximum Rate. Accrued interest on this Note shall be due and payable on the last business day of each month, commencing May 29, 1998. All principal of, and accrued but unpaid interest on, this Note shall be due and payable on December 31, 1998 (the "Maturity Date"). Should the Maturity Date be any day other than a business day, the maturity hereof shall be extended to the next succeeding business day and interest shall be payable with respect to such extension. Payments made to Payee by Maker hereunder shall be applied first to accrued interest and then to principal. 12 All past due principal and, to the extent permitted by applicable law, interest upon this Note shall bear interest at the Maximum Rate, or if no Maximum Rate is established by applicable law, then at the rate of 18% per annum. Maker, and each surety, endorser, guarantor or other party ever liable for payment of any sums of money payable on this Note, jointly and severally waive diligence, demand for payment, presentment, protest, notice of protest and non-payment or other notice of default, notice of intention to accelerate the maturity of this Note and notice of acceleration of the maturity of this Note and agree that their liability under this Note shall not be affected by any renewal or extension in the time of payment hereof, or by any indulgences, or by any release or change in any security for the payment of this Note, and hereby consent to any and all renewals, extensions, indulgences, releases or changes, regardless of the number of such renewals, extensions, indulgences, releases or changes. This Note is secured by, among other things, that certain DECLARATION DE GAGE DE COMPTE D'INSTRUMENTS FINANCIERS NANTISSEMENT D'ACTIONS, of even date herewith, executed by Maker and Payee (the "Security Document"), whereby Maker pledges all capital stock of Ferembal S.A., now owned or hereafter acquired by Maker (the "Property"). No waiver by Payee of any of its rights or remedies hereunder or under any other document evidencing or securing this Note or otherwise shall be considered a waiver of any other subsequent right or remedy of Payee; no delay or omission in the exercise or enforcement by Payee of any rights or remedies shall ever be construed as a waiver of any right or remedy of Payee; and no exercise or enforcement of any such rights or remedies shall ever be held to exhaust any right or remedy of Payee. An "Event of Default" shall exist hereunder if any one or more of the following events shall occur and be continuing: (a) Maker shall fail or refuse to pay when due any principal of, or interest upon, this Note. (b) any statement, representation or warranty made by Maker to Payee shall prove to be untrue or inaccurate in any material respect; (c) default shall occur in the performance of any of the covenants or agreements of Maker contained herein or in any instrument executed or delivered to Payee in connection herewith (other than the payment of principal and interest as referred to in (a) above), and such default is not cured within 15 days after Payee gives written notice thereof to Maker; (d) Maker shall (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor or liquidator of Maker or of all or a substantial part of its assets, (ii) file a voluntary petition in bankruptcy, admit in writing that Maker is unable to pay its debts as they become due or generally not pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) file a petition or answer seeking reorganization or an 13 arrangement with creditors or to take advantage of any bankruptcy or insolvency laws, (v) file an answer admitting the material allegations of, or consent to, or default in answering, a petition filed against Maker in any bankruptcy, reorganization or insolvency proceeding, or (vi) take corporate action for the purpose of effecting any of the foregoing; (e) An involuntary petition or complaint shall be filed against Maker seeking bankruptcy or reorganization of Maker or the appointment of a receiver, custodian, trustee, intervenor or liquidator of Maker, or of all or substantially all of Maker's assets, and such petition or complaint shall not have been dismissed within 60 days of the filing thereof; or an order, order for relief, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition or complaint seeking reorganization of Maker or appointing a receiver, custodian, trustee, intervenor or liquidator of Maker, or of all or substantially all of its assets, and such order, judgment or decree shall continue unstayed and in effect for a period of 60 days; (f) the failure of Maker to pay any money judgment against Maker at least ten days prior to the date on which its assets may be sold to satisfy such judgment; (g) the failure to have discharged within a period of ten days after the commencement thereof any attachment, sequestration, or similar proceedings against any of Maker's assets; or (h) the liens and security interests granted to Payee pursuant to the Security Document cease to be valid and perfected first priority security interests in the Property or any default or event of default shall occur under the Security Document. Upon the occurrence of any Event of Default or other default hereunder, under the Security Document or under any other agreement or instrument securing or assuring the payment of this Note or executed in connection herewith, including, without limitation, any guaranty delivered to Payee in connection herewith, the holder hereof may, at its option, declare the entire unpaid balance of principal and accrued interest on this Note to be immediately due and payable, and foreclose all liens and security interests securing payment hereof or any part hereof. Maker reserves the right to prepay the outstanding principal balance of this Note, in whole or in part at any time and from time to time without premium or penalty. Any such prepayment shall be made together with payment of interest accrued on the amount of principal being prepaid through the date of such prepayment. Any provision herein, or in any document securing this Note, or any other document executed or delivered in connection herewith, or in any other agreement or commitment, whether written or oral, expressed or implied, to the contrary notwithstanding, neither Payee nor any holder hereof shall in any event be entitled to contract for, receive or collect, nor shall or may amounts received hereunder be credited, so that Payee or any holder hereof shall be paid, as interest, a sum greater than the maximum amount permitted by applicable law to be charged to the person(s), partnership(s), firm(s) or corporation(s) primarily obligated to pay this Note at the 14 time in question. If any construction of this Note or any document securing this Note, or any and all other papers, agreements or commitments, indicate a different right given to Payee or any holder hereof to contract for, ask for, demand or receive any larger sum as interest, such is a mistake in calculation or wording which this clause shall override and control, it being the intention of the parties that this Note, and all other instruments securing the payment of this Note or executed or delivered in connection herewith shall in all events comply with applicable law; and proper adjustments shall automatically be made accordingly. In the event that Payee or any holder hereof ever contracts for, receives, collects, or applies as interest, any sum in excess of the amount calculated at the Maximum Rate, if any, such excess amount shall be applied to the reduction of the unpaid principal balance of this Note, and if this Note is paid in full, any remaining excess shall be paid to Maker. In determining whether or not the interest paid or payable, under any specific contingency, exceeds the amount calculated at the Maximum Rate, if any, Maker and Payee or any holder hereof shall, to the maximum extent permitted under applicable law: (a) characterize any nonprincipal payment as an expense or fee rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) "spread" the total amount of interest throughout the entire term of this Note; provided that if this Note is paid and performed in full prior to the end of the full contemplated term hereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Rate, if any, Payee or any holder hereof shall refund to Maker the amount of such excess, or credit the amount of such excess against the aggregate unpaid principal balance of all advances made by the Payee or any holder hereof under this Note at the time in question. This Note is being executed and delivered, and is intended to be performed in Dallas County, State of Texas. Except to the extent that the laws of the United States may apply to the terms hereof, the substantive laws of the State of Texas shall govern the validity, construction, enforcement and interpretation of this Note. In the event of a dispute involving this Note or any other instruments executed in connection herewith, the undersigned irrevocably agrees that venue for such dispute shall lie in any court of competent jurisdiction in Dallas County, Texas. If this Note is placed in the hands of an attorney for collection, or if it is collected through any legal proceedings at law or in equity or in bankruptcy, receivership or other court proceedings, Maker promises to pay all costs and expenses of collection including, but not limited to, court costs and the reasonable attorneys' fees of the holder hereof. CONTINENTAL CAN COMPANY, INC. By: /s/ Abdo Yazgi -------------------- Name: Abdo Yazgi Title: Executive Vice President 15 EX-10 3 EXHIBIT 10.2 Exhibit 10.2 SHARE PLEDGE AGGREEMENT BETWEEN: CONTINENTAL CAN COMPANY (the "Constituant"), and SUIZA FOODS CORPORATION (the "Beneficiary"). WHEREAS: - - The Constituant holds 256,910 shares of Ferembal, a societe anonyme with a capital of 40,083,000 FF, with registered offices at 6, boulevard of General Leclerc, 92110, Clichy, registered at the Company register of Nanterre under the number No. B 334 384 054 (the "Company"). - - The Beneficiary has granted a loan to the Constituant in an amount of $20,000,000 which has been granted pursuant to the terms and conditions of the Promissory Note attached hereto dated 27 April, 1998 (hereafter the "Loan Agreement"). - - As a guarantee of the loan, the Constituant has accepted to affect in guarantee all of the shares which it holds in the company Ferembal S.A. pursuant to the terms and conditions set forth below. NOW THEREFORE IT IS AGREED AS FOLLOWS: 1. The Constituant declares by the present document, affecting as security, in conformity with the provisions of article 29 of the law number 83-1 of 3 January 1983, for the benefit of the Beneficiary, 256,910 nominative shares of the Company which are registered in the account opened in the name of the Constituant in the books of the Company (the Shares"). 2. The Constituant warrants that the bylaws of Ferembal SA do not contain any dispositions which submit the sale or transfer of shares to a third party to a preliminary approval "agreement") of the Board of Directors. The Constituant irrevocably undertakes to the Beneficiary not to modify the bylaws of the Company in order to introduce an "agreement" provision, such undertaking remaining in effect up to the complete repayment to the Beneficiary of the principal amount of the loan provided for in the Loan Agreement, together with all interest, expenses and accessory amounts related thereto. 3. The Constituant warrants that the constitution of the present pledge for the benefit of the Beneficiary has been the subject of all approvals and authorizations which are necessary pursuant to all legal, statutory and by-law provisions which are applicable to it. 16 4. The present pledge is granted to guarantee the reimbursement of all amounts in principal, interest, expenses and accessory amounts and with respect to all obligations for which the Constituant may be liable with respect to the Beneficiary pursuant to the Loan Agreement. 5. Pursuant to Law No. 83-1 of January 3, 1983, all shares, other securities and financial instruments which may be substituted for or become supplementary to the Shares set forth as a pledge, due to exchanges, bringing together, splits, free attributions, subscriptions in cash or otherwise, as well as the products thereof, in all currencies, are included in the base of the present pledge. 6. The Constituant warrants that is the sole owner (in both "bare property" and "usufruct") of the Shares and is, therefore, legally entitled to constitute a pledge on the Shares in favor of the Beneficiary. The Constituant warrants that no pledge, privilege or other security interest on all or any part of the pledged Shares has been granted to date and that no "opposition" or other reason exists to block the present pledge. The Constituant further warrants that there does not exist any "convention de croupier" or similar agreement relating to all or part of the Shares. 7. The Constituant undertakes that as long as the present pledge shall remain in effect it shall not: (i) constitute another pledge or security interest on all or any part of the Shares; (ii) sell or transfer, directly or indirectly, in whole or in part, the Shares; (iii) permit the Company to be operated other than in the normal course of business in a prudent manner; (iv) permit any legal transformations involving the Company, such as mergers and contributions of assets, to take place. 8. In order to notify the present Pledge Agreement to the Company, a copy of the present document is at this time delivered to the Beneficiary for delivery to the Company, which Company shall debit the Shares in the Constituant's account and shall credit a special "pledge" account in the name of the Beneficiary on the books of the Company. 9. The Beneficiary may, eight days after notice to the Constituant given to it directly in hand or sent by registered letter, request the executive of the present pledge pursuant to article 93 of the Commercial Code or it may request a court to attribute the pledged Shares to it in conformity with the provisions of article 2078 of the Civil code, the preceding 17 dispositions applying notable in the event of a simple declaration by the Beneficiary of an "Event of Default" pursuant to the Loan Agreement, all of this without prejudice to any other recourse available against the Constituant. 10. The Beneficiary undertakes that at the latest eight days from the receipt of full payment by the Constituant of all principal of the loan which is the subject of the Loan Agreement, and of all the interest, expenses and accessory amounts related thereto, that it will notify the Company and the Constituant by registered letter return receipt requested of the termination of the present pledge. This Pledge Agreement will continue in effect until all of such sums have been duly paid to the Beneficiary or until otherwise provided by law in the event of the executive of the present pledge. 11. The stamp duties and registration taxes, as will as all taxes, penalties and expenses (including fees of legal counsel) which result from the executive of the present pledge due to the coming into existence of one or the other of the cases foreseen in paragraph 8 above, are for the exclusion account of the Constituant. 12. For the purposes of this agreement, the parties elect domicile at their respective corporated offices as indicated above. 13. The present pledge is subject to and shall be interpreted under French law (without application of its conflict of law principles). 14. All disputes arising under the present pledge will be subject to the exclusive jurisdiction of the courts of the jurisdiction of the Court of Appeals of Paris and each party declares irrevocably accepting such jurisdiction and waiving all objections with respect thereto. CONTINENTAL CAN COMPANY, INC. SUIZA FOODS CORPORATION By: /s/ Abdo Yazgi By: /s/ J. Michael Lewis --------------------------- ------------------------ Executive Vice President Vice President 18 EX-27 4 EXHIBIT 27
5 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 9,543 21,685 76,796 5,448 89,513 196,768 277,746 133,669 396,599 133,090 125,000 843 0 0 70,451 396,599 123,516 123,516 104,583 117,851 3,787 0 3,843 1,878 (94) 1,378 0 0 0 1,378 .42 .39
-----END PRIVACY-ENHANCED MESSAGE-----